Indian Princess Three Dollar Gold Piece ~ Profile History

Careful grading of the Indian Princess Three Dollar Gold Piece is critical because there's quite a difference in value between mint state examples and those showing wear.

Specifications
Designer: James Barton Longacre
Obverse Design: Liberty is wearing a feathered headdress of equal-sized plumes with a band bearing LIBERTY.
Reverse Design: Wreath of tobacco, wheat, corn and cotton with plant.
Edge: Reeded
Weight: 5.02 grams
Diameter: ±20.5 millimeters
Composition: Gold (90%), Other (10%)
Dates Minted: 1854-1889

Background
There was a proposal for a U.S. three-dollar gold coin way back in 1832, but Mint Director Samuel Moore squelched that idea quickly. There was simply no need for it at the time. Actually, there was probably never really a need for a three-dollar gold coin, but that was especially true in 1832. Remember, there were few gold coins being struck, as there was little gold available to make gold coins! That would all change after 1848, when gold was discovered in the California foothills. This led to the Gold Rush years where gold poured out of California, thus leading to a demand for higher productivity of gold coins AND for more gold coin denominations.

The official reason behind the creation of the Three-Dollar Gold Piece is in line with the reason the U.S. Mint created a Three-Cent coin: postage. Now, the Three-Cent coin idea at least made sense in 1851: the cost of a first-class postage stamp had been reduced from five-cents to three-cents, so why not create a single coin with which the average citizen could buy a stamp? So what does this have to do with the creation of a Three-Dollar coin? Well, the idea was, with a Three-Dollar gold coin, one could buy 100 of the new postage stamps! Never mind that the cost of 100 stamps was more than most American citizens made for full day’s work!

The truth probably has more to do with the gold lobbyists desire for another U.S. gold coin denomination to raise the value of gold even more. So in 1852, they lobbied hard for a three-dollar gold coin. It worked: Congress approved the idea for this new coin denomination in February of 1853.

In 1889, the U.S. Mint finally ceased its production of the Three-Dollar Gold Piece, though it would not be until 1890 that Congress would pass legislation abolishing production of this denomination altogether. In the end, the Indian Princess Three-Dollar Gold Piece last probably much longer than it should have, but that is the advantage of today’s collector, as there are many dates to choose from – granted though, most of these dates are quite scarce and costly. The Indian Princess Three-Dollar Gold Piece will go down in history as the one and ONLY three-dollar gold coin ever struck by the U.S. Mint.

History
Mint Director James Snowden had chief engraver James B. Longacre create a design for the new three-dollar gold coin. What Longacre came up with, was an “Indian Princess” design, though the “Indian” princess with plume-like headdress on the obverse actually has Caucasion features. Incidentally, the Indian princess bust on the Three-Dollar Gold Piece is similar to that of the Indian Head cent of seven years later. That makes sense, because Longacre would go on to design THAT U.S. coin classic as well!

Longacre is also responsible for designing U.S. coins where he takes the unusual step of putting the date on the REVERSE instead of the obverse, as is usually standard. The new Three-Dollar Gold Piece was one such U.S. coin type where the date is on the reverse– it appears within the wreath below the words “3 Dollars”.

Regular coinage of the new Indian Princess Three-Dollar Gold Piece began in April of 1854, with 138,618 pieces struck that year. That seems like a small mintage, and it actually is, but for this series, it was by far the highest mintage of any year. Interestingly, there is an 1854-D Three-Dollar Gold Piece, but don’t mistake that for being a Denver mint coin– the Denver mint was still years away from being established. That “D” stands for the mint at Dahlonega, Georgia. This would be the ONLY three-dollar gold piece struck at that mint, and for that reason, combined with its tiny output of 1,120 pieces, this piece is quite rare and expensive today. Expect to pay $8,300 for an average-grade (in this case, Very Fine) example.

There was also a New Orleans output of 1854 Three-Dollar Gold Pieces. These are also quite scarce (24,000 struck), and also the only year New Orleans struck three-dollar gold coins. These 1854-O pieces will cost you $1,000 in Very Fine.

The San Francisco mint struck Three-Dollar Gold Pieces from 1855 through 1860, though skipping the years 1858 and 1859. After 1860, the Three-Dollar Gold Piece was only produced at the Philadelphia mint.

Collecting
Besides the 1854 Three-Dollar Gold Piece, only three other dates would have “significant” mintages: 1855 with 50,555; 1874 with 41,820; 1878 with 82,324. Most other dates had mintages of just a few thousand, some even under 100! For example, in 1875 only 20 pieces were struck, and they were all Proof issues. Likewise, the 1873 date is a Proof only issue. There is also a notable rarity in the series: the 1870-S is unique, and so rare as to not even have values listed!

Though mintage figures were paltry through the 1870's, there was a slight rise in production of the Three-Dollar Gold Piece in 1887 and 1888. Interestingly, it was because of a current fad: there was a “love token” craze going on, where silver and gold coins were taken out of circulation, smoothed out on one side, and a lover’s initials placed on the smoothed out side. Some of the more well-heeled American citizenry would make use of the Three-Dollar-Gold Piece to use as a love token for their significant other.

The most affordable Three-Dollar Gold Piece you’re likely to encounter will be the 1874, valued at $800 in Very Fine. The 1854 is also a “less expensive” date at $850 in Very Fine. Of particular value might be the dates of 1879 and 1880. With mintages of about 3,000 and 1,000 respectively, they are still priced the same as higher-mintage “common” dates with retail values of $850 in Good.

Mints
Philadelphia Mint (No mintmark)
Dahlonega Mint (D mintmark)
San Francisco Mint (S mintmark)
New Orleans Mint (O mintmark)

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Daily Pfennig: 01/31/11: Consumer Spending?

By Chuck Butler
Jan 31 2011 2:04PM
www.caseyresearch.com



In This Issue…

* U.S. GDP prints at 3.2%...
* Dollar rallies on GDP data…
* Eurozone inflation rises 2.4%
* The CABAL…

And, Now, Today’s Pfennig For Your Thoughts!

Consumer Spending?

Good day... And a Marvelous Monday to you! It’s January 31st, and the country is about to get hit with a major winter storm… We’re supposed to get about an inch of ice, and then anywhere from 3 to 12 inches of snow… Other parts of the country will get blizzard conditions… pretty crazy… Reminds of the 2 feet of snow we got about this same time of year in 1982. The St. Louis Fed closed for a couple of days, and people were stranded all over the place… Let’s hope that doesn’t happen again, eh?

Well… the snow is about to dump on us, and the euro got dumped on last Friday… The euro (and the rest of the currencies) got slammed on Friday, from mid-morning on… The euro, which was well into the 1.37 handle when I hit send on Friday, fell 1.5-cents… And while the euro was getting slammed, Gold & Silver woke up from their doldrums, and rallied strongly. I mentioned to the boys and girls on the desk that the trading seemed very strange, given that the euro was down, and Gold was up VS the dollar. As I look at the screens this morning though, it seems we’re getting a reversal of that Friday trading, with the euro gaining back 1-cent, and Gold selling VS the dollar.

So… what happened on Friday, and what’s turned it around overnight? Well, Friday, we saw the first estimate of 4th QTR GDP here in the U.S., and while it wasn’t as robust as expected (3.6%), GDP did show a strong move of +3.2%... Of course that’s the first estimate, and it could go up or down from there… My guess? I think it will go down… One of the components just didn’t make sense to me… the report said that Consumer Spending is strong… What? Where are they getting the money to spend? Ahhh… My good friend, and investment sage, John Mauldin, addressed this in his weekly letter that can be read for free… (www.2000wave.com) Here’s John on that Consumer Spending claim…

“The really surprising number you saw the talking heads on TV mention was the growth of consumer spending, at 4.4%. Is the US consumer back? After all, real final sales rose by 7.1%, a number not seen since 1984 and Ronald Reagan. But real income rose a paltry 1.7%. Where did the money that was spent come from? Savings dropped a rather large 0.5% for the quarter. That was part of it. And I can’t find the link, but there was an unusual drawdown of money market and investment accounts last quarter, somewhere around 1.5%, if I remember correctly. (David Walker remembered that article as well.) That would just about cover it. But that is not a good thing and is certainly not sustainable.”

Chuck again… Yes, John, I agree… those draw downs can’t be a good thing as far as sustaining strong growth… Besides, are we, as a country, going to go down that “consumption” road again? Before we embark on that journey, let me remind everyone that consumption does not create wealth! And, as the Big Boss Frank Trotter told an audience one time, “I walked through a cemetery the other day, and I noticed that 100 years ago, most of the grave stones said that people died of “consumption”…

OK… so it was all about the dollar on Friday, as the mass media was in love again… But something else strange happened on Friday… and that was the stock market sold off by more than 100 points (at one point in the day it was 150 points!) … If the U.S. economy is as strong as the GDP would suggest, I would certainly think that the stock jockeys would be dancing in their seats… But that was not to be… What could they be afraid of, for they’re not smart enough to look under the hood of the GDP report… They take it for what it is, and usually run with it… I’m not knocking stock jockeys, I’m just pointing out that this was not normal trading for them…

Well that was Friday… Overnight, like I said above, the euro has climbed back 1-cent overnight. Well.. can you believe that it was a pop up of Eurozone inflation? Well, my dear reader friends, that’s exactly what pushed the euro higher this morning. Eurozone inflation accelerated to a two-year high in January… Remember now, the European Central Bank’s (ECB) ceiling for inflation is 2%, and January’s number was 2.4%... In December it was 2.2%, so… the trend for inflation here is not the ECB’s friend. But, you may recall me pointing out a couple of weeks ago, that ECB members were beginning to take notice of the rising inflation, and as the ECB and its members will tend to do, they started talking hawkishly… Well, folks, the ECB can stop talking now… I know the Eurozone economy is on tenterhooks, but the ECB could become the first major Central Bank to hike rates… Don’t think they will? I wouldn’t bet against the ECB… Their mandate from the Maastricht Treaty is to provide price stability, and even if 2.4% inflation isn’t the worst thing in the world… They’re the ones that instituted the ceiling of 2%, so if you place a ceiling of 2%, you have to do something once it moved above the ceiling for more than 1 month…

The unrest in Egypt continues this morning… The goings on here are sure to upset the risk applecart… Especially for the Emerging Markets… Remember that when one Emerging Market suffers, they all suffer, whether they have problems or not… So, the Egypt thing has really put pressure on the likes of Brazil, South Africa, and others… One Emerging Market that is not suffering though, and bucking the trend, is Mexico… But I’m not even going to board that bus!

The data cupboard here in the U.S. will get a workout this week, beginning today with two of my faves, Personal Income and Spending…. We’ll get a better look at the “income” of those so-called “spending consumers”… And we end the week with the Jobs Jamboree! Lots will happen before Friday though, especially for commuters! But… as it looks right now, it looks like the forecast for Job creation in January is going to be +140,000… While that’s far better than the -300,000 we saw a couple of years ago, 140,000 jobs is not enough to sustain a so-called growing economy… And unfortunately, for us… that means the boys and girls over at the CABAL (I’ll explain in a bit), will feel that their QE2 is justified… and as readers of this letter know, I’ve already gone out on the limb and said that QE2 won’t be the last one in the installments of debt monetization…

OK… as you all know, I’ve called the Fed the Cartel ever since I read the book, “The Creature from Jekyll Island”… And told you that if you read that book, you too would call the Fed, the Cartel… OK… so… now I’m getting some heat for using Cartel from the powers that be… So… here’s another version for me of this that I can use, and it’s CABAL… and it stands for the people responsible for creating the Fed, and care taking of it now…

You may or may not know the story of the secretive closet advisers to Charles II of England in the mid 17th century. At any rate after the departure of an appointed minister it was said, somewhat inconclusively that Sir Thomas Clifford, Lord Arlington, the Duke of Buckingham, Lord Ashley, and Lord Lauderdale - thus CABAL became his primary advisers and were signatories to a treaty with France against Holland.

C - Central Bankers (for the other major central banks)
A - Nelson Aldrich (The Aldrich Plan became the Federal Reserve act) as you know his son-in-law was John D Rockefeller
B - The Bernanke of course
A - Alan Greenspan
L - Linda Robertson - the newly hired lobbyist to help smooth the image.

So… that’s it! My new name for the Fed Reserve, because there’s nothing Federal about them, and there are no reserves…

I see where Moody’s downgraded Egypt’s credit rating… Isn’t that like adding insult to injury? Leave it to these credit ratings guys…

Then there was this… from Reuters this morning… Quantitative easing by the Federal Reserve and other central banks cannot address fundamental economic problems but may lead to excessive global liquidity and competitive currency depreciation, China's central bank said on Sunday. “Quantitative easing policy cannot fundamentally address economic problems, and it may cause excessive liquidity on a global scale as well as risks of competitive currency depreciation," the Chinese central bank said in its 59-page report. "It is creating imported inflation and short-term capital inflows, pressuring emerging markets," it said.

Chuck again… Same old stuff I told you with the first round of QE in March of 2009… and then again last fall when it was brought on again by the CABAL…

To recap… The U.S. 4th QTR estimate of GDP was 3.2%, and along with the unrest in Egypt, knocked the stuffing out of the currencies on Friday… But a stronger than expected inflation report for the Eurozone this morning, has the euro back on the rally tracks, and acting as the engine that it is, the rest of the currency are following along. The GDP report was a little suspicious and we discuss that along with good friend, John Mauldin…

Currencies today 1/31/11… American Style: A$ .9940, kiwi .7710, C$ $1.0010, euro 1.3675, sterling 1.59, Swiss $1.0610, … European Style: rand 7.18, krone 5.8015, SEK 6.49, forint 199.90, zloty 2.88, koruna 17.7585, RUB 29.80, yen 82.20, sing 1.2810, HKD 7.7970, INR 45.90, China 6.5950, pesos 12.16, BRL 1.6740, dollar index 77.91, Oil $89.85 (the unrest in the Middle East, has really pushed the price of Oil higher), 10-year 3.34%, Silver $27.65, and Gold… $1,327.10

That’s it for today… Well… yesterday, was our little Christine’s Birthday… she turned… no wait! I don’t want her throwing pencils at me for telling her age! But, she’s been with us for 10 years now! WOW! I packed an overnight bag in case we can’t get out of here or back in the morning… Better to be prepared, eh? I’m listening to the Temptations’ song, Papa was a rolling stone, this morning… great old song! Little d, (Delaney Grace), and the EverBaby (Everett) came to see us yesterday… Delaney sat and played with these little stuffed animals and sang for hours, making up words for melodies to other songs… It was quite funny… The EverBaby is already getting big, he’s just a butterball! OK… We’ve got to get done and out of here today, to get home before it gets bad, so, I’m going to sign off here, and get to work… I hope you all have a Marvelous Monday, and be safe out there the next couple of days!

Chuck Butler
President
EverBank World Markets
1-800-926-4922
1-314-647-3837

****

Two decades ago, Chuck Butler embarked on his extensive career in foreign investments as the Director of Operations for the Fixed Income Division of the Mark Twain Bank. He oversaw the clearing and custody of all bond department trades and Mark Twain portfolio transactions.

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Gold Up Date January 31 2011

By David Levenstein
Jan 31 2011 1:52PM
www.lakeshoretrading.co.za

Despite recent volatility, strong physical demand for gold will underpin prices.

Last week after hitting the lowest level in four months, the price of gold suddenly bounced. On Friday, news about the deteriorating situation in Egypt gave the gold price a big boost and traders who had been short, or sold, on gold’s recent pullback were suddenly covering their short positions or going long. At one time the price of gold surged by almost $40 an ounce. Personally, I do not see why the unrest in Egypt should be worth $40, but when it comes to predicting the gold price it has always been difficult to calculate the price move as determined by some geo-political crisis. In the past few months we have seen unrest in Greece, France, Tunisia and Yemen. And, only few months ago, tensions between the two Koreas had suddenly jumped to an all-time high. Yet, these events did not have the same impact on the gold price as the current situation in Egypt. It goes to show how traders react on news events and how their perspective on these events can impact on the gold market. This is one of the reasons why gold prices can be so volatile at times. Yet, the underlying fundamentals in the gold market have not changed and continue to provide an extremely bullish scenario for gold.

Recently, there was news about how a tiny hedge fund SHK Asset Management run by, Daniel Shak, has been responsible for some of the recent price action seen in gold prices. Evidently, as gold prices started falling this year, the trade, which was a combination of being long and short gold contracts started going bad. And, on Monday, January 24, he liquidated his position and is returning money to clients. As a result, the number of gold contracts on CME Group Inc.'s Comex division plunged more than 81,000, to about 500,000, the biggest single reduction ever. While his trade didn't account for all of the contracts, it accounted for a large percent of the daily turnover which on a normal day is about 3,000 to 5,000 contracts.

This goes to show you how one person can control one of the largest positions in the gold market. In an interview Shak said he quit the trade when he was 70% down. People close to the firm confirmed the loss was about $7 million.

While the futures markets can determine price action in the short-term, in the longer-term the simple supply and demand dynamics of the market will prevail. And, when it comes to gold, demand for the yellow metal has been very strong.

According the World Gold Council (WGC), investor demand for gold was very robust during 2010. The gold-backed ETF’s that the WGC monitors saw net inflows of 361 tons during 2010, the second largest on record after the 617 tons of net inflows experienced during 2009. This brought total holdings to a new high of 2167.4 tons by the end of December 2010 worth USD 98 billion at the year-end gold price.

Investment demand for gold bars and coins also continued to grow during 2010. Physical delivery at the Shanghai Gold Exchange totalled 836.7 tons in 2010. According the WGC report, physical delivery as a percentage of trading volume had increased to 33% by the fourth quarter as Chinese investors sought to get hold of gold bullion.

Demand for physical gold in other parts of Asia also remained very robust. The demand for gold in Taiwan increased in 2010, and in Vietnam, retail investment demand remained very strong. In India, initial reports tend to indicate that sales of gold bars were strong during 2010, in partitular in the fourth quarter. And, due to the increase of demand, the Reserve Bank of India authorised seven more banks to import bullion.

Private investor demand for bars and coins in Europe and North America also continued to grow during 2010. European and American investors led the way in gold bar and coin buying as a way to protect their wealth against currency devaluation, and as a hedge against inflation. In the US investors bought 1.2 million ounces (38.0 tons) worth of American Eagle bullion coins according to the US mint.

In addition to the increased investor demand, global jewellery demand totalled 1,468.2 tons during the first nine months of 2010, an increase of 18% from the same period during 2009. While the final data for Q4 will be released in mid-February 2011, it is widely expected that gold consumption for jewellery in 2010 will show an increase over the previous year. At the country level, India the largest consumer of physical gold has shown signs of a recovery in demand for the yellow metal compared with the year before. During the first nine months of 2010, gold jewellery consumption in India rose 513.5 tons, 73% higher than the same period during 2009. Similarly, gold jewellery demand in Hong Kong, Russia, mainland China, and Saudi Arabia rose by 27%, 19%, 8% and 2% respectively during the first three quarters of 2010 when compared with same period in 2009. On the other hand, gold jewellery demand in the UAE, Japan, Vietnam and Turkey was slightly lower in the first nine months of 2010, relative to 2009 while the rest of the world saw a more significant contraction in jewellery consumption, in particular Europe.

While the demand for physical gold remains robust and will underpin the price of the yellow metal the global currency crisis is only going to deteriorate. And, as our world continues to be influenced by lying politicians, corrupt bankers, deceptive investment advisors, national government debt that is spiralling out of control, not to mention budget deficits that are already out of control, governments will continue with their expansionary monetary policies. The end result will be further currency debasement, which in turn will inflate the prices of many commodities which will cause further unrest and thus merely perpetuate the cycle of unrest, inflation, currency debasement, currency wars, trade barriers and poor economic growth. It is for this reason that now more so than any other time it is important to include gold in your investment portfolios.

TECHNICAL ANALYSIS

While the candlestick pattern is not a reversal pattern of sorts, the downward trend seems to be stalling and may well find support around the $1325 level. However, traders may try to push the price down to the psychologically important level of $1300. I believe that prices will trade with an upward bias in the short-term.

David Levenstein

****

About the author:

• David Levenstein is a leading expert on investing in precious metals. Although he began trading silver through the LME in 1980, over the years he has dealt with gold, silver, platinum and palladium. He has traded and invested in bullion, bullion coins, mining shares, exchange traded funds, as well as futures for his personal account as well as for clients.
• His articles and commentaries on precious metals have been published in dozens of newspapers, publications and websites both locally as well as internationally. He has been a featured guest on numerous radio and TV shows, and is a regular guest on JSE Direct, a premier radio business channel in South Africa. The largest gold refinery in the world use his daily and weekly commentaries on gold.
• David has lived and worked in Johannesburg, Los Angeles, London, Hong Kong, Bangkok, and Bali.
• For more information go to: http://www.lakeshoretrading.co.za/
• Information contained herein has been obtained from sources believed to be reliable, but there is no guarantee as to completeness or accuracy. Any opinions expressed herein are statements of our judgment as of this date and are subject to change without notice.

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Gold Ends Lower; Egypt Situation Still Fluid for Markets

P.M. Kitco Metals Roundup:

31 January 2010, 02:13 p.m.
By Jim Wyckoff
Of Kitco News
http://www.kitco.com/





(Kitco News) - Comex gold futures prices ended lower Monday as the market place, for the moment, perceives there has not been escalation in the Egypt civil unrest. However, it's likely there will be more unexpected twists and turns as this major Middle Eastern development plays out. Comex April gold last traded down $12.40 at $1,329.30 an ounce. Spot gold last traded down $9.40 at $1,329.50.

While traders generally perceived the weekend and Monday's developments in Egypt and not seriously escalating, Egypt's civil discontent and the uncertainty regarding that situation will keep the sellers in gold at least somewhat timid for the near term. Protesters have called for a "million man" march in Egypt Tuesday that could quickly escalate into more violence and be very market-sensitive. In fluid situations like the one in Egypt at present, no one can predict if the worst is over, or is yet to come, regarding demonstrations and violence. It cannot be ruled out or even considered unexpected that gold could see much stronger buying interest in the coming days, on a flight-to-safety move by investors. The civil unrest in Egypt could spread to other Middle Eastern countries, or there could be a move by Egyptian protesters to close the vital Suez Canal. The bottom line is that traders should not consider the markets' relatively calm trading action Monday (except for crude oil, which was sharply higher) as a strong sign the Egypt situation has peaked, from a markets perspective.

The U.S. dollar index traded weaker Monday, as Friday's short-covering bounce and support from the Egypt news faded quickly. The already technically weakened U.S. dollar index is still in a bearish near-term technical posture which is an underlying bullish factor for the precious metals. Gold bulls have been disappointed recently that the yellow metal has not seen more upside support from the weaker dollar index.

Reports overnight said the Chinese Lunar new year is likely to squelch physical demand for gold from China and other parts of Asia for the near term, along with the uncertainty of Asian investors about the Egypt situation. It was also reported in the news that an official from China's central bank said the Chinese government should increase its official holdings of gold and silver.

The London P.M. gold fix was $1,327.00 versus the previous P.M. fixing of $1,319.00.

Technically, April Comex gold futures closed nearer the session low Monday and gave back about half of Friday's safe-haven gains that came amid the Egypt unrest. The fact that sharply higher crude oil futures prices and a weaker dollar Monday could not help the gold market is a bearish clue for gold. Gold prices are still in a four-week-old downtrend on the daily bar chart.

Gold bulls' next near-term upside technical objective is to produce a close above solid technical resistance at last week's high of $1,354.00. Bears' next near-term downside price objective is closing prices below psychological support at $1,300.00. First resistance is seen at $1,340.00 and then at Monday's high of $1,347.20. Support is seen at Monday's low of $1,323.60 and then at $1,310.00. Wyckoff's Market Rating: 5.0.

March silver futures closed up 3.1 cents at $27.95 an ounce Monday. Prices closed near mid-range. Prices Friday did see a bullish "outside day" up scored and prices closed at a weekly high close on Friday. The key "outside" markets were in a bullish posture for silver Monday--sharply higher crude oil prices, higher stock indexes and a weaker U.S. dollar--but the silver bulls could not get much upside traction from such. This is a bit worrisome for the silver bulls and they need to show more power soon.

The next downside price objective for the silver bears is closing prices below solid technical support at last week's low of $26.30. Bulls' next upside price objective is producing a close above solid technical resistance at $29.49 an ounce. First resistance is seen at Monday's high of $28.42 and then at $27.78. Next support is seen at Monday's low of $27.52 and then at $27.00. Wyckoff's Market Rating: 6.0.

March N.Y. copper closed up 780 points at 445.10 cents Monday. Prices closed nearer the session high. The bulls have regained good upside technical momentum as prices trade near the January contract and all-time high. The key "outside" markets were in a bullish posture for copper Monday--sharply higher crude oil prices, higher stock indexes and a weaker U.S. dollar.

The copper bulls have the solid overall near-term technical advantage. Bulls' next upside objective is pushing and closing prices above solid technical resistance at the January all-time high of 449.80 cents. The next downside price objective for the bears is closing prices below solid technical support at last week's low of 420.80 cents. First resistance is seen at 446.75 and then at 449.80 cents. First support is seen at 440.00 cents and then at 437.00 cents. Wyckoff's Market Rating: 8.5.

By Jim Wyckoff of Kitco News; jwyckoff@kitco.com

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China's Role in the Price of Gold

By Steven Jon Kaplan
Jan 31 2011 1:44PM
www.TrueContrarian.com


One unheralded but critical development during the past two years has been the sharp rise in physical gold buying from China. The gold buying by China’s central bank has been well reported, but an equally essential story has been private accumulation of physical gold. Various estimates have been given since much of the buying has been unreported or inaccurately tabulated, with most reliable analysts believing that total Chinese demand as measured by weight increased at least 20% in 2010 as compared with 2009, and by a similar percentage in 2009 as compared with 2008. Some have suggested that China’s total gold buying may have even surpassed India, traditionally the world’s largest consumer of gold.

I have no doubt that a significant percentage of gold’s price increase in 2009-2010 was caused by the incremental demand from Chinese buying. The real question, then, is what will happen with this demand going forward, and which factors will be the most important in gauging future trends.

The government of China has intentionally kept its currency, the renminbi (popularly known as the yuan), pegged to the value of the U.S. dollar. During bull markets for risk assets, such as in 2009-2010, this has caused the Chinese currency to become notably undervalued relative to where it would likely be if it were permitted to float freely. China also keeps bank savings rates very low relative to inflation, with pressures from rising food prices in particular causing among the world’s most negative real yields. This has encouraged Chinese consumers to buy almost everything they can get their hands on with their money instead of conservatively saving it. Some of that has found its way into gold; much of the rest has gone into the soaring Chinese real-estate market.

At its peak at the end of 1989, the ratio of Japan’s real estate to income was roughly between 10 and 12 times in the most overvalued neighborhoods. It reached similar extremes in Dublin in 2006, and in various parts of the United States at about the same time. In sharp contrast, the current average for many cities in Arizona, Nevada, and Florida where real-estate bubbles have already collapsed is between 1 and 2 times income. Today, there are numerous cities in China where real estate is averaging between 20 and 40 times average household income. This has to qualify as the most dramatically overvalued real-estate bubble in world history.

The reason why this is so critical to the gold price is that as people’s houses have soared in value in China, they feel much wealthier and have therefore been more eager to spend their income on nonessential items like gold. However, we know that all bubbles must eventually burst, and the most lopsidedly exaggerated ones are going to suffer the worst percentage collapses. In my opinion, the most important question in the gold market today is how the price will be affected by a plunge of 50% or more for Chinese real estate, and whether there are any clues as to when this will occur.

FXI is an exchange-traded fund of Chinese equities which trades in the United States. At the beginning of the previous bear market, China was one of the world’s first emerging markets to begin a downtrend in October 2007. It may not be a coincidence that FXI almost surely peaked on November 8, 2010, which was many weeks ahead of any potential top for the S&P 500 index. Four weeks later, on December 7, 2010, gold may have completed its zenith for the cycle. If these were indeed the final highs for the next few years, then this would suggest that real-estate prices in China may have already begun to retreat.

If that is the case, then why isn’t this being reported as one of the top financial stories? While there is no way to know for certain, it is possible that the Chinese government has forbid any discussion in their local media of the possibility of a real-estate collapse in that country, so as to prevent widespread public panic. While there are various complaints that the Chinese may have about their economic or political system, the sharp rise in prosperity and annualized double-digit GDP growth rates have kept the populace mostly supportive of government policy. If real-estate prices were to drop by half or more, and this were to lead to the kind of sharp rise in unemployment, foreclosures, and similar ills to what has been experienced by Ireland, Spain, the U.S., and other countries in recent years, then this could provide the most serious threat to the regime since they assumed power in 1949. Looking back over Chinese history, most emperors faced the greatest threat of being deposed following episodes of severe economic contraction.

The media have become so routinely preoccupied with double-digit growth rates in China that most people take for granted that this will continue for several years or even several decades. However, I believe that the real-estate bubble has created a dangerously artificial prosperity which will be exposed once housing prices begin to decline, and will become a serious issue once housing prices plummet more dramatically. As soon as the psychology among the average Chinese person switches from “real estate only goes up” to “I’d better sell before my neighbor does”, an accelerated pullback is likely—as anyone in Tokyo, Dublin, or Phoenix can attest.

Those who are familiar with China mostly think that the government will somehow be able to engineer a “soft landing”. This was what people thought in Tokyo in 1990, and in the United States in 2005, and in Ireland in 2006, but history proved that you can’t have a soft landing when a housing bubble collapses. Since China has a much more exaggerated bubble by any measures, then it is far more likely to lead to a more severe contraction rather than a less severe one.

In all regions where real-estate prices slumped, people thereafter spent far less money on nonessential items. This was not primarily because they had less money to spend, but because they psychologically felt poorer as a result of having their most valuable assets lose a significant percentage of their value. Economists often refer to this phenomenon as the negative wealth effect. In China, one important demonstration of the negative wealth effect would be sharply curtailed demand for gold.

While India does not have as extreme a real-estate bubble for China, it also has substantially overvalued housing prices. Most other countries which are among the highest in per-capita purchases of the yellow metal also happen to have housing prices which are far above historic norms. Even as the S&P 500 and similar equity indices have continued to be generally strong (at least until very recently), many emerging-market bourses have underperformed since early November 2010.

In the short run, precious metals and their shares have become unpopular, which usually leads to some form of sharp rebound. In the longer run, however, the most serious threat to gold—as it also is to most other risk assets—is the inevitability of the collapse of real-estate bubbles throughout the world. Currently, roughly 4.5 billion people live in neighborhoods where the ratios of housing prices to incomes, or housing prices to rents, have never been higher. As these bubbles inevitably collapse, which may already be occurring in places like China where such information is not likely to be accurately reported by the media for political reasons, it is likely that people will feel poorer and will therefore spend much less of their money on nonessential items like gold. The notable underperformance since November 8, 2010 by assets like FXI, an exchange-traded fund of Chinese equities, and a subsequent downtrend since December 7, 2010 by GDX, an exchange-traded fund of gold mining shares, may be signaling that a reversal of fortune is imminent. While short-term bounces are likely to occur whenever sentiment has become unusually depressed, as has been the case recently, it will likely take one or two years for the sting of the real-estate collapse in many regions of the world to complete its negative wealth effect on the prices of gold, gold mining shares, and related assets.

By Steven Jon Kaplan

****

Steve has been quoted in MarketWatch, Reuters, Dow Jones, Jiji (Japan), Barron's, and other financial media, and has been featured on MarketWatch's cable TV programming.

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Classic Head Half Cent ~ Profile History

A total of 3,637,912 Classic Head Half Cents were made between 1809 and 1836.

Specifications
Designer: John Reich
Obverse Design: Liberty Bust
Reverse Design: Coin denomination within a wreath
Edge: Plain
Weight: 5.45 grams
Diameter: 23.5 millimeters
Composition: Copper (100%)
Dates Minted: 1809 - 1811, 1825 - 1836

Background
There have been several times in U.S. coinage history where a particular coin design came out in a “family” of denominations. For instance, the 1794-95 Flowing Hair design on U.S. silver coins was shared by the half dime, half dollar and dollar. Similarly, the “Barber” coin designs of 1892-1916 were shared by the dime, quarter and half dollar. Usually, though, whenever a particular U.S. coin design emerges as a family of denominations, those sibling coins share a particular time span, or at least a rough time span. An example of this would be the Capped Bust designs that were featured on U.S. half dimes, dimes, quarters and half dollars. Though the Capped Bust design didn’t begin on the same year for all denominations, the Capped Bust design ended for all four denominations in 1837. But then there is the case of the Classic Head half cent. It too had a “sibling”: the Classic Head large cent. But while the Classic Head half cent and large cent both started at roughly the same time (1809 and 1808 respectively), the Classic Head half cent design kept going and going, long after the Classic Head large cent was retired.

The Classic Head half cent of 1809-35 is the most commonly encountered of all the half cents. Like all half cents, this is a scarce coin type, but had the highest mintages of any U.S. half cent type. Actually the Braided Hair half cent of 1840-57 was struck over a longer period of time, but only in its final years of 1849-57 were any of them really struck for circulation. The Classic Head half cent is the only half cent to have a mintage of over 1 million in a single year—that being 1809. And that was the only year ANY half cent mintage reached 1 million!

The Liberty bust on the Classic Head half cent strongly resembles the Capped Bust liberty head on the U.S. silver coins of 1809-37. Still, there is enough difference to classify the Classic Head coppers and the Capped Bust silver coins as two different coin design types. As it is, the Classic Head half cent shared its design only with the Classic Head large cent. Both coins feature a husky, heavily-curled Miss Liberty (derided in her day as the “Blowsy Barmaid”) wearing a French type cap and headband reading “Liberty.” On the reverse, the coin denomination is spelled out within a wreath. The Capped Bust large cent made its debut in 1808. As far as half cents in 1808, the Draped Hair half cent was finishing up its run. The Classic Head large cent’s little half-cent sister wouldn’t appear until 1809, the year Abraham Lincoln was born!

History
At first, it seemed that the Classic Head large cent was destined to outlive the Classic Head half cent. After 1811, the Classic Head half cent vanished. Meanwhile, the Classic Head large cent kept on being struck through 1814, after which, it too disappeared. In 1815, no U.S. copper coins were struck, but when copper coinage resumed in 1816, it resumed in the form of a new large cent: the Coronet Head large cent. But as for the half cent, it was nowhere to be seen. Logic dictated that if the half cent was to return, it would be a Coronet Head half cent. But fourteen years passed without any new strikings of half cents.

Then, in 1825, the half cent made a comeback. But instead of a Coronet Head half cent to parallel the Coronet Head LARGE cent that had been in production for nine years, the U.S. Mint simply continued on with the Classic Head half cent design! In fact, strangely, while the Coronet Head large cent continued on through 1839, the Classic Head half cent was struck alongside it for nearly that long. The end for the Classic Head half cent finally came in 1835, though there was a proof-only striking in 1836. Why a Coronet Head half cent was never struck as a “sibling” to the large cent, it’s hard to say. Perhaps since the half-cent was not an all-important coin denomination by the 1820’s, the U.S. Mint may simply have elected to save money on creating new coin dies.

Collecting
There are only a couple of truly scarce, high price-tag dates for circulation strike Classic Head half cents. One would be the 1811 date. There were just 63,140 struck that year, but the small-ish mintage alone must not tell the whole story. Apparently it’s much harder to track down than the 1825 half cent which ALSO has a mintage of just 63,000 yet retails for much lower. The 1811 half cent retails $225 in Good and $750 in Fine! By comparison, the 1825 half cent retails only $45 in Good and $75 in Fine. Clearly, despite the similar mintages between these two dates, far fewer 1811 half cents have survived. Another even rarer date is 1831 --—only a little over 2,000 were struck and they retail at around $5,500 in Good.

As mentioned before, the 1809 Classic Head half cent is the most common date of the series with a mintage of 1.1 million. But it’s a popular date as it comes during the “Early U.S” period --—the time of Thomas Jefferson and James Madison. Also, it’s the first year of issue, and those are always popular. But the larger numbers of this date being out on the market keeps the retail value in Good down to around $35 in Good and $55 in Fine. Most other dates in the Classic Head half cent series retail for just a few dollars more than the 1809, even though later dates have far smaller mintages—in many cases 100,000 or less!

Classic Head half cents don’t enjoy nearly the collector popularity that the earlier half cents (Flowing Hair, Liberty Cap, Draped Bust) do. One reason is that they just come in at the tail-end of the “Early U.S.” period, so they don’t have quite the same romance of the earlier half cents. Still, the Classic Head half cent is a great opportunity to own a coin that’s both an early U.S. classic (no pun intended) and a low-mintage coin type. Prices are still very reasonable for even nicer circulated grades. Take advantage!

Grading
Happily, the Classic Head half cents don’t seem to suffer from the same planchet quality problems as its sibling, the Classic Head large cent. It’s far easier to track down a Fine to Very Fine Classic Head half cent than it is the Classic Head cent. Certainly, one reason for this is that half cents didn’t circulate nearly as much as large cents. But it still appears that the planchet quality for the Classic Head half cent was better than for its large cent sibling.

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View 100-oz. gold nugget at Feb. 3-5 Long Beach expo

Written by Independent Media Source
Monday, 31 January 2011 08:22



A 100-oz. gold nugget discovered in northern California last year will make its first public appearance in Southern California, Feb.3 - 5, 2011, at the Long Beach Coin, Stamp & Collectibles Expo.

 A 100-oz. gold nugget discovered in northern California last year will make its first public appearance in Southern California, Feb.3 - 5, 2011, at the Long Beach Coin, Stamp & Collectibles Expo.
LONG BEACH, Calif. – The headline-making 100-ounce gold nugget recently discovered in Northern California will make its first public appearance in Southern California at the Long Beach Coin, Stamp & Collectibles Expo, Feb. 3 - 5, 2011. Open to the public, the show will be held in the Long Beach Convention Center, 100 S. Pine Avenue.

"It weighs just under 100 troy ounces -- about nine pounds avoirdupois, and is the largest verifiable California gold nugget now in existence. It's nicknamed the 'The Washington Nugget' because it was discovered near the famous Mother Lode Gold Rush mining camp near Washington, California in Nevada County last March," said Ronald J. Gillio, Expo General Manager.

It has a collector value estimated at $250,000 to $400,000, and will be publicly exhibited for the first time in Southern California courtesy of Fred Holabird and Don Kagin of Holabird-Kagin Americana of Reno, Nevada.

Another featured exhibit will be the finest known suriving 1792 U.S. half dime, a historic early American silver coin that was authorized by President George Washington. Acquired for a record price of $1.5 million in 2007 by the Cardinal Collection Educational Foundation, the coin will be displayed by the Foundation and Stack's-Bowers Numismatics on Thursday and Friday, February 3 and 4.

During the three-day Long Beach Expo more than 1,000 dealers will be buying and selling rare coins, paper money, stamps, postcards, historic documents, antiques, estate jewelry and other collectibles. Some dealers will provide free, informal appraisals for visitors.

A free gold coin door prize will be awarded each day to a lucky visitor, and a children's treasure hunt will be held on Saturday, Feb. 5. Nearly a dozen educational programs and collectors' club meetings will be conducted in conjunction with the February Long Beach Expo.

Heritage Auction Galleries of Dallas, New York and Beverly Hills will hold a public auction of U.S. coins during the show.

The public hours are Thursday and Friday, Febr. 3 and 4, 2011, from 10 a.m. to 7 p.m., and Saturday, Feb. 5, from 10 a.m. to 5 p.m.

General admission is $8 (good for all three days); $6 for members of any coin or stamp club who display a valid membership card; and $4 for seniors 65 and older and for children ages 8 to 16. Free admission for children ages 7 and younger. Discount coupons are available online at www.LongBeachExpo.com.

For additional information, call Expos Unlimited at (805) 962-9939 or during the show dates call the Long Beach Convention Center at (562) 436-3636.

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