First, a very condensed history.  The phrase “In God We Trust” was first used on U.S. money during the American Civil War, on the 2-cent coin.  Its use on other coins followed.  Laws in 1865 and 1873 allowed the phrase to be used on U.S. coins.  (I guess there was no law forbidding the use of the phrase on the 1864 2-cent piece!)  A law in 1908 required the use of the phrase on U.S. coinage, and by 1938 all coins had the phrase.  A law requiring both coins and currency to bear the phrase was enacted in 1954.  In 1956, a law made “In God We Trust” the official U.S. National Motto.  By 1966 and all years thereafter, all U.S. money had the phrase.  (Godless dollars don’t count.  They were errors.)

Teddy Roosevelt takes a stand

On introduction of a new $10 gold piece in 1907, President Roosevelt instructed the Mint not to include the words “In God We Trust” in the design.  He responded to the ensuing criticism in a public letter, published in the New York Times on November 13th, 1907.  From the letter (emphasis mine):

“When the question of the new coinage came up we looked into the law and found there was no warrant therein for putting ‘In God We Trust’ on the coins.  As the custom, although without legal warrant, had grown up, however, I might have felt at liberty to keep the inscription had I approved of its being on the coinage.  But as I did not approve of it I did not direct that it should again be put on . . . . ”

“My own feeling in the matter is due to my very firm conviction that to put such a motto on coins, or to use it in any kindred manner, not only does no good, but does positive harm, and is in effect irreverence, which comes dangerously close to sacrilege.  A beautiful and solemn sentence such as the one in question should be treated and uttered only with that fine reverence which necessarily implies a certain exaltation of spirit.”

“Any use which tends to cheapen it, and, above all, any use which tends to secure its being treated in a spirit of levity, is from every standpoint profoundly to be regretted . . . .“

(From a letter of President Theodore Roosevelt, published November 13th, 1907, in the New York Times)

It’s clear that President Roosevelt’s aim was not to box God in or exclude God, but to keep God at the proper level of respect and reverence.

In whom (or in what) do you trust?

There are over 2300 verses in the Bible that deal with money but one that is closely related to this issue is Matthew 6:24:

“No one can serve two masters. Either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve both God and Money.“  (Matthew 6:24, New International Version)

So, even though “In God We Trust” is on every piece of money that flows through our hands, do we actually trust God?  Or do we trust the security and the power that we see as coming from the money itself?  Is the phrase “In God We Trust” now so commonplace that we don’t even really think about it much anymore?

I’m a Christian.  I must confess that I do take comfort in what wealth I’m currently enjoying, and that’s wrong.  Everything that is “mine” really isn’t mine.  It’s God’s.  Trusting in my “stuff” instead of in God is idolatry.  There is no room for trusting God and trusting something else too.  But like anything related to a spiritual walk, it’s a process of prayer and relationship-building to gain greater trust in God and lesser trust in money and the things of this world.

Not just “In God We Trust” but “In God Alone We Trust.”

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It’s clever.  I can’t say that it’s fraudulent.  It’s not as if he bought a stamp and is stamping the cards himself or anything like that.  They hand him the cards with the extra stamp, and they let him cash in his free lunch by turning in multiple incomplete cards.  He’s playing by their rules.  They just haven’t caught on yet.

They just haven’t caught on … yet

That’s the rub.  They will catch on eventually.  Someone at the shop will see what’s happening, and close the little loophole.  They may start demanding that the card be completely full: no multiple cards.  They may just get rid of the free stamp, so there’s no advantage to collecting more than one at a time.  Or something else.

He, and everyone else, won’t be able to do that anymore.

But you know what?  That’s all right!  Kudos to you if you find a loophole and enjoy a little reward for it.  This is the free market in action, and it’s the best way in the world to wring out inefficiencies, because ultimately society as a whole benefits when that happens.  Businesses should be free to offer incentives to attract more business, and consumers should be free to do their darndest to extract as much service from businesses as they can (without being illegal, immoral, or unethical).

Inefficiencies are wrung out all the time

Here are just a few that come to mind:

• Bounties for switching long distance companies.  This was in the early- to mid-1990s if I recall correctly.  There was fierce competition from long distance companies to steal customers from competitors.  The people who played this game would switch early, and switch often.  Company A would pay someone $50 to defect from Company B.  As soon as the check cleared the bank, they’d be on the phone with Company C, ready to sign up if the price was right.  Invariably the price was right, and as soon as that check cleared the bank, they’d call up Company A again!  Eventually the phone companies caught on, and they started attaching strings:  the bounty would come as a credit on their next six phone bills.
• Free dial-up Internet.  Others played the game with AOL and other ISPs far better than I did.  They’d call up to cancel after paying for a while.  The representative would offer a free month.  Awesome.  Thirty days later, they’d call up to cancel again, and get someone different on the line, who would — you guessed it! — offer them a free month just for staying on.  Eventually, they saw this happening, and kept track, I guess.
• Free airline five-star treatment, courtesy of the Mint.  Buy a whole boatload of dollar coins from the Mint, using your credit card, and get them delivered to your door, for free.  Make sure to use a card that gives you airline miles.  When the money arrives, deposit it in the bank, use it to pay off the credit card bill in full, and keep the airline miles (or cash back, or whatever).  Well, not only did the Mint not appreciate this (since the whole goal of this program was to get the coins in circulation), but some credit card companies started treating these kinds of transactions as cash advances, so interest started accruing immediately.
• Withdrawing large amounts of coinage, searching them for gems, and redepositing them in the same bank.  This is more for a coin treasure hunter (of which I know a few).  Withdraw $500 worth of half dollars.  Go through all of them searching for ones that are worth more than face value.  After picking through all of them, return the $499.50 worth that are worth exactly 50 cents apiece back to the same bank.  If you were a teller at that bank, how quickly would you get sick of that?  One of my treasure-hunting friends was ticked off when they started charging to withdraw coins like that!

In any case, here’s my story and I’m sticking to it.  Loopholes are made to be found and exploited.  Just realize that they’re not forever, and that you may the cause of your favorite loophole’s demise.

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Passive investing is fine and serves a purpose, but since his sons have a lot of time to try some fairly high-risk, high-reward financial activities, I asked this:

@fcn Re: your boys and their savings, are they entrepreneurs? Or are you looking for more traditional investments?

To which he responded over a couple of tweets:

@mbhunter funny you should ask. I was just talking to our oldest about selling stuff on eBay. We discovered some coins at a local antique store that I think he could buy and resell at a tidy profit. They had dozens (at least) on hand.

Antique stores happen to be excellent places to find deals on collectible coins.  Some antique dealers specialize in coins, but many don’t, so they may set a price on the coins that will bring them a profit without realizing that coin prices can fluctuate a lot.  That, and they may be merely renting a booth from an antique mall, so they’re not in the store all the time to update prices even if they knew fair market value for the coins had changed.

Pawn shops are also good place to hunt for deals, but for different reasons.  Many pawnbrokers don’t specialize in coins either.  Their primary business is as lenders of last resort.  The money loaned on the collateral is usually a fraction of what the item is worth; if the pawnbroker buys the item outright for cash, it’s even less.  They sell coins alongside cordless drills, DVDs, computers, subwoofers, guns, etc.  They don’t deal with coins exclusively, so for the most part they know what they paid for the coins and what spot price is for the metal in the coin (if it’s gold or silver).  This is a start but it’s far from the end.

Coin dealers (or antique dealers who specialize in coins) probably have their bases covered, so it’s more of a challenge to find deals.  They know the intrinsic value of the metal in the coins, they know rare dates, and probably have a fair idea of condition, whether the coin was cleaned or not, etc.  Reputable coin dealers will give you good coins at a fair price, but not at bargains.  To quote a (very grumpy) coin dealer I go to on occasion: “I check [gold and silver] prices every day.  I’d be a fool not to.”

Here are six recommendations for starting out on a coin hunt at antique stores and pawn shops.  They’re easy to do, and will help you to identify clear bargains that most people won’t see:

1. Get a copy of Coin Prices magazine (or subscribe). The articles are interesting but the main pieces of information in these magazines that are worth studying are the pictures of the coins (for visual recognition) and the populations of the coins (how many were minted, or possibly even how many are known to be floating around).  The coins with the low populations are the key dates, and are typically more valuable than coins of the same type with large populations.  Knowing that the 1921 Peace Dollar is a key date let me spot a nice bargain at one pawn shop.  The pawnbroker sold me that coin for a common date price.  It was easily worth five times that.
2. Check Coinflation.com. This website updates the melt value of common American and Canadian coins every day.  For example, based on the latest closing price for silver, a Roosevelt silver dime currently has $2.23 worth of silver in it.  A Morgan dollar currently has $23.91 worth of silver.  Melt value is important because it sets a floor on the value of the coin.  If an antique dealer hasn’t monitored the price of silver recently, and if the price has gone up recently, then the coins in their booth might be underpriced.  I picked up several silver dimes priced at $1.50 when the melt value was at least $1.75.
3. When you find coins, check the dates. The dates of the coins are very important.  The mint date indicates the composition of the coin (or should, anyway).  US dimes, quarters, and half dollars minted 1064 and before are 90% silver.  Dimes and quarters minted 1965 and after are not silver.   Some antique dealers will put, say, a bicentennial Washington quarter in a 2-by-2 card and put $1.00 on it.  Or sell Sacagawea dollars for $1.50, or more.  A business-strike 1976 Washington quarter is not silver.  Unless it’s in near-perfect condition (unlikely) then it’s not worth more than 25 cents.  (I’ve made similar mistakes like this.)  Sacagawea dollars, though they’re not circulated widely yet (and won’t be without a fair amount of kicking and screaming by the public!) aren’t worth more than a buck unless they’re in mint state.  If you can’t see the dates on the coins, find a way to see them, or pass them by. And don’t trust what’s on the card!  I’ve seen US State quarters marked with the date that the state entered the union rather than the mint date!
4. If you find an underpriced coin, shut up! I’ve made this mistake too.  I find a coin that’s way underpriced, and I ask them to check something on the coin.  This raises their suspicions, they find out, and raise the price of the coin.  You either know what you’re doing, or you don’t.  The more you study coins, the more confident you’ll be buying them, and the better the deals you can get.  So just stay cool, buy the coin at the offered price, and ride off into the sunset.
5. If you need to investigate a coin, do so out of eyeshot of the person selling the coins. If you’re not familiar enough with a coin to know its value, then go outside and look it up on eBay with your iPhone or something, or go home and learn about it.  The dealer will get suspicious if he sees you researching a coin right in front of him.  Better not to tip your hand that you think it might be underpriced.
6. Keep learning! Coins are fun.  I enjoy them.  The more you know, the more deals you’ll find, and the more fun you’ll have.

Happy hunting!

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There’s a fair bit of activity on eBay buying and selling 95% copper cents, and the coin sorters to distinguish them from the newer zinc variety.  Why the interest, you might ask?  It’s the copper content of the cents that’s interesting.  These high-copper cents, minted for part of 1982 and most of the years before, are now worth more than twice their face value based solely on the copper content.

Basically, each one of these cents has more than two cents’ worth of copper in them.

This mismatch has come about from a decades-long, systematic increase in the money supply.  A dollar today only buys 8% of what it bought eighty years ago.  Since just the turn of this century, it already buys 22% less.  Since there are more dollars chasing the same (or nearly the same) amount of goods, prices rise on average to meet the increased money supply.  The prices of everything are affected, including copper.

The composition of the cent changed in 1982 from 95% copper to 5% tin/zinc, to 97.5% zinc, 2.5% copper.  Zinc is a cheaper metal, but a cent is a cent as far as the cashier is concerned — and as far as the Mint is concerned.  Over time, it makes less and less sense to spend the high-copper-content ones.  They’re kept instead, since at some point it makes more sense to keep them for their copper.

For the time being, though, would-be smelters would break the law if they extracted the copper from cents.  They are also forbidden from exporting anything but trivial quantities to countries where it wouldn’t be illegal.  (A similar ban was enacted after silver was removed from dimes, quarters, and half dollars.  The ban has since been lifted.)  What is still legal is shipping them within the country and storing them as just a large pile of cash.

Enter eBay and others.  You can buy pre-sorted cents, by the pound, in quantity.  Not just the older wheat cents (pre-1959) but the more modern Lincoln Memorial cents (1959-1982).  Circulated wheat cents are more sought-after by coin collectors, so they go for a premium anyway.  The newer ones, though, are still widely circulated, but they’re getting less so.

I just saw an auction for 500 pounds of 1959-1982 cents go for $1,200, with free shipping.  This price is between the face value of the money and the market price of the copper in the cents.  The face value of the lot is

500 pounds * 454 grams per pound * $0.01 per 3.11 grams = $729.90

The value of the copper in these cents is

500 pounds * $3.91 per pound of copper * 95% copper content of cents = $1,857.25

The reason for buying is appreciation of the underlying commodity in dollars. (I suppose, also, that the coins themselves become more collectible as time goes on as well.)  At some point in the future it will pay to sell these.  It may even pay to melt them (assuming the ban is lifted after the “easy money” is no longer so easy).  More to the point, though, it’s trading something that holds value with something that is clearly losing value.

Storing these old things is a cost that some people obviously are willing to bear.  People who pulled out their silver dimes are pretty happy now, I’d think; the reasoning for pulling out the copper cents is the same.  Cents are bulkier relative to their value than silver dimes, and far bulkier than gold coins, but the cents are what people can get their hands on at a discount to their true value, now.

I was born too late to see the silver money go out of circulation, but we all have front-row seats to watch the copper cent go away.  And we can watch it on eBay!

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It was quite a treat:  700,000 gallons of aquarium as well as sprinklings of other kinds of habitat.  What an incredible display of marine life it was.  Some of the staff was there to assist us in touching a few things:  horseshoe crabs, hermit crabs, and stingrays, which were our personal favorite.  (If you’ve never touched one, they’re a little bit spongy on the back.)  We also saw some sharks, dozens and dozens of other beautifully-colored fish like the lionfish, as well as some seahorses.  It was well worth the price of admission.

My daughter really likes “little” things.  She gets this naturally from her mother.  Outside of the exhibit area there were hand-crank machines for making elongated pennies.  We put 51 cents in the plunger in the top (two quarters for the cost of making the elongated penny, plus the penny), and the machine squeezed the penny through a press and made a design on the front and back.  The elongation happens because the penny only goes through in one direction.

So for a total of $1.02 my daughter has two elongated pennies:  one with a seahorse, and one with a stingray, her favorite.

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The owner was buying a collection of coins from someone, so I waited until he was done.  I learned a few things today:

• The new Lincoln cents are making their way around. Both the owner of the store and the guy who was selling his collection were pretty talkative so we talked coins a little bit.  The seller had one of the new 2009 Lincoln cents and showed it to me.  This was the first time I had seen one.  I guess they’re taking a while to get around.  The first Lincoln cent design was introduced almost two months ago.
• Don’t try to make side deals in front of the dealer. I didn’t directly offer to buy some of the coins from the seller, but again, we were all chatting, so it came out that I might be interested in buying some of the coins.  I think I knew enough not to offer the seller any money for the coins right there, because that’s a good way to never be welcome in the shop again.  He offered to sell some to me, but I said that I wasn’t going to get into the middle of the transaction.  Nor did I talk much about what the coins were worth, because it would weaken the owner’s bargaining power.  Again, not a good idea if I ever wanted to come into that store again.
• Kennedy halves in 1966 had a doubled die variety. I offered to buy some Kennedy halves from the collection, but he said that he’d need to look through the 1966 ones before selling them to me, because there was a doubled die variety.  Certainly a good thing to know!  Now I get to look through my 1966 halves.

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I’m not totally convinced that the new designs will be in widespread circulation. As Bob noted, the cost of minting cents is prohibitive relative to the coin’s face value.  Though zinc and copper prices have dropped from their highs to their prices about five years ago, the cost of minting a cent is still the highest of the coins in relation to its face value.

The launch of the new design took place in Lincoln’s birthplace of Hodgenville, KY, on the bicentennial of his birth.  Half a million of the new cents were offered at face value at that ceremony to any of the 1,500 attendees that wanted them.  The Mint, though, has given no other information on the release schedule for the other designs, or how they will be offered for sale.  There will be a special collector’s run of no more than 50,000 sets in the 95% copper content, but nothing more on the common 97.5% zinc content.

Nor is there any requirement to mint a certain minimum number of coins.  That’s at the discretion of the US Secretary of the Treasury.  From Section 302(b)(2) of the Presidential $1 Coin Act of 2005:

NUMBER- The Secretary shall prescribe, on the basis of such factors as the Secretary determines to be appropriate, the number of 1-cent coins that shall be issued with each of the designs selected for each calendar quarter of 2009.

At the moment, there is a surplus of cents available for recirculation, as people have been raiding their piggy banks and heading to the bank or the Coinstar machine to raise funds.  Hence, there’s no need to mint more right now, as there is still widespread acceptance of exchanging them for face value.

The cost issues associated with minting the cents are real.  Managing public perception of the coins and currency is a delicate art: as minting the cents becomes more and more of a loss, the public receives clearer and clearer signals that not only doesn’t a cent buy much, it’s worth more storing it away than spending it.

For the meantime, though, metal prices are lower than they have been, so the Mint might be able to get away with minting larger quantities of the new cents.  They’d certainly like to; all of these novel designs are money-makers for the Mint.  (That wording was clear, right?)  But, it’s not their call how many they produce.

In any case, if only half a million of each design end up in circulation, they’ll be rare indeed.

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We looked it over for about 30 seconds, and then my wife asked, “Now what are we going to do with it?”  (It was hers; she had been collecting them since before we had met.)

What, indeed?

I’ve mentioned before that most state quarters found in pocket change aren’t really going to hold their value.  Unless they’re errors or rare varieties, or in very high mint state, they’re going to be worth their face value, which, thanks to inflation, purchases less and less as time goes on.  (The Delaware quarter has lost almost 25% of its purchasing power already!)  Tens of millions of each design were minted.  The coins themselves are composed of less than three cents’ worth of base metals.  You can collect them if you want, but they’re not “collectible.”

So, back to my wife’s question: What do we do with them?  Right now we have $12.50 in quarters with a map, collecting dust, and depreciating.  It’s not really suitable for framing.  It’s taking up space and incrementally cluttering our lives.  We could:

• Buy a couple of pizzas with the quarters. The pizza place would probably appreciate the quarters for their cash drawer.
• Take the quarters out and start again. Our daughter is almost four, so she’s probably a tad young, but it won’t be very long (maybe a couple of years) before she can start learning her states.  It’s a good opportunity to learn some history.
• Pass the map on to someone who can use it as such. Decluttering can be a good thing.  We can’t save everything.  We can’t even save most of everything.
• Sell the map. Why not?

The most pragmatic thing to do with the map full of quarters is to not save it.  The fun was in the collecting, and now it’s over.  It’s time to spend the quarters.  If we really want then back again, it won’t take long to find them.

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My father-in-law asked me one year what I wanted for Christmas, because all he could really think of was cash.  I responded, “And cash is bad because … ?”  And he said, “Well, just giving cash seems a little crass.”

And I suppose it is.  Occasionally we have collections for special occasions at work: someone has a baby on the way, someone’s getting married, or we want to thank the cleaning crew at Christmastime.  Though a gift card is really more or less the same thing as cash, it seems much more thoughtful than just stuffing all of the ones and fives in an envelope with a card.  The cash is easier to spend, but it seems less like a gift and more like a handout.

But there are cool ways to give cash — ways that show some thought and don’t have the appearance of a handout:

• Presidential dollar coins.  I think these things are cool.  Hey, they’re only a few cents’ worth of metal, but they’re really shiny fresh out of the roll.  Or, left in the roll, they might be worth another buck or two sold uncirculated to a dealer.  Once in a while there may be a mint error that could be worth hundreds of dollars.
• Quarters.  I was an arcade fiend when I was in middle school so quarters were always a welcome gift.  Maybe throw in a state quarters map for fun, now that they’re all out in circulation.  It’s handy to have a few quarters in your pocket for emergencies.  An example: suppose you’re out with your young child who is still in diapers.  You end up one diaper short near the end of the day, and you’re no place close to where you can buy one.  If you manage to find a bathroom, often they’ll have a diaper vending machine if they have a changing table, but it usually only takes quarters.  I’d be glad I had a few at that point.
• Nickels and cents.  For that friend on your Christmas list looking to hedge against inflation with physical copper.
• Uncirculated anything.  I managed to get an uncirculated roll of 1995 Kennedy half dollars for face value at the credit union recently.  Uncirculated is more vaulable than circulated, but it’s never less valuable than face value.
• Two-dollar bills.  I’m giving a few of these this year.
• Currency origami.  Turn dollars into boxes, or other stuff.  We’ve done this before.
• Inside another gift.  Like inside a mug, or pinned carefully in the pocket of a pair of pants.

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I have just read your article on coin accumulation and I was hoping that you could help me.  My father recently died and left me in total 3146 British coins and 83 varied coins.  I want to know how best to sell them and if I could make them valuable.

Here’s what I would suggest doing (not knowing at all what you have):

1. I’d recall anything that your father said about the coins. He accumulated (or collected) them, so he may have talked about them or mentioned why he collected them.  If you don’t know, does anyone else who knew him know?
2. Handle the coins carefully until you know better what you have. You might have a common 2007 50 pence coin (worth about US $1) or you might have a half-crown coin from the 17th century.  Handling the 50-pence coin with your hand probably won’t hurt the value much, but doing the same to the other might devalue it quite a bit.  It’s safer to handle coins as little as possible, by the edge if you do, and to wear gloves to avoid transferring oils and moisture from your hand to the coins.  Coins aren’t made valuable; they’re kept valuable.
3. Identify the coins that you have. Things to look for initially are (a) the date and (b) the denomination.  Older British coins might not have the denomination on them but if you have the date that’s a start.  This website seems to be a good source of information on British coins, or if you’d rather get a book, you can check out a world coins book for the appropriate century or centuries.  Knowing what you have is essential to getting maximum value.
4. Determine the values of the coins. The books on world coins linked above will have pricing information.  I’ve found these prices to resemble market prices but not dictate them.  If you’re qualified to grade your coins (you’ll know if you are) then so much the better.
5. Weigh the costs of your time against the likely value of your coins. You can sell all of the coins at once to a dealer, and she may totally lowball the value of what the coins are actually worth, but you’ve sold them, and invested almost no time.  Or, you can go through all of the coins one by one, determine their values, condition, etc., and make a literal mint on them, but it takes a lot of effort and time.  Somewhere there’s a “sweet spot” of time invested vs. payoff.
6. Weigh the costs of selling the coins against the likely value of your coins. If you’re going the eBay route, there are lots of people looking that will check out your listings, but that audience costs:  listing fees, final value fees, PayPal fees, shipping fees.  Buyers will factor in shipping when they bid, so if sell a coin worth $10 for $10 on eBay (their cost including shipping), you’ll make maybe $5 after all is said and done.  Larger value items will probably do better for you because the shipping is a smaller part of the overall cost.
7. Determine how quickly you need to sell the coins (if at all). If you’re in a hurry, you’ll probably get less than if you wait for the right buyer to come around.  A coin dealer will probably make you an offer on the spot, but it will be a lowball.  A pawnbroker will really lowball you.  A collector will pay what you want if he really wants the coin and if it’s a fair price, but you might have to wait a while for that collector to come around.
8. The most value might be gained by spending them! If you live in the UK, heck, spend the modern coins or put them into a savings account.  If you live in the US, you just received a whole bunch of non-dollars — which, given the ongoing federal government bailout, might be a good thing!

Anyway, those are my general suggestions.  Any other thoughts?

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