Nice article on modern world coins

I just thought this was a pretty nice article going over modern coin scarcities. While still not my cup of tea, I do think great collections can still be put together of great coins for little money today.

http://www.coinweek.com/featured-news/case-modern-world-coins/

I did find the fact the two authors of a modern coin story being named Morgan and Walker pretty funny though.

 

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Cool article and good pickup on the names.

 

I like the article and it's the same high quality they usually write but in this case it only brushes on the opportunities in modern world coins. US moderns are pretty much ignored but many world moderns have already exploded in price because just like US coins they were never saved. European coins have already experienced strong gains in most cases but some of these coins have yet to be affected yet are just as scarce.

Some of the biggest opportunities are in Asian and South American coins as well as numerous African countries (Australia has already "gotten off the dime" but has a long way to go). India seems to be the focus of attention right now but this whole thing is just mushrooming. A lot of moderns are extremely scarce and people didn't notice because no one collected them. Now they are getting collected and some are scarce even circulated but many are scarce in pristine condition. It looks like the typical modern will be tough in Unc and then there will be several thousand examples in VF to AU that are spread far and wide which were taken home by tourists. Most of the rest are either low grade or have already been melted and turned into refrigerators.

 

From that article: "Cash exchanges using old currency were forbidden under the new law" - Nonsense. Also, contrary to what the authors say, production of the euro cash began in summer 1998. And the revelation that the pre-euro currencies were "fiat" is astounding. Gee, what else? But I suppose it is an article for investors, not necessarily for collectors.

Christian

 

Moderns have never been collected and very few are collecting now.

Many of these coins can NEVER be a mass collectors market like Mercury dimes or large cents because there simply aren't enough coins. People never saved them.

I believe they are great collectable coins because if you can't find the uncs you can still search poundage for VF's and XF's. Just because coins are very cheap doesn't mean they aren't collectable. Just because coins are increasing rapidly in price doesn't mean they are "investor" coins. Indeed, I'd advise investors to stick with the old tried and true because the opportunities to lose money in world moderns is simply staggering and becoming greater every year. There are coins that have increased 40,000% in the last year. Maybe these are going far higher and maybe they'll lose 80% of their value next week if someone finds a roll of them. These can be very volatile markets and volatile markets are much better suited to collectors than investors.

 

I really consider all currency systems used to date to be "fiat" because nothing has inherent or intrinsic value. When it was issued a 1935 quarter had only six cents worth of metal in it while a WY quarter from a few years ago had seven cents worth of metal in it. This was before the LME defult on nickel.

Perhaps the authors had some other law in mind when they made the statement about cash exchanges being illegal. Perhaps one or a few countries prior to adoption actually had just such a law?

 

What I just find odd is the emphasis on "fiat" - as you wrote, there simply is nothing else. What is true though, and in that regard I agree with the authors, is that there is hardly any incentive to keep, say, a bronze or copper-nickel coin because of its intrinsic value ...

As for those "illegal exchanges", maybe some of the euro countries had restrictions regarding the continued use of old coins. But the article simply refers to a "new law", without any further information. And I do know that around here you can certainly pay with DM cash if the store still accepts it. (Most don't, but that is a business decision, not some law.)

While we do indeed not know exactly how many of those old coins "survived", the fear that they may soon be gone is an exaggeration, I think. In Germany, for example, about 24 billion DM and Pf coins, worth 3.5 billion euro, have not been redeemed.

Christian

 

You probably know more about most of this stuff than I do. I had a friend try to spend DM coins a couple years back and wasn't able to get rid of any at all. She'd have needed to take them to a bank.

The attrition of coins in circulation can be staggering. They simply get lost or destroyed in fires and floods. Lower denominations are most impacted and have about a 3% annual attrition but even large coins suffer misadventure. When they are redeemed the larger coins are redeemed in much larger percentages even relative to surviving numbers. People are much more likely to save a few 10p coins than a 5 M as a memento. If they find a coin later they just might toss it in the trash rather tan go to any effort to redeem it.

I'd be pretty surprised if more than about 10% of large denominations survive. I'd guess that these survivors closely match what was in circulation when they were withdrawn. ie- They are heavily worn older coins and lightly worn recent dates. They are not "collector coins".

 

I personally would not buy a 3% attrition rate. In the 80's it was very common to find 30's and 40's nickels in circulation. I have read sl coins were still very common in the 20's. Short of Greshams law or collectors taking "old" coins out of circulation, they can circulate a very long time. Some ancient Roman coins circulated for a couple of centuries at times. So, maybe the 3% is accounting for currency debasement and collectors nowadays, but it would not be a normal state of affairs.

 

Sure - those pre-euro coins and notes cease to be legal tender when a country introduces the euro cash. In Germany that was more than twelve years ago, and since then there has been hardly any reason for accepting such old money. My point was that, contrary to what Morgan and Walker (nice names indeed ) claim, there is no "law" here which would dictate whether a store accepts old or foreign cash.

Also, even in those member states where you cannot redeem the old cash any more, many coins were not returned. Would be nice to have more precise figures (ie. what "remained" of which denomination, year and mintmark) but that we do not know. From a collector's POV, though, I would not really worry. Still plenty around, and at least over here prices of pre-euro coins have not really gone up ...

Christian

 

Just for information regarding attrition rates. I used to roll search (2009-2010) and kept the pre-82 cents (a total of >38,000). Since I am a statistics nut, I kept track of how many coins I found from each year from 1959 through 1982. I then calculated the expected number of each date I would expect to find based on their proportions relative to the total mintage for all years combined. There was a statistically significant difference between the expected values and the actual observed values. The crossover point was 1977. After 77, I found more than expected, before 77 I found less than expected. Not worth much, but might contribute to the attrition rate discussion.

 

Good information, but I wonder how much of it is already skewed by both copper hoarders and collectors. Good reading would be about the "New York Subway Hoard", a group of coins pulled out of circulation I believe in the 40's. That would be much more unbiased attribution rates of coinage, absent collector or gresham law concerns.

 

Modern attrition rates are far higher than older ones because coins used to be real money. You could buy a sandwich, coffee and piece of pie for a half dollar in 1960 but now the cheapest thing in the supermarket is a quarter. People used to make a living fishing coins out of storm sewers but now a good days work might not be worth a cup of coffee. If you lost a nickel in our car seat cushions in 1960 you might go to a lot of trouble to retrieve it but now the coin will be recycled with the car. The average car is estimated to contain 12 coins now when it's recycled. Memphis, TN ships a couple truckloads of coins that have been through the municiple incinerator each year. When Niagra Falls was shut down for cleaning many years ago payloaders scooped up several truckloads of coins.

3% might be a slight exaggeration because I tend to include coins that have been severely degraded so are no longer collectable. A lot of these will end up in the garbage stream or redeemed before too many years though they also accumulate in circulation a little bit if their shape isn't badly affected. 3% also applies to the lower denominations while larger ones are closer to 2 1/2%. There are people now days who simply dispose of coins less than 25c but most such people don't encounter coins regularly. Small coins, like dimes, are more likely to get away from people and have higher attrition. Despite not having the P mint mark added since 1980 it's gettoing a little unusual to see a dime with no mint mark. Coin shops are starting to get calls from the general public inquiring about the value of a 1967 dime with no mint mark. The attrition on dimes is so high that only about 45% of the 1965 mintage survives and, of course, they are severely degraded for the main part.

These same things apply to all world coinage to a greater or lesser extent. But unlike in the US many countries have demonetized one or more issues over the years. Usually the old coins are withdrawn and melted. In olden days the coins were withdrawn but peple didn't redeem them because they contained more silver or gold than the new ones had, but now days most people tend to redeem them and especially high denominations.

It's not the coins themselves that are rare. For instance the 1955-G German 1 M had a mintage of 2 1/2 million. I'd guess 1 1/2 million survived in 1999 when they were recalled and


con't...

 

...con't


I'd guess 1 1/2 million survived in 1999 when they were recalled and about 85% of these were melted. This leaves a substantial number of coins available but these are spread all over the world and the vast majority were in typical condition when they were "saved". This means there are very few survivors over F condition and many of these will be destroyed before they ever come to light or become available to collectors. The coins weren't saved when they were new so there are none in collections to fullfill future demand.

 

I don't think that copper hoarders would affect the outcome much since they would be pulling coins without regard to the date. I would expect hoarding to increase the attrition rate for all years equally, but not change attrition rates relative to each other. I only used mintages between 1959 and 1982 to determine the proportions, so aside from the small percentage of zinc cents in 1982, zinc coins (everything after 1982) were not included in the calculations. As such, these data likely primarily reflect attrition rates that span the twenty years or so before copper hoarding became popular

I guess its possible that collectors could be withdrawing early memorials at a higher rate then later ones. I can think of a couple of possibilities (1959 first year coins, and 60 large and small date coins). I think I can pull that type of effect out of the data by seeing if there is a significant increase in attrition for those dates. But now we get into the question of exactly how much impact do collectors have on attrition. I think that question either was pretty much answered in the mid-60's or we will soon will be seeing the elimination of mintmarks.

I have graphed the data (told you I am a geek) and will post it later

 

Ok, great. I think it would be interesting. I do think the 1977 cutoff is curious. I am not doubting for a second the older a coin gets the less prevalent it is in circulation. I guess I am just saying nowdays its more gresham law and collectors than natural attribution.I simply thought 3% attribution, if ascribed to natural causes, was too strong based upon my readings on the subject.

I wasn't trying to necessarily disagree with you Cladking, just having a theoretical discussion, as the topic is interesting to me. Based upon other hoards from 70-100 years ago I have read about, I would assume natural attribution of minors, (more likely to get lost, set aside, etc), might be more around 1.5-2% if no collector or gresham law pressure.

 

You asked for..... Here is a pdf with graphs of Lincoln cent attrition. There is no indication that attrition is higher in 59 or 60 as might be expected. What is weird is that it looks like attrition is higher for P-minted coins than for D-minted coins.

Enjoy

 

How much sampling bias do you believe could be attributable to your geographic location? How did you get expected values, from the original mintages, original mintages degraded over time, or something else?

 

I don't think sampling bias caused the discrepancy. If that were case, I would expect the observed ratio to track the expected ratio. The fact that the observed line is nearly flat suggests that the ratio of mintmarked coins is pretty constant regardless of the numbers minted in the various years. That being said, I am in an area that is served by the Denver mint. I rarely see a new Philadelphia coin. So I can't completely discount sampling bias.

 

Thanks. Very interesting.

The numbers are important and tell a story but I'm not certain just what story they are telling. There are a few major confounding factors here. Chief among them is that these copper cents have a far higher survival rate than the zinc coins that followed them. The 28 years of zinc penny production almost swamp the mintages of these and their survival rate is far lower. If this weren't confounding enough pennies have a very low velocity and tend to sit in cans a lot. Finally, a large number of copper pennies have been removed from curculation since 2008 because of their metallic value.

Copper has stayed fairly steady at around 20% of circulation issues (wheaties about .5%) with all these factors working against them. Zincs corrode away as fast as they are made to replace the coppers being hoarded as pennies get used less and less in commerce.

I believe that if production weren't trailing off so fast and zincs weren't so ephemeral then the "expected" percentage of the early memorials would be substantially lower and a higher attrition rate implied. ie- only about 10% of cents would be copper.

The way pennies are used changed quite a bit starting in 1974 when they acquired a negative real value. Any computations on a "coin" with a high negative value made of metal worth more than its face value has got to be a toughie.