Monday, August 25, 2008

Making World Coins

Part One - Making Silver Proof Collector Coins

The first of a two-part article on the coin minting process, here we explain just how those beautiful Silver Proof world coins you have in your collection came to be made.

When you look at the exquisite craftsmanship, mirrored fields and highly detailed frosted designs of Proof coins it's hard to imagine they are produced in what looks to be nothing more than a metalwork factory. But that is essentially what the mint's coin processing area is.

Various world mints have differing nuances when it comes to minting their Proof coins, however the overall process is generally the same. In this article we will explain the techniques used to create Royal Canadian Mint coins. There are other differences too when it comes to minting circulation coins as opposed to Proof coins, and we will look at circulation coin production in part two of this article.

The Coin Process
The metal used for the coins (Sterling Silver or Pure Silver) is melted down in a furnace at around 2000 degrees Fahrenheit. The metal is then cast into a bars roughly 1.5 inches (3.8cm) high, 5 inches (12.7cm) wide and 30 inches (76.2cm) long. The individual bars are then put through the Roughing Mill, which flattens them to around 0.3 inches (0.8cm) thick. These sheets are then heated for added strengthen and run through the Finishing Mill which flattens them to the desired thickness dependent on the coin being minted.

The flattened sheets are then put through the blanking machine which punches out circular blank "coin" disks. The left over remnants of the sheet, called Scissel, is melted down to be made into more silver bars.

The blanks are fed through a Rimming machine, which adds a raised edge and removes the rough edge caused by the blanking process. The idea of the rim is to enable the design of the coin to be transferred faultlessly at the time it is struck. Adding a rim to a coin is said to add 10-15 years to the coins life.

From there the blanks are placed in a Burnishing machine which is sort of like a huge washing machine full of steel beads, cleaning solution and water. The beads work as an abrasive to finely polish the blanks. The Burnishing procedure is repeated many times over and can take up to 6 hours for a "cycle" to be completed. Once burnishing is complete, the blanks are spread out individually and towel dried by hand to ensure that no scratching or water marks appear on the surface.

The blanks are then fed through another furnace to heat and strengthen them prior to being struck.

The Design Process
The design process starts simply with an idea or theme which is then realized as an image. The design can come from an original artwork or a photograph or a combination of the two. The Mint designer creates the coin image on computer to be submitted for approval from Mint officials. From there another computer program connected to an engraving machine gets to work making a rough engraving onto a large plaster disk. This engraving process creates the design as a negative image which is then used as a mold to create a positive plaster disk. The positive disk is then enhanced by hand by a sculptor and the finished disk is used to cast a negative in plaster, which is then used to case a positive cast in rubber. From the positive rubber mold they cast a negative in a hard epoxy which is placed on a Pentagraph machine. The Pentagraph is a reducing machine which traces the larger hard epoxy disk and creates a smaller brass replica 1 1/2 times the size of the original. The reduced reproduction process takes 36 hours to complete and the resulting negative brass template is given to an engraver to fine tune. This is also where the lettering such as denomination, year and country of issue is added to the coin design.

The negative brass template is then put back on the reducing machine for another 36 hours where a copy is traced in high-grade steel, 1 1/2 times smaller than the brass disk. This reduced copy is called a matrix and it is the same size as the coin to be struck. The matrix is then struck onto a block of steel creating a positive image called a punch and finally the punch is struck onto another piece of steel to create a negative image. This is called a die (also known as working die) and it will be used to strike the coins themselves. There are two dies for each coin; the bottom die (Anvil) usually produces the side of the coin known as the Reverse, while the top die (Hammer) produces the Obverse.

Still following along with all those negatives and positives? The making of coins is a complicated process but each part of the puzzle is important in creating something that will stand the test of time.

Note: Depending on where you are in the world the sides of the coins may be the other way around. For example, in the United States the Obverse (also known as the "front" or "tails") is the side that carries the theme or focus of the coin, such as a commemorative event, anniversary or public figure of importance, while the Reverse (also known as the "back" or "heads") usually carries the portrait of a past US president or the United States coat of arms. In Australia the Reverse of a coin is the theme side (front) and the Obverse is known as "heads" on account of the effigy of Queen Elizabeth II being on that side.

Bringing Coin and Design Together
There are two different presses that can be used for striking collector coins. The Automatic press is mainly used for non-precious metals such as Copper and Nickel, and the Manual Press is used for Silver, Gold and Platinum coins. As Proof coins are placed into the press by hand an average 8-hour shift will produce around 8000 coins. Compare this to the 15 million circulation coins struck in a day and you begin to see the special care taken to create these miniature works of art.

The Proof dies strike the coin simultaneously, two or three times to create the high quality impression you see in your Proof issues. Each Proof coin is then individually examined to check for blemishes and warping. Due to the highly polished fields of Proof coins and the high pressure used to strike them, the striking process can sometimes produce a "ripple" effect noticeable in the mirrored portion of the coin. If this happens the coin is rejected and sent back to the furnaces for re-melting.

The finished Silver Proof coins are encapsulated and in most cases enhanced by elegant packaging that creates an even more splendid display for the collector upon purchasing.

Silver bars after being flattened

Going through Blanking machine

Coin blanks in the Burnishing Machine

Blanks are towel-dried by hand

Computerized coin design

Computer etching on plaster disk

Epoxy disk on Pentagraph machine

Matrix being etched from Brass template

Proof coins are minted by hand

Coin blank ready to be struck

Finished coin still in press

Canada 2008 $1 Silver Proof
- Example of finished Silver Proof coin

Below is a video presentation of the Silver Proof collector coin minting process.

Tuesday, August 19, 2008

Inspiring a New Generation of Young Coin Collectors

A fantastic initiative has been started by the Perth Mint to help encourage a new generation of coin collectors. The series promises to be a fun and educational experience for young collectors, as they collect their way through a variety of Australian animals featured on legal tender $1 Australian coins. The series has been exclusively designed to inspire a lifelong interest in coin collecting.

With news that the number of adult collectors around the world was on a decline, the Perth Mint took the market-leading step of creating a series of coins with motifs appealing to children aged between 8 and 12.

The coins released in the 2008 series are broken up into 3 'elemental' categories with four 30.20mm coins in each:

Palm Cockatoo - This dark-colored bird is located throughout the rainforests of Northern Queensland. Apart from being the largest in the cockatoo family it is distinctive due to having one of the largest bills of any parrot species.
Wedge Tailed Eagle - Named on account of it's distinctively wedge shaped tail, the 'Wedgie' is Australia's largest bird of prey and one of the largest in the world, with an average wing span of over 8 meters.
Ghost Bat - Appearing ghostly at night due to having an extremely thin wing membrane, this is the only carnivorous bat found in Australia. Their numbers are almost exclusively found throughout northern Australia.
Splendid Wren – Also known as the Blue Wren in Western Australia, this bird is noticeable on account of it's stunning blue plummage. Located throughout the more arid and semi-arid regions of Australia, the Splendid Wren feeds mainly on insects and seeds.

Echidna - One of Australia's unique egg-laying mammals, the Echidna is also known as the spiny anteater. Covered with hard spines and with powerful claws, the Echidna's small stature and cute appearance are quite deceptive.
Grey Kangaroo - By far and away Australia's most iconic animal, this marsupial was named from the aboriginal word 'gangurru', and can grow to around 6 feet in height.
Common Wombat - These short herbivorous marsupials inhabit forest and mountain ranges in the southern areas of Australia, including Tasmania. The Common Wombat has evolved down from a rhinoceros-sized Giant Wombat of prehistoric times.
Frill-Necked Lizard – These little dragons are predominately found in the Kimberley region of Australia. They are so named due to a large curtain of skin which will flare out when the lizard is frightened or provoked.

Whale Shark - Found in tropical areas such as Australia's northern ocean, the Whale Shark is the largest of the fish species - but despite it's name and size these sharks are not 'man eaters'.
Platypus - First thought of as a hoax when seen by European settlers, the distinctly Australian platypus is one of only 2 distinct species of egg-laying mammals - but also one of only a few venomous ones.
Green Turtle - This large and endangered turtle is different from it's cousins in that it can often be seen basking in the sun of tropical beaches in northern Australia.
Australian Sea Lion – This species of sea lion only inhabits the south and west coasts of Australia. Numbers have grown since the harvesting of sea lions was prohibited in 1972.

Each coin is housed in it's own individual information card. These brightly colored, beautifully illustrated cards offer factual information about each respective animal, such as where they are located, what they eat and whether or not they are endangered. Featuring a stunningly detailed image of each animal on the front of each card, this is a great way of introducing young ones to the wide range of animals that inhabit the far-off land 'down under'.

Obtaining the complete set also gets you a few added extras, such as activity sheets featuring word games and puzzles, as well as a series of full-color animal stickers that can be used to adorn school books, bedroom doors, etc.

But that's not all...

As if all that wasn't enough, by purchasing the complete set of 12 uniquely Australian $1 collector coins you get a free bonus bronze medallion featuring the ambassador of the coins, 'Gordy the Gecko'. This cheeky little mascot adorns the medallion in full color exhibiting bountiful excitement and fun. The medallion is also housed on a card with a personal note to collectors.

All the coins, information cards and bonus goodies come beautifully packaged in a full color ring-binder featuring a 3D image of a Kangaroo on the front cover and housed in a brightly designed protective outer sleeve, making this an wonderful gift idea that parents and grand parents can give youngsters as a fun and interesting learning tool. The sturdy packaging means that the set can be viewed often and will stand up to the riggers of wear that often accompany enthusiasm, or can be stored for future generations to admire.

The 2008 Young Collectors set is the first in a series of coin collections to be released in coming years, with the goal of inspiring children to share in the passion of the world's most popular hobby. The official Young Collectors Website is a fun, colorful and informative place that furthers the interest and knowledge by supplying tips on caring for the set as well as plenty if tidbit information on the animals that inspired each coin.

The complete set of these adorable $1 Australian icons is now available through Euro Collections International.

Thursday, August 14, 2008

Coin Collecting Terminology - Part 1

The Appearance of Modern World Coins

When collecting world coins (or any coins for that matter), it’s important to understand the terminology used to describe the appearance (or Finish) of a particular coin. This can help you to decide whether a coin has value for money, how it will look in and of itself as well as being part of your collection.

Some people will choose a coin based on its finish, collecting only Proof coins, or Uncirculated coins, etc – while others may collect based on a theme in which they will look to own a coin regardless of its finish (although a Proof version of their chosen theme will no doubt get pride of place).

There are three main categories when it comes to the finish of modern world coins. Older coins and ancient issues may be decided on their grade, however as modern world coins are, by definition, more recent in their arrival on the marketplace, they are generally of a very high grade. This means that it often comes down to the finish of the coin to determine its worth to the collector. Below we have explained in detail what the three main varieties of coin finish are and what work goes into creating them. We use these terms to describe the appearance of a coin in the title of products offered on the Euro Collections website.

This abbreviation stands for uncirculated. When we describe a coin as UNC it means that the coin has never been issued into circulation. As such the coin has only a small number of surface imperfections.

Such imperfections are common to UNC coins because of the manner in which most of them are struck. Given that such minting activities are focused on producing coins for circulation, the coins are usually produced in high speed automated coin presses often spitting out thousands of coins a minute. To feed those presses the blanks also have to be produced in mass quantities. When the coin press finishes striking a coin, it is usually ejected into a large metal bin for later counting and packaging. Sometimes the presses will even bag and seal the coins immediately, but in either scenario there are going to be bag scratches and other surface imperfections. If the coins receive relatively little handling and later on are packaged in rolls, such coins can be very free of surface scratches.

Slovenia 2008 3€ Presidency Bi-Metal UNC

Some collectors actually prefer UNC coins because these are the coins which actually go into circulation.

The next step up is "brilliant uncirculated", or BU. Here the minting process is dramatically different from that used for UNC coins. First, the blanks are prepared much more slowly and with a higher reject rate. As well, the blanks are polished. Also receiving a lot of polishing are the actual production dies used to mint the coins. With polished blanks and dies, mints then produce coins with completely mirrored finishes.

Finland 2008 5€ Science And Research BU

The number of coins made with each pair of production dies is much fewer compared with regular circulating coins. During the minting process each coin is made one at a time and the press operator during a shift will hand buff the dies frequently to make sure that they are free of any dust which might otherwise be struck onto the surface of the coin.

And after the coins are minted, a lot of effort goes into the final inspection process to weed out any sub-standard coins before they are sent on to be packaged.

Collectors who prefer BU coins consider them to be a more perfect specimen of a coin that would be made for circulation.

Over the years this term has evolved. Today, however, it generally applies to coins which have frosted features and mirrored backgrounds, or fields. Sometimes coins can be described as "reverse proofs" meaning that the features are frosted while the field is brilliant.

The proof coin represents the height of the minter's craft. The same careful preparations are needed for proof coins as for BU coins. But over and above that, special steps are taken to produce the frosted and mirror finishes.

Switzerland 2008 Shooting Taler Silver Proof

The most important of these is the preparation of the production dies. Each die is first taped over with a special clear masking tape. Then a mint technical will use a very sharp knife and a microscope to carefully cut out and remove the tape covering those features to be frosted. Next the dies are blasted with glass beads. The protected areas are left brilliant and the areas to be frosted are, well, frosted. The dies are then ready to produce coins.

In theory, the mirror areas of a BU coin and a proof coin are equal, but in practice the proof coin is often subjected to more scrutiny and thus the overall quality can be higher.

Proof coins with large mirror fields are especially hard to produce. There can be problems with metal flow which can cause ripples in the field or other slight distortions. This is just one example of the problems mint engineers must solve in order to produce a perfect coin. Then too, there are the pitfalls in production. The smallest speck of dust or some other die imperfection can cause a problem on the finished coin and cause it to be rejected.

Proof coins represent the best a mint is capable of producing. The greatest amount of preparation, production resources and quality control go into these coins. It is therefore not surprising that among our customers, proof coins as singles and in sets are purchased most often.

Keep an eye out for these terms when searching for your next world coins. Feel free to post your own comments regarding these finishes and what your preferences are.

In recent years, the term "cameo" and "deep cameo" have been used to describe some proof coins. The definition of these terms has been taken from the PCGS (Professional Coin Grading Service).

"The term applied to coins, usually Proofs and proof-like coins that have frosted devices and lettering that contrast with the fields. When this is deep the coins are said to be "black and white" cameos. Occasionally frosty coins have "cameo" devices though they obviously do not contrast as dramatically with the fields as the cameo devices of Proofs do. Specifically applied by PCGS to those 1950 and later Proofs that meet cameo standards (CAM)."

Deep Cameo
"The term applied to coins, usually Proofs and proof-like coins that have deeply frosted devices and lettering that contrast with the fields - often called "black and white" cameos. Specifically applied to those 1950 and later Proofs that meet deep cameo standards (DCAM)."

For more information on terms relating to coin collecting you can visit the PCGS Coin Term Glossary.

Tuesday, August 5, 2008

Collecting Gold Coins - Part 3

Choosing Gold Coins Based on Market Potential

Let's suppose you're choosing between two gold coins and you want to add one of them to your collection. You like them equally well and the amount of fine gold that each contains is about the same. What other factors can you consider to help you make your decision? One additional factor, but a tough one to evaluate, is a coin's future market potential.

It has been said that the coin that every collector would like to have would be a coin with a mintage of only one. Certainly the rarity of such an object would be really attractive. But it would be an ironic situation because with only one such coin in existence there would be no real market, with multiple sellers and multiple buyers. When the owner of such a coin wanted to sell it, how would he price it? There would be no direct comparisons on which to base the price.

For a real market to exist for a coin, there has to be more than one example of a given coin. There's probably no magical number here in terms of the minimum number needed to make a real market, but there are many examples of coin issues where the known and confirmed population is as few as 10 pieces. Almost invariably such coins are older pieces when the question of grading also has a pronounced effect on a coin's market price, and at that point the discussion really gets complicated.

The other part of the equation, of course, is demand. No coin will appreciate in the marketplace unless there is a demand. More specifically, the demand needs to be greater than the supply. Whenever the demand exceeds the supply, prices go up. Some coins minted in the 10's of thousands have gone up in value even though it appeared that they were not especially rare. It turned out, however, that they became rare just because the demand was greater than the available supply.

So the bottom line in all of this is that when you, as the collector, are looking at a coin's market potential, do not fail to consider the mintage, or supply. You also need to think about the potential demand for that coin. Generally, the lower the mintage the better, as long as the demand works out to be higher.

If after thinking about a coin's future market potential you still can't decide, then go back and reconsider the aesthetics. Because regardless of a coin's precious metal content and regardless of its future market potential, if you like that coin chances are you'll always like it. And that's the best reason of all to collect gold coins and coins in general.

Sunday, August 3, 2008

Collecting Gold Coins - Part 2

The Price/Value Issue in Gold Coin Collecting

For many collectors, the visual appeal of gold coins (See Collecting Gold Coins Part 1) and their affordability will be enough information on which to base a purchasing decision. But sometimes, that decision is more complex because a choice needs to be made between more than one gold coins of equal visual appeal. Choices, choices. Oh, what to do?

Faced with such a dilemma, the collector will then often ask "Which of these gold coins will turn out to be the better investment?" Well, if everybody really knew the ideal answer to that question, we'd all be rich! However, it is a reasonable question and one which does have an answer - in fact, a number of answers if we dissect it a little.

Canada 2008 $350 Purple Saxifrage Gold Proof

The first way to restate the question is "Which coin, over time, will have the greatest value as a collectible, regardless of the gold content?" And the other is "Today, which of these gold coins gives me the most gold for the money I spend?"

The first of these two questions is something the market determines over time and is always a factor of supply and demand. The second, however, is mostly about gold content. It can be answered, and can sometimes help a collector make a choice.

To best illustrate this point and how it can be applied in collecting decisions, let's look at two possible scenarios.

Coin 1
Weight (total weight) = 16 grams
Purity (or fineness) = .999
Price = $300.00

Coin 2
Weight (total weight) = 18 grams
Purity (or fineness) = .917
Price = $300.00

Coin 1 is "three nines" (.999) fine or 24 karat. So in this example the coin offers the collector 0.5 troy ounces of gold (16/32) for $300.00.

In the case of Coin 2, it is .917 fine or 22 karat (22/24=.9167). Such a coin would contain a second metal, or an alloy - usually silver or copper. In this example the pure gold content would be 16.5 grams (18 x .917).

Between these two coins, the better gold buy is, by the slimmest of margins (0.5 grams), Coin 2. This example also serves to illustrate the importance of comparing the pure weight between coins, rather than the gross weight.

Over and above the question of gold content there is another quantifiable element that can be considered, and that is a coin's face value. If, for example, a gold coin has a face value of 150 Euros and contains a half troy ounce of gold, then regardless of what happens to the gold price, the minimum value of that coin is its legal tender value, i.e. 150 Euros. Obviously, if the gold price were to rise above the equivalent of 300 Euros per ounce, then the bullion value of the coin would be greater than its face value, and might also exceed its collector value too.

New Zealand 2008 $10 Sir Edmund Hillary 1/4oz Gold Proof

Another way to look at the difference between a gold coin's price and its bullion value is to regard that difference as the "numismatic premium", which of course represents the cost of making the coin and getting it to the collector. Numerous factors affect this premium. For example, a coin might have a very low mintage. Obviously this tends to increase the price of the coin because the costs of designing striking, packaging and marketing the coin have to be recovered over fewer units. In some cases the premium can be high because the coin has sold out and is increasing in value in the secondary market. Still another factor can be the ever-changing value of world currencies. For example, in 2008 the value of the Euro has climbed some 50% against the US Dollar.

To sum up, when choosing among gold coins of equal visual appeal, the collector can consider the actual cost of the pure gold each coin contains. Sometimes this can help a collector reach a good decision he/she will be happy with.

If you plan to buy a gold coin solely on the basis of its gold content, then you should be considering gold bullion investment coins such as: The Austrian Gold Philharmonic, the US Gold Eagle, the Canadian Maple Leaf, and so on.

In numismatic gold coins, the most important factor is not gold content but rather artistic content, and whether or not the coin you are considering really appeals to you. No matter how great a gold coin may be from a gold content point of view, this won't matter at all if it doesn't provide true collecting enjoyment.

By understanding the factors which can go into such purchases we hope the gold coins you add to your collection bring you enjoyments for many years to come.