NCLT, pseudo coins and other terms

[Bimat]

There are non-circulating Legal Tender or NCLT.

Does that mean all the Proof/prooflike issues are NCLT? Proof issues are definitely Legal (if they are issued by Government) but they can not be used for payment.Proof issues should be placed in a different category other than these 4 you mention,I think.

Aditya

[translateltd]

Proof and proof-like pieces can and usually do have legal tender status, but I think very few people would choose to spend them.

[Figleaf]

I would be interested in seeing a listing of 1 2 3 4 5 6.........of how it is a threat
to the coin collector, the coin collecting community or the hobby of collecting coins.

One of the common characteristics of NCLT is that they need advertising. This make sense since they don't circulate, so only by advertising can you create demand. The core problem is that the advertisers misrepresent the pieces they are flogging. They use terms such as "rare", "pure gold/silver", "legal tender", "in demand by collectors", "dies wil be destroyed", "quality as demanded by collectors" and some will go even further to suggest that buying the piece is a good investment. Their target audience is clearly not collectors or museum directors, but lay retail investors. They are out for what is known as asymmetrical information: they know a lot more than you do.

In fact, NCLT is not rare, not pure silver/gold, not in demand by collectors, and an exceptionally bad investment decision. Very few professionals would invest in coins and none in NCLT. Those who do invest in coins do get burnt badly, either because they have to conduct forced sales (the Hunt brothers), or they use crooked dealers. In general, professional investors look at investing in coins as stupid. Most will not even touch precious metals, but you will see that these are flogged to retail investors in the same aggressive way with all kinds of suggestive nonsense. In professional terms, this is expectations management. A healthy industry wants to lower expectations to the point where they can be met. However, if you think the world will never run out of suckers, you maximise expectations and sell that.

The moment of truth comes when our retail investors tries to sell his NCLT. Look them up in Krause. If they sell over issue price at all, it's significantly less than inflation. It's hard to find any Franklin Mint issue that has kept up with inflation. (I am not picking on Franklin Mint, they simply have the longest investment record) The general benchmark for NCLT is not inflation, but melt value. However, NCLT issuers sell way over melt value, including cases when they advertise the high purity of the coin. Even the (wrongheaded to begin with) suggestion that you can invest in, say, gold by buying gold coins is utterly misleading. The issuer profits, the buyers lose.

So how does this threaten the hobby. Well, imagine the vet, just retired, some money on his hands who hopes to amuse himself with coins and earn a little extra by investing in them. You know the type. He buys some coins and some NCLT. Crisis breaks out, gold and silver go through the ceiling, he wants to cash in and ... is offered melt value minus cost and profits. After this experience, he leaves the hobby behind him. In general: the lay public targeted by the misleading advertisers are exactly the people who might have become coin collectors, had they been rightly informed. Instead, they will not touch coins again and those who have the courage to confess their misadventures (most retail investors brag only about their successes, which are invariably due to their wisdom, not to luck) will discourage more prospective collectors. In an age when coin collecting is taking a drubbing from electronic games, that is an important loss and a threat to the hobby.



As an aside, the reason why I don't like all the NCLT, NCNLT etc. terminology is that they suggest that legal tender status matters. It doesn't. In fact, the vast majority of coins were never legal tender. Legal tender is a 19th century invention. Roman coins were never legal tender. If a piece is advertised as "legal tender" you may assume it is a pseudo-coin until the contrary is proven. In addition, most countries, "foreign" coins circulated. It is for instance quite clear that Canadian and Spanish colonial money saw wide circulation in the United States. However, NCLT suggests that coins circulate only in a legally restricted area. What does matter is the "non-circulating" part.

Peter

[africancoins]

>>Then who issued those so called coins,Paul? WBCC mail says that they were issued by PM.<<

WBCC Newsmail 677 - item 3 includes clearly from a press release...

>>>>
d. Copyright for the image of Her Majesty used on these fake pieces rests with Ian Rank-Broadley FRBS FSNAD and this uncouped image has been licensed exclusively for use by Pobjoy Mint Ltd which company confirms that it has not produced these items.
<<<<

When Pobjoy know who made these they will be wanting to take them to court... whoever it may be.

Thanks Mr Paul Baker

[Prosit]

...In general: the lay public targeted by the misleading advertisers are exactly the people who might have become coin collectors, had they been rightly informed...

I tend to agree with everything you said except for the one sentence above.  I don't believe those people are the type that "might have" become serious coin collectors.  Not to any appreciable percent anyway.   I am sorry to disagree but I have no sympathy for people who want to "invest" in coins.  None

Every serious coin collector I have known personally have a few of those items and no one has ever admitted to me that they thought of it as an investment. Likely they wouldn't even if they had thought that 

I have a fairly large collection with a relatively few of those controversial items and none bought for investment purposes.  I have no coin bought for that reason either. Dale

[Bimat]

If his goal was investment, he was an investor, not a hobbyist.

I agree

[Michael E. Marotta]

A fascinating discussion, thanks to all!  Certainly, much to consider, but, ultimately, offered from only intuitive perspectives with citations to individual items, but without any statement of what principle or rule defines. 

On the one hand, if you appreciate the coiner's art, then such "presentation pieces" stand on their own with long historical tradition, going back at least to Thomas Simon's "Petition Crown" of Charles II. 

In America, we take our Commemoratives of the US Mint quite seriously, with those who deplore the modern emissions yet pointing to the "classic commemoratives" of the 1920s and 1930s.  They are, of course, Non-Circulating Legal Tender, an awareness keen to the Krause cataloguers.

[Prosit]

I happen to really like the US modern commeratives and have devoted far too much funds to collecting them.
Do I consider them good investments, Heavens no! although I bought a gold visitor center for just under 220 USD and later sold it for just under 600.  Look at that one now...makes me wish I had bought a hundred.  One example that did well out of many many that did not or would not do so well today.
 
Are they coins?  Did they circulate? OMG, I don't trouble my conscience with those silly questions, I like them, that is enough motive. If it were a Conch shell and I liked it and could afford it and wanted it, I would get it.

I would collect the older commemoratives as well, of which many did circulate, but I can't aford to.  So I don't.
Move on, nothing to see here.


Dale

[Figleaf]

Aren't those DemRep Congo thingies fantasies?

Peter

(Note: Originally that was a reply to this post.)

[<k>]

Aren't those DemRep Congo thingies fantasies?

Peter

From Wikipedia:

No circulating coins exist, but there are numerous designs of 25-centime, 50-centime and 1-franc coins made of non-precious metal to be sold to foreign collectors.

And they're listed in the Gerhard Katalog.

[Pabitra]

Aren't those DemRep Congo thingies fantasies?

Peter

I have also been told so.
Then which are the coins in circulation?

And they're listed in the Gerhard Katalog.

And that according to me, is the final test.

[chrisild]

Would "Gerhard" possibly be Gerhard Schön?   Well, he lists them in his World Coins catalog, but that simply means they have been issued by the central bank. From what I know, coins are not used in the Dem. Rep. Congo though. So for me these are NCLT pieces.

Christian

[<k>]

Dem Rep has NO coins in circulation - only banknotes. The "coins" are for collectors.

As I already mentioned from Wikipedia:

No circulating coins exist

[chrisild]

True, but we should not call them fantasy pieces, I think. "NCLT", "collector coins" or something like that is fine. The dividing line may be thin but it is visible.

Christian

[Pabitra]

This starts another debate on definition of coins. This too is a well discussed topic. There used to be a coins group, hosted by uni.edu and this topic used to be the standard whipping horse.

Dem Rep has NO coins in circulation - only banknotes.

Please do not forget timeline.
These were issued in 2002 and now they are no longer in circulation.
Inflation takes heavy toll and expedites the demise of coinage.
The Government takes the easy way out of issuing only notes since initial capital expenditure required is lower.
This poor economic decision is indicative of poor governance.
The result is higher inflation as similar non- sound economic decisions continue to be made.
A very vicious cycle indeed.

while Figleaf calls them "pseudo-coins", because for him, a coin is not a coin unless it circulates and can be spent.

I fully agree with Figleaf. I call them "stamped metal tokens with face Value imprinted".

But then, who defines what has circulated?

In Saudi Arabia, 5 halal and 100 halala are almost impossible to find. So is 50 paisa in India. But they are circulated coins.

When a tourist goes to a country and stays in the capital, he may not come across any coins. Does it mean that coins do not exist?
There are several countries in Asia, Africa and South America when coins have ceased to be important means of economic transactions in main towns.
This is especially true for those countries which do not mint their own coins.
The decision to get the coins minted is long drawn affair and there is a well known incident when the coins delivered after a long gap had ceased to be functionally important;
The Central Bank had to issue a fiat that a significant percentage of every withdrawal from the bank had to be in coins.


What about central bank issued coins.
New Zealand coin set has different metallic composition from coins in circulation.
Many European countries have denominations included in Central bank sets which can not be found in actual circulation.
Why Netherlands new 1 cent coin ( with the new King) is not found in circulation? Does it make it a fantasy piece? Similarly for Finland and Belgium.


What about whole lot of non-standard specification 2 Zloty coins of Poland, which are the only items you can get in their National bank?
OR bimetallic 1 Lira of Turkey with all types of animals but officially released by the mint but not legal tender (except in vending machines there).


Nice discussion on a very important topic.
Request to moderator to split it in to a new thread.