A boom town this is not.
As a crowd files into an auction at the Douglas County Fairgrounds on a sweltering Sunday morning, the most excitement here is over a broken water line — a break that caused the auction to be moved into an air-conditioned building of the fairgrounds.
As pickers sift through an assortment of oddities stacked on sawhorse tables, the most raucousness comes from a plastic fish that sings Sinatra.
But indeed this is the place to get at least a peek at America’s newest boom. At the front of the room, right near the big hats that run this ring, men and women squat on their heels and nearly press their noses against the shined glass of a display case.
America’s newest prospectors at work.
It isn’t quite 1849 all over again, but in case you haven’t watched the financial pages, there is a fever spreading through the precious metals market. Gold has increased in price by about 180 percent in the last five years. Although more quietly, silver has soared, too, up about 155 percent in the same time period.
But these days, a gold pan or a heavy hammer isn’t needed to stake a claim to valuable ore. Gold and silver coins fit so nicely into a person’s pocket. Here, all you need is a bidding strategy and an eye for a bargain.
“I do feel a bit like a prospector,” said Cindy Williams. “I mean, I just bought a coin for $50 that a book says is worth $450.”
Here’s hoping that book — from Hobby Lobby — is right.
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It has been a pretty fair minute for auctioneer Mark Elston. Thus far he’s selling at a pace of about $100 every 60 seconds. That goes on for a few minutes until he gets into a batch of coins that to the lay person looks a lot like the previous batch, except shinier. Then the pace picks up to about $200 a minute.
Elston sold coins for an hour and fifteen minutes on this Sunday.
Silver dollars were the main movers, and many went for somewhere near $20 to $35, but some easily doubled that.
“I haven’t seen it like this in a long time,” said Elston, a veteran Lawrence auctioneer. “Everybody is selling coins now.”
Coin auctions certainly are becoming easier to find. An auction house just south of Topeka has started running a monthly coin auction, and fairgrounds, small-town libraries and lots of other normally sleepy venues are coming alive with coin auctions more often.
“I would think they would get to the point that they would flood the market, but that hasn’t happened yet,” Elston said.
Instead — in this day where stock values have been about as solid as the paper they are printed upon — a growing group is buying into a motto long used by old real estate auctioneers — they ain’t making any more of this.
“You can’t reproduce an 1800 coin, not an authentic one,” Elston said. “I think most people believe the real coins are going to at least hold their value.”
Many were more optimistic than that on Sunday. One buyer, who asked not to be identified, purchased “over $400” that day. How much over likely was the more pertinent question since he was seen sliding about $200 worth of silver into his pocket during about the first 10 minutes of the auction.
“I came here to buy silver dollars today,” he said. “Every indication is that prices are going to continue to go up. In this economy I think there will continue to be a demand for metals and things that have an intrinsic value.”
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To enter the Kansas Coin Connection, 846 Ill., you push a doorbell and wait for the owner to peer through the shop’s window and open an electronic lock. When you enter, you may be in the only retail establishment in Lawrence where the proprietor openly wears a pistol on his hip for all to see.
That’s the way it works when your display cases glitter with gold that now sells for about $1,200 per ounce. Being robbed earlier in the year also serves as an incentive.
“It definitely takes more money to be in this business now,” said Steve Neher, who owns the shop with his wife.
But business has been busy. And, Neher says, it also has been different. Neher has seen spikes in gold and silver prices before, but those often have been based on individuals trying to corner a market or because of other technical factors, he said. But now there seems to be a wider group of people buying metals for a more fundamental reason.
“Most people think this is backed by the U.S. government,” Neher says as he pulls a hundred dollar bill from his wallet and snaps it tight. “It’s not.”
Neher is directly speaking to the fact that currency in the United States is issued by Federal Reserve Banks and is the obligation of those banks.
But in a broader sense he’s referring to an old phrase once only uttered by currency geeks: Fiat money. Ever since the U.S. government decided in 1971 to no longer back its currency with gold reserves, there has been a sector of the population concerned that paper money is subject to a major loss in value under the right circumstances.
Some believe those circumstances are inching nearer, Neher said. As concerns grow whether China will continue to purchase U.S. bonds in the same quantities, that leads to inflation fears. As India purchases more gold for its reserves, that adds fuel to people concerned about the value of paper money. But Neher said perhaps the biggest factor is that the most recent financial crisis and the resulting recovery programs have led more people to understand how easily the U.S. can print money.
“People are starting to realize that the U.S. dollar isn’t worth what it once was,” Neher said. “As long as they keep printing money at the rate they are, it will continue to dilute and devalue the dollar.”
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Jim Denney also takes comfort in a coin. He has for the better part of his life. Like many coin collectors, he started as a kid, gave it up for a while and then came back to it as a more mature mind contemplated the meaning behind it all.
“You pick up a coin from the 1800s, and you just can’t help but wonder where that coin has been,” Denney said. “I hope that is what comes out of all this. I hope we cultivate more real collectors and not just people who are chasing the dollars, because the real joy in this is the knowledge and the history you gain.”
When Denney talks about investing in coins, he always puts the word in quotation marks. For him, this isn’t about trying to figure out monetary policy and trends.
“There are experts who say inflation is the great threat,” Denney said. “There are experts who say deflation is the great threat. You can find an expert to tell you whatever you want.”
Instead, Denney spends his time trying to figure out what he has. Every coin he gets during the course of a day goes into a big jar. Then he eventually puts each coin under a microscope to see if it is something special.
“I don’t spend them before I look at them,” Denney said. “I just don’t do that.”
Silly? Maybe, maybe not. A little difference in a fairly ordinary-looking coin can mean a lot. For example, a 1998 “proof” penny — a proof is a coin minted to a higher standard for collectors but often ends up in general circulation — is worth more than a cent. If you find one in your pocket, it is worth about 60 cents to a dollar at a coin shop. But if you find a 1998 proof penny that happens to have the “A” and the “M” of America close together, you’ve done quite a bit better. It is worth about $3,000 retail.
“There are people every day who spend coins that are worth more than they think,” Denney said.
So, there you go. Pocket prospecting. A claim you can easily stake.