By Charles Morgan, Scott Purvis, and Hubert Walker for CoinWeek ….
In a hobby already prone to hyperbole, the recent release of the Kennedy Gold Proof inspired a mixture of vocal opinions and raised many questions.
Some saw the hysteria and dealer-driven speculation as a blight on the hobby, calling the coin’s roll-out the straw that’ll break the camel’s back for modern coins.
Others were more measured in their criticism, mostly concerned with how the U.S. Mint re-tasked American Numismatic Association staff and transformed the bourse floor and surrounding areas into an unwieldy queue. And yes, some considered the coin launch (and its attendant publicity) good for the hobby, overall[1a].
Several dealers told CoinWeek that they felt less safe at this year’s ANA, and many convention-goers we spoke to felt uneasy about the endless line that had formed around the Donald E. Stephens Convention Center. Many felt that the hullabaloo surrounding the Kennedy Gold Proof show release distracted customers, who normally come to the show to shop for coins from hundreds of the nation’s top dealers.
But whatever the complaints may be, one thing is certain. The release of the Kennedy Gold Proof was a bonanza for some.
Setting a Price at the ANA
Predictably, the limited supply of coins at the show caused prices in the secondary market to skyrocket.
On the issue’s first day of release, many dealers at the ANA World’s Fair of Money adopted a wait-and-see approach before establishing a price for the coin, which made it even more difficult to acquire certified examples. In fact, most convention-goers found that show-graded coins were not readily available for purchase until the closing days of the show.
Other dealers decided to stay on the sidelines.
John Maben from ModernCoinMart chose not to participate. In a letter to CoinWeek, Maben stated:
“We were prepared to buy 100 or so of the gold Kennedy half dollars at a big premium from others that took the time to stand in line [sic] however … at the conclusion of the show, we bought exactly one”.
Raw coins were selling for more than double the issue price by the last day. On Saturday afternoon, one dealer was offering a Kennedy Gold Proof, in its original box, for $3,000.
“Unethical but Not Illegal”
The release of the Kennedy Gold Proof made the evening news, especially in areas where the coin physically went on sale.
Denver’s ABC7 reported it this way:
“Several people in line were being paid by casting directors and coin buyers to be there. The Mint tells us it had no idea that was happening, calling it ‘unethical but not illegal’”.
The “casting directors” and “coin buyers” mentioned in the report turned out to be representatives of well-known coin dealer Kevin Lipton, the 2012 winner of the Professional Numismatists Guild’s (PNG) Lifetime Achievement Award. His Beverly Hills, California-based firm also recruited hundreds of Denver-area homeless to buy the coins.
This created an unexpectedly surreal environment for the collectors that showed up to buy the Kennedy gold proof coin on the issue’s first day of release.
Mitch Spivack, another California-based coin dealer and a prominent collector of modern coins, happened to bring his daughters with him to Denver to purchase the coin. The unusual makeup of the line made him wonder if he was in the right place.
“It was 99% homeless people and folks thinking that they were waiting in line for a casting agency,” Spivack said. “There was virtually no one in line who was excited about buying a coin for themselves”.
According to CBS4 News in Denver, Lipton’s homeless stand-ins had their hands marked and were given $20 to wait in line.
They did so for more than 12 hours.
And, according to Spivack, those 12 hours were not without incident.
“Some of the homeless brought dogs with them. The dogs would fight each other. And some people were not well. Several people couldn’t make it to the end for health reasons,” he said.
Although the CBS report doesn’t state what the buyers were paid after delivering the coins to Lipton’s representatives, several dealers who spoke on the condition of anonymity said the firm paid each homeless person a total of $100 for their services.
We spoke with Lipton last week about the coin’s roll-out. The first question we asked concerned his use of area homeless to buy coins and the reported $100 payout. He said the number was wrong but wouldn’t specify, only saying it was more.
When asked how he recruited such large numbers of area homeless to wait in line and whether he thought he was exploiting the economically vulnerable, Lipton said, “We found people milling around. We fed them and paid them to stand in line. If it wasn’t for us, they wouldn’t have been fed or earned any money. We were thanked by hundreds of people. We helped them pay rent and put food in their stomachs”.
Lipton was not alone. Several other dealers also hired surrogate buyers but were more selective. Bob Higgins of The Argent Group, for example, reportedly paid the spouses of active-duty service members from nearby Ft. Carson $300 each. Still others enlisted the help of the general public by placing ads on Craigslist.
2014 Harry J. Foreman Dealer of the Year Lee Minshull reportedly paid his proxy buyers $400 each. Our calls to Minshull have so far gone unanswered.
For the most part, the scene in Chicago at the ANA World’s Fair of Money was more orderly but not much different.
On the eve of the coin’s release, several dealers–including Lipton, Minshull and SilverTowne’s Dave Hendrickson–secured Early Bird Access for stand-ins at the World’s Fair of Money. The fee is $150 per person, but to even be eligible a buyer must first be a member of the ANA.
This means that scores of new members were enrolled into the ANA just so dealers could acquire Early Bird Access for them.
There were also several reported incidents where Early Bird Access credentials were handed off to other buyers on the show’s second and third days. The ANA began checking buyers’ identification after they were apprised of this. We were told by officials at the ANA that they verified multiple instances of abuse of the Early Bird system and were able to track them back to specific dealers, but the officials that talked to us wouldn’t say whether the Association will levy any disciplinary action against them.
Meanwhile, the lines themselves caused headaches for convention-goers and auction houses.
On the show’s first day, representatives from both Heritage Auctions and Stack’s Bowers complained that the lines prevented customers from viewing auction lots. ANA President Walter Ostromecki, Jr. told CoinWeek that the two firms were so upset about the situation that they threatened to terminate their contracts with the ANA if something wasn’t done about it.
The problem was remedied quickly.
But access wasn’t just a problem for the major auction houses. Other organizations, such as the Numismatic Literary Guild, were unable to gain entrance to their meeting rooms due to the “holding pen” the ANA set up to keep Kennedy Gold buyers off the bourse floor until groups of 20 could be brought in to make their purchases.
Not helping matters was the Mint’s checkout system, which was erratic throughout the show. Many customers faced checkout times exceeding five to 10 minutes per transaction.
In Philadelphia, the event was calm and the process was orderly but again, shill buyers made up a sizeable percentage of those waiting in line.
Philly.com reports that armed security personnel representing coin firms accompanied some buyers to a local hotel where they were reembursed for their time. The going rate in Philadelphia, according to the website, was $300 to $600 each.
Similar scenarios played out in Washington, D.C.. Proxy buyers there reported being paid $300 to $400 each.
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