We hear about a lot of counterfeit items from China but this one has coin collectors on alert. Five coin-collecting organizations have banded together to issue a warning. The American Numismatic Association, the Industry Council for Tangible Assets, Numismatic Guaranty Corporation , Professional Coin Grading Service and the Professional Numismatists Guild say that Chinese-made counterfeit coins pose a significant financial threat to unsuspecting consumers. They believe that the public is spending millions of dollars on fake U.S. coins offered in online auctions and offline in places like flea markets and swap meets.

These types of copies are illegal to resell. The U.S. Hobby Protection Act, first enacted in 1973 requires manufacturers and importers of imitation numismatic items to mark them plainly and permanently with the word, "COPY" in accordance with the Code of Federal Regulations. Many of the replica items do not bear these markings. Thousands of coins described as "copy" or "replica" are listed for sale in online auctions every day often using images of the genuine coins. More than a million of these coins may have already been sold in the U.S.

The groups say that customers should not purchase any "replica" coins because they may be in violation of federal law and that they should be very careful about who they buy from. "Even during the recession, the United States rare coin market remains vibrant and active with an estimated $5 billion in annual sales. We urge collectors and investors to become knowledgeable and use common sense when buying," says Steven R. Eichenbaum, Numismatic Guaranty Corporation Chief Executive Officer.

For a copy of the booklet, What You Should Know Before You Buy Rare Coins, send $1 to the Professional Numismatists Guild, 3950 Concordia Lane, Fallbrook, CA 92028.

A tiny piece of change brought in some big money recently. The 1870-S half dime is a small silver coin struck at the San Francisco Mint in 1870. The coin was sold as part of a New Jersey man's collection of 93 mint-condition half dimes to Laura Sperber, President of Legend Numismatics of Lincroft, New Jersey. The entire collection went for $2.2 million and the 1870-S has a value of $1.4 million.

This tiny coin, a forerunner to the modern nickel, was not even known to exist until 1978. There were plans to create the coin but Mint records showed that no 1870-dated half dimes were made at San Francisco Mint. Then in 1978 this coin turned up in Chicago. It was sold for $425,000 and changed hands several times since then. It has been certified genuine by Professional Coin Grading Service of Newport Beach, California.

What's really interesting is that Sperber and Legend Numismatics originally bought the coin for $661,250 at an auction in 2004 and then sold to the New Jersey collector. The company re-purchased it five years later for more than double that price, and has already sold it along with the New Jersey man's other half dimes for an undisclosed amount.

No sooner was the election over than floods of Obama commemorative coins started to be advertised. Just in case you were thinking that these coins might be a smart investment, the Professional Numismatists Guild, a non-profit organization composed of the nation's top rare coin dealers, is advising consumers that the coins honoring President-elect Barack Obama are not now nor will be later an investment deal. They caution that the coins should be considered only as souvenirs. In other words, buy them because you like them, not because you think they might be worth something later.

"All of the items we've seen offered so far on television and online are merely political mementos that certainly may be enjoyable as a keepsake, but typically will have little or no re-sale value later in the mainstream numismatic market," said Gary Adkins of Edina, Minnesota, Professional Numismatists Guild President. He warns that some of the Obama coins are layered or plated with a very thin layer of gold and that there is usually very little bullion value on plated pieces. For more info on what not to buy when it comes to coin collecting, check out the PNG website.

The news last week of a $10 gold coin that sold for $5 million is particularly interesting because the date on the coin is not the date it was minted. The Eagle coin is stamped 1804 but was created in 1834 at the Philadelphia Mint for Andrew Jackson as a diplomatic gift. This coin has some pretty fast appreciation, it sold for $1 million in 2003 and then for $2.47 million in 2005. There are just four of them out in the world.

I wonder what is it about coins that makes the prices rise. In part it is because they are a tangible record of history but I suspect the real reason is something else. As David Albanese, the president of Albanese Rare Coins, the dealer of the coin, reported both the buyer and seller are "northeastern United States entrepreneurs who have been collecting coins since they were young boys." I think this is why some coins sell for such high prices. Many other collecting hobbies take root after one is established in the world, wine, art, jewelry and watches, the love of those often develop later in life. But so many young boys and girls are given coins as gifts, thereby establishing a lifelong love of numismatics.

[Thanks, Lana]

[Thanks, lana]