Raise the front of the handkerchief to allow the audience to see that the coin is indeed under the handkerchief. While doing this, bring the front edge of the cloth all the way back where the back edge of the cloth is draped over the right arm, and pick it up. Focus remains

on the coin. (Fig 3)

    Bring both edges forward supposedly covering the coin once more, but actually the coin is now behind the cloth underneath a secret "fold" held by the

right thumb. (Fig 4)

     The left fingers take the coin/handkerchief, unfolding the secret fold so that the coin is directly behind the cloth. The right hand moves downward as if to come from under the handkerchief leaving the coin behind (Fig 5). This downward movement is very important to the illusion because your right hand is supposed to be covered along with the coin. All explanations and presentations that I have seen of this trick has the right hand just moving to the side which looks sort of weird to your audience, as if your right hand penetrated the handkerchief. At the very least it will arouse suspicion that you don't need at this point. I made up this little convincer of taking the right hand "out from under" the handkerchief, and the result is much more powerful magic at the end.

     The right hand moves up to begin twisting the handkerchief at the bottom of the coin. To the audience it looks as if the coin is being trapped in the middle of the cloth, but is actually being held behind it by two thin wraps of material caused by the twisting action. If you continue to twist, the cloth will start to pull down away from the coin. Stop before that happens and hold the twist directly beneath the coin displaying it to the spectators. (Fig 6) You might say something like, "a coin helplessly

trapped by an ordinary pocket handkerchief". Up to this point the presentation has been filled with constant motion. This little pause allows the audience to catch up to what they think is going on. It is also a good point to make a magic pass, or utter your favorite magic words, or tap the coin with a wand because for the people watching, magic is about to happen.
     Continue the twisting action allowing the cloth to pull downward over the coin. It will look to your audience exactly as if the coin is slowly penetrating the fabric to free itself. (Fig 7)

     When the coin is almost free allow one of the spectators to remove it from the handkerchief, but retain your hold on the twist. Don't release it just yet. Remind the people of what they have just seen, and that you are now holding the cloth at the exact point that the coin came through. Tell one or two of them to hold the handkerchief at opposite corners. Now release the twist and invite them to inspect the material for any holes they think it might contain. (Fig 8) I have found through

numerous performances that this doubles the impact of the trick. First, they were surprised to see the coin coming through the material, then they thought that there must be a hole, then their minds were blown again when no hole is found.

Final Note:
Practice this well so that all of the moves are smooth and natural. Add in your own words from your own vocabulary to make the magic personally yours, and you will be rewarded with an excellent piece of magic that you can perform anywhere.