The RYK Retort: More on the 1892-CC Eagle

Editor’s note: The following reply was received by me this morning and it was written by well-known collector Robert Kanterman about the blog I published yesterday. It is unedited and, I think, an interesting insight into the mind of a sophisticated, well-focused collector. I was the lucky buyer, and I will address DW's points from the previous blog.

1. Underpriced? Perhaps a little bit, not too much — okay, I thought it was a screaming bargain! I would have been interested up to the $1200-1300 range. Maybe even $1500 if I really needed it for a date or type set.

As recently as a few months ago, the basal value of any old Liberty $10 was approaching $1000. Perhaps I am living in the past, but I still view $10 Libs as $1000 or so coins.

2. CC gold is extremely popular. More popular than ever. Just when I think that interest is starting to wane, it seems to gather more steam. Good luck trying to find me some CC $20's in OGHs.

3. I love OGHs, and I am not afraid to admit it. Graded years ago, under perhaps different standards, and untouched by human hands for 20+ years, what's not to love? Add to that the fact that many filthy gold coins from European hoards were slabbed in the OGH era (more below). I also believe that the green of the label and the gold of the coin complement one another in a way that even art enthusiasts like DW should appreciate.

A wise coin dealer friend told me earlier this year that the PCGS Reconsideration service marked the death knell of the OGH. I am not so sure. The OGH is dead. Long live the OGH!

4. DOGs (Dirty Original Gold coins) are The Bomb among serious collectors of 19th century circulated gold coin and other numismatic vagabonds. DWN has certainly educated collectors about originality, in his books, website, and in person, and made them popular, but RYK invented the "DOG" and used his big mouth (or noisy keyboard, anyway) to spread the gospel.

5. Liberty $10's are a great series, chock full of rarities and interesting dates. There are numerous logical ways to collect them that do not necessarily bust your coin budget (or require you to sell your home). There is also no question that David Hall's finest ever PCGS registry set and its well-publicized sale a few years back has raised the profile of these coins. Here's a confession — the first coin that I ever purchased from DWN was an 1849-O $10. The second coin was an 1883-CC $10. The last two were also Liberty $10's, both in OGHs. I really like Liberty $10's a lot.

And The Winner For Most Popular Coin Is....

I bought a ton of coins at the recent ANA. They ranged in price from under $1,000 to close to $100,000 and nearly all have been sold on my website in the two+ weeks since the end of the show. One coin garnered more attention than any other. It was ordered no less than eleven times (by different individuals) until I finally marked it "on hold." I would have never guessed, when I bought it, that this seemingly mundane coin would have become my Most Popular New Purchase for the 2013 ANA. And the winner for Mr. Popularity was (drumroll)......???

An 1892-CC eagle graded EF40 by PCGS (and approved by CAC) in an Old Green Label Holder.

Priced at a whopping $1,000, this coin connected with a wide range of people. It was ordered by two dealers and nine collectors running the gamut from beginners to seasoned vets.

What was it about this coin that made people go gaga?

I have a few theories. Let's explore them.

1. It Was Underpriced

As I mentioned in the description, by today's standards this coin grades more like AU50 to AU53 than EF40. This made it more likely to have a final value of $1,250 or so as opposed to the $1,000 it was listed for. At least eleven people spotted that this was a good deal, if not an actual bargain.

2. It Was An Affordable But Nice CC Gold Coin

If you don't have a huge budget but want to own a Carson City gold coin with a good overall appearance, you don't have a ton of choices. The typical CC double eagle now costs over $2,000 - and at the $1,000 price point any half eagle that's not dated 1891-CC tends to be kind of boring. I can't remember the last time I had an interesting CC eagle that was priced at $1,000.

3. The Lure of the OGH Is Strong...

Collectors love OGH PCGS coins and it isn't hard to understand why. The purist in me appreciates that a coin graded back in the late 1980's or early 1990's is going to look the same in another 20+ years as it does now. In other words, if PCGS had missed surface enhancement(s) on said 1892-CC eagle, the coin would have already turned in the holder. The fact that it was dark and dirty was a pretty sure sign that it was "as is" and wasn't going to turn.

4. Nice, Original Coins Are In Demand

This coin was dirty and original and coins with this sort of appearance are in demand. I'd like to think I had a little bit to do with this...

5. Liberty Head Eagles Are In Demand As Well.

As I've pointed out a number of times in the last few years, the Liberty Head eagle series has gone from mildly popular to very popular. This denomination will never be as popular as its big brother the double eagle but the number of people who dabble or specialize in this denomination has grown dramatically since 2008-2009. And an interesting Liberty Head eagle priced at a grand isn't easy to find.

I would have to guess that this perfect storm of desirability and appeal was what made this 1892-CC eagle so popular. To the collector whose email I received first and who is now the happy owner of Mr. Popularity...kudos. And to everyone else who tried and failed to buy the 1892-CC eagle...thanks and sorry. We will do another deal and soon, I hope!

Some Recent Trends in the Rare Coin Market

If you are a reasonably long-term participant in the rare coin market, you may not have recognized the fact that the market has changed in a huge way in the last five to ten years. Walking around the  floor at a show, you may not notice this (many of the same dealers are buying and selling coins) but the collectors and dealers who are really "in the know" are aware that things are irrefutably different.

How so?

Let's take a look at a few of the ways the rare coin market is far, far different in 2013 than it was in 2008 or 2003.

1.  CAC becomes a force. Five or ten years ago, CAC didn't exist and the major services didn't have someone "checking their work." This led to some sloppy grading and clearly the existence of CAC has tightened standards. Does this mean the services (or CAC) are perfect? Most clearly not but I think grading is more consistent now than in the past and this is evidenced that fewer dealers are making a living solely as "breakout" specialists.

I see a big change in the market from another CAC-related perspective as well. In some series, if a coin doesn't have a CAC sticker, this can mean the kiss of death. I think this is an unfortunate circumstance and I'm guessing this wasn't something that John Albanese had in mind when he established CAC. But as of the middle of 2013, we can look at auction prices and dealer sales and gauge that a CAC sticker clearly increases liquidity and in some cases it increases prices by a significant amount.

2.  Interesting coins outperform all others.  In the rare date gold market, the coins which are clearly in the highest level of demand are those which are interesting to multiple groups of collectors. As an example, a coin like an 1855-O gold dollar has multiple levels of demand because it is a distinct one-year type coin while an 1850-O gold dollar (which is three times as rare in Uncirculated but priced at about one-third to one-half as much) is of interest mostly to a smaller group of specialists.

This isn't to say that people deliberately sought "boring" coins before. But in 2013 (and beyond) it seems clear to me that people want coins with an interesting story behind them.

Some examples of interesting branch mint gold coins include 1855-D gold dollars, 1861-D gold dollars and half eagles, 1839-O quarter eagles, 1854-D three dollars, 1838-C and 1838-D half eagles, 1838 eagles, 1861-S Paquet double eagles. Coins like this have at least a few things in common: they are either one-year types or first year of issues or they have very interesting back stories which appeal to a wide variety of collectors. I call these coins "multiple level of demand" issues and they are clearly in vogue right now.

3.  Pricing Becomes Complicated.  A decade ago, rare coin pricing was fairly simple. You had a coin--let's say an 1885-CC double eagle--and it was graded AU58 by PCGS. You looked at the Greysheet and saw that Bid was $10,000. The coin was pretty decent, it was a popular, low-mintage CC issue and, therefore, it was worth 10% over Bid. You priced it at $11,000 and if it didn't sell quickly, you lowered the price to $10,500. Simple.

But today, there are countless variations of 1885-CC double eagles. It could be a PCGS coin or an NGC coin. It could have a CAC sticker or not have a sticker. It could have a "+" designation or a "*" designation (or even both). It could be in an old green label holder. The possibilities are literally endless.

Suddenly, many significant coins have four, five, six or even more potential variations and just as many possibilities when it comes to pricing. The 1885-CC double eagle in AU58 could be worth $20,000 or it could be worth $25,000 or it could even be worth $30,000. And that's not taking into consideration the possibility that it's an upgradable coin and it is worth $35,000 or more.

Unfortunately, the Greysheet has not kept up with this widening range of prices. Today's collector has to be very nimble or very well-connected to know the price differences between a PCGS/CAC and an NGC/non-CAC coin in his series; especially if he specializes in something like St. Gaudens double eagleswhere the variation(s) in prices can be dramatic.

4.  Every Picture Tells a Story.  As I have written about before, the advent of the internet has made numismatics an increasingly visual hobby. With most collectors making their purchases solely based on images from dealer or auction websites, the visual appeal of a coin has become paramount. Unless a coin is very rare, in today's market it is visual appeal which sells a coin more than almost anything else.

This tends to be less true in the branch mint gold area than in silver coins where superb color can mean staggering premiums. But, as I have noted in the past, how a coin will look on my website once it has been imaged is a major consideration in the process I use to determine if I will or won't buy a coin.

Which brings us to the next point.

5.  In Crust We Trust.  After years and years of beating the "buy original coins" drum, it looks like many collectors of branch mint and early gold have begun to listen to me. This has been reinforced by the emergence of CAC (see above) who tends to appreciate originality and rewards coins which have not been dipped or processed.

The change of taste towards "dirty original gold" has no been without consequence(s). The first I've noticed is that both PCGS and NGC now sometimes over-reward originality. How ironic is this? For years, the services tacitly endorsed the dipping of coins to make them bright so that they would achieve the highest possible grade. By now, so many coins have been ruined by this that when a nice original AU50 is sent in, the chances are good that it will grade AU55 or even AU58 just because it has original skin.

Another consequence is that collectors who want original surfaced coins typically mistake so-so or ugly coins with some color for nice coins with really nice color. This is understandable. Let me give you example. At a recent show, a collector showed me a group of coins which he had purchased through auctions in the last three years. He wanted me to verify that they were all "crusty and original." The coins ranged from not even remotely original to reasonably original but were not attractive. I thought they were clearly nicer than the bright, dipped out junque which he might have bought a few years ago but he still didn't fully "get" the concept of crust. And I'm not sure many collectors--or dealers--do. And this is what, in my opinion, makes the whole 'dirty original gold" craze somewhat ironic.

6.  True Rarity Becomes Appreciated.  Because of the preponderance of numismatic information, collectors are a lot smarter in 2013 than they were in 2003. Many collectors have access to information which, a decade ago, was only accessible to real students of the hobby.

One consequence of this is that you don't have to "convince" collectors that a certain issue is rare. You can prove how rare a coin is by how often it does--or doesn't-- appear at auction and how high--or low--the populations are at PCGS and NGC.

This has made tastes change in recent years. As an example, I just sold a very, very cool San Francisco eagle which was one of the two or three finest known for the date. Ten years ago, I would have bought this coin and my reaction would have been "cool item but who the heck am I going to sell this to?" Cut forward to 2013 and not only did I pay a very strong price for the coin with no hesitation but my reaction was "cool item; I better not put it on my website because so many people will want this that I'm going to anger the collectors I don't call about it."

I see this trend intensifying in the coin market in the coming years. Whether you are spending $1,500 or $15,000 do you want to own a coin  which is hard to find or one which is rare? And what if rarity can now be quantified due to the number of coins which have been graded by PCGS and NGC and the auction archives which Heritage and PCGS make readily available?

What are some of the recent trends in the coin market which you find interesting? Feel free to leave your comments about this topic in the space below or email me at dwn@ont.com to continue this discussion.

The PCGS Set Registry for 19th Century Gold Collectors: Part One

This week the DWN Blog welcomes guest blogger Robert Kanterman.

I'd like to thank long-time DWN client and personal friend Robert "RYK" Kanterman for writing this excellent study on some of the potential avenues for the PCGS Set Registry which are available to collectors of 19th (and early 20th century) gold coinage. Robert's suggestions are followed by some of my own observations/comments. Please note that my comments appear in italics throughout this blog.

As a collector, I am always look for new ways to enjoy coin collecting, new directions to explore, and ideas to share with others who are similarly searching for collecting themes, especially when they are interested in collecting gold coins. In this two-part blog, I will discuss some gold coin collecting ideas offered by PCGS's very successful registry program, some of which are probably unknown to many gold coin collectors.

I will not be discussing the Indian gold series or Saint Gaudens double eagles, but will instead focus on 19th century gold and especially Liberty head series, 1838 through 1908. I am also going to focus on sets that do NOT require the purchase of coins that cost more than my first car (a 1984 Honda Accord - $9,700 in 1984; no 70-CC $20, or even 70-CC $10 or the like).

I will disclose that I have no financial affiliation with DWN or PCGS and that I have active registry sets in some of those that I will be discussing.

I.  Charlotte Basic Type Set: a gold dollar, quarter eagle, and half eagle. This trio can be completed in XF condition, with nice original coins, for much less than the price of my 1984 Honda. If you have deeper pockets or want to go further, expand to the three gold dollar types, two quarter eagle types, and three (or four) half eagle types.

I agree with RYK and think that the simple three coin denominational set from Charlotte is a great place to begin with branch mint gold collecting. For less than $10,000 you can purchase nice AU examples of the three denominations. To "spice up" the set, look for scarcer dates. As an example, instead of the 1851-C for your gold dollar, choose a scarcer but still affordable issue such as the 1853-C.

II. Liberty Head $5 Gold Date Set, Circulation Strikes (1839-1908). The set includes one half eagle from each date (any mint) of this very long series, none of which are real stoppers, unlike the $10 and $20 series. That said, there are a total of 70 coins, and this can take a long time to assemble and significant resources, especially if you demand AU or higher condition examples for the better dates. The 1862-65 and 1875 dates are going to be the toughest.

I'm a huge fan of Liberty Head half eagles and I especially like the pre-1880 dates. To me, the one flaw with RYK's choice of this set is the fact that while the earlier dates of this denomination are interesting, the later dates are sort of monotonous.  You can get around this, to a degree, by focusing on the CC or O mints in the 1880's and 1890's slots but this still leaves you with the task of buying a lot of generic issues for your set. If it existed, I'd rather work on a No Motto date set of half eagles with one from each year, 1839-1866.

III. Liberty Head $5 Gold Mintmark Type Set (1839-1908). Sticking with the popular Liberty $5 series, the Liberty $5 gold coin is the only coin in the US series that was struck at all seven operating US Mints (Philadelphia, New Orleans, Charlotte, Dahlonega, San Francisco, Carson City, and Denver). This set therefore requires inclusion of one coin from each of these seven mints and was a popular collecting challenge in the pre-certification era. It was a stock product for Capital holders, long before anyone heard of PCGS.

I do not completely agree with the weighting (for example why is Philadelphia worth twice Denver?), but it is an enjoyable collecting challenge that can be completed in a variety of grade and price points. To maximize your resources, pick the 1893-O $5, the ubiquitous 1891-CC $5, 1899 and 1901-S $5's, and the 1907-D $5. To make it more interesting and challenging, pick No Motto San Francisco, Philadelphia and New Orleans $5's, a Carson City $5 pre-1879, and the 1906-D $5.

Ah...the seven mint set of Liberty Head half eagles. This may be dating myself but I used to assemble a lot of these in the pre-PCGS/NGC days and sell them, in Capital plastic holders, to marketers. I agree with RYK's suggestions regarding "spicing up" your seven coin set with more interesting dates. You might not be able to afford a nice pre-1880 CC half eagle but don't settle for an 1891-CC; buy a coin like a nice AU55 1882-CC or an 1890-CC in MS61 to MS62

IV. Classic Head $5 Gold (1834-1838). This popular series has a significant following, with some choosing to pursue the minor McCloskey varieties. The basic set, however, has 8 coins - 5 reasonably easy to find and three that are more difficult: 1834 Crosslet 4, 1838-C, and 1838-D. If you stick to EF coins, you can stay under our budgetary requirements. If you wish to compete, you will have to go AU and higher. What I like about this set is that you get a popular Redbook variety (the Crosslet 4) and two great first year southern mint coins.

I'm a huge fan of Classic Head half eagles (and quarter eagles as well). To me, these coins bridge the gap between early gold and the more modern Liberty Head issues and they have a "handmade" charm which the latter issues don't show. As RYK pointed out, the 1834 Crosslet 4 and the 1838-C/1838-D issues can be stoppers for the collector on a tight budget but affordable examples do exist so they are not an unrealistic goal. If you are strict about not buying any coins which are more expensive than RYK's Honda Accord, you might have a problem with the 1838-C and the 1838-D in higher grades as properly graded AU and better coins are probably going to exceed Accord Value.

I can also see collecting Classic Head gold by die variety. A list of all the varieties can be downloaded from the Heritage website and many of these can be cherrypicked from dealers (including myself) who don't take the time to identify the scarce and rare varieties. Collecting gold by die variety has never been popular but if any series were to become the standard for gold coins, it would likely become the Classic Head half eagles.

V. Complete Liberty Head Gold Type Set (1838-1907). I am not sure who came up with this idea, but I really like it! This set requires one coin of each type of the Liberty head gold era. As someone who is prejudiced against smaller coins (sorry, SD!), only requiring two mini coins (Type 1 gold dollar and any Liberty quarter eagle) allows the collector to focus on the bigger coins (three $10's and three $20's). The stopper is the "Type 1" or "Covered Ear" No Motto $10 from 1838 and 1839. I recommend having some fun and sprinkling the set with branch mint gold, if you can. With the exception of the stopper, every coin can be purchased in XF or better condition for under $2,500.

This set seems a little gimmicky to me but, that said, I'm in favor of any sort of set that turns "accumulators" of coins into "collectors."  The stopper which RYK refers to (the 1838-1839 $10) isn't hard to locate and a nice EF40 to EF45 1839 Head of 1838 eagle is affordable and available. And I really like the idea of sprinkling some branch mint coins in this set.

VI. 20th Century Gold Liberty Head sets (1900-1907/8, quarter eagles through double eagles). I am not sure if Doug is going to like this one, and that is why I placed it at the end. Let's tackle each one individually. The quarter eagle set (1900-1907) contains eight coins, all Philadelphia Mint, and probably will not keep the interest long of anyone who has read this far into the blog.

• The half eagle set (1900-1908) contains 18 coins,  including many common coins, some surprisingly uncommon, and one relative stopper (1904-S). The set could be completed with AU and/or lower MS coins for around $12,000 or less, though better coins will certainly cost more.

• The eagle set (1900-1907) includes 21 coins with three relative stoppers (1900-S "the silent stopper"--if you don't believe me, I challenge you to find one, 1906-O and 1907-S). This set affords you the opportunity to buy coins from four mints (Philly, Denver, New Orleans, and San Francisco), and even the more common coins can be expensive in higher grades.

• Last, but not least, is the $20 Lib 20th century set (1900-1907), a total of 18 coins, that range in difficulty, from the most ubiquitous Liberty head gold coin of all, the 1904 $20 to the challenging about AU 1902 and 1905 $20's. Because each coin contains nearly an ounce of gold, the basal value of even the most common coins will approach $2000.

RYK was right about me not really being a fan of these sets. For every interesting issue like the 1900-S eagle (yes, it is a tough coin in Uncirculated,  by the way) there are five which are little more than generics and I think your money is spent better on really scarce or rare issues. For the price of, say, a 1905 double eagle in AU, you could buy a much more interesting (and rare) coin which will perform better and give you more pleasure in the long run (at least in my opinion...)

There you have it, six (or nine) collecting ideas for those interested in starting a US gold collection or those already collecting who wish to move in a new direction.

Part Two will discuss some collecting ideas not in the PCGS registry that I would like to see taken up by PCGS and some collecting ideas offered by the NGC registry. As always, contact Doug at DWN@ont.com, if you would like to talk coins and add some of the coins discussed here to your collections (new or old). Contact me at ryk@blackandgoldcoins.com if you just want to talk coins.

What Percentage of Classic Rare United States Coins Have Been Graded by the Services?

     After 25+ years of encapsulating coins and 50+ million submissions, it is clear that PCGS and NGC have had a huge impact on the way we view coin rarity. I have personally learned many things: which coins are rare and which are not; which coins are true condition rarities and how issues within a specific series can be viewed on a comparative basis. This got me to thinking: how many coins within a series need to be graded (on a percentage basis) to make definitive rarity statements? And once this has been determined, what percentage of coins within certain series have already been graded by PCGS and NGC?      To start making trenchant observations about absolute and conditional rarity, I think we have to feel confident that over 50-60% of all known coins in a specific series have been graded. When it comes to expensive (let's say $5,000 and up) gold coins, I think the percentage of all coins graded by PCGS and/or NGC ranges from a low of around 65-70% to a high of close to 90%.

 Let's take a look at a few specific areas and try to guess what percentage of coins have been graded.

     1.  Charlotte and Dahlonega Gold

     The Charlotte and Dahlonega market was reasonably hesitant to embrace third-party grading and this initially made sense, given how erratically these coins were graded by PCGS and NGC during their formative years. But by the end of the 1980's, submitters were more confident and large quantities of these pieces were being encapsulated. And given the high average value of C+D gold, it makes sense that even the low end coins would eventually be sent in for slabbing.

     My guess is that a great majority of Charlotte and Dahlonega gold in all denominations resides in PCGS or NGC holders as of 2013. There are certainly still a few old school collectors who have held out and won't have " those confounded newfangled slabs" in their collections but these are seen less and less as the years pass. And given the fact that there were never many C+D coins in overseas sources, such as European banks, the thought of bags of Dahlonega half eagles lurking in Dortmund seems remote.

     When you look at PCGS and NGC populations figures for C+D mint gold, you have to remember a few things. The first is that these figures are inflated by resubmissions. The second is that they, of course, do not include damaged or cleaned coins which do not qualify for slabbing. Taking these two factors into consideration, I'd still say that the percentage of C+D gold which has been graded by PCGS and NGC is comparatively high; ranging from 75 to 85% of the known examples. In the case of choice, high end pieces (MS60 and above) this might be as high as 90% with the few renegade raw coins being those held by museums such as the ANS and the Smithsonian.

     2.  Proof Gold

     I always felt that one aspect of slabbing which was undervalued was its ability to protect fragile coins. Back in the old days, coins were typically transported to shows loose in 2x2 plastic flips and it would always make me cringe to see a coin like a Gem Proof Liberty Head double eagle in a soft flip. You knew that these coins were collecting hairlines with every trip to Long Beach or New York. Slabs were far safer environments for such coins. Because of this, Proof gold was an early adherent and by the late 1980's/early 1990's many Proof gold coins were already in slabs.

      Then came the Great Proof Gold Era of 1995-2000 when collections such as Childs, Bass and Pittman were sold at auction. In some cases you had very rare issues with ten or so known coins having three different survivors sold in a short period of time. Virtually all of these coins wound up being encapsulated or, in the case of the Bass collection, were sold in PCGS slabs.

     There are still two rich sources of unslabbed Proof gold: the ANS collection and the US Mint collection in the Smithsonian. But other than these two, I doubt if there are more than a handful of gradable Proof gold coins that still lurk in the raw. I'm going to guess that the percentage of pre-1916 proof US gold coins that have been graded by PCGS and NGC are at least 85% and may actually be as high as 90%.

      3. Early Gold

     I can remember auctions full of interesting unslabbed early gold coins as recently as the mid-1990's but these days are long, long gone. Today, virtually all early gold that is capable of being encapsulated is now encased in slabs. There were holdouts in this area of the market who lasted longer than in the two categories mentioned above and for good (and bad) reasons. I can remember dealing with some old time collections as recently as the 1990's who felt that they knew more about early gold than PCGS and NGC did and, in a few cases, they were right. Also, lower grade early gold wasn't as expensive then as it is now and a raw problem-free 1810 half eagle wasn't looked at like a man with two heads might be today.

     The grading services have vastly improved their ability to grade early gold and most of the old time collectors who scoffed at slabs have passed away or are no longer active. Today's generation of early gold collectors and investors would just as soon eat dirt as they would buy any early gold coin unslabbed and they have come to rely on PCGS and NGC to help them grade these complicated issues. As a result, I'd have to estimate that at least 75-85% of all early gold is now encapsulated and I wouldn't be surprised if the actual number is as high as 90%.

    4.  Generic Gold

    When I speak of Generic Gold, I aam refering about coins such as common date With Motto Liberty Head half eagles and common St. Gaudens double eagles. Staggering numbers of these coins exist in the higher circulated grades and the lower Uncirculated grades and many of these have been graded by PCGS and NGC. If you look at population figures for coins like 1901-S eagles in MS62 to MS64 or 1927 Saints in MS62 to MS64, the numbers are pretty impressive.

     But I think there are still very large quantities of these coins that have not been sent in to PCGS and NGC. I know for a fact that there are at least six or seven American firms who import large amounts of United States gold coins from European and other overseas sources every month. While supplies from Europe ebb and flow, the quantities coming over every year are still immense; in the tens of thousands at the very least.

     So while there are hundreds and hundreds of thousands of generics in slabs, I think that the quantity of raw coins remains very large. I'm sort of guessing here but I wouldn't be surprised if the number of slabbed generic coins in slabs is only 50% of the total that have survived.

     5.  Miscellaneous

     As I mentioned above, one of the parameters of slabbing coins is the economics involved. If a coin is worth $400, it is less likely to be slabbed than if it is worth $3,000. But a reasonably interesting $400 coin, like an AU50 1851-O dollar is more likely to be slabbed than an uninteresting $400 gold coin like a common date $2.50 Indian in AU50. Becuase of this fact, I think there are still tens of thousands of cheap American gold coins which have yet to be slabbed although this number is diminishing over time due to the rise in gold prices and the demand for slabbed coins versus raw coins.

     There are still some non-gold series where lots of nice collector-grade coins have not been slabbed due mostly to collector preference. Examples of this include Large Cents, Seated Liberty coinage and Barber coinage in all denominations. This includes significant numbers of problem-free coins in the $100-2,500 price range in grades ranging from AG to AU.  You can still go to coin shows and find interesting raw coins like 1862-S half dollars in nice EF45 or 1874-CC trade dollars in VF30. While I don't see the end of the line--yet--for such coins, I can tell you that more and more are being "made" at PCGS and NGC.

     So what can we conclude from my percentage guesstimates regarding numbers of coins graded at the services?

     The most important conclusions is that, yes, sizable percentages of many United States gold coins have been encapsulated and due to this fact we can make statements about rarity--fundamental, absolute and condition--which really couldn't be made as recently as a decade ago.

     That said, there are still important and impressive individual coins "in the wild" and in  collections that are not widely known which always make me hesitate to make definitive statements along the line of "this is the finest known" or "this is the rarest Liberty Head half eagle in Uncirculated" (and believe me, I make more of these statements than the average coin dealer...) With the recent sale announcement of the Eric Newman collection, this reminded that important new discoveries (or re-discoveries) await us with each passing year.

     I want to know your thoughts on this subject. If you'd like, share them below or email me at dwn@ont.com.

Rosen Report Answers, 2013

Every year, I participate in the Rosen Report in which I (along with an impressive panel of fellow dealers) answer a series of timely and interesting questions which pertain to the rare coin market. This year's version of the report was interesting and I think that you will find my answers to be informative. Please note that all of the questions are as asked by Maurice Rosen; the answers are the exact ones which I gave to him. These answers were published in December 2012 and January 2013. Out of respect for the "freshness" of Mr. Rosen's newsletter, I waited a while to publish them.

1) Much has been said and written about the glut of off-grade and problem slabbed coins (due to sloppy grading, doctoring, and just very low-end coins for the grade). The comparison of those coins in the market versus truly high-quality, eye-appealing coins --the ones we constantly look to buy-- is striking.

 A)   Will we always have this glut?

     I’m guessing that in the 1880’s, the collectors of that era were complaining that there were a lot of not-very-nice coins around so this “complaint” is not new. Also, you have to realize that grading is a continuum. MS63 is actually a series of grades, ranging from 63.0 to 63.9. You never see the 63.7, 63.8 and 63.9 coins because they are being tried and re-tried for higher grades and the 63.5 and 63.6 coins are being sold by retailers like myself, Legend and Pinnacle to our best clients and don’t get offered to the average collector. So what most collectors see is the “dreck”—i.e., the 63.2 and 63.3 coins that just barely made it. It’s no great conspiracy and not at the fault of the services; it’s more the dynamics of the marketplace.

 B)   What would reduce or even eliminate it? And, what needs to be done to achieve that?

 You will never reduce grading mistakes by the services. The coins are being graded by humans and even the best grader gets a few things wrong every day. Multiple this by three graders, all making a few mistakes every day, and at the end of a decade or two of grading you have a few thousand egregious errors. A few things the services can do is 1) be more proactive about cleaning up their mistakes  2) use more outside consultants for esoteric coins that they don’t really understand  3) rotate the graders more frequently  4) shame the blatant doctors of coins by outing them.

 C)   Isn't it true that there's always been a glut of inferior slabbed coins but it is due to our heightened awareness to grading and improved tastes that the situation is magnified?

 I disagree with this. I think the number of dealers and collectors who really, truly know how to grade (like at the level of a Jason Carter or a Ryan Carroll) is always going to be very few, just like only a few athletes are ever going to be able to run like Usain Bolt or hit like Miguel Cabrera. The seeming “glut” of crappy coins is mostly because so few nice, fresh coins are available and the 10-15% of coins in any series that are “A” quality are so amazingly easy to sell right now, most collectors (and many dealers) never see them. Remember: even before third-party grading there were still a lot of schlocky coins in the market.

 2) Is it time to recognize Modern Coins as a more legitimate part of numismatics, therefore worthy of an investor's consideration? Or, do you regard those coins as largely a hustle of sorts, too speculative and over-exploited? And, whether you like Moderns or not, are there any you see that are worth investing in?

            I’m not a big fan of modern coins but I totally understand why people collect them and can understand their appeal, such as it is. I don’t think that modern coins in PR70 or MS70 are worth such big premiums but, then again, I think common date Walkers in MS68 or PR68 are bad deals as well.

            If I had to select an area in the modern coin market to invest in, it would be the Spouse coins. Some of these have very low mintages and if the market for these were created and nurtured by a legitimate modern coin dealership, I think they could see good long-term growth. My main caveats in modern coins are don’t overspend for quality and stay with low mintage issues.

 3) A) Of all worthy slabbable coins (pre-Moderns of sufficient economic value to be submitted) what percentage would you say have been slabbed? Indeed, have the services pretty much penetrated the universe of those coins?

            Not including Morgan Dollars and Saints (which still seem to exist in significant quantities as raw coins), I would say that over 75% of all the worthy coins have been slabbed. In the case of areas such as early gold or Proof gold, the percentage of slab-worthy coins that have been graded at least once by the services may be as high as 90%

  B) If so, what are the implications here?

            I can think of at least two major implications here. The first is that if NGC and PCGS clean up their population figures reasonably well, we can, for the first time, have a pretty good idea of the absolute rarity for many issues. The second implication is that really “fresh” coins (and by this I mean stuff that has never been to the services) are probably even rarer than we think they are. The next time a really great really fresh deal (like the remainder of the Bass collection or Eric Newman’s coins) come on the market, you will see a level of demand for cons like this unseen in numismatic history.

 4) What one series of reasonably moderate cost to complete (say, under $25,000) would you recommend an investor look into? Please explain your selection.

            $25,000 is a pretty limiting amount for working on a set but if this is all that I have to work with, I’m going with Proof 64 Barber Dimes. Let’s see…there are 24 different dates and at an average cost of around $750-1000 per coin (and no key dates with big premiums. That means a set of reasonably scarce coins with good eye appeal could be done well within budget. I would focus on nicely toned coins with cameo designation that were just a hairline or two away from grading higher. And at just a few hundred bucks more for 65’s, you could throw a few Gems into the set.

 5) The premiums for generic U.S. gold coins are coming back slightly from their lows of a year ago. A) Have the dynamics of this market changed so much that it is wishful thinking to expect premiums to expand much more? Why so?

     In the past, there were a number of large marketers who sold generic gold. Now they sell modern coins. The supply of generics has stayed constant but there is a pronounced lack of demand. It’s understandable why the marketers have punted generics from their programs. Other than Saints, most generics just don’t have a really compelling story. Modern coins can be sold in MS69/PR69 and MS70/PR70 grades, they have reasonably attractive designs and they have performed fairly well over the course of the last decade.

 B) If you think premiums can increase a lot, please explain why and what conditions would arise to bring that about. Also, please state which issues here offer the best investment potential.

            Unless the large marketers decide to re-focus on generics, I don’t see this market doing that well. This was always a very heavily manipulated market with periodic “shortages” created by the suppliers and market conditions generated by promotions. If a firm suddenly starts a promotion on, say Indian Head half eagles in MS64 and they need 500 coins, you’ll see prices shoot up. But the way the market is now, there is no real reason for most generics to increase in value. I don’t really care for the “investment potential” of generics but I do buy MS66 Saints for my personal holdings as I like the supply/demand ratio of these coins.

 6) There's talk about the government phasing out the use of coins and paper money as technology provides digital and other forms of payment.

A) How would such a development effect the coin market?

       My first reaction was if coins and paper money are phased out, this will add a flavor of “uniqueness” to our markets as we are suddenly dealing in obsolete products. But as I thought more about this, I thinking phasing out coins and paper money would harm the market(s). Even though no one searches their change for interesting coins anymore like we did as kids, getting a new generation of collectors interested in coins will be a lot harder if they don’t even know what a “coin” or a “bill” is.

 B) Would it open the door to certain oppressive government actions bearing down on the coin market?

     I think any of the (potential) oppressive government actions on coins in the future are going to be based on VAT’s or comprehensive interstate internet taxation.

7) Some folks have the feeling that the U.S. coin market has been so researched and exploited that every stone has been overturned and there are few, if any, areas left with standout potential.

 A) What are your thoughts here?

            If you think about it, the majority of the research on US coins has been focused on a few areas. There are plenty of series that have next to no research. And even areas that have specialized books about them often lack good general information. An example: if you collect bust half dollars, the Overton book is great. But it is solely about die varieties. What if you want basic information about, say, an 1812 half dollar and don’t care about die varieties. No one has ever written a good general collector’s guide to Bust Halves that discusses the rarity of the coins (date by date), how they should look, which coins are the finest known for each year, how to tell Proofs from business strikes, etc.

 B) What area or areas seem relatively unexploited to you?

            A few areas that come to mind are Proof bust silver coins (someone should write a book on these…), San Francisco Liberty Head gold (especially quarter eagles, half eagles and eagles), Philadelphia gold and early gold.

 C) Any favorite issues there?

            Just about any 100% no-questions-asked Proof bust silver or gold coin is a great value. Same goes for many pre-1878 San Francisco quarter eagles and half eagles in EF45 and better with original color and surfaces.

 8) The commem market (silver and gold) has been in the doghouse since the wild highs of 1989.

 A) What will it take to revive it?

            Commemoratives aren’t marketed properly. Sellers always describe coins with comments about how cheap they are relative to 1989. Who cares! That’s not a smart approach. They need to be marketed for their beauty, their relative scarcity and their collectability, not because they are thirty cents on the dollar when compared to 1989. If a large firm like Blanchard suddenly got interested in commems, the coins could increase in value. Perhaps a really good new how-to-collect book might help this series as well.

 B) What specific issues have noteworthy potential?

            I’ve always been fond of the issues from the 1910’s and 1920’s in MS65 and MS66. I also like coins with really nice color but not enough of a “wild” appearance that they bring huge premiums.

 9) Are Morgan and Peace $1s still a great choice for investment gains? Which issues do you like best.

            Scarcer date O mint dollars in MS65. For Peace Dollars, I like nearly any non-Philadelphia issue in MS65 with original surfaces.

 10) CAC coins:   A) Is the market warming more and more to CAC'd coins such that investors should focus almost exclusively on them?

            In my opinion, CAC has made extremely strong inroads into the high end of the coin market. If you look at auction results for CAC, they inevitably bring higher prices. When I have a CAC and non-CAC example of the same issue on my website, the CAC coin inevitably sells first. I don’t agree with the thought that a non-CAC coin is a “bad” coin but I feel that people who are buying coins primarily as an investment are probably better off focusing on CAC material, especially if they are not comfortable with their ability to distinguish an A coin from a B coin.

 B) In what areas do CAC'd coins have the greatest impact?

            The areas that CAC has made the greatest impact are the areas which the grading services are most inconsistent on: common date St. Gaudens double eagles in MS66 and MS67, better date 20^th century gold issues in MS65, Proof gold, high end early gold.

 C)  The least impact?

     Collector coins such as colonials, early copper, rare date bust and seated, EF-AU early gold, certain areas of the rare date gold market.

 11) Since 2001, gold has risen 7-fold from the 250's to as high as the 1900's. During these last 12 years the government has largely not changed the climate or rules under which transactions take place, nor taxes on or ownership of gold. Something tells me that the next multi-fold increase in gold's price will see the government taking a much more aggressive and oppressive role in the market. A) What are your thoughts here?

            As state and federal deficits increase, the government is going to have to get more create about producing revenue without raising taxes. I would imagine that large profit-taking in gold, should metal prices rise to, say, $3,000 per ounce, would put these gains on the radar for the government.

 B) How might the rare coin market behave with such heightened presence of the government in the gold market?

            For many collectors, one of the beauties about the coin market is that it remains essentially unregulated. Regulating it certainly won’t be a way to attract more people into the hobby.

 12) What's the one coin that could come onto the market that would cause the biggest splash in and out of the industry? Why so? (Examples: 1873S Seated $1, 1849 $20).

            The currently missing third known example of the 1854-S half eagle would be a pretty big deal for me or the second 1870-S three dollar that was supposedly placed in the mint cornerstone. But I think the coin that would actually cause the biggest splash would be an 1849 $20 that someone could own. That coin would bring a lot of money!!

 13) You have $1 million in fun money. What one coin or series would you buy to hold for the next ten years? Please explain your selection.

            Ah, the old million dollar fun money scenario… My answer would be predicated on what was available for sale at the time this money became available. If, for example, a fresh deal of early gold became available and I could spend the million dollars at an auction (and provide my client with fair value), I’d go in that direction. Or, if there was a great collection of Saints, I’d focus there. The main thing is that I would be looking for outstanding quality coins with great eye appeal and true overall rarity.

 14) Are generics dead? Are there any issues here that offer good value, if not speculative appeal for someone looking to amass a position?

            Generics aren’t necessarily dead but if you invest in them, you better have a way to market them or access to information about who is planning a big promotion. As an example, if a little birdy tells you that a TV shopping network is planning on promoting MS64 Morgans in a big way, then it might make sense to invest in these coins before prices go up. But that seems highly unrealistic for most collectors—even those with good connections

 15) Two investors come to you to assemble a portfolio to hold for the next 5 to 10 years. One has $25,000 to commit, the other $250,000. What would you put into each of their portfolios? Why make those picks?

            a)  $25,000 portfolio:  one each of the following:  Reduced Size Capped Bust Dime (1828-1837) in MS65 with CAC approval (around $10,000), No Motto Seated half Dollar in MS65 with CAC approval (around $7,500), Indian Head half eagle in MS65 with CAC approval (around $12,500). Yes, I realize that adds up to $30,000…

 b) $250,000 portfolio: one each of the following, most or all with CAC approval:  a nice MS65 Red and Brown Matron Head Large cent from the 1820’s or 1830’s, no 1820 (around $10,000), an MS64 Large Size Bust Quarter 1815-1828 (around $15,000), a true Gem MS65 Capped Bust Half Dollar 1807-1836 (around $10,000), an MS64+ No Motto Seated Liberty Silver Dollar, 1840-1865, (around $10,000). That would be a total of around 50k on a group of nice type coins. Combined with the 30k portfolio above, this would be around 80k on type coins

       Three Dollar Gold Piece, 1854-1889, an MS66 example (around $20,000), MS64 Classic Head Half Eagle, 1834-1838 ( around $20,000), No Motto Liberty Head half eagle, 1840-1865 in MS64 (around $15,000), a nice piece of Proof gold in PR64 or PR65 struck before 1900 and withy a mintage of less than 100 (around $35,000) and one really nice MS62 to MS63 Dahlonega quarter eagle or half eagle (around $20,000) That would be a total of around $110k+ on nice gold coins.

            One great $50,000 coin, preferably in gold. Maybe something like a finest known Liberty Head eagle or a rare date Saint (has to be CAC approved) or an important Type One or CC Liberty Head double eagle.

            The remaining 10k on hand selected MS65 Saints, all CAC approved.

   Do you have any comments or further questions about my Rosen Report 2013 answers? If so, please contact me via email at dwn@ont.com