If you collect very rare or finest known coins, figuring out what to pay for an item that you need for your collection can be difficult. Here is a real-life example of how I came up with what I believe to be an accurate value for a one-of-a-kind coin. The coin that we are going to use as our Coin Pricing Lab Experiment is the Finest Known 1860-C half eagle; an item that my firm recently handled.
When analyzing any complicated, rare issue, there are at least four things that I give major consideration to:
1. Establishing rarity
2. Determining comparables
3. Gauging the depth of the market
4. How nice is the coin for the grade and for the issue
So let’s take the scenario that I am bidding on this 1860-C half eagle at auction (as opposed to selling it by private treaty) and assisting Collector X. The first thing that I am going to help him with is a basic understanding of the rarity of the issue.
According to the soon-to-be-released third edition of my book on Charlotte gold coinage, the 1860-C half eagle is a moderately scarce issue with an estimated 125-150 pieces known. My best estimate is that there are seven to eight properly graded Uncirculated examples with one in MS64 (the present example) as well as at least two or three in MS63. I would suggest to Collector X that he remember that with as many as three known in MS63, the chances are pretty good that at least one will magically transform into a second MS64 in the future. And should this happen—and his coin is no longer "population 1 with none better"-- it will lose value.
Most collectors eventually check out the PCGS and NGC population reports. As of April 2008, PCGS had graded a total of eleven 1860-C half eagles in Uncirculated while NGC had graded twenty-five (!) in Uncirculated for a combined total of thirty-six. Now, I would be quick to tell this collector that these figures are dramatically inflated by resubmissions and that virtually every 1860-C half eagle that I have seen in a PCGS or NGC slab below MS62 is debatable about whether or not it truly is Uncirculated. But there is no denying the fact that there are enough purported Uncirculated 1860-C half eagles out there to make this MS64 lose a bit of its luster. It is a scarce coin but not one that could be called a fundamental rarity as it is readily obtainable in circulated grades and even available in the lower Uncirculated grades from time to time.
In my new Charlotte book, I rank the 1860-C as the thirteenth rarest Charlotte half eagle in higher grades out of 24 issues. So, in my opinion, it does not get any extra "points" in regard to its contextual rarity. And there is nothing "sexy" or historically significant about the date. Unless Collector X is a Charlotte half eagle specialist who collects finest known pieces, this is not necessarily a coin that he absolutely has to have. On the other hand, it is very nice for the grade and it would make a great addition to his set. So I would suggest to the collector that he be reasonably aggressive in figuring a bid but not necessarily ultra-aggressive.
The second thing to consider is determine comparables and establish a baseline price. Since there has never been an MS64 1860-C half eagle sold at auction, we can’t just simply refer to the last auction price and go from there. In this case, what I would try to do to help the collector is to determine what a "generic" MS64 Charlotte half eagle is worth.
I recently sold two MS64 1852-C half eagles. This date is the most available Charlotte half eagle in MS64 so it would certainly qualify as a "generic" issue within the series. I sold the 1852-C half eagles in the $32,500-35,000 range. So, clearly, the 1860-C, which is a scarcer date than the 1852-C, is worth at least this much.
The next thing I would look at is what the 1860-C is worth in the next grade down. There is a fairly recent auction record for an 1860-C in MS63 that was sold by ANR in August 2006 when they auctioned a nice NGC MS63 for $25,300. I would then compare this number to the generic or baseline value for a common Charlotte half eagle in the same grade. I sold a pair of 1852-C half eagles in NGC MS63 in the last month or so for around $20,000. Using this information, I think it’s safe to say that the 1860-C in MS64 is worth approximately 20% more than a generic issue in this grade. So, at this point in the conversation, I’m thinking the coin would be worth around $42,000 (i.e., $35,000 times 1.20%).
The final things to consider are the external factors behind this coin’s valuation or what I refer to as "gauging the depth of the market." If a coin is part of a series that is avidly collected by date, the appearance of an important, finest known coin can throw pricing to the wind. As I mentioned above, the Charlotte half eagle series is reasonably popular with collectors but I do not know that many people are that concerned with owning the finest 1860-C. If this were a really popular issue like the 1838-C or 1861-C, that would be a totally different story. These two issues have multiple levels of demand and Charlotte collectors would be competing with type collectors and Civil war specialists, creating a much more active bidding environment.
Gauging the depth of the market is not as much of a no-brainer as you might think it is. As an example, in a recent Heritage sale, some previously unpopular Seated Liberty Proof issues from the 1840’s and 1850’s brought staggering world-record prices. Almost overnight, a few new collectors had decided to collect these coins and as a result, prices were around three times greater than what might have been expected. This does not appear to be the case for the 1860-C half eagle but it is important for Collector X and his advisor to know who the potential buyers are for this coin and to make sure that no one else is putting together a set of Finest Known Charlotte half eagles.
You may have noticed that over 1,000 words into this article I still have not mentioned published price guides in terms of determining the value of the MS64 1860-C half eagle. I have avoided mentioning Coin Dealer Newsletter and Coin Values for a good reason: when it comes to pricing coins that are not often traded, these sources are essentially worthless. CDN does not list a bid price for the 1860-C in any grade higher than MS62 (it even ignores the MS63 auction price from 2006 that I mentioned above...) so it is not helpful in pricing this date in MS64. Coin Values does list a value of $35,000 in MS63 (which is probably a pretty fair "retail price" for an 1860-C in this grade) but lists no price in MS64. With no published pricing information AT ALL this is why pricing coins like this is not easy; even for an advanced collector or knowledgeable dealer.
So, what do I think the 1860-C half eagle in NGC MS64 is worth? If this coin were offered to me at $35,000 I would consider it a great value and buy it without hesitation. At $40,000 I would still probably be a buyer although partially for the ego-message that any coin dealer gets from owning a Finest Known coin in a field in which he specializes. At $45,000 I would probably pass, as I couldn’t make any profit, but I would tell my client that it’s still a fair price for him to pay. At $50,000 I would definitely be out but would tell my client that he would be getting a heck of a coin albeit for a strong price. At anything over this, I’d tell my client that he was probably overpaying but would let him determine at what point he would back off.
Before closing, it is important to discuss how nice the coin is for the grade. If this coin were in, say, an old NGC "fatty" holder and I thought it was a virtual certainty to upgrade to an MS65 if resubmitted than much of what I have written above could be flushed down the Numismatic Sink. It’s hard enough to figure out values for accurately graded finest known coins; for undergraded ones it’s doubly hard. The figures that I listed in the paragraph above assume that the coin is a solid MS64. If the coin is an MS64.5 and I think it has a real chance to upgrade then I would have to add at least 20-30% (if not more) to the value ranges mentioned above.