The EEEES theory of coin collecting/investing has proven to be remarkably successful in the past five years. And what exactly does this acronym mean? It stands for “Easy Explanation Equals Easy Sales.” Yes, I know it sounds like something from a bad marketing seminar but it makes a lot of sense if you analyze its meaning. In the past five years, we have seen an influx of new collectors into the hobby. Many of these collectors have immediately started purchasing expensive, high end coins. But unlike their counterparts from past generations of numismatists, they had very little background, other than what they read on a few websites. For them, ease of understanding was critical in the decision to buy a specific coin.
And this is exactly why coins like High Reliefs and Stellas and $50 Panama-Pacific Rounds/Octagonals have become so popular in the past five years and risen dramatically in price. In a nutshell, coins like this are easily understood by both new buyers and new sellers. Putting it another way, if a coin can be easily explained by the new breed of Internet coin dealer, it is easy to sell. Because of EBay and the success of Internet coin auctions, many purchases have become impulsive. An impulsive coin purchase is much more likely to involve a coin that requires little analysis than one that takes a page of pontificating to explain.
The EEEES theory shapes many of my purchasing decisions. I am much more likely to purchase an 1838-D half eagle than an 1849-D half eagle because the former has a great story (first-year-of-issue and one year type) while the later has nothing especially remarkable about it.
I think that the market for certain “easily explained” coins has become a bit on the frothy side. As an example, prices for coins like 1911-D quarter eagles and 1909-O half eagles are hard to justify given the relative availability of these issues in most grades. But to the new generation of collectors, these are venerated key coins in popular series. To a collector who has only just become a serious buyer, the fact that a 1909-O half eagle in MS61 or MS62 has tripled in price in the past few years is not relevant as his point of reference about coins might only go back a few months.
I expect Easily Explained coins in all series to remain in the forefront of the market as long as it stays bullish. Some of today’s avid new buyers show no inclination to become well-read, complete numismatists and will, therefore, never be able to understand subtly rare coins. For better or worse, the demand for the 1838-D half eagle will continue to grow at a much stronger rate than for the 1849-D half eagle.