Market Premium Factor (MPF)

Although I can’t take credit for inventing the concept of Market Premium Factor (MPF), it is something that I have discussed before and find very interesting. The basic concept of MPF is that in a specific series of coins, certain dates trade for premiums over the common (or basal) issues. An interesting series to explore the concept of MPF is Indian Head eagles. In this series, basically any coin not dated 1926 or 1932 (the two basal issues) is considerably scarcer than a basal issue. However, until very recently most of these dates sold for little more (if any) than the two common issues. A date like the 1912 with a PCGS population of fewer than 500 in MS63 and fewer than 175 in MS64 and above did not command much of a premium over a 1932 with a population of over 10,000 in MS63 and over 5,000 in MS64 and above.

Why could dates like the 1910, 1910-D, 1911, 1912, 1914 and 1915 be purchased for virtually no premium over the common dates like the 1926 and 1932? Because until recently, the Indian Head eagle series was not seeing many collectors putting together date sets. These coins were trading primarily as type coins and this meant that no one really cared about what date they were purchasing.

The MPF for a series changes when it becomes popular. Suddenly, Indian Head eagles have become more popular. There are not necessarily a ton of new collectors putting complete sets together. But there is enough new interest in the series that even a neophyte can recognize the fact that a 1910-D eagle in MS64 is much scarcer than a 1932 in the same grade. When this occurs, the premium factor between the basal issues and the slightly scarcer issues increases. Suddenly a coin like the 1910-D eagle is now bringing 10-20% more than a 1932.

There are still a number of series that do not have fully developed MPF’s. In the St. Gaudens double eagle series, there are at least a dozen issues which sell for “type coin” prices which are considerably scarcer than the basal issues such as the 1924, 1925, 1926, 1927 and 1928.

For the savvy collector or investor a key to making a good return on your investment is to identify coins that are scarce but which do not sell for a significant premium. If and when this series becomes popular and collectors start paying attention to specific dates, you might well have some nice profits.