One of the clear indicators that a market has graduated from an early stage to a later stage in its development is that liquidity spreads to all areas in the market; even those that were left behind in the early stages of the market. This was clearly the case in a market such as tech stocks in the late 1990’s. Is this case in the rare coin market? I do not think that there is a clear answer. I recently read a numismatic newsletter that stated that because of the fact that nearly all 18th and 20th century non-gold coinage had increased in value in the past five years, it was inevitable that weak areas like Seated and Barber coins would rise. I do not agree with this.
Gold coinage is a different market because of the huge rise of bullion prices in the past year. With gold having doubled in value from less than $300 an ounce to over $600, gold coins have seen a level of demand that is unparalleled since the late 1970’s/early 1980’s. At this point there are really no weak areas in the gold coin market because just about any coins that are round and gold have a strong intrinsic demand right now.
In the past few years, there have been some areas in the gold coin market that have been underperformers. These would include $5.00 and $10.00 Indians, Classic Head quarter eagles and half eagles, No Motto gold from Philadelphia and San Francisco gold coinage. For the most part these former weak sisters have seen stronger demand than I can recall in the past year. But how much of this is actual demand for these specific series and how much is gold-based demand?
In this day and age, many formerly weak series become stronger because of cunning promotions. Until recently, a nice AU55 No Motto half eagle or eagle from the Philadelphia mint was a very hard coin to sell because there was minimal demand. Today, the demand for such a coin is twofold: it is gold and, perhaps just as importantly, it is a coin that suddenly has a promotional apparatus supporting its market. I would contend that it is actually more significant that it is being promoted than anything else. Most of the new buyers of No Motto gold are not collecting this series because gold has doubled in value in the past year. They are collecting it because one or two major coin marketers have made a compelling case for the collectability of these coins.
The major reason why certain series continue to be slow performers in this strong coin market is because they are not being effectively promoted (I do not, by the way, consider promotion of coins to be a negative thing as it increases demand for many series that deserve to have more collector support). Seated and Barber coinage appear to be cheap and undervalued because no one is doing even basic promotion of these series. The same holds true with Peace Dollars and Silver Commemorative half dollars. The easiest way to make Peace Dollar prices increase is for new collectors to come into the market and for dealers to start actively buying and selling these coins. If a book on this series was to be published and collectors learned the ins and outs of each issue, you’d see prices rise almost immediately.