Rare Coin Market Retrospective: First Half of 2008

As the year races towards its half way mark, let’s step back and take a quick overview of what’s happened in the rare gold coin market so far in 2008 and what’s on tap in the coming months. Last year saw an almost unparalleled upwards spike in gold prices and, as a result, we saw levels for many generics that were hard to imagine. I remember wholesaling some very low end AU Saints at over $1,000 each and thinking “Jeez, this is a lot of money for junky Saints.”

Despite huge increases in commodities in 2008, the gold market has been weaker than what we saw in 2007. My guess is that we’ll see gold continue to hold in the $850-950 range but I wouldn’t be surprised if we saw some price increases as the election draws nearer.

The generic gold market is as weak right now as at any time I can recall. There is a lot of supply on the market and very little demand. There are exceptions to this rule, of course. CAC approved common date Saints in MS65 and better are very easy to sell and smaller denomination issues in MS63 and up have pockets of demand. But it appears to me that generics will stay weak for the immediate future.

The market for very rare United States gold coins has never been better. If you follow the top end of the market, you’ve probably noticed a scenario in which there are very few great coins available and lots of demand. Many of the really great six and seven figure rarities don’t trade at auction and are quietly placed by specialized dealers who have multiple collectors anxiously waiting to buy really great one-of-a-kind coins.

The market for “collector quality” gold coins is excellent as well. There is still plenty of demand for key date issues and coins in the $1,000-5,000 with good eye appeal and some “sizzle.”

The area of the market that I do see weakness in is the so-called “middle market.” By this, I mean coins in the $7,500-15,000 price range that do not have something special going for them. (In this case “special” has a lot of potential meanings: low mintage or low population, excellent eye appeal, interesting background history, etc.)

Some of the specific areas in the market that appear to be strong right now include the following: - Early Gold: The market for pre-1834 U.S. gold coins remains extremely strong. Buyers are more selective in mid-2008, however, than they were a year ago. Coins that have problems have to be sold at a discount in order to attract buyers. In 2007 many rare date early gold coins were impossible to locate at any price. An important collection became available at the Central States show and if any of the rarities from this set become available for resale it will be interesting to see what prices the coins bring. Additionally, Stack’s will be selling a major collection of early gold in June and many rare date pre-1834 issues will be available for the first time in a number of years.

- Carson City Gold: Without much fanfare, this has been one of the strongest areas in the market in 2008. Collectors are actively seeking high quality Carson City gold issues in all denominations. Coins that appear to be in most demand are PCGS graded examples that rank either as Finest Known or solidly in the Condition Census.

- Rare Date St. Gaudens Double Eagles: This was one of the least hot areas in the market during much of 2007 but it appears that the entrance of a few new collectors into this arena has turned the Saint market around. Fewer nice coins are being offered for sale as most of the excess material from the Morse collection has finally found new homes. As I’ve said many times before, all it takes to drive a market like this is two or three aggressive new buyers and I think you’ll see some strong activity in the rare date Saint market during the rest of 2008 and beyond.

- CAC Approved Gold: Due to the fact that a number of retailers are now exclusively selling CAC approved coins, it goes without saying that the demand level for such coins is reasonably strong. Just because a coin has a CAC sticker does not automatically make it worth significantly more than when it was non-stickered. But the CAC sticker does appear to increase the liquidity of the coin and this is going to prove interesting in some areas of the market that were formerly slow. Another thing I like about CAC is that it motivates dealers to buy coins that might have previously been out of their comfort range. As an example, I recently sold a small group of New Orleans eagles to a well-known retailer who, as far as I know, had never handled these items before. Increased liquidity is something that I think is good for everyone.

- Rarities and Trophy Coins: If you happened to see the prices realized for Contemporary Art at the recent Christie’s and Sotheby’s sales you’ve probably guessed that the extremely wealthy appear to be doing just fine in this precarious economy. This doesn’t really have a direct correlation to the coin market as the major art buyers at the contemporary sales probably don’t have a clue what a 1796 quarter eagle is. But, it does show that in nearly all collectibles markets right now there are very elite buyers who can afford the best and who are willing to pay seemingly out-of-sight levels for items that are truly exceptional.

There are two significant coin shows on the horizon (Long Beach and Baltimore) as well as a group of auctions (Superior, Goldberg and Heritage before or during Long Beach; Bowers and Merena at Baltimore and Stack’s a few weeks later) with some fresh, interesting material. I anticipate that these shows will be a bit stronger than usual and that some of the prices at these auctions will be stratospheric. After these two shows, we will probably see a bit of a lull in the market until ANA in late July/early August. This is typical and is mostly a result of people forgetting about coins for a month or two while they enjoy the summer.