If you are a reasonably long-term participant in the rare coin market, you may not have recognized the fact that the market has changed in a huge way in the last five to ten years. Walking around the floor at a show, you may not notice this (many of the same dealers are buying and selling coins) but the collectors and dealers who are really "in the know" are aware that things are irrefutably different.
Let's take a look at a few of the ways the rare coin market is far, far different in 2013 than it was in 2008 or 2003.
1. CAC becomes a force. Five or ten years ago, CAC didn't exist and the major services didn't have someone "checking their work." This led to some sloppy grading and clearly the existence of CAC has tightened standards. Does this mean the services (or CAC) are perfect? Most clearly not but I think grading is more consistent now than in the past and this is evidenced that fewer dealers are making a living solely as "breakout" specialists.
I see a big change in the market from another CAC-related perspective as well. In some series, if a coin doesn't have a CAC sticker, this can mean the kiss of death. I think this is an unfortunate circumstance and I'm guessing this wasn't something that John Albanese had in mind when he established CAC. But as of the middle of 2013, we can look at auction prices and dealer sales and gauge that a CAC sticker clearly increases liquidity and in some cases it increases prices by a significant amount.
2. Interesting coins outperform all others. In the rare date gold market, the coins which are clearly in the highest level of demand are those which are interesting to multiple groups of collectors. As an example, a coin like an 1855-O gold dollar has multiple levels of demand because it is a distinct one-year type coin while an 1850-O gold dollar (which is three times as rare in Uncirculated but priced at about one-third to one-half as much) is of interest mostly to a smaller group of specialists.
This isn't to say that people deliberately sought "boring" coins before. But in 2013 (and beyond) it seems clear to me that people want coins with an interesting story behind them.
Some examples of interesting branch mint gold coins include 1855-D gold dollars, 1861-D gold dollars and half eagles, 1839-O quarter eagles, 1854-D three dollars, 1838-C and 1838-D half eagles, 1838 eagles, 1861-S Paquet double eagles. Coins like this have at least a few things in common: they are either one-year types or first year of issues or they have very interesting back stories which appeal to a wide variety of collectors. I call these coins "multiple level of demand" issues and they are clearly in vogue right now.
3. Pricing Becomes Complicated. A decade ago, rare coin pricing was fairly simple. You had a coin--let's say an 1885-CC double eagle--and it was graded AU58 by PCGS. You looked at the Greysheet and saw that Bid was $10,000. The coin was pretty decent, it was a popular, low-mintage CC issue and, therefore, it was worth 10% over Bid. You priced it at $11,000 and if it didn't sell quickly, you lowered the price to $10,500. Simple.
But today, there are countless variations of 1885-CC double eagles. It could be a PCGS coin or an NGC coin. It could have a CAC sticker or not have a sticker. It could have a "+" designation or a "*" designation (or even both). It could be in an old green label holder. The possibilities are literally endless.
Suddenly, many significant coins have four, five, six or even more potential variations and just as many possibilities when it comes to pricing. The 1885-CC double eagle in AU58 could be worth $20,000 or it could be worth $25,000 or it could even be worth $30,000. And that's not taking into consideration the possibility that it's an upgradable coin and it is worth $35,000 or more.
Unfortunately, the Greysheet has not kept up with this widening range of prices. Today's collector has to be very nimble or very well-connected to know the price differences between a PCGS/CAC and an NGC/non-CAC coin in his series; especially if he specializes in something like St. Gaudens double eagleswhere the variation(s) in prices can be dramatic.
4. Every Picture Tells a Story. As I have written about before, the advent of the internet has made numismatics an increasingly visual hobby. With most collectors making their purchases solely based on images from dealer or auction websites, the visual appeal of a coin has become paramount. Unless a coin is very rare, in today's market it is visual appeal which sells a coin more than almost anything else.
This tends to be less true in the branch mint gold area than in silver coins where superb color can mean staggering premiums. But, as I have noted in the past, how a coin will look on my website once it has been imaged is a major consideration in the process I use to determine if I will or won't buy a coin.
Which brings us to the next point.
5. In Crust We Trust. After years and years of beating the "buy original coins" drum, it looks like many collectors of branch mint and early gold have begun to listen to me. This has been reinforced by the emergence of CAC (see above) who tends to appreciate originality and rewards coins which have not been dipped or processed.
The change of taste towards "dirty original gold" has no been without consequence(s). The first I've noticed is that both PCGS and NGC now sometimes over-reward originality. How ironic is this? For years, the services tacitly endorsed the dipping of coins to make them bright so that they would achieve the highest possible grade. By now, so many coins have been ruined by this that when a nice original AU50 is sent in, the chances are good that it will grade AU55 or even AU58 just because it has original skin.
Another consequence is that collectors who want original surfaced coins typically mistake so-so or ugly coins with some color for nice coins with really nice color. This is understandable. Let me give you example. At a recent show, a collector showed me a group of coins which he had purchased through auctions in the last three years. He wanted me to verify that they were all "crusty and original." The coins ranged from not even remotely original to reasonably original but were not attractive. I thought they were clearly nicer than the bright, dipped out junque which he might have bought a few years ago but he still didn't fully "get" the concept of crust. And I'm not sure many collectors--or dealers--do. And this is what, in my opinion, makes the whole 'dirty original gold" craze somewhat ironic.
6. True Rarity Becomes Appreciated. Because of the preponderance of numismatic information, collectors are a lot smarter in 2013 than they were in 2003. Many collectors have access to information which, a decade ago, was only accessible to real students of the hobby.
One consequence of this is that you don't have to "convince" collectors that a certain issue is rare. You can prove how rare a coin is by how often it does--or doesn't-- appear at auction and how high--or low--the populations are at PCGS and NGC.
This has made tastes change in recent years. As an example, I just sold a very, very cool San Francisco eagle which was one of the two or three finest known for the date. Ten years ago, I would have bought this coin and my reaction would have been "cool item but who the heck am I going to sell this to?" Cut forward to 2013 and not only did I pay a very strong price for the coin with no hesitation but my reaction was "cool item; I better not put it on my website because so many people will want this that I'm going to anger the collectors I don't call about it."
I see this trend intensifying in the coin market in the coming years. Whether you are spending $1,500 or $15,000 do you want to own a coin which is hard to find or one which is rare? And what if rarity can now be quantified due to the number of coins which have been graded by PCGS and NGC and the auction archives which Heritage and PCGS make readily available?
What are some of the recent trends in the coin market which you find interesting? Feel free to leave your comments about this topic in the space below or email me at firstname.lastname@example.org to continue this discussion.