Stacks Bowers auctions made numismatic history last night by selling a PCGS SP66 1794 silver dollar for $10,106,875. This amount is by far an auction record for a single coin and it is very significant for many reasons. And it's also time to fess up: I thought the coin would bring considerably less money than it did. Do I think this was a savvy purchase? Yes I do and I find some of the comments that I have read and heard about the sale to be amusing and poorly considered.
I didn't attend the auction in person but I've watched the on-line video of the auction and a potentially controversial moment occured when the sucessful bidder "jumped" the increment from $5.5 million to $8.5 million. It later turned out that this wasn't the result of the agent representing the interests of two collectors (the buyer, who is smart and experienced, was never going to be bidding for multiple clients on this one lot) but it was the decision of the buyer to induce a "shock and awe" response that would make the competition quickly fold.
So, think about this. A few weeks from now, no one is going to remember how the 1794 dollar was jumped from $5.5 million dollars or why it was jumped. There are going to remember what it sold for and that it was the first coin to ever sell for $10 million dollars or more. And the eventual new owner of the coin, in a few months or years? I guaranteee you he will care less about how it was jumped, if he knows at all.
Was this a good strategy? Its easy to be a Monday morning quarterback and over-analyze this move. Personally, I wouldn't have done it this way and it is possible that this decision cost the buyer some money. But here's my analysis and why, in the long run, I think that the act of buying the coin was a lot more important than what it actually sold for.
This coin was either going to be a sensational bargain (which is what I expected; something in the $5 million-6 million range was my pre-sale guesstimate) or it was going to be a home run. If it got anywhere close to the old auction record of $7,590,000 (set by the 1933 double eagle in July 2002) or the private treaty record of $7,850,000 (set by the same 1794 dollar a few years back) it literally had to leapfrog over this amount.
Let's say the coin was stalling at the 7 million dollar mark. If you were serious enough to be player at $7 million, you'd be crazy not to pay $8 million and immediately have the coin set the all-time record. But if you were at $8 million, why not pay $10 million? Yes, I know this sounds odd but hear me out.
When you are talking about really great collectibles items no one remembers what coin or what car or what painting is the second most expensive or the third most expensive. What people want to know is what is THE most expensive? What is the single "greatest" coin? While I do not personally think the 1794 dollar is the single "best" coin there is, it is the best that was available in late 2012/early 2013 and this is a period in which, in its short duration, we are seeing epic prices for the best of the best in all fields.
So put yourself in the buyers position. He is the owner of a firm which specializes in super high end rarities and in order to cement his position as the source for seven (or eight!) figure coins, he has to buy the 1794 dollar. And he has to pay a record price for it. But as a smart businessman, he knows that $10 million sounds a lot more robust than $8 million or even $9 million. If he wants to catch the attention of a hedge fund multi-billionaire, he is more likely to do it with a coin which is "the first 10 million dollar coin" than one which is the "first 8 million dollar coin."
So what impact is this likely to have on the coin market? Probably none in the near future. But I can see some ripples that will occur sooner than later.
- Stack's Bowers gains some strong momentum in the rare coin auction market. As recently as a few months ago, I would have expected Heritage to set the record for the highest priced coin and suddenly Heritage has to be thinking, "maybe we need to step up our game a little bit." Heritage is still the force to be reckoned with in the auction market but clearly, they can't just assume they are going to be getting all the big deals from here on out.
- I have always believed that the most valuable American coin is the Childs 1804 silver dollar graded PR68 by PCGS. This coin sold for $4.1 million in August 1999. I am not a great fan of 1804 dollars but I can make an easy case for it being the one coin that someone like Bill Gates would buy if he was going to buy just one coin. The Childs coin is the "best of the best" and I think that its suddenly a $15-20 million dollar coin, maybe even more.
- Gem early type is likely to see a shot in the arm from the sale of the 1794 dollar. If you own a nice fine 1796 dime, it isn't suddenly worth 10-20% more. But if you own a Gem 1795 half dollar or a superb 1799 dollar, you can make the case that your coin(s) seem cheap compared to the $10 million dollar 1794 which just sold. I'm thinking that all Gem/Superb early type in all metals just went up at least 10-20%, if not more.
- I was sort of surprised that all the players for the Specimen 1794 dollar were known collectors. Frankly, I thought there was a good chance that the buyer would be someone like the individual who bought the 1933 double eagle in 2002: a mystery man who had never bought another coin and who, it seems, have never again bought a coin. It will be interesting to see who the next owner of the 1794 dollar will be. If someone wants to start a great collection of early silver coins, in anticipation of the upcoming Newman sale(s), what better place to start than with the 1794 dollar?
- The next great trophy coin that will hit the market is the famous Walton specimen of the 1913 Nickel which Heritage is offering as part of the Central States sale this spring. Will it eclipse the $10 million dollar mark set by the 1794 dollar? I would guess not as it isn't a Gem coin like the 1794. But I'm thinking it will set a record price for the issue.
- You should be seeing a lot of feel-good stories about coin investments in the coming days and weeks and stories about the $10 million dollar 1794. I'm assuming that this story will get picked up by Forbes and by Bloomberg and that a few ultra-wealthy people could possibly have rare coins suddenly appear on their investment radar screens. And if you are reading this, Carlos Slim , I can be reached at firstname.lastname@example.org and am happy to discuss coins with you in English or Spanish!
My most heartfelt congratulations to the new owner of the 1794 dollar. Great purchase, Bruce, and one which puts you in the pantheon of the all-time great collectors. I also would like to congrulate Stacks Bowers and a great job of selling the 1794 dollar, from the cataloging to the marketing to making it through the nerve-wracking days leading up to the sale itself.