A few weeks ago, I published an article written by collector Robert Kanterman that discussed U.S. gold coins that he regarded as good values. Along with each of selections, I posted my comments. Some of them were in agreement with Robert, others were not. The response to this blog was exceptional and I believe it was among the most popular of the nearly 250 that I’ve written since I began this feature around two years ago.
Robert must have received a Big Box of Motivation for the holidays because he became inspired to write the natural counterpart to the last article: a feature on gold coins that he regards as being “overvalued.” Naturally, I am pleased to publish it and am responding with my comments for each of his selections.
One quick word before we begin. What does “overvalued” mean to the gold coin collector? There is no definite answer to this important question and I’m not 100% certain that if you asked this question to Robert and I independently if we’d agree. My perception is that an overvalued coin is an issue that has a pricing premium that, in the current market environment, is difficult to justify. This parameter is not indelible and it can change, given the conditions of the market and the circumstances of the individual collector.
And away we go....
RYK: Here are my 12 overvalued and/or overpriced rare date gold coins. I would only qualify this group of selections by saying that there is nothing inherently wrong with any of these coins (I have owned several in the past). I just do not agree with how the market values them. I will be interested in reading DW's rebuttals.
1. 1854 and 1855 Philadelphia Type II Gold Dollars, Especially in MS-62 and Higher
This is actually one of my favorite designs across the U.S. gold series, but just because I like the coin, does not mean I like the value it offers. The MS coins are hardly scarce, yet they sell for several thousand dollars and up. I personally have trouble believing that there are that many people who "need" high grade examples for a type set. I would be happy to settle for a nice AU-58 for under $1000 and use the difference somewhere else.
DW: It’s hard not to agree with RYK on this one. I also love the Type Two gold dollar. I love the design, dig the history and like the fact that it is a short-lived issue. But I have a very hard time justifying the current price levels for examples graded MS62 and higher; even though these levels are significantly reduced from past highs. Currently, a common date Type Two gold dollar (i.e., an 1854 or an 1855) is worth $17,000 in MS64 and around $40,000 in MS65. The current PCGS population figures for Type Two gold dollars are 418 in MS64, 87 in MS65 and another 28 in MS66 and above. Unless there are significantly more collectors assembling high grade gold type sets than I’m aware of, these price levels seem inflated. 2. 1840-D, 1841-D, and 1842-D Quarter Eagles
After the 1855-D and 1856-D quarter eagles, this trio is next in line for scarcity, filling out the top five. Perhaps unfairly, I tend to group these together when considering them, but I see them with about the same frequency as one another, and there is a significant rise in availability of Dahlonega quarter eagles after this date. In AU-55, these are $12,000-20,000 coins, which seem like a lot for a series that has as limited an audience as this one does.
DW: I don’t totally agree with RYK on this selection. If you are a date collector of Dahlonega quarter eagles, these are important issues (if you are a type collector, these issues, I realize, are meaningless). Something that’s hurt the reputation of the 1840-D, 1841-D and 1842-D quarter eagles is that there are a lot of lousy examples in third-party holders. In properly graded EF and better, all three are genuinely scarce and in AU55 or better they are very rare. Given the value levels in this series, I don’t think that any of the three are overvalued.
3. So-Called Better Date Quarter Eagles After 1885
When one looks at the Redbook, there is a string of quarter eagles with very low mintages in the later years of the series. I think that these are often sold to collectors as better dates, but the auction records and the frequency with which these are sold do not support this. With the exception of the 1881 and the 1885, it's probably best to put away the books and consider these as generics.
DW: I agree but not with a lot of enthusiasm. The dates that Robert refers to are a classic example of Market Premium Factor. In a good market, an issue like the 1886 or 1894 gets a significant premium due to its low mintage and relatively small PCGS/NGC population figure(s). In a weaker market, this MPF tends to evaporate and a coin that once sold for a 10-30% premium becomes obtainable at levels closer to common date status. Given the fact that very few people collect late date Liberty Head quarter eagles by date, most of these probably do not merit a premium. In higher grades, however, certain of these are genuinely rare and I would be happy to buy all of RYK’s 1894 quarter eagles in MS64 or MS65 for common date prices!
4. 1911-D $2.50
The 1911-D quarter eagle is the most overrated and overpriced dated gold coin in the US series, bar none. I understand the argument that it is the key date of the most collectible gold series, but I have a very hard time believing that there are enough collectors of the series to support the obscene price of the fairly common issue. (I was going to add that it is the 09-S VDB Cent of U.S. gold coins, but I think that it would give this coin more credibility than it deserves.)
DW: Ouch! Do you have the feeling that Robert isn’t going to be inviting a 1911-D quarter eagle to the prom? But who am I to argue, given the fact that I’ve already accused the 1911-D of being one of the leading Faux Rarities in all of American Numismatics. This is clearly one key date that is priced too high and I would not be surprised to see its price plummet in the coming months. At least until the next time the Indian Head quarter eagle series gets (re)promoted...
5. 1857-S $3 I must admit that I was struggling to pick a selection from the $3 gold series, not because these coins are all undervalued, but because so few stand out from the pack. I chose this issue because I felt that the premium attached to this issue for being a branch mint issue seems out of proportion to its actual scarcity. Stated more succinctly, it's twice as common as the historic 1865 $3 (one of the keys to the series), yet sells for about the same price in AU-55. Look yourself at the population spreads and accompanying prices on the PCGS site, and you will see exactly what I mean.
DW: Here’s another issue which I am in partial agreement with the Good Doctor. (I’ve always wanted to write the expression “the Good Doctor” in a blog!) When you compare it to the 1865, the 1857-S is an overvalued issue but this isn’t totally fair because the 1865 is probably the most undervalued coin in the whole Three Dollar series. Just as with the 1840-D/1841-D/1842-D quarter eagles, the population figures for the 1857-S don’t tell the complete story. Most every 1857-S I see in AU55 is (cough, cough) “enthusiastically graded” and choice, crusty examples in EF45 and higher are awfully scarce. If I had to pick an overvalued issue in the Three Dollar series, I’d select the 1854-O or the 1885. But that’s another story. Or another blog.
6. 1879 Flowing Hair Stella $4 This is a coin that I dreamed of owning as a young collector and one that owes its popularity and high price to its capricious inclusion in the Redbook. There are four offered in the upcoming FUN sale, and I have long said that you can't swing a dead cat at a major show without hitting at least a couple of these. These days, $150,000 buys an ugly, much-too-bright Stella. So much for my dream coin.
DW: The 1879 Flowing Hair Stella was one of my primary “faux rarities” in my infamous blog of a few months ago, so no one is going to be surprised when I say that I agree fully with RYK on this one. Prices on this issue are going to drop in the coming months and it will be interesting to see where they settle. Maybe RYK will be able to afford his “dream coin” after all!
7. 1842-C Small Date $5
I think that Doug has commented on this in the past, and as a devotee of the southern branch mint $5's, this issue always stood out to me as one that was more common than believed and consistently overpriced. When I was active in C and D $5's, the ones that were on the market seemed to stay on the market a very long time (or jump from auction to auction), so I think that the collector market agrees with me.
DW: I still regard this as a rare date. The problem with the 1842-C Small Date, however, is the fact that not everyone regards it as essential for “completeness” in the Charlotte half eagle series. Another problem is that Trends values are way too high for the 1842-C Small Date. This is compounded by the fact that many of the AU examples in third-party holders are pretty gnarly. As a value buyer, I’d still give strong consideration to a crisp, crusty EF example but I’d pass on an AU until levels come down.
8. 1860-D $5 For some reason, the price guides have always treated this Dahlonega $5 as a better date. Doug ranks it #16 out of 26 Dahlonega $5's in overall scarcity (I rank it 17th), and it warrants no premium over the "common" Dahlonega $5 (i.e. 44-D, 45-D, 47-D, etc.). There is no logical reason why this coin is priced as a better date among Dahlonega half eagles.
DW: I can’t argue with this choice. This issue somehow started selling for a premium a few years ago despite the fact it is no rarer than the 1858-D or 1859-D. I’m not sure that I’d single it out as one of Baker’s Dozen most overvalued U.S. coins but I do think it should be priced as a common date.
9. 1799 $10 This is the most common 18th century U.S. gold coin with large numbers in PCGS and NGC holders and large numbers in lower tier holders and raw (or raw equivalent). They are big and beautiful coins, but they are everywhere. $30,000 for an AU-55 seems like a lot of money when a considerably more scarce 1799 $5 is about half the price in the same grade.
DW: I strongly agree with this choice despite the fact that I really like everything about the 1799 (except its current market valuation). I can remember not so long ago when a nice fresh AU 1799 eagle was an easy coin to find at $13,000-15,000. Today, they are double this amount and the typical coin is apt to be processed and unappealing. If you really want to own a 1799 eagle (and I think a nice early ten is an integral part to any potential collection of U.S. gold) I’d probably wait a while and see if prices retreat back to the levels of five-seven years ago.
10. 1851-O and 1852-O $20 Several years ago, I thought these were really good values, when they could be purchased for a small premium over the majority of the Philadelphia Type I $20's. At $5,000 or so for an AU-50, when a more scarce Philly issue like an 1855 sells for about one-third of the price and a considerably more historic and scarce 54-S sells for about $3,000, the value of these two is no longer apparent.
DW: I have mixed feelings on this choice. Having very much helped to create the market for Type One New Orleans double eagles, I am pretty stunned to see nothing-special examples of the 1851-O and 1852-O selling for $5,000-10,000. This does seem like a lot of money for nothing all that special. In the defense of these two dates, remember that they are the most available double eagles from this popular mint and there is very strong collector demand for said coins. But I do agree with Robert that your $3,000 is better spent on a nice 1855.
11. High Relief Saint The High Relief Saint is arguably the most beautiful U.S. coin (gold or otherwise) ever struck by the U.S. Mint. One can also make the argument that based on its availability that it is significantly overpriced. I would love to own one but not at these levels.
DW: Agreed. Next....
12. Hoarded 1920's Branch Mint Saints I was discussing the possible auction purchase of a 1920's branch mint Saint with a wise coin dealer (who happens to be a specialist in rare date gold) when he turned to me and said, "You have to be careful with these hoard dates—the ones from the 1920's that are being slowly released into the market." He then rattled off a few of these dates. Sure enough, when one tracks the auction records for these, there appear to be several dates undergoing quiet distribution at prices that are not supported by their level of availability.
DW: I’m going to waffle a bit on my answer to this one, even though I am (I think...) the supposedly wise coin dealer who made the comment cited above. I do think you have to be careful buying many of the mintmarked Saints from the 1920’s. You have to be careful for three reasons. The first is that some dates do exist in hoard quantity and it’s important to pay careful attention to the PCGS/NGC population figures. Secondly, the quality of these coins is all over the map. I’ve seen 1926-S double eagles in MS65 holders that were true Gems and I’ve seen 1926-S double eagles in MS65 holders that I wouldn’t break out of an MS64 holder. Unless you are an expert grader, you need to work with an expert in this area. Finally, the market for dated Saints can change quickly based on the number of active collectors. What seems undervalued today can seem overvalued in a few months (and vice-versa) if the market loses (or gains) participants in the high-end arena.
Bonus: Anything Overgraded, Especially XF coins, dipped and in AU Holders It goes without saying that processed and/or overgraded coins are generally not a good buy, especially when they are premium priced. That said, I am going to be a bit of a contrarian. There may be opportunities that arise when the collector can recognize the overgraded coin and pay the appropriate price while others simply pass because the coin is overgraded. One of my best acquisitions was made precisely under these circumstances.
DW: I disagree with Robert here that “opportunities may arise” when it comes to buying overgraded coins and paying the appropriate price. I’m not sure why you’d ever want to buy an overgraded coin. But if a dealer will sell you an EF45 in an AU50 holder for an EF45 price, then I guess this makes sense (huh??)
Bonus II: Many Shipwreck Coins, Especially 1857-S SSCA $20's For the sake of this discussion, let's limit our focus to the Brother Jonathon, the S.S. Central America, and the S.S. Republic coins. I am a big fan of shipwreck gold coins—I love the history, the exploration, the retrieval, and the science of conservation. I think that there is nothing more fascinating than holding a coin in your hand that sank to the bottom of the ocean in a storm 150 years ago, was found buried in sand in deep water 145 years later, and conserved to look like it did the day it left the Mint. However, the shipwreck premium, in many cases, is well beyond reason. I will concede that for some better dates, there is some logic to the shipwreck premium, but certainly not for the 1857-S $20 from the S.S. Central America. These are readily available in quantity in any major auction or coin show.
DW: In theory, Robert is right. What he doesn’t realize is that there are a number of large retailers who can sell the heck out of these shipwreck coins and that the demand is generally well in tune with the supply. While I agree with Robert that the price levels seem out-of-whack with the populations, what he needs to realize is that these shipwreck coins are, in a way, a distinct “mini-market” within the broader market. The history and neatness factor of these shipwreck double eagles makes them unfair to compare with other, less active segments of the coin market.
So there you have it: the Numismatic Dan Ackroyd and Jane Curtin of this generation (for those of you too young to get this reference, look it up online) have, I hope, given you plenty of numismagrist to chew on this holiday season.