What's Hot and What's Not: Spring 2011

One of the more popular entries in the DWN Blogospehere is the "Hot/Not" feature. Its been a while since I've written one of these, and with groundbreaking ideas not exactly teeming in my little coin brain right now, it seems as good a time as any to analyze which coins are in demand right now and which aren't. WHAT'S HOT

1. Virtually any coin that is either finest known or which appears as such according to the PCGS/NGC population figures.

There have been some really incredible auction results (and private sales) in the last few months involving United States gold coins that were "population one with none better." Obviously, there has always been a great level of demand for coins like this. But in the past the "make your mouth drop" prices tended to be for very actively collected areas like Carson City gold or New Orleans double eagles.

A recent market trend is for even esoteric coins that are indisputably great to bring big bucks. An obvious example is the $103,500 1862-S eagle that I blogged about recently. This is a coin that as recently as two years ago (or less) would have probably flown under the radar. Today nothing is "too" esoteric; as long as it is a nice coin and it has that all-important "pop top" feature going for it.

Will this continue? I see no reason why not. There is clearly a very strong ultra high-end segment of the market right now; investors and collectors who are seeking the best of the best and will pay virtually whatever it takes. And here's the rationale behind this: a really great finest known United States gold coin from the mid-19th century is still buy-able, from time to time, in the $50,000-100,000 range. Compare this to prices on great American art (or other collectibles) from the same era. Coins at the upper end of the market still make lots of sense when viewed from this perspective.

2. Rare Proof Gold

Another area that I've written about recently is rare Proof gold. By this I am generally referring to pre-1890 issues with mintage of fifty or less; more often than not in the eagle and double eagle denominations.

This is an area that appeals to well-heeled collectors and investors who are typically relatively new to numismatics. These coins are indisputably rare, tend to be visually impressive and are large in size; three perfect factors in determining their increased level of demand.

A coin like an 1870 double eagle in Proof was never "not hot." The fact that coins like this have actually become available in the last six months to a year is a factor in their record-setting prices at auction. A coin can't be "hot" if it is never available and before this recent mini-spate of high-profile Proof gold it had been a considerable amount of time before such coins were available.

3. Interesting Early Gold

If you are a collector of early gold, you've probably noticed a real drought of interesting pieces available in the last year of so.

This scenario is even worse at coin shows. I typically buy four or five interesting early gold coins at a major show. So far this year I've been nearly shut-out in my early gold buying at shows; even at such large events as FUN and Central States. Most of what I do see is either the same group of over-graded retreads that remain in stale inventories or semi-generic issues (1813 half eagles, 1803 eagles, etc) that just don't appeal to me unless they are fresh and lovely.

What's with this lack of product? I think it has to do with a couple of factors. First is the strength of the hands that the good stuff rests in right now. A lot of strong buyers focused on early gold during the 2005-2010 era and they aren't selling right now. Second is the fact that nice quality early gold is tougher to find than most people realize. Now I'm talking about 1821 half eagles and 1798/7 eagles here; I'm talking about relatively common coins like 1805 quarter eagles or 1803/2 half eagles. Crusty, eye-appealing and affordable gold is hard to find in any market and especially so in this quality and rarity-oriented era in which we collect.

If a sale of early gold that contained a few dozen really fresh, really appealing early gold coins were to occur (the early gold equivalent of the Miller sale held by Heritage at this year's FUN convention) I think you'd see crazy, crazy prices.

4. Solid Value Collector Coins

It doesn't matter if were talking rare date San Francisco half eagles in Fine to Very Fine or New Orleans eagles in Extremely Fine or crusty Dahlonega quarter eagles. If the coin is a solid value, if its priced in the $1,500-5,000 range and if it has something "special" about it (great visual appeal, estimated population of under 100 pieces, low mintage, etc.) it is in very high demand right now.

You'll notice that most of my first three "hot" series dealt with expensive to very expensive coins. While it is true that the very high end of the market is good right now, the same can be said with the true collector end of the market.

People are little less scared to spend money now than they were two or three years ago. I'm noticing that collectors who might have sat on the sidelines in 2009 and even 2010 are now returning to the market. But these same collectors are more particular with what they are buying.

I'm noticing that it has become harder and harder to find attractive, interesting coins in this price range. And this is even with me broadening my horizons and dealing in areas that I shunned in the past (Philadelphia and San Francisco issues come to mind here).

I'm going to limit the "hot" areas to four but there are other coins that seem really strong right now. These include but are not limited to Dahlonega quarter eagles and half eagles, Type One double eagles, Carson City double eales, rare date Liberty Head eagles and Civil War era gold.

WHAT'S NOT HOT

1. Off Quality Better Date Saints

I've discussed in detail in previous blogs as to why the St. Gaudens double eagle market has floundered in the past. Its most definitely in a floundering mode right now and the coins that seems to be in the least demand are the semi-keys in off grades. Examples of such coins would be a 1924-D in MS63 or a 1925-S in MS62.

Why are these coins that nobody wants right now? There are a host of reasons. These All these better dates are available in higher grades and with the exceptions of true rarities like the 1921, collectors don't want to settle for grades. Saints in MS62 and MS63 grades typically are not attractive and many of these coins are rubby "sliders" that have low-end eye appeal. And the populations of these faux better dates are high in these grades. A mintmarked Saint from the 1920's might have a population of well over 100 coins in the MS62 to MS63 range with another 50+ higher yet still be priced in the $5,000-15,000 range.

Unless promoted, I don't see the market for these coins getting better anytime soon.

2. Commemorative Gold

In nearly three decades of being a professional rare coin dealer, I can't recall having met anyone who actually collected gold commemoratives. I've looked at collections/holdings/portfolios that contained collections of gold commems but these were invariably sold as investments.

Every five years or so, someone promotes commemorative gold, makes a lot of money and escapes before the market deflates. I think its been at least five years since this area of the market has been promoted and I'd have to think these coins are overdue. That said, I personally hate them.

Why? Too small, too common, banal designs, no challenge for the collector; everything that as a numismatist I find boring in one small package. There are two notable exceptions: the Pan-Pac $50 Round and Octagonal issues. These seem as popular as ever and despite some drop in the price a few years ago I think these are a safe and solid "big ticket" item for the well-heeled investor.

3. Indian Head Quarter Eagles

As I've mentioned before, this series was "hot" for many years; mainly due to outstanding promotion(s) by a small group of marketers. For the most part, these firms have stopped selling Indian Head quarter eagles and there appears to be a glut of coins on the market.

Prices are down quite a bit in this series and I'm not sure if now might not be a good time for contrarians to take a position (at least a small one). If you could find real Gem common dates at current levels they seem like a fair value. The same might even hold true for the better dates (especially the 1914 and 1914-D) if you can find Gems with CAC stickers and great eye appeal.

The key 1911-D has taken quite a beating price-wise and bid has dropped down to $54,000. I'm guessing that a CAC-approved Gem would bring a lot more than this if one were available. I've mentioned before that I find this to be one of the most overpriced American coins of any date/size/shape but....

4. Off Quality Material

Looking through many cases and boxes at coin shows, I'm amazed at the large number of really awful coins that are still around. I almost never price this sludge but sometimes, just for grins, I'll pull out an especially nasty coin and ask for a price; just for educational purposes, of course. Sometimes, the answer sounds almost desperate: "I dunno; what will you pay?"

Since the advent of CAC and with the scrutiny given coin doctoring by the grading services, perceived quality has become fashionable among collectors. (Note that I say "perceived" since I think many collectors who think they are buying quality coins do not really know what a quality coin is). This has increased the demand for "A" quality coins and "B" quality to an extent while making "C" quality very illiquid; especially in the $5,000 and up category.

I see no change in this. Collectors will continue to seek nice (or at least nicer coins) and this will increase the spread between these and blatantly unoriginal, low end pieces.

Other areas in the market that seem "not hot" to me but which didn't make the List of Shame include PR70/MS70 moderns, generics, MS64 and MS65 Indian Head half eagles, many Indian Head eagles and faux-scarce date Type Three Liberty Head double eagles.