When Auction Records Don't Tell the Whole Story

I’ve discussed how using previous auction records can be an extremely valuable asset in determining the current value of a coin. But there are instances when previous records can be misleading and they can keep a collector from making an intelligent buying (or selling) decision. When I recently attended the Heritage pre-ANA Platinum Night Sale, I was bidding both for my own account and for a number of clients. One of the coins that a client of mine had a strong interest in was an 1855-D quarter eagle graded AU55 by PCGS. The coin was pedigreed to the North Georgia collection and it had been off the market since its last auction appearance all the way back in January 1999. This could easily be confirmed three ways: it was in an older style PCGS holder, there were no auction records for this specific coin in the last decade and the consignor had been actively buying key date quarter eagles during the 1999-2000 era and it was likely that he had purchased it back then.

The next step for me was to view the coin in person and I travelled to Dallas a few weeks before the sale to look at the lots. I liked the 1855-D quite a bit. It had attractive medium to deep reddish-gold color, a nice planchet and I thought it was a high end example of a date that is seldom found with good eye appeal. I called the client the next day and reported the good news.

We then needed to determine the coin’s value. My first reaction was to go to Heritage’s auction archives and look to see what the last couple of PCGS AU55 examples had brought. Here’s what I discovered:

In February 2009, a PCGS AU55 had sold for $12,650. The only other relevant record for a PCGS AU55 was in June 2007 when an example brought $14,375. Trends for this date in AU55 is $27,500 which I told the client I thought was on the high side but I also mentioned that I thought the prior two auction prices seemed very low.

My next step was to go back to the two Heritage sales that the 1855-D quarter eagles had appeared and read my viewing notes. I first went to the February 2009 catalog. According to my notes, I thought that the 1855-D in that sale was “recolored with a large obverse flaw at 12:00.” Given the fact that I had scratched a large “X” through the photo and wrote “YUCK” next to it, I assumed I wasn’t crazy about the coin. Then, I checked the June 2007 sale. Voila! It was the same coin and my reaction was equally as harsh.

Just for grins, I also checked the Heritage January 2006 catalog where there was another 1855-D quarter eagle in PCGS AU55. This one had sold for $18,975 and, guess what, it was the same coin. So not only had this coin dropped in price from close to $19,000 to just over $12,000 it also meant that the PCGS population of nine coins in this grade was probably inflated as well.

My client was interested in this information but he was even more interested in what I told him next. According to my notes, the North Georgia coin had brought $32,200 all the way back in 1999. Even more interesting was the fact that this coin was graded the same ten years ago, meaning that it hadn’t magically gradeflated from, say, an AU50 to an AU55 as have so many branch mint gold coins.

As I stated earlier, the crux of the issue was what to pay for this coin. Based solely on the auction records cited above, I would have stated in the $13,000-16,000 range. But as I just explained, these records were misleading because they all represented one coin and this specific coin is probably the world’s worst PCGS AU55 1855-D quarter eagle.

In the end, we wound-up purchasing the coin for $23,000. Compared to the $12,650 that the last 1855-D quarter eagle in PCGS AU55 this seems like a high price. But I don’t think it is. What the auction records didn’t explain was that the 1855-D is an extremely rare coin in properly graded AU55, it is essentially unavailable any finer (PCGS has graded just three above AU55) and a high end coin with great eye appeal for the issue and a good pedigree is worth a premium to a serious collector.

My client hasn’t seen this coin yet (I just shipped it yesterday and he should be looking at it about the time I finish this blog) but assuming he likes it as much as I do, the moral of the story is don’t let previous auction prices keep you from making intelligent numismatic decisions. I give this collector alot of credit for being smart enough to figure much of this out on his own without me having to hold his hand through every step of the process. A good collector gets a great coin to add to his impressive collection. Sometimes, things work out for the best...