Hunting For Value In Today's Rare Coin Market

As we roll towards the mid-way point of the numismatic year, this is a good time to step back for a second and reflect on value. The Numismatic Prognostications of late 2008/early 2009 have not proven as dire as first thought (at least not yet...) but there has still been quite a bit of shake-out in the coin market. For the collector who is a stickler for good value, does this represent a good time to jump into the market and pursue some of the bellwether items that are standards in any collection? Let’s take a look at a few of these and see if they are good values at current levels or if the collector should ride the market out and take a “wait and see” approach.

The first coin I’d like to look at is a 1795 half eagle graded AU55. The 1795 half eagle is a very popular issue due to its status as one of the two first gold coins struck by the United States mint. It is scarce but not unobtainable and it is priced at a level that many collectors can (still) afford. The current value of an average quality 1795 half eagle in AU55 is around $40,000. Last year, examples consistently traded in the $45,000-50,000 and at the peak of the market in 2007 they hit the $50,000-55,000 mark.

Now, let’s look back a few years. What were 1795 half eagles in AU55 worth five or six years ago? As I recall, it was possible to buy a nice, solidly graded example for around $25,000-30,000. My gut feeling tells me that it’s not likely that we’ll see these levels again for this coin but that a dip down to around $35,000 might be possible this year, especially for examples that are low-end and unoriginal.

In my opinion, at current levels (give or take 5-10% on the downside or upside), the 1795 half eagle is a pretty good value in AU55. But I’d be very picky right now. The last three or four examples that I have seen in AU55 holders have been fairly unattractive. A choice, lustrous piece with good eye appeal and nice color is hard to find at the new levels and I think it’s a solid value.

How about the Big Brother of the 1795 half eagle: the eagle from this year? I personally love 1795 eagles. It’s a beautifully designed coin, it’s historic, it’s scarce but not to the point of being esoteric (as are some of the rare date early eagles of this design) and it’s an issue that has been in demand since the early days of coin collecting.

Prices levels for this issue in AU55 have held up a little better than they have for the similarly dated half eagles. I haven’t handled an AU55 in a few months but I’m guessing that they are worth around $50,000-55,000 right now. Last year, examples traded in the $55,000-60,000 range and at the peak of the market in 2007, I traded at least three of them in the $65,000-70,000 range.

Looking back a few years, 1795 eagles in AU55 were trading for around $35,000-40,000. If I had to guess what the current “basal value” for this issue is, I’d say around $45,000. At this level, I have to think there are a lot of dealers who would jump in, even for coins that weren’t especially high end.

In my opinion, a nice, choice 1795 eagle at around $50,000 is very good value. Again, I’d be picky if I were buying one. I’d spend a few extra thousand dollars and wait for an example that was as original as possible.

What about High Reliefs? As you might know, I’m not a huge fan of High Relief double eagles from the standpoint of value. But I do love the design and if I were a collector I can’t imagine not owning a nice MS64 example at least once during my collecting career.

If you shop around, I think you should be able to buy a decent non-CAC quality MS64 for around $26,000-28,000. These were worth around $32,000-34,000 a year ago and at the peak of the market in 2007 I can recall seeing examples trade in the $36,000-38,000 range. Around five or six years ago, as the Great Bull Market in coins was beginning, MS64 High Reliefs were available in the $22,000-24,000 range.

These numbers are sort of surprising to me. Given the near-ubiquity of this coin in this grade (PCGS alone has graded over 1,200 in MS64) I would have personally expected it to have dropped more than it has so far. Many collectors are not aware of the fact that some of the dealers who were the biggest two-way market-makers in High Reliefs have cut back their buying due to cash-flow constraints. Given these factors, I’m impressed that MS64 High Reliefs have only dropped 15-20% since last year. My gut feeling is that they could drop another 10-20% but I don’t see them getting much cheaper than the low 20’s in MS64. At this level, I would have to think that they are a “safe” purchase.

Let’s look at one last item. How about something that straddles the line between “generic” and “rare coin?” I’m thinking Three Dollar Gold and, more specifically, I’m thinking an 1878 $3.00 in MS64.

If you follow the generic market, you probably are aware that Three Dollar Gold is not in demand right now. I would term this series as “cold” and it might even be approaching “glacial.” With a little price shopping and comparing various dealers’ inventories, you should be able to buy an MS64 in the $6,500-7,500 range. These were worth $8,500-9,500 a year ago. The peak of the market for common date MS64 Three Dollar gold was in late 2005/early 2006 when these were being promoted and they got as high as $12,000-14,000 in MS64. Going back to the beginning of the bull market, MS64 Threes were selling for $5,500-6,000.

I’d like to tell you that I thought MS64 Threes were a great value right now because I do think that they are cheap. But the problem with this series is ample supply and almost no current demand. Unless someone starts promoting Threes again, I could see MS64’s drop down to the $5,000-$5,500 range. So unless you really need one for a type set, I’d suggest waiting a while and letting them get cheaper.

"Faux Rarities"

One of the ways to determine the strength of the rare coin market is to look at the pricing of coins that I like to call “Faux Rarities.” A Faux Rarity is a coin that, despite a high valuation, is relatively common. Three examples of Faux Rarities are 1879 Flowing Hair Stellas, high grade St. Gaudens High Reliefs and Panama-Pacific Exposition Octagonal $50 gold pieces. It is my opinion that once coins like this start decreasing in price, the market is weakening. Despite the fact that it is technically a pattern, the 1879 Flowing Hair Stella is still collected as a regular issue and this has helped to make it a far more valuable item than if it were regarded solely as a pattern.

An estimated 425 examples were produced but I believe this number is too low and does not factor in Restrikes that were produced later. There appear to be at least 400-500 examples known in grades that range from Damaged Very Fine to Superb Gem Proof. Stellas are most often seen in Proof-63 to Proof-65 and it is hard for me to consider them truly rare when they seem to be available in quantity in every major auction; not to mention in the cases of a number of dealers at major shows.

If you purchased a Gem Proof Stella back in 2000 (at the beginning of the current bull market in rare coins) you probably paid $100,000 or so. If you were a bit later to the party (say 2003 or 2004), a similar coin would have cost you around $200,000. Today, the same quality Stella (graded PR66) might cost as much as $300,000. The problem with the PR66 Stella market is that, due to gradeflation, a PR66 now has a combined PCGS/NGC population that is north of fifty coins. A second thing to consider is that most of the Stellas in today’s PR66 holders have been conserved; unlike the Gems back at the beginning of the decade that tended to be original and very attractive.

I regard the St. Gaudens High Relief in MS66 as probably the ultimate Faux Rarity. Yes, this is a beautiful coin and, yes, it is an historic issue. But it appears to me that as much as 90% of the original mintage still exists and most remaining High Reliefs tend to be very choice.

In 2000, I can remember selling MS66 High Reliefs for around $40,000-45,000. By 2004, levels had risen to $70,000. Today, a nice MS66 will cost the collector around $100,000 or possibly a bit more. Considering the fact that PCGS and NGC have a combined population of 180 High Reliefs in MS66 (plus an additional fifty-one in grades higher than this) it is pretty difficult for me to say with a straight face that this is a “rare coin.” It has been brilliantly promoted but I doubt this issue can sustain enough demand to continue to appreciate in price.

Another classic Faux Rarity is the massive 1915-S $50 Panama-Pacific Octagonal. A total of 645 examples were produced and it appears that virtually all of the original mintage still exists. When the gold commemorative series is popular, there is legitimate collector demand for this issue. But gold commemoratives have been as a dead as a doorknob for a number of years so this level of demand tends to be more artificial. This, I believe, is a characteristic of all Faux Rarities.

Despite an apparent lack of specialized collector demand for this issue, it has been well-promoted during the last few years and Octagonals sell easily at coin shows and auctions. An MS65 example is currently valued at around $125,000, which is an impressive gain over the $100,000 or so it was worth a year or two ago. Five to seven years ago, if you could find an MS65 Octagonal (it is only in the last few years that PCGS started grading MS65’s of this design with any regularity; back in the day, virtually all Gem quality examples were graded MS64) it would have set you back $50,000.

As I mentioned above, I think that these Faux Rarities represent a sort of harbinger for the overall state of the high end of the coin market. When these issues begin to free fall in price (which I think is inevitable given how much they have risen in price in five years) this could well be a sign that the market as a whole is ready to begin a correction. Will truly rare coins get dragged down along with these Faux Rarities? I’m not sure. In the past they have but it appears to me that the market has enough depth this time around that perhaps the Drag Down Effect will not be as strong this time around.

The Ten Coolest United States Coins Revisited

In June 2000, I wrote an article entitled “The Ten Coolest United States Coins.” Let’s say you were a true Douglas Winter Numismatics cultist and you had decided to follow my advice to the letter. How would your seven year investment have performed? Are there any coins I would have deleted from this list? Some analysis and random thoughts regarding these ten coins follows. In 2000, I suggested purchasing an example of this popular, historic issue in Choice About Uncirculated and stated that an example would cost around $10,000. I think this amount represented a typo as, even back then, a Continental Dollar in AU would have cost at least twice the amount I listed.

My decision to include this coin was prescient, to say the least. This has proven to be among the most popular and in-demand early American issues in the last seven years. And how can it not have been? This issue has everything going for it: size, interesting history, unique design and the magical 1776 date.

Today, a nice AU 1776 Continental Dollar will probably cost in the area of $60,000. And if you had bought a really nice AU55 to AU58 back in 2000, the chances are better than even that this coin would be regarded as an MS61 today with an estimated value closer to six figures. Clearly, this would have been a very good purchase.

I. 1776 Continental Dollar

This is not a regular issue coin but, rather, a proposed or speculative issue. Varieties are known in silver, pewter and brass and with different spellings of the word CURRENCY. For this set, I would suggest a pewter piece with the spelling "CURENCY" and the lack of the designers initials (represented on this coin as "EG FECIT," which is believed to signify that the design was by Elisha Gallaudet).

It is probable that these coins did circulate in colonial America and that they did have a recognized value. This fact makes them a legitimate candidate for the first "dollar" struck in this country as well as the largest coin, in terms of size, issued prior to the establishment of the United States. The magical date 1776 makes them even more desirable, in my opinion. And, finally, the charming design on the reverse (featuring thirteen interlinked rings with the name of each colony and symbolizing unity) is believed to have been suggested by Benjamin Franklin.

For this set, I would opt for a very slightly worn piece; perhaps in the About Uncirculated-55 to 58 range. I like the idea that the coin saw some light circulation during the colonial era but would want it to be lustrous and well struck. Such a coin would cost $7,500-$10,000; making it an exceptional value for such an incredibly historic issue.

II. 1792 Half Disme

This is another coin that seemed much undervalued to me back in 2000. I like this issue for many of the same reasons I mentioned above for the Continental Dollar: great story, interesting design and fascinating history. In 2000 I suggested purchasing a nice AU example and felt it would cost around $10,000-15,000. If you had been able to find a nice half disme back then, you probably would have been able to buy it at the high end of my suggested range.

As with most early coins, this is an issue that has performed fantastically since 2000.

If you can find a good looking AU55 to AU58 half disme (and this will be hard as most real AU coins are now in MS61 and MS62 holders) you are probably going to have to pay around $100,000 for this coin. Even an example which looks like its been run over by a train is going to cost in the mid-five figures.

Without patting myself on the back too much, I’d have to say that this choice was a home run. Of course, I wasn’t smart enough to listen to myself and actually put away any nice half dismes...

III. 1793 Chain Cent

There aren’t all that many coins left that still give me a tingle in the spine when I buy one, but Chain Cents qualify. I love the design and history of these coins and admire the fact that they have been coveted by collectors since the late 1850’s.

In 2000 I recommended buying an EF or an AU Chain Cent and felt that it would have cost in the area of $20,000 to $45,000. It wouldn’t have been easy to find a decent looking example but with some searching you might have been able to buy one with good detail and reasonably choice surfaces.

Today, Chain Cents are not only nearly impossible to find in grades above VF20, they are just about the most overgraded type I have seen in third-party holders. Coins that I personally grade Fine-12 are housed in EF-40 holders and both services seem to conveniently overlook the fact that coins in EF holders are riddled with problems.

Assuming you could find a decent coin in 2007, you’d be looking at spending $60,000-80,000 plus for an EF and at least $100,000 for an AU.

This was a good choice but in retrospect I think I might have selected a 1793 Liberty Cap instead. But, as I recall, I didn’t choose this type in 2000 because I thought it would be impossible to find one that I liked even back then.

IV. 1794 Silver Dollar

This is the first and largest United States silver coin. Any well-heeled collector who couldn’t be sold on the desirability of this coin back in 2000 had to truly have his head in the sand.

In my 2000 article I suggested a nice EF example of this coin and that such a piece might be available in the $75,000-90,000 range. This value range might have been just a touch low and I’m guessing that if anyone did take my advice, they probably had to pay closer to $100,000.

Regardless of what this theoretical collector paid, if he did buy a 1794 dollar, he did very, very well. Early dollars caught fire a few years ago and the 1794 proved to be the ultimate trophy coin in the early dollar series.

A nice EF 1794 dollar today is worth $250,000 to $300,000. Any significant investment made in early dollars around 2000 would have done fantastically well seven years later but the 1794 is the one issue which I believe will continue to show the greatest strength in the future.

V. 1795 Eagle

I selected this coin for my group of 10 because it is the first United States gold coin and it is the sort of big, neat, old gold coin that new and old collectors alike seem to love. Looking back at this choice, I might have changed it to a 1796 quarter eagle or another 18th century issue.

In 2000, a nice About Uncirculated 1795 eagle was available for around $30,000-35,000. Such a coin would have graded AU53 to AU55 (and would grade AU55 to AU58 in today’s looser environment). Today, the same sort of coin would be priced at around $80,000-90,000; possibly a bit more if the coin was original and had nice eye appeal.

I am not as enthusiastic about this issue today as I was seven years ago. I think at close to $100,000 the 1795 eagle in AU is pretty pricey, given the fact that it still somewhat available. More importantly, most pieces in AU holders are really low end for the grade.

Still, a rise in value from $35,000 or so to around $90,000 isn’t too shabby for a seven year hold. This is typical of most early gold during the past seven years.

VI. 1836 Gobrecht Dollar

I didn’t choose a Proof 1836 Gobrecht Dollar as one of my Ten Most Cool Coins because of its history or numismatic significance. I chose this issue because I love the design. There’s just something about the stark cameo-like appearance of the obverse and the eagle flying in the field of stars on the reverse that I’ve always found very appealing. Apparently, I’m not the only one who thinks this way.

Back in 2000, nice PR63 Gobrecht Dollars seemed pretty cheap. They could be bought for around $20,000. Today, the same coin is more likely to cost in the area of $30,000-35,000. So the gain that this coin has shown has been pretty impressive although it pales in comparison to some of the early issues listed above.

Personally, I think PR63 and PR64 1836 Gobrecht Dollars are still a good value and even though the market for these pieces is a bit soft right now, they are a good long-term purchase at current levels. Examples which are too dark should be avoided as should pieces which have been overdipped and which are now bright white.

VII. 1850 Double Eagle

What could I possibly have been thinking when I put this issue on my list of Ten Cool Coins? Sure it’s interesting and it has status as a first-year-of-issue but I’d hardly put it in the same ballpark as the other nine coins on this list.

That said, this issue has performed very nicely since 2000, especially in high grades. In my first article, I suggested purchasing an MS61 and figured that such a piece would be obtainable in the $6,000-9,000 range. Today, a nice MS61 sells for $12,000 or so.

In retrospect, a Liberty Head double eagle collector could have done a lot better from an investment standpoint if he had purchased a few nice New Orleans pieces. As an example, the 1854-O and 1856-O issues have shown spectacular price gains in the past seven years and even the secondary rarities such as the 1855-O, 1859-O, 1860-O, 1861-O and 1879-O have performed exceptionally well.

I’m not going to totally disown this choice but I’m pretty embarrassed to see it alongside such issues as a 1794 Dollar or a Chain Cent.

VIII. 1861-D Gold Dollar

The 1861-D gold dollar remains my favorite Dahlonega coin of any denomination. It’s the most historic southern issue, I love the crudeness of its manufacture and it is, of course, genuinely rare.

Back in 2000, the 1861-D gold dollar seemed to be available on a somewhat regular basis. With a little luck and patience you could find one at auction or in a specialist’s inventory. Today, these coins seem to have disappeared and I have not personally handled an 1861-D in close to a year.

I recommended purchasing a nice AU58 example and suggested that it would cost $17,500-20,000. If you heeded my advice, you did very well as a similar example would probably fetch double that amount today. What makes this all the more remarkable is the fact that the high end of the Dahlonega market has been fairly flat in the past seven years with certain coins actually dropping in value despite what is arguably the most sustained bull market in modern numismatic history.

This is another coin which I would hang on to for the long term if I had one put away right now. Despite its rise in price, it is a coin which is in great demand and which has such a wonderful story that it can’t help but appreciate in value in the coming years.

IX. 1879 Flowing Hair Stella

Unlike the 1861-D dollar, the 1879 Flowing Hair Stella is a truly rare coin. If you check auction records over the past few years, you’ll note that a lot of pieces have sold. But I still think the Stella is a coin that is genuinely cool. It is interesting, has a unique design and history and it really is a perfect “trophy coin” for a well-heeled investor.

In 2000 I suggested purchasing an example that graded PR63 (back then, Stellas existed in this grade. The PR63 of 2000 is now a PR64). A nice example would have been available back then for around $50,000-55,000. Today, the same coin would probably be worth around $150,000.

When nice Stellas were worth $50,000 or so they were a great value. At today’s price level, I don’t really like the value that they represent. But, I can certainly see how coins like this trade for $150,000 given their great story and always high level of demand.

Time to pat myself on the back one final time. This was a great recommendation and if you listed to me you made a ton of money!

X. 1907 High Relief Double Eagle

I can remember struggling with the decision to make this the tenth and final coin on my list. High Reliefs are big, beautiful and “cool” but they are just so...common. I hated to put a coin on this list that I knew could be obtained by the truckful at major auctions and conventions. But this was a list built around cool coins and if a High Relief isn’t a cool coin than what was?

My recommendation was to purchase a nice MS64 and back in 2000 this coin was obtainable in the $14,000 to $17,000 range. For a number of years, the market for High Reliefs stayed pretty flat but this coin was extensively promoted in 2005 and 2006 and it rose in value to a high of around $35,000-40,000. Today, the market for these has softened and a nice MS64 High Relief is more likely to sell in the $26,000-28,000 range.

If I were in the market for a High Relief as an investment, I’d probably consider buying one now, while prices are somewhat depressed. I’m guessing that MS64’s could drop as low as around $22,500-25,000 but at that level there would be enough market support that people would jump in and start pushing up demand.

So there you have it. Ten Cool Coins revisited seven years later. Had you bought some or all of these coins you would have tripled your money and had a pretty neat little coin collection to boot. The best lesson to learn from this list is that cool coins are always what people will want to buy, regardless of what series or price range you are discussing.

1907 High Relief Double Eagle

If there is a more popular United States gold coin than the 1907 High Relief double eagle, I’ve yet to encounter it. This is a coin that just about everyone aspires to own. It is beautiful, historic and, in its own way, extremely desirable. The story behind this issue is interesting. I won’t go into the full detail here (it would take many pages to be properly told). Theodore Roosevelt hated the Liberty Head design and secretly hired the famous sculptor Augustus St. Gaudens to redesign the larger gold denominations. St. Gaudens produced what is now regarded as easily the most spectacular imagery ever seen on a United States pattern issue (the Ultra High Relief of 1907).

This design proved to be impossible to strike and it incurred the wrath of the Mint Engraver Charles Barber who felt slighted that an outsider was hired to design a United States coin. He eventually “improved” the design in such a way that the final product in 1907 barely resembled the majestic Ultra High Relief that St. Gaudens produced.

The “normal” High Relief coins also proved to be very difficult to strike and, of course, met with strong opposition from Barber. There were 11,250 examples produced before the design was changed again later in the year. A remarkably high percentage of these coins have survived. PCGS shows over 4,000 graded as of the middle of 2006 and, in my opinion, there are as many as 5,000-6,000 High Reliefs known.

There are two varieties of High Reliefs. The more common is the so-called Wire Edge. The Wire Edge coins were the first High Reliefs struck and they show excess metal on the edge which produced a sort of “fin.” This problem was later corrected and the final High Reliefs struck are known as “Flat Edge” coins. In my experience, the Flat Edge coins are about four or five times scarcer than the Wire Edge coins. The Flat Edge coins sometimes bring a 5 to 10% premium but, more often than not, they do not command a premium. I think they are excellent value, especially if priced as a “common date.”

NGC has designated a number of High Reliefs as Proofs. While there are unquestionably such things as Proof High Reliefs, it is my opinion that the coins marked as such by NGC are NOT actual Proofs. The coins in NGC proof holders clearly have a number of raised die swirls on the surfaces and are probably among the first pieces struck. But they have the same edge as a “normal” High Relief and the true Proofs have a noticeably different edge with different shaped and positioned edge lettering.

In recent years, prices have shot up for High Reliefs. This has been the result of a number of well-managed promotions. But High Reliefs, if you think about it, are coins that sell themselves and it is inevitable that in a strong coin market, they are the sort of coin that is likely to show a strong level of appreciation. New collectors and investors are always attracted to High Reliefs and I expect that prices for these coins in MS60 and higher will continue to be strong for some time.

When buying a High Relief, there are a few things I would suggest you look for. First and foremost is coloration. An original, untampered-with example should display very rich green-gold or yellow-gold color. Look for a piece that has even color with similar hues on the obverse and the reverse.

You should also avoid pieces that show obvious friction on the relief details but you need to understand that because of the nature of this coin’s design, most examples do show some “rub” on Liberty’s and the eagle’s breasts. Finally, you need to look carefully at the surfaces and make certain that the High Relief you are being offered does not have any serious marks or prominent abrasions. This is a coin that is common enough that if you do not like what you see, be patient and wait for the right example.