The State of the Dahlonega Market, 2011
/I published the second edition of my book on Dahlonega gold coinage in 2003. A lot of time has passed since then and, as part of the upcoming third edition, I'm going to be including a chapter in the new work that is a sort of State of the Union of the Dahlonega market for 2011. As you are likely someone who is interested in these coins and who is a loyal follower of raregoldcoins.com I'd like to share my thoughts with you. 1. Major Collections Sold Since 2003
In the 1990's and early 2000's, it seemed that a major collection of Dahlonega gold was being sold every year or so. It was an incredibly fertile time for collectors and, in retrospect, I'm not certain that we knew just how good we had it.
Since 2003, the number of major collections of Dahlonega gold that have hit the market have dwindled. In early 2004, Heritage sold the Green Pond collection. This was a collection that I was primarily responsible for assembling, and a number of record prices were set when the coins were sold.
In April 2006, Heritage sold the gold dollar and quarter eagle portion of the famous Duke's Creek collection. Again, many record prices were set; a number of which stand to this day.
But with the exception of these two sales, the auction market for Dahlonega gold has been pretty bleak since 2003. Oh, sure, there have been great individual coins sold. And there have been sales with a few interesting coins here and there. But for the most part, the number of great collections that have hit the market since 2003 can be counted on one hand with a few fingers leftover.
2. Evaporation of Supply
The lack of great collections sold at auction is a nice segue to the second point: the overall lack of supply. I'm not talking about just finest known and Condition Census coins here; I'm talking coins across the board from Very Fine to Mint State.
There are a host of reasons why the supply of nice Dahlonega coins is lower now than I can ever remember. You'll notice that I said "nice." Before we go any further, I think its important to define the term "nice" when it comes to my perspective of Dahlonega coins; and coins in general.
I regard a nice coin as one with a pleasing, natural appearance. It may not necessarily be a coin that is truly "crusty" but it is a coin that I would regard as being above-average and likely to receive approval from CAC if it were sent to that service.
So why is the supply of nice coins so low right now? For a number of reasons. First of, there just aren't that many nice Dahlonega coins left. I feel that the number of coins that have been cleaned and processed in recent years is very substantial; probably more than we realize. So we are looking at a smaller pool of coins that are nice than ever before.
Also, we are looking at a collector base that has expanded and who tend not to sell the nice coins that they have. They are serious collectors, they like their coins and unless a better coin comes along they tend to hold their nice Dahlonega coins for the long term.
So what's in short supply? First and foremost are the keys. The really popular Dahlonega issues like 1861-D gold dollars and half eagles and 1856-D quarter eagles have become ultra hard to find. The same holds true with nice "collector quality" 1838-D half eagles, 1842-D Large Date half eagles, 1855-D quarter eagles and 1854-D threes.
3. Changes in Estimated Populations My population estimates from 2003 proved more accurate than when I estimated population back in the 1990's for my first Dahlonega book. But the numbers still seem low and I have raised them. Typically, an issue now has an overall population that is, in my estimation, 10-30% greater. I've come to the conclusion that "common date" Dahlonega gold coins are more common that I used to think.
The "bell curve" of grade distribution for Dahlonega gold has changed as well. This is, of course, due to a loosening of standards over time. Many issues now appear more common in AU grades than they do in EF but I believe that many slabbed AU50 and AU53 coins offer weak claims to an AU grade.
The number(s) of high grade Dahlonega pieces has stayed remarkably consistent since 2003. Part of this has to do with the fact that not many new Mint State Dahlonega coins have come onto the market since 2003. There have been some MS60 and MS61 coins that are clearly upgrades from AU58's past and other coins that have crossed-over from NGC to PCGS and vice-versa. But mostly I'd attribute this stability to good research by yours truly. High grade 1849-D quarter eagles are a lot easier to track than VF's and EF's, of course.
4. Date Collecting Remains Popular One of the things that interests me most about the Dahlonega market is that it is one of the last bastions of date collecting. Many other branch mint series have lost traction as far as collecting by dates goes and issues that formerly sold for premiums now may be regarded as little more than semi-generic issues. But this is not really the case with Dahlonega coins.
Why is this so? I'd have to say there are a few obvious reasons that spring to mind. The first is that this is a true collector market and collectors like to collect coins by date. The second is that there is a good deal of variation with Dahlonega coins on a yearly basis. In other words, an 1849-D gold dollar tends to look very different from an 1850-D dollar; unlike a Proof Seated half dollar that has a seemingly interchangeable appearance regardless of date. Finally--and perhaps most importantly--there are no gigantic "stoppers" in the Dahlonega series. Nothing is so rare or so overly expensive that it means the average collector can't aspire to complete a date set.
One of the nice things about collecting Dahlonega coins by date is that if you look at them in the popular collector grades (i.e., VF and EF) they are still reasonably affordable. Yes, I realize that an 1854-D $3 and an 1861-D $1 are expensive for the collector of average means. But when you are talking about a set where there are just a few issues north of $10,000 and most are well under $5,000, I would term these coins as affordable.
5. Prices Rise...And Fall Given what I perceive to be a strong market with good supply and demand numbers and an avid collector base, I'm actually surprised that Dahlonega coins are as affordable as they currently are. Let's pick three Dahlonega issues in reasonable grades and see how they have performed since 2003.
The first coin we'll look at is an 1849-D dollar in AU50. This issue is the Dahlonega equivalent of an 1881-S Morgan. It is plentiful, popular, and trades with comparative frequency.
A PCGS AU50 example sold for $2,530 as Heritage 10/10: 4569 and this seems to be a pretty fair current market value for a decent AU50 example. Going back to the Heritage May 2005 sale, a similarly graded 1849-D dollar brought $2,200. Not factoring in possible gradeflation of the AU50 from 2005, this is a pretty unimpressive return.
How about the same issue in higher grade? An NGC MS63 example brought $9,775 in the Heritage February 2010 sale as Lot 1363. In May 2004 an NGC MS63 sold for $9,200 as Lot 329 in the Bowers and Merena sale. Again, not a really glowing price appreciation.
Let's pick a better date issue for the quarter eagle series; say an 1854-D. Heritage 8/10: 3423, graded AU58 by PCGS, sold for $14,950. Back in May 2003, Superior sold a similarly graded example (also slabbed by PCGS) for $17,825.
Why have many Dahlonega gold coins actually dropped in value in the last few years? Let's use this question as a segue to bullet point #6 in this State of the Union address.
6. And What About Grading? When I wrote an overview of the Dahlonega market in the 2003 edition of my book, I was pretty vocal in my dislike for the gradeflation that had characterized higher quality issues in this area of the market. How has grading changed eight years later?
I don't think the grading services did any better grading Dahlonega coins between 2003 and 2008. Too many choice, original coins continued to be dipped, processed, and quite possibly ruined in an attempt to get the best possible grade.
With the establishment of CAC in 2008, the pendulum appears to have swung back towards rewarding originality. CAC-approved Dahlonega coins are liquid and they bring higher prices at auction than non-CAC coins; if only because they just seem to be nicer.
So where am I going with these comments? I think the Dahlonega gold market has been hurt by too many lower end, unoriginal coins in holders. Time and time again, I've seen a really low end AU58 sell at auction for a very cheap price and drag down values as a result.
Since 2003 (if not before), the Dahlonega market has become very two-tiered. There are price levels for the low-end and commercial quality coins and there are price levels for the choice, original coins. In my opinion, for many dates the premium should be 50% for choice coins but this just does not seem to be the case.
7. Certain Issues Remain Undervalued. I mentioned before that I think Dahlonega coins are, for the most part undervalued. I really do believe this to be the case, especially with coins in the $2,500-7,500 that have choice, original surfaces. But there are certain issues that I think remain particularly undervalued.
In the dollars, I continue to like the 1850-D and the 1857-D. Both are not priced at all that much more than common dates but are quite hard to find.
I have always felt that the quarter eagles from this mint were the most undervalued denomination. Nearly all Dahlonega quarter eagles in choice, original AU50 and better and undervalued.
In the half eagle series, the dates that I feel are the most undervalued include the 1846-D Normal Mintmark, 1848-D and 1857-D.
So there you have it: my State of the Union address for the Dahlonega gold market as of the Spring of 2011. This remains an area of the coin market that is near and dear to me, and one that I think is extremely fulfilling for collectors.
