The PCGS Set Registry for 19th Century Gold Collectors: Part One

This week the DWN Blog welcomes guest blogger Robert Kanterman.

I'd like to thank long-time DWN client and personal friend Robert "RYK" Kanterman for writing this excellent study on some of the potential avenues for the PCGS Set Registry which are available to collectors of 19th (and early 20th century) gold coinage. Robert's suggestions are followed by some of my own observations/comments. Please note that my comments appear in italics throughout this blog.

As a collector, I am always look for new ways to enjoy coin collecting, new directions to explore, and ideas to share with others who are similarly searching for collecting themes, especially when they are interested in collecting gold coins. In this two-part blog, I will discuss some gold coin collecting ideas offered by PCGS's very successful registry program, some of which are probably unknown to many gold coin collectors.

I will not be discussing the Indian gold series or Saint Gaudens double eagles, but will instead focus on 19th century gold and especially Liberty head series, 1838 through 1908. I am also going to focus on sets that do NOT require the purchase of coins that cost more than my first car (a 1984 Honda Accord - $9,700 in 1984; no 70-CC $20, or even 70-CC $10 or the like).

I will disclose that I have no financial affiliation with DWN or PCGS and that I have active registry sets in some of those that I will be discussing.

I.  Charlotte Basic Type Set: a gold dollar, quarter eagle, and half eagle. This trio can be completed in XF condition, with nice original coins, for much less than the price of my 1984 Honda. If you have deeper pockets or want to go further, expand to the three gold dollar types, two quarter eagle types, and three (or four) half eagle types.

I agree with RYK and think that the simple three coin denominational set from Charlotte is a great place to begin with branch mint gold collecting. For less than $10,000 you can purchase nice AU examples of the three denominations. To "spice up" the set, look for scarcer dates. As an example, instead of the 1851-C for your gold dollar, choose a scarcer but still affordable issue such as the 1853-C.

II. Liberty Head $5 Gold Date Set, Circulation Strikes (1839-1908). The set includes one half eagle from each date (any mint) of this very long series, none of which are real stoppers, unlike the $10 and $20 series. That said, there are a total of 70 coins, and this can take a long time to assemble and significant resources, especially if you demand AU or higher condition examples for the better dates. The 1862-65 and 1875 dates are going to be the toughest.

I'm a huge fan of Liberty Head half eagles and I especially like the pre-1880 dates. To me, the one flaw with RYK's choice of this set is the fact that while the earlier dates of this denomination are interesting, the later dates are sort of monotonous.  You can get around this, to a degree, by focusing on the CC or O mints in the 1880's and 1890's slots but this still leaves you with the task of buying a lot of generic issues for your set. If it existed, I'd rather work on a No Motto date set of half eagles with one from each year, 1839-1866.

III. Liberty Head $5 Gold Mintmark Type Set (1839-1908). Sticking with the popular Liberty $5 series, the Liberty $5 gold coin is the only coin in the US series that was struck at all seven operating US Mints (Philadelphia, New Orleans, Charlotte, Dahlonega, San Francisco, Carson City, and Denver). This set therefore requires inclusion of one coin from each of these seven mints and was a popular collecting challenge in the pre-certification era. It was a stock product for Capital holders, long before anyone heard of PCGS.

I do not completely agree with the weighting (for example why is Philadelphia worth twice Denver?), but it is an enjoyable collecting challenge that can be completed in a variety of grade and price points. To maximize your resources, pick the 1893-O $5, the ubiquitous 1891-CC $5, 1899 and 1901-S $5's, and the 1907-D $5. To make it more interesting and challenging, pick No Motto San Francisco, Philadelphia and New Orleans $5's, a Carson City $5 pre-1879, and the 1906-D $5.

Ah...the seven mint set of Liberty Head half eagles. This may be dating myself but I used to assemble a lot of these in the pre-PCGS/NGC days and sell them, in Capital plastic holders, to marketers. I agree with RYK's suggestions regarding "spicing up" your seven coin set with more interesting dates. You might not be able to afford a nice pre-1880 CC half eagle but don't settle for an 1891-CC; buy a coin like a nice AU55 1882-CC or an 1890-CC in MS61 to MS62

IV. Classic Head $5 Gold (1834-1838). This popular series has a significant following, with some choosing to pursue the minor McCloskey varieties. The basic set, however, has 8 coins - 5 reasonably easy to find and three that are more difficult: 1834 Crosslet 4, 1838-C, and 1838-D. If you stick to EF coins, you can stay under our budgetary requirements. If you wish to compete, you will have to go AU and higher. What I like about this set is that you get a popular Redbook variety (the Crosslet 4) and two great first year southern mint coins.

I'm a huge fan of Classic Head half eagles (and quarter eagles as well). To me, these coins bridge the gap between early gold and the more modern Liberty Head issues and they have a "handmade" charm which the latter issues don't show. As RYK pointed out, the 1834 Crosslet 4 and the 1838-C/1838-D issues can be stoppers for the collector on a tight budget but affordable examples do exist so they are not an unrealistic goal. If you are strict about not buying any coins which are more expensive than RYK's Honda Accord, you might have a problem with the 1838-C and the 1838-D in higher grades as properly graded AU and better coins are probably going to exceed Accord Value.

I can also see collecting Classic Head gold by die variety. A list of all the varieties can be downloaded from the Heritage website and many of these can be cherrypicked from dealers (including myself) who don't take the time to identify the scarce and rare varieties. Collecting gold by die variety has never been popular but if any series were to become the standard for gold coins, it would likely become the Classic Head half eagles.

V. Complete Liberty Head Gold Type Set (1838-1907). I am not sure who came up with this idea, but I really like it! This set requires one coin of each type of the Liberty head gold era. As someone who is prejudiced against smaller coins (sorry, SD!), only requiring two mini coins (Type 1 gold dollar and any Liberty quarter eagle) allows the collector to focus on the bigger coins (three $10's and three $20's). The stopper is the "Type 1" or "Covered Ear" No Motto $10 from 1838 and 1839. I recommend having some fun and sprinkling the set with branch mint gold, if you can. With the exception of the stopper, every coin can be purchased in XF or better condition for under $2,500.

This set seems a little gimmicky to me but, that said, I'm in favor of any sort of set that turns "accumulators" of coins into "collectors."  The stopper which RYK refers to (the 1838-1839 $10) isn't hard to locate and a nice EF40 to EF45 1839 Head of 1838 eagle is affordable and available. And I really like the idea of sprinkling some branch mint coins in this set.

VI. 20th Century Gold Liberty Head sets (1900-1907/8, quarter eagles through double eagles). I am not sure if Doug is going to like this one, and that is why I placed it at the end. Let's tackle each one individually. The quarter eagle set (1900-1907) contains eight coins, all Philadelphia Mint, and probably will not keep the interest long of anyone who has read this far into the blog.

• The half eagle set (1900-1908) contains 18 coins,  including many common coins, some surprisingly uncommon, and one relative stopper (1904-S). The set could be completed with AU and/or lower MS coins for around $12,000 or less, though better coins will certainly cost more.

• The eagle set (1900-1907) includes 21 coins with three relative stoppers (1900-S "the silent stopper"--if you don't believe me, I challenge you to find one, 1906-O and 1907-S). This set affords you the opportunity to buy coins from four mints (Philly, Denver, New Orleans, and San Francisco), and even the more common coins can be expensive in higher grades.

• Last, but not least, is the $20 Lib 20th century set (1900-1907), a total of 18 coins, that range in difficulty, from the most ubiquitous Liberty head gold coin of all, the 1904 $20 to the challenging about AU 1902 and 1905 $20's. Because each coin contains nearly an ounce of gold, the basal value of even the most common coins will approach $2000.

RYK was right about me not really being a fan of these sets. For every interesting issue like the 1900-S eagle (yes, it is a tough coin in Uncirculated,  by the way) there are five which are little more than generics and I think your money is spent better on really scarce or rare issues. For the price of, say, a 1905 double eagle in AU, you could buy a much more interesting (and rare) coin which will perform better and give you more pleasure in the long run (at least in my opinion...)

There you have it, six (or nine) collecting ideas for those interested in starting a US gold collection or those already collecting who wish to move in a new direction.

Part Two will discuss some collecting ideas not in the PCGS registry that I would like to see taken up by PCGS and some collecting ideas offered by the NGC registry. As always, contact Doug at DWN@ont.com, if you would like to talk coins and add some of the coins discussed here to your collections (new or old). Contact me at ryk@blackandgoldcoins.com if you just want to talk coins.

The Dilemma of the Placeholder

If you collect a set (or sets) and are competing in the Set Registry, the chances are good that you’ve struggled with the Dilemma of the Placeholder. Let’s examine the Pros and Cons of buying a placeholder coin and try to decide whether this is a smart collecting strategy or not. First off, let’s define what a “placeholder coin” is. I view a placeholder coin as one that you buy as a stop gap. As an example, say that you are assembling a set of Indian Head eagles. One of the few dates that you are missing is a 1911-D. One comes up for sale at auction in a grade lower than what you really want. You decide to buy it anyway because of the fact that it a) fills a gaping hole in your set and b) gives you a sufficient number of Registry Set points that you move up a notch and pass Collector X. Was this is a smart purchase or not?

Let’s look at the pros of buying a placeholder coin. The first is the measure of satisfaction that filling a really nagging hole can give. There is nothing more frustrating for our hypothetical collector than seeing a big ol’ ugly blank every time he looks at his set inventory - especially if he has a nice date run before and after the missing coin. Coin collecting is a very emotional hobby and the Karmic Value of filling a hole is hard to put a value on.

Another pro is the fact that a placeholder coin might grow in appeal on the owner. I’m going to assume that as a collector you are smart enough to not buy something truly hideous and to at least hold out for a moderately attractive placeholder. You might learn that your placeholder is actually so rare that it represents the only coin that you are likely to have a shot to buy.

For some collectors a placeholder coin represents a practical decision. Let’s say for example that you are assembling a gold type set from the 19th and 20th centuries and that you don’t have the ability to spend $100,000+ on a nice 1808 quarter eagle. In this case, a decent looking coin in, say, an NCS holder with EF sharpness but with signs of an old cleaning at $40,000-50,000 might be a savvy purchase; especially given the fact that an uncleaned 1808 quarter eagle in this price range might take years and years to locate.

For every pro there is a con, so now let’s look at the cons of buying placeholder coins. To my way of thinking, the biggest con about a placeholder coin is the fact that you know you are going to have to replace it. Unless the market goes up in your series, you are probably going to lose money on it when you sell it. Let’s say, for example, that Collector Z buys the mythical 1911-D eagle we discussed above. He purchases one for $10,500 that’s decent but not really a great looking coin due to the presence of some marks on the obverse. A year later he finds the right coin and it’s going to cost him $27,500. Unless Collector Z has a buyback or “trade up” agreement with the dealer he bought it from he’s probably going to take a 10-15% hit on the coin. Let’s say he’s sells it at auction and nets $9,250; a loss of $1,250. This brings the actual cost of his new coin to $28,750.

Another con about collectors buying placeholder coins is that it teaches them bad collecting habits. I’m a big believer in buying the right coin the first time. I’ve seen some collectors “self-churn” themselves as they buy a 1911-D eagle first in MS61, then upgrade to an MS62 then upgrade to an MS63 and so on. As I just mentioned above, there are transaction costs that will hit you in the wallet every time you upgrade. It also flies in the face of something that I try to teach new collectors: be patient and wait for the right coin. The Coin Gods like to play games with impatient collectors and I can’t tell you the number of times I’ve seen a collector settle on an inferior coin only to have the absolutely perfect coin come along a week, a month or a year later.

So, the bottom line: placeholder coins, yes or no? I’d say in the majority of cases “no”. The exception would be if you are buying something that is so readily liquid and has a tight enough buy/sell spread (a coin like a $50 Pan-Pac Round) that even a short-term hold isn’t likely to have negative impact on its value.

The Registry Set Phenomenon

PCGS introduced the concept of the registry set a few years ago but the concept did not seem to catch on until the early part of 2000. In the last two years, it has become an unqualified hit for PCGS with over two thousand collectors currently participating. The concept of the registry set is simple. Collectors seek to assemble complete sets and list them on the PCGS website when they wish to share the information. Some collectors wait until their sets are complete or nearly finished; others list sets that include just a few dates.

Registry sets have had a huge impact on certain market areas. As an example, prices in series such as Jefferson Nickels and Eisenhower Dollars have risen dramatically in the past two years. If an issue in one of these series is (currently) low population, the chances are good that at least one registry set collector will pay a very strong price for it.

Interestingly, the registry set phenomenon has had virtually no affect on the rare date gold market. When I last checked, there were only one three sets listed for Dahlonega gold and none for Carson City or Charlotte. Collectors of such popular series as Type One Liberty Head double eagles or New Orleans gold couldn't list their sets in the PCGS registry if they wanted to as they are not yet granted their own category.

Many experienced collectors look at the registry set phenomenon as a current market fad that is destined to die a quick and painless death. While I strongly believe that prices on many modern coins have become ridiculously inflated as a direct result of registry set demand, I do not think this is a passing fad. In fact, I think it can be a real long-term benefit to the coin business.

In order to benefit from this new system, the collector must understand it and use it to his benefit. Here are some points to consider:

At this point in time, it is to late to jump on the registry set bandwagon as far as modern (post 1950) coinage goes. But, since virtually no one has properly used this system for 19th century gold coins, it is very easy to have a #1 or #2 set in a popular series such as Charlotte or Dahlonega gold.

Registry sets are all about marketing. Placing your set on the PCGS registry does not mean you are going to sell it. But it provides you with terrific (free) exposure. It also adds instant creditability to a set. Your set sounds more impressive as "Joe Blow's Carson City Gold Set: The #1 Set on the PCGS Registry" than just "Joe Blow's CC Gold Set." And this could translate to higher prices when you sell your coins.

The collector needs to make the registry set concept work for him and not vice-versa. Paying outlandish prices for common date coins solely to have a #1 set is not a prudent move. Being on the cutting edge and assembling the #1 set of Charlotte gold when everyone else (or so it seems...) is chasing MS-67 Eisenhower dollars may prove to be extremely intelligent in the long run.

There are a few hardcore registry collectors who have already assembled a number of high ranked 20th century sets. It is likely that at least a few of these will turn their attention to 19th century sets and when they do, the demand for certain coins could rise quickly.

If PCGS begins to promote the concept of "classic coin" registry sets, it is likely that the concept will catch on more quickly. Knowing the marketing savvy that PCGS has, it seems likely that they will create more classic coin sets and promote them in the future.

I have a few basic complaints about the registry set concept and how it hurts the coin market. I'd like to point these out:

Many registry set buyers make foolish purchases. In most modern series, the price differential between an MS-67 and an MS-68 can be astronomical. This doesn't apply to the rare date gold market yet...but if it does, collectors should think carefully about buying "supergrade" coins if the only reason for doing this is to score extra registry points.

The concept of the registry set does not reward the coin itself; only its "plastic grade." As the savvy collector knows, there can be an AU-58 Charlotte half eagle that has infinitely better eye appeal than an MS-62; yet in the registry the ugly MS-62 is more highly rated than the high end AU-58. Don't make poor buying decisions just because your "competition" has a high grade example of a specific issue. Your lower grade piece could well be a better coin!

The rarity factor of certain coins are not (yet) properly weighted. In the modern coin series, PCGS has addressed this problem. But as the system currently works, a high grade example of a very rare issue such as an 1856-D quarter eagle is given the exact same value as a more common issue. Until this is properly addressed, the ranking of rare date gold sets is irrelevant.

Collecting is about more than having a highly ranked registry set. If the sets are used to promote numismatics and the fun inherent in this hobby, great. If they become a tool for dealer hype and collector ruthlessness, as they are in the modern coin arena, than they are causing more harm than good.

Registry-related fads can be harmful to the neophyte's pocketbook. As an example, it is likely that at some time in the near future, deep cameo and ultra cameo proof gold and silver coins from the 19th century will be given more weight in the set registry than their non-cameo counterparts. Don't pay a large premium for one of these cameo pieces; especially in a series that most coins already tend to come with cameo contrast.

Like it or not, the registry set phenomenon is here to stay. For the collector of rare date gold coins, it is an interesting opportunity to get in on the ground floor and, quite possibly, add some "free value" to an already collectible set.