The San Francisco Surprise

Around four or five months ago, I got wind of a soon-to-be-conducted rare gold coin auction in San Francisco that sounded interesting, to say the least. I heard that it contained long date runs of Liberty Head gold and it featured such rarities as an 1854-S quarter eagle and an 1856-O double eagle. I live for "secret deals" like this. I'd fly to Fog City, spend in the high six figures, make a ton of money on my new purchases and have fun in the process. It was going to be SO easy... Except for one big thing. There are no "secret auction deals" anymore. The internet has made all information so accessible that deals like this tend to attract just enough of the big players in a specialized field like rare gold that they are extremely competitive. No, the San Francisco Surprise was going to be a bloodbath.

There were a number of factors that made this auction unusual. For one, it was being conducted by a stamp company (Schuyler Rumsey) and it would be interesting to see how they handled their foray into a new field.

So how did the sale do? And what does this sale tell me about the market and the rare coin auction market? The answers are interesting; far more so, in my opinion, than merely going over some auction highlights.

I thought prices for the sale ranged from sort of weak (for the very common pieces and the generics which probably would have been better sold outside of the auction venue) to exceptionally strong (for the very rare date $10 Libs). The few six figure coins in the sale were a touch on the weak side (they probably would have brought 10% more in a Heritage auction) while coins that appeared to have potential for upgrading or "improving" were strong to exceptional.

Did the heirs to this collection make a mistake choosing a stamp company and not going with an experienced coin firm like Heritage or Stacks Bowers? Typically I would have said a resounding "yes" but I thought Schuyler Rumsey did an outstanding job in nearly all respects. Their catalog was a bit amateurish but in the end this made no difference. Its hard to say for certain but I think many of the coins in this sale actually did better in this little, obscure auction than they would have at a major auction. Heritage may have 400,000+ registered members in their community and unparalleled technology but Rumsey reminded me of a few important facts about the auction business in general.

First, as I said above, if you get the right five to ten dealers in the room (or on the phone), the number of registered bidders or the number of hits on your website mean nothing. At least 50% of the value of the sale went to these five or ten dealers. The best way to make money in this sale would have been to lock these guys in their hotel rooms.

Secondly, Rumsey's technology was far, far better than I would have expected. It was easy to bid on their website and, to be honest, it seemed to be faster and every bit as efficient as Heritage's. It might not have had all the bells and whistles that Heritage's system has but let's not forget that Rumsey is located in San Francisco and with Silicon Valley technology available to the firm they clearly have figured out how to effectively run an IT system.

Thirdly, in the words of Mr. Costner, if you build it, they will come. The sale contained some really rare coins (issues like 1863-1865 half eagles, 1861-D gold dollars and half eagles, Civil War date eagles plus an 1873 and 1876 eagle). Avid collectors know how rare these coins are and either they or their advisers found them. Many of these rarities sold to phone bidders and, in the case of at least a few bidders, they were sold sight unseen.

Which leads me to the next point. Rumsey was smart enough to know that they weren't coin experts. So they got some good advice. Smart move: they sent most of the coins to PCGS so this gave bidders confidence. Smarter move: they advertised the sale in Coin World and gave out catalogs at the Long Beach show. Smartest move: they got at least one bidder to look at all the coins before the sale and give them bids on nearly all the lots. I feared that $10,000 coins would open at $2,000 and we'd sit through interminable slogs waiting for them to hit their true value. This didn't happen. Three weeks ago I attended a coin auction put on by a firm that has 30+ years of experience and it was so maddeningly slow that I left early in fear that I was going to have an anxiety attack. The Rumsey sale was smoothly run and almost hitch-free.

Another point: the fight against coin doctoring must not be going all that well because I saw people paying pretty confident prices for coins that needed "help." As an example, there was a cleaned 1861-D half eagle (Lot 661) that seemed to me to not only be a "no grade" but to be one that would have to be extensively resurfaced to ever get in a holder. It had the detail of an AU55 but I thought it was a risky purchase at much more than $20,000. It sold for $40,250. The person who bought this coin--and he is a smart, veteran dealer--obviously thinks this coin can be fixed, it can wind up in an AU55 or AU58 holder and it can be sold for more than $50,000. Caveat emptor....

Yet another point: this was a fresh deal and the market is STARVED for fresh coins. Note that I didn't say it was a nice fresh deal. I thought around 10% of the coins were really nice and another 20-30% were kind of nice. But many of the coins were downright ratty. These didn't seem to matter to buyers. Nor did the fact that many of the not-very-nice coins were hard to sell as is and would become even harder to sell when they were scrubbed (or re-scrubbed) and upgraded.

A few highlights and my comments:

Gold Dollars: The 1855-D in PCGS VF35 sold for $12,650. It was a decent coin but nothing great. I guess this means that "basal value" for any example of this date in a holder is now in the low five figures. The nice AU53 1861-D gold dollar sold for $51,750 to a phone bidder who, I'm told, never even saw the coin. It's an AU55 and you paid an awful lot for it...

Quarter Eagles: The 1842 in PCGS 45 was estimated at $750-1000. It sold for $5,175. If only it was even remotely attractive. The very nice 1848 CAL in PCGS 55 sold for $63,250. I liked the 1849-C in PCGS 55 (I graded it a solid 58) but someone liked it better and it brought a solid $12,650.

Half Eagles: The only early half eagle I liked was the 1814/3 in AU58 but I was not willing to grade it MS62 like the successful bidder did at $25,300. The C+D half eagles were decent and I bought the coins I liked the best; sometimes at considerably less than my maximum bid. The Civil War coins were pretty schlocky but they brought strong prices anyway; the 1862 in AU55 was bid up to $12,650.

Eagles: Uggghhh...did I get blown away. I thought there were some pretty nice coins in this part of the sale. So did everyone else. The great AU55 1852-O? It sold for $18,400 (!) The undergraded 1865-S Normal Date in EF45? (I thought it was an AU53). It brought $24,150. The lovely EF45 1870-CC that I graded AU53? How about $97,750? Many, many price records were set.

Double Eagles: It was back to reality as prices for this denomination were strong but not insane like the Eagles. The nice 1856-O in EF45 sold for $276,000 which seemed like the "right" number. The 1861-S Paquet in VF35 sold for $51,750 while the 1866-S No Motto in AU55 went very strong at $83,275. There were some very pleasing CC double eagles in the sale and they all brought strong prices.