Eight Tips on Buying United States Gold Coins

As a specialist in the area of United States gold coins, I often find myself giving "tips" to buyers. Some of these seem pretty obvious to me while others are kind of clever and maybe not so obvious. Here are some of these tips along with a bot of pertinent commentary. 1. If you are a gold coin specialist who is worried about potential hoard coins hurting the value of pieces in your collection, there are a few things you can do as a safeguard. First, stick with coins struck prior to 1890. Most of the gold coins expatriated from overseas appear to be dated from 1890 onwards. Coins struck earlier, especially those before 1878, seem a lot "safer." Second, limit your exposure by not buying very high grade coins. The collectors who owned high grade 1857-S double eagles before the S.S. Central America was discovered got killed afterwards. But if you owned a nice AU example, your downside was limited. Third, you could stick with lower denomination coins. Hoards of gold dollars, quarter eagles and half eagles seem less frequent and dramatic than those with eagles and double eagles. But to those collectors who live in fear of hoards, I'd tell them to get over this and just buy what appeals to you.

2. By the grade before the big price jump. What I mean by this, if you have a choice between an MS64 double eagle priced at $3,500 and an MS65 priced at $25,000 I would always buy the lower priced example, especially if the population is high in the lower grades. As an example, if there are seventy five examples of the $3,500 MS64 with just five better doesn't it seem like that at least a few of the high end 64's could gradeflate to MS65?

3. Nearly every collector who works on a series builds it the wrong way. It seems to me that all collections should have the keys be the best coins in the series while the common dates should be nice but not overblown. Instead, most collections skimp on the keys but overdo it on the commons. Let me give you an example. If you are working on a set of Dahlonega quarter eagles the coins you should "overdo" are the legitimate rarities like the 1854-D, 1855-D and 1856-D. I would stretch on all three and buy the nicest ones I could find. On the other hand, I would be content to purchase nice, original AU55 or AU58 examples of the common dates like the 1843-D, 1844-D and 1847-D and sink maybe $5,000 per coin into these three issues.

4. Always use a 5x glass when you are making a buying decision. Just recently, I bought a Charlotte half eagle at a coin show. It was in an old green label PCGS holder and it looked great to the naked eye. I made an accepted offer and never used a glass to look at it. When I got home and was ready to break the coin out to regrade it I put a glass on the obverse and noticed a deep, detracting scratch that had naturally blended into the surfaces. Yes, you may have great vision and you may be a really macho guy but use a glass whenever possible.

5. Buy coins with good eye appeal. Unless we are talking about an amazingly rare issue like an 1854-S quarter eagle, there is no reason to buy an ugly coin. And I would include damaged coins when I am talking about coins that lack eye appeal. As time goes by, I am noticing that fewer and fewer 18th and 19th century United States gold coins have good eye appeal. By "eye appeal" I mean a coin that is pretty; one that makes you stop in your tracks, look at it carefully and maybe even take a deep sigh. I can pretty much assure you that when you go to sell your coins, the ones with good to great eye appeal are going to be the ones that cause the greatest commotion.

6. First impressions are usually correct. If you get a coin shipped to you by a dealer and your first reaction is "yuck" or "um...I don't really like that" you should pass. Nearly every major mistake that I have ever made as a buyer has been convincing myself that I "liked" a coin when, in fact, I really did not.

7. Price buyers wind up with mediocre collections. Really nice coins with good eye appeal are really hard to buy right now for a number of reasons. If you are a buyer whose is driven by price alone I'm guessing you either buy modern coins or you haven't had much luck lately buying. And if you are a cheap buyer who puts in low bids at auction, I'm guessing the only coins you are buying are the dark, ugly, low-end pieces that those of us who like nice coins wouldn't buy no matter how cheap they are. You aren't going to have fun when you go to sell your coins. But don't take it from me; as an experiment post a few of your "good deals" on a message board to try to sell them to the local dealer....

8. If you are buying coins as an investment and expect to turn them over quickly to make a profit, there are a few things you should know. Rare coins have a fairly sizable entry/exit fee. If you are buying from a typical retailer, you are probably paying at least a 15-20% markup. And when you go to sell your coins, whether it be to a dealer or through auction, you are probably paying in the area of 10-20%. So even if you are buying and selling through good sources, you are talking about values having to go up 25-40% just to break even. That's why I don't personally tout coins as an investment and when someone does ask me about coins in this regard, I stress that they really need to be held at least a full market cycle (or five to eight+ years).

Like these buying tips? Want to read another blog with more tips? Leave a comment at the end of this blog or drop me an email at dwn@ont.com

The DWN Rare Gold Coin Market Heat Index: 2010

As someone who is pretty attuned to the strengths and weaknesses of the rare gold coin market, I can accurately rate how well (or poorly) a specific series is performing. 2010 was an interesting year for gold coins. We saw tremendous price increases in gold bullion but many areas of the coin market were flat. In the first annual DWN Rare Gold Coin Market Heat Index (cue sizzling sound effect...), I am going to discuss the relative position(s) of the most commonly traded areas of the market. This totally non-scientific study is keyed to the following ratings, which go from 1 to 10:

1. This series is so cold you couldn't give the coins away 2-5: This series ranges from ice cold to moderate strength 6-9: This series ranges from strong to very strong 10: This series is en fuego

And without further ado, let's talk hot or cold gold...

I. Gold Dollars There is pretty solid overall collector support for gold dollars. While there do not appear to be many specialists working on complete sets, there are a number of collectors working on focused subsets; i.e., Dahlonega dollars, Civil War issues, etc. I would say that Type One branch mint dollars are probably the strongest overall segement of this market and the weakest is, clearly, high grade non-branch mint Type Two coins.

In the Type Three series, I am noticing some strength in very high quality Philadelphia issues from the 1870's and 1880's. In most cases, the coins that are the strongest are PCGS graded MS67 and better pieces with great eye appeal. The Charlotte and Dahlonega market is very bifurcated. Top quality original pieces in all grades are very strong while overgraded, non-original pieces are hard to sell even at a serious discount.

OVERALL RATING: 5. This denomination is collector-driven and reasonably strong as of the end of 2010. The coins showing the greatest demand include the very rare Dahlonega issues (1855-D, 1856-D and 1861-D), mintmarked Type Two coins in "collector grades" and Finest Known or high Condition Census Type Three issues graded by PCGS and approved by CAC.

II. Quarter Eagles This is perhaps the most mixed denomination in the entire U.S. gold oeuvre as the heat index ranges from borderline frigid to pretty toasty. Early quarter eagles are showing mixed collector support. These coins are still undervalued when compared to other early gold denominations but they are no longer "cheap." Some weak auction results for overgraded 1796 No Stars and 1808 quarter eagles have lowered Trends but nice examples of these two significant dates are still in demand. Collectors of early quarter eagles are looking for value. They want either very rare issues that are underpriced (such as the 1826/5 or the 1834) or coins that are choice and original.

The Classic Head series seems fairly weak right now with the exception of nice EF-AU grade branch mint pieces which are still popular.

The Liberty Head series is beginning to attract more collectors as people come to realize that there are many legitimately scarce coins from the 1840's, 1860's and 1870's available for $5,000 and less. Branch mint coins from this series have a good following. Dahlonega quarter eagles are very popular and easy to sell as long as they are decent quality (or better) for the grade. Charlotte and New Orleans issues are less popular. Unless these coins are very choice and original, they sell for discounts relative to Trends.

The Indian Head series remains cold although it shows more heat than at this time last year. Prices are inching up for certain issues. The key 1911-D still seems overvalued, even at the new lower level(s) that it has adjusted to.

OVERALL RATING: 4 1/2. Without the Indian Head series I would actually have ranked the quarter eagle denomination a 6 but the weakness of these coins (along with softness in the generic MS65/MS66 common date Liberty Head issues from 1898-1907) drag down the overall score by one to one-and-a-half points. The coins showing the greatest demand include the rarities (1841, 1854-S, 1863 and 1875 in higher grades) and the key issues from Dahlonega (especially the 1856-D). Also in demand are nice pre-1834 quarter eagles in AU55 and above that are choice, original and well-made. I'm noticing some subtle demand (demand-in-the making?) for affordable higher quality Philadelphia and San Francisco coins from the 1860's and 1870's. These have gone from ice cold to moderately strong in 2010.

III. Three Dollars

The Three Dollar gold denomination remained one of the least in-demand areas of the rare coin market in 2010. Despite a strong price increase in gold bullion, values for Uncirculated generic Threes dropped and, in the case of MS65 coins, they dropped fairly precipitously. There is some demand for the popular Civil War issues and exotic later date low-mintage issues occassionally breakout of the sell-for-a-discount box that they have resided in for the last few years.

There is a good supply of nice Threes on the market right now (and this is one of the few denominations that this is so) and a contrarian collector with alot of self-confidence could put together an outstanding collection in the next few years. I'm not certain what it will take to jumpstart this series but, at this time, the patient is on life support.

OVERALL RATING: 2. Three Dollar gold pieces are in the doldrums and they don't appear to have more than marginalized support. There are occasional bright spots in this market. Very rare, low mintage Proofs have brought strong prices at their infrequent auction apperances and any PCGS graded, CAC approved finest known branch mint issue has enough collecor support that it would bring a record price if available. Two iconic branch mint issues are showing mixed results. The 1854-O is weak now due to an oversupply of overgraded examples. The 1854-D is actually showing much more strength than a year or two ago and prices have risen for this popular coin in 2010. A Gem 1875, if available, would be in demand as well.

IV. Half Eagles

If I had to predict which U.S. gold coin is poised for the biggest potential gains in the next few years it would be the half eagle. There is alot of value to be had in this denomination (especially in the Liberty Head series) and I wouldn't be surpised to see a few ambitious collectors attempt to make a splash in this area.

Early half eagles are showing good demand, especially in the EF45 to MS62 range. Any pre-1813 half eagle that is graded by PCGS and NGC and is priced below $7,500 has eager buyers, as long as it is reasonably attractive. The 1795 half eagle has renewed demand after having dropped in price since its peak in late 2007/early 2008. Higher grade (MS63 and above) half eagles struck from 1800-1812 are steady to slightly up in value but the coins must be nice for the grade to sell for published levels. There have been almost no Fat Head half eagles (other than the usual array of 1813's) on the market in the last two or three years. These coins are generally off the market in tightly-held collections and I believe that if any fresh, mega-rare pieces were to become available in the next few months, they would sell for all-time highs.

The Classic Head market is fairly soft with the exception of the 1838-C and 1838-D which are extremely popular in all grades. It's been quite some time since I've seen a nice 1838-D for sale and a choice, original Uncirculated coin could bring alot of money in this market.

As I mentioned above, collectors are beginning to recognize the value inherent in the Liberty Head half eagle series. Nice Uncirculated coins from the 1840's and 1850's are very rare and in the case of the Philadelphia coins, they are affordable in grades up to and including MS63. Charlotte and Dahlonega half eagles are strong as long as the coin(s) are nice for the grade with good surfaces and color. New Orleans half eagles of this era remain popular with collectors and the supply of higher grade examples (AU55 and above) seems to have suddenly dried-up. The rare date No Motto issues from San Francisco remain difficult to sell with a few exceptions; notably the very rare 1864-S. I would rate the No Motto market as strong and getting stronger.

The With Motto market is not as strong. Carson City half eagles seem to be less popular with advanced specialists than in the past and are selling for discounts unless they are exceptional. Better date Philadelphia and San Francisco issues are weak with the exception of the excessively rare 1875 (an AU55 example just sold for $143,750 in the November 2010 Bowers and Merena auction). Generic With Motto Liberty Head half eagles are weak with MS65 and MS66 coins having dropped in price during 2010.

The Indian Head half eagle series is showing a bit of strength in the better-date mintmarked issues from the 1910's. Common dates are weak and prices for MS65's have dropped significantly in the last year; enough to the point that I actually think they are a good value right now.

OVERALL RATING: 5. The half eagle market is solid but not spectacular. The "right" coin can sell for a record price (as witnesed by the AU55 1875 that I mentioned above) but there are enough overgraded, low-demand pieces selling for discounts at auction to keep the overall heat index factor at just a "5." I have had very good success selling early half eagles and No Motto Liberty Head half eagles in the $2,000-25,000 range this year. My gut instinct tells me that some of the overlooked rare dates from the 1855-1875 era could be seeing more demand in the coming years.

V. Eagles

For years, I've written that eagles were "the next big thing" and, for once, I was right. This denomination saw a number of record prices in 2010 and Liberty Head eagles led they way due to competition among a small but dedicated number of collectors at the top end of the market.

But not all was rosy in the World of Eagles. Early eagles saw weakness that continued from 2009. This is clearly the result of some truly gross coins in holders. I often see coins graded AU55, AU58, MS61 and even MS62 that are 100% unoriginal and lack any semblance of eye appeal. While pieces of this (low) quality still brought decent prices at auction in 2006-2008, the market has become more selective and now these coins sell for discounts. This has reduced values across the board but, suddenly, I like choice, original examples at 20-25% discounts off of previous market highs. I can't remember any properly graded MS64 or better early eagles selling in the last year and I think a CAC-approved example would still bring a very strong price.

The Liberty Head eagle series did really well in 2010 and this trend should continue for the foreseeable future. Any Finest Known or high Condition Census coins, regardless of date or mint, should do quite well. New Orleans eagles are popular and in demand and interesting high grade pieces (like the record-breaking 1842-O that brought over $70,000 this year at auction) will continue to bring high prices. I think a real value play in this area are common date Philadelphia No Motto coins from the 1840's and 1850's in choice AU to MS63 grades.

With Motto coins of this denomination saw sporadic levels of demand. Carson City eagles sputtered a bit but really high end, choice pieces were actively sought. If a very nice 1870-CC came on the market it would be a potential record-setter. New Orleans eagles were led by the 1883-O which, in a short period of time, has gone from hugely undervalued to hugely priced. Even the formerly undervalued 1880-O saw some love in higher grades. The semi-scarce Philadelphia and San Francisco issues from the 1880's and 1890's remained overlooked and these are undervalued. If the concept of the "short set" were ever applied to With Motto eagles, these dates could appreciate quite a bit.

Indian Head eagles were similar in performance to their half eagle counterparts. There was some interest in AU58 to MS63 better dates from the teens and the rare 1920-S and 1930-S saw slightly increased demand. Common dates in MS65 and above were weak. Proofs were weak unless the coins were PCGS graded and CAC approved. The few original Gem Indian Head eagles that sold in the last year brought very strong prices as collectors have come to realize how few of these coins remain with natural color and surfaces.

OVERALL RATING: 7 Based on the results of the Stack's Johnson-Blue auction this Fall, I might have rated this denomination a "9" but one extremely strong auction doesn't make for a blazing hot market. But that said, the demand for nice eagles has picked up quite a bit. Early eagles will continue to be soft unless the coins are "all there." I think Liberty Head eagles are a great example of what happens when a few collectors begin to compete for nice coins. As I have always said, it doesn't take dozens of new players in a market to drive prices up if the coins are genuinely scarce. I'd look for the middle end of the Liberty Head eagle market to show some appreciation this year as collectors who are priced out of the higher end coins look at pieces in the EF45 to AU55+ range. Quality and originality will remain a key factor in this area of the market.

VI. Double Eagles

If you follow the rare gold coin market just a little, itsy-bitsy bit you probably are aware that double eagles were the unquestioned darling of the market in 2010. I see no reason why this won't continue into 2011--and beyond.

Why are double eagles so popular right now? A combination of factors. Obviously, their size and intrinsic worth helps them. They have a great back story and the presence of shipwreck coins has brought hundreds of serious new buyers into the double eagle market. I also think that it helps that these coins are rare but no so much so that they are unpromotable. You can promote an 1870 quarter eagle in Mint State; there just aren't enough to go around. But most of the popular dates in the double eagle series exist in a large enough quantity that nearly everyone who wants one can have one. maybe not in the ultimate grade(s) but in close to optimal condition. And that's the beauty of this denomination, in a nutshell.

There wasn't a more popular series of coin in all of the numismatic market in 2010 than Type One Liberty Head double eagles. These coins were in demand in all grade and price levels. Even though values rose considerably, there are still at least fifteen to twenty different dates in the series that can be bought in Extremely Fine grades for $3,000 or less. This series did well in both the low end and high end although a few dates like the 1861-S Paquet and 1866-S No Motto are off their 2007/08 historic highs. New Orleans issues did nicely this year as did San Francisco coins. I think the best value play in this market are the Philadelphia coins struck from 1854 to 1860 in AU50 or better.

After a few years of softness, the Type Two market picked up quite a bit. The Philadelphia issues from 1866 to 1872 were popular and the Carson City coins were in strong demand. Speaking of Type Two CC double eagles, the 1870-CC remains a bit of an enigma. Clearly, its price level is off its high of a few years ago but no really nice examples came to the market in 2010. I'd be very curious to see what a high end PCGS AU50 or AU53 brought if available.

The Type Three market was a bit more spotty. The unquestioned leaders from a demand standpoint were the CC issues which are suddenly in very strong demand in all grades. The extremely rare low mintage Philadelphia dates (1881, 1882, 1885, 1886 and 1891) continued to sell for record prices when available. The weakest area were the condition rarity common and semi-scarce Philadelphia and San Francisco issues. But even these coins could occasionally hit a huge home run at auction if they were really choice for the grade, free of serious marks and had population of ten or less with fewer (or none) better.

The Saint Gaudens market did not fare as well. It seems like there are not enough new buyers to keep up with the supply of scarce and rare dates that were available in the last year and prices dropped accordingly. There were exceptions. PCGS graded, CAC examples of genuinely rare dates from the 1920's and early 1930's brought strong prices if the coins were graded spot-on. If they were marginal quality, they often sold at a strong discount. It was possible for a coin like a 1927-S in MS64 to have a value range of $50,000-60,000 for a low end coin and $75,000-85,000 for a high end one. The generic Saint market was, as always, like a numismatic yo-yo with lots of ups and downs. Premiums for MS63 to MS65 coins were high around the middle of the year but shrunk as the price of gold soared. MS66 and MS67 coins with CAC stickers were in strong demand and did well. It seems likely that they will continue to be in demand in the coming year.

OVERALL RATING: 8 1/2. If dated Saints had performed better in 2010, this number would clearly be a "9." Liberty Head double eagles were the top performer in the rare gold market in 2010. The areas that were in the greatest demand included rare Type One issues in all grades, "exotic" shipwreck coins (i.e., non-S mint Central America coins, PL and DMPL pieces, etc.), high end rare date Type Two coins, rare low mintage date Type Threes and virtually all Carson City pieces.

I'd like your comments and feedback about the 2010 Heat Index. Please feel free to send me an email at dwn@ont.com and let me know which areas of the dated gold market were the most sizzlin' in 2010 and which you think will be the hotties of 2011.

The Pittman I Sale: Twelve (!) Years Later

One of the most significant auction sales held during the 1990’s was the John Jay Pittman Collection. Conducted over the course of three years and held in three different sessions in Baltimore, the sales were conducted by David Akers and featured an amazing array of United States and foreign gold, silver and copper issues. The first Pittman sale was held in October 1997. It’s hard for me to believe that the twelve year anniversary of this auction just passed as it really seems like it was just yesterday that I flew to Baltimore to examine the coins, bid on the lots and compete against most of the major collectors and dealers in the United States. It was an intense but fun four or five days in Charm City.

Dave Akers astutely concluded that it would be more interesting (and profitable) to split up the Pittman United States issues into two segments and the gold denominations that were featured in the first sale included dollars, half eagles and double eagles. Not including a group of Proof Sets that had gold coins, there were over 500 lots of gold, most of which hadn’t been offered since the 1940’s or the early 1950’s.

I remember viewing the lots and being extremely impressed with the quality. I hadn’t really known much about the Pittman collection except that I had seen his displays of early Proof coins at various coins shows in the 1970’s and 1980’s. I was expecting some very impressive Proof gold (and wasn’t disappointed). It was the business strike issues, though, that intrigued me most and which offered some of the biggest surprises in the days that lay ahead.

The first gold dollar that really caught my eye was lot 863, a superb gem 1854-S that even the notoriously conservative Dave Akers called “Gem Uncirculated” in the catalog. I graded the coin MS66 to MS67 and was amazed by the quality. It sold for $33,000 to a tall dealer from Oklahoma.

The most impressive Proof Gold Dollar was a nice example of the very rare 1854 Type Two which, according to Akers, was one of just four known and one of just two not impounded in museum collections. It brought $176,000 and I graded it a solid PR64. This was one of the coins that Pittman became famous for employing his aggressive bidding technique at the Melish sale in 1956. Legend has it that for this coin (and the Proof 1855 that followed), he went to the podium as it was being sold as raised his arm like the proverbial Statue of Liberty. His strategy proved to be lucrative as he was able to buy the coin in 1956 for just $525; a pretty decent return on investment over a forty-year hold.

My favorite early half eagle in the sale was, without a doubt, the amazing Proof 1833 which was one of just two known and the only one available to collectors. I graded it PR66+ and described it as follows in the catalog: “INCREDIBLE!!!!” It sold for $467,500. In January 2005, the same coin, graded PR67 by PCGS, sold for $977,500. I still regard this as one of the single greatest early gold coins I have ever seen. Just as an FYI, Pittman bought the coin from the Farouk sale in 1954 and paid all of $635.

There were two Proof Classic Head half eagles that weren’t far behind the 1833 on the DW cool-o-meter scale. The first was an 1835 (one of three known and one of two owned by Pittman) and an 1836 (one of three known). The 1835 sold for $308,000 while the 1836 brought $198,000. In January 2005, the 1835, graded PR67 by PCGS, sold for $690,000 while the 1836, as far as I know, has not traded at auction since the Pittman sale.

There were some amazing Liberty Head half eagles in the collection and, interestingly, nearly all of them came from the same source(s): the Farouk sale of 1954 with earlier ownership by Col. Green.

Some of the coins that I remember most include an 1840-C that is now graded MS64 (it has sold at least three or four times since the Pittman auction and is easily the finest known), a superb MS63 1840-O (I have handled it twice since Pittman and it is among the nicest New Orleans half eagles of any date), a killer MS62 1842 Large Letters and an MS64 1844-D (now in the Duke’s Creek collection and easily the finest known).

One really controversial coin in the half eagle section was Lot 981, an 1847 that was essentially perfect but which had a HUGE (and I mean huge!) copper stain on the reverse. Some people absolutely loved the coin while others couldn’t stand it. In the end the “lovers” won out as it brought an amazing $110,000.

Perhaps the number one “sleeper” coin in the half eagle section was Lot 984, an 1847-O half eagle that was graded “Extremely Fine to About Uncirculated” in the catalog. I thought the coin was a nice AU55 and felt it was the second finest I had ever seen, after the Eliasberg/Milas coin. I wound up bidding $18,000 and lost out. It brought $24,200 and was later graded MS61 by NGC where it remains the only example graded Mint State by either service.

One last coin, then we’ll end this overlong remembrance. Lot 1022 was an 1859-D half eagle that I graded MS64 to MS65. I recall speaking with the late Jack Hancock before the sale and discussing this coin. He didn’t say much about it (I knew he loved it as much as I did) and I knew he had a customer who would pretty much pay whatever it took. Jack wound-up paying $60,500 for the coin which is still in the Duke’s Creek collection and which was graded MS64 by PCGS after the auction.

The first session of the Pittman sale brought $11,820,512. I can recall thinking the coins brought “all the money” at the time but looking back at the catalog today I’m struck at how reasonable many of these irreplaceable coins were. What is most stunning, though, is to see the prices that Pittman paid in the 1940’s, 1950’s and 1960’s. If there was ever proof that really good coins held for a long time are really good investment, it was the Pittman sale!