With little fanfare, an important group of half eagles and eagles were sold at the recent Heritage Long Beach auction. I was intrigued by the source of this group of coins and since the Heritage catalog had nothing about their origin, I decided to do a little digging. What I found out is extremely interesting for any collector of No Motto Liberty Head gold. The coins that initially got me intrigued were a small group of eagles produced between 1844 and 1847. The two coins that I thought were especially interesting were an 1846 eagle graded MS62 by NGC (Lot 3852) and an 1846-O eagle graded MS62 by NGC (lot 3858). I am pretty aware of all the high grade examples of these two dates and the two coins in the Heritage sale were unknown to me.

But what really got my interest were some of the secondary coins surrounding these two eagles. Lot 3851 in the Heritage sale was another 1846 eagle. This would also have graded MS62 except for the fact that it had hairlines from a cleaning and also a slight “environmental damage” sort of appearance which, in my opinion, looked liked the result of having been buried at one time. Another odd coin appeared as Lot 3857. This was an 1846-O eagle that had the sharpness and details of an MS62 but which had a dull and very grainy reverse with a very “ED” appearance.

My first reaction was that these coins might have been from shipwreck; specifically from the S.S. New York which contained some high quality gold from this era. But why, I asked myself, would coins from this wreck not be packaged in the special NGC holder that designated these coins as being from the shipwreck? After all, the recent Stack’s 7/08 sale of these coins had conclusively proven that the S.S. New York pedigree added considerable value.

The answer to the mystery was solved when I looked at Lot 3851 in the Heritage sale. This was an 1846 eagle with Uncirculated details but which had reverse rim damage at 2:00. When I saw this damage I thought “backhoe.” And when I thought “backhoe damage” I thought “Jackson, Tennessee hoard.”

Let me explain. Back around 1984-85, while a parking lot was being excavated in the little town of Jackson, Tennessee, a sizable hoard of gold coins was uncovered by workers. Upon the discovery of these coins there was a literal feeding frenzy and dozens of workers ran off with “loot” in their pockets. Because of this fact, there has never been a full inventory of what was in this hoard but as far as I know, there were Philadelphia, Charlotte, Dahlonega and New Orleans coins ranging from around 1843 to as late as 1858.

I have personally owned dozens of coins from this hoard. And once you’ve seen a Jackson, Tennessee coin, it is fairly easy to identify. Most of the coins from this group show some signs of environmental damage; probably from iron oxides in the earth which have attacked the gold in the two centuries in which they were buried.

The quality of the coins in this group has also ranged from the spectacular (the two finest known Dahlonega gold dollars of any date) to the average (a group of 1853 Philadelphia quarter eagles in EF/AU grades that were attractive if not terribly impressive). The eagles (and half eagles) in the Heritage sale from the Jackson hoard seem to fall within the parameters of grade and appearance of coins from this group.

So what coins from Jackson were in the group? As far as I can tell, they included the following:

Lot 3649, 1844-O Half Eagle, NGC MS62. NGC #3165682-005
Lot 3651, 1845 Half Eagle, NGC MS62. NGC #3165682-007
Lot 3653, 1846 Half Eagle (Large Date variety), NGC MS62. NGC #3165682-009
Lot 3655, 1846 Half Eagle (Large Date variety), NGC MS63. NGC #3165682-010
Lot 3656, 1846 Half Eagle (Small Date variety), NGC AU58. NGC #3165682-008
Lot 3658, 1846-D/D Half Eagle, NGC MS62. NGC #3165682-011
Lot 3850, 1844-O Eagle, NGC MS60. NGC #3165682-012
Lot 3851, 1846 Eagle, NCS "Uncirculated details"
Lot 3852, 1846 Eagle, NGC MS62. NGC 3165683-002
Lot 3857, 1846/5-O (sic) Eagle, NCS "Uncirculated details"
Lot 3858, 1846-O Eagle, NGC MS62. NGC #3165683-005

This list is interesting for a number of reasons. First of all, it is clear to note that the coins were submitted in consecutive order on at least two different invoices. And given the numbers of the invoices (the “316” series) I know that they were submitted by Heritage and not by the consignor(s).

Even more interesting is the fact that the next Heritage auction (October 2008 in Dallas) is going to have still more coins from this deal including another 1846 eagle in MS62 (NGC #3165683-001) and an 1846-O graded AU58 by NGC (#3165683-004). There are also high grade but damaged examples of the 1845-O eagle (with reverse rim damage) and the 1846-O eagle (reverse scratches).

It will be very interesting to monitor how many more of these half eagles and eagles appear at auction in the coming months. If I were a collector of Condition census quality No Motto gold, I would watch these offerings very carefully to make certain that the populations of many currently-rare issues such as the 1846 and 1846-O eagles do not take large upward jumps.

In the past few years, there seems to have been an explosion in the availability of rare date United States gold coins. Many issues that were considered very rare a few years ago now seem almost commonplace. Is this actually the case--or is this perception totally incorrect? The correct answer lies somewhere in the middle. A number of interrelated events have occurred during the past few years which have significantly altered the traditional relationship between supply and demand that has dictated the rare date gold market for the better part of three decades. All of these events are important and each needs to be analyzed individually to make any "big picture" conclusions in regards to this market.

I. Rising Prices Have Brought Many Coins Onto The Market

Ten to fifteen years ago, the prices for many better date United States gold coins were extremely low. It was possible to purchase outstanding pieces in the $500-$2000 range. Today, many of these same coins are worth five to ten times (or even more) their original purchase price. Many collectors have decided to take their profits. After all, it's hard to pay $7,000 for another AU-50 1840-C half eagle when the AU-50 you bought fifteen years ago was priced at $750.

II. Grading Standards Have Changed Considerably In The Past Few Years

Population explosions seem to be greater for high grade gold coins than for low and middle grade pieces. There is a good reason for this. The grading standards of the late 1980's and the early 1990's have loosened considerably. The very same coin that PCGS or NGC graded Extremely Fine-45 in 1989 is almost certainly an About Uncirculated-53 to About Uncirculated-55 today. And many of 1989's AU-55 and AU-58 coins are today's Mint State-60, Mint State-61, Mint State-62 or even Mint State-63 pieces. The result of this "gradeflation" is that many dates that once appeared to be very rare in high grade now seem much more readily available. The truth of the matter, however, is that many of these Uncirculated coins are the exact same pieces that were considered About Uncirculated a decade ago.

III. A Number Of Exceptional Hoards Have Come Onto The Market

The last ten years have seen some amazing groups of gold coins enter the market. Some, like the Brother Jonathan hoard of 1861-1865 San Francisco double eagles and the S.S. Central America hoard of 1857-S double eagles and territorial issues, are well known. Others, like the group of Uncirculated 1856-D half eagles discovered in South Carolina a few years back or numerous groups of key date eagles and double eagles found in Europe or other overseas locations, are not as well known. All of these have made certain formerly rare issues much more available in high grades than in the past.

IV. The Market Is Now Dominated By Investors

Until recently, issues such as Charlotte and Dahlonega gold were strictly collector-oriented. Investors were led to believe that these coins were "bad investments" because they were not available in Mint State-65 or because they were "too esoteric." After years of bad performance by investor series such as silver commemoratives or modern type, the same investment gurus who had badmouthed Charlotte and Dahlonega gold coins were now jumping on the bandwagon. The result was a major disturbance in the supply/demand ratio for such coins.

The most immediate result was a quick run-up of prices. Suddenly, a lot more people wanted high quality Charlotte and Dahlonega coins. Many of the Condition Census quality pieces that had previously been owned by serious collectors were now in the hands of investors. This became a negative factor for the short and medium range health of the Charlotte and Dahlonega market.

Collectors are great for markets because they tend to hold their coins for a long period of time. In order for Charlotte and Dahlonega prices to have risen in an orderly fashion, as they did through the 1970's and the 1980's, the coins had to appear to be rare (i.e., the demand had to outstrip the supply). One of the reasons why it has become so hard to find nice medium grade (i.e., Very Fine-35 to Extremely Fine-45) Charlotte and Dahlonega coins is that these are "collector grades" and the people who own these coins hold them for ten to fifteen years.

Investors are bad coin owners because they tend to sell very quickly. They will buy a high grade piece and sell it six months to a year later. This creates a situation where supply suddenly outstrips demand. Even more hazardous is the fact that the perception of rarity for these coins becomes altered. Coins that were once believed to be rare were now trading on a regular basis. While it might have been the same two examples of a specific date that traded over and over, the casual observer was now led to believe that a supposedly rare issue was more available than he had been led to believe.

The fallout from this has been very interesting. As this article is being written, I find that the demand for affordable, lower grade (i.e., Very Fine and Extremely Fine) Charlotte and Dahlonega gold coins, as well as most other branch mint issues, is extremely high. But coins like this are very hard to find as they tend to be in the hands of serious, long-term collectors who do not wish to sell them. I now find myself in the curious position that when someone calls me looking for a $1,500 version of a certain Charlotte or Dahlonega issue, I have to tell him that I do not have this coin but I do have a $10,000 version. The market now seems to be saturated with hard-to-sell expensive coins while the demand is for inexpensive coins.

V. Too Much Information Leads To Disinformation

In the 1970's and 1980's there was very little easily accessible information about United States gold coins. Today, there is an incredible amount of information. For the sophisticated collector or dealer, this data is a godsend. For the neophyte, this information can be confusing or even misleading.

As an example, let's look at the PCGS and NGC population reports. These monthly publications, which list the number of coins graded by each service, have become widely-recognized sources of information. According to the most recent reports (May 2000 for PCGS and April 2000 for NGC), there have been 21 1859-D gold dollars graded in Mint State by PCGS and another 16 have been graded by NGC for a total of 37 coins.

In my 1997 book "Gold Coins of the Dahlonega Mint, 1838-1861" I estimated that 10-12 Uncirculated examples of this date were known. Was my estimate that wrong or is there something misleading about the PCGS and NGC data?

What many people don't realize about the population reports is that the numbers are often greatly swollen by resubmissions. The "21" Mint State 1859-D gold dollars recorded by PCGS might actually be no more than ten or so separate coins. When you also realize the fact that many of the coins graded Mint State-60 or Mint State-61 by this service could just have easily been called About Uncirculated-58, then my original estimate of 10-12 truly Mint State 1859-D gold dollars seems a lot more accurate.

Another type of information that can easily be misinterpreted by neophytes is auction records. Many collectors make purchases based on the fact the a certain coin has or hasn't appeared a certain numbers of times at auction over the course of a few years.

I keep a meticulous database of Condition Census, rarity levels, and frequency of appearance for branch mint gold coins. I can cite numerous rare coins that have appeared in as many as five or six auctions over the course of one year. This is compounded by the fact that this exact coin may have appeared first as a PCGS AU-58, then as an NGC MS-61, then as a PCGS MS-61 and finally as a NGC MS-62. Same coin, four different holders. If you do not carefully track these appearances and study the plates in the auction catalogs (or view the coins in person), you can make some incorrect assumptions about the rarity of rare date U.S. gold coins.

VI. A New Type of Dealer Starts Buying Dated Gold

Until recently, the number of dealers who were serious buyers of rare date U.S. gold coins was fairly small. They tended to be knowledgeable purists who bought coins for collectors. They were stable in their business endeavors and didn't look at every coin as an upgrade or "breakout" opportunity.

This all began to change as price levels increased and value spreads widened. Suddenly, a date might be worth $1,500 in Extremely Fine-45 and $7,500 in About Uncirculated-50. The possibility of upgrading a coin from this proved to be extremely tempting; especially after grading standards became more loose.

The rare date gold market was then invaded by "crackout" dealers who would buy a wide range of coins in a wide range of grades. This type of dealer thinks nothing about submitting a coin five, ten or even fifteen times before he gets it into the "right" holder. If this dealer does not keep very careful track of the PCGS or NGC inserts from each of his submissions, the possibility of some--or all--of them becoming lost is great. I can cite numerous examples where the PCGS or NGC population for a truly rare coin is now totally out-of-kilter because one dealer submitted a coin ten times then either lost the inserts or is holding onto them for some reason.

VII. A Case Study: The 1840-C Half Eagle

To prove--or disprove--my thesis, I thought it would be interesting to look at a specific rare date gold issue and analyze its rarity. A good example is the 1840-C half eagle. This was a coin that I once believed was very rare in all grades and I would become excited whenever I had the opportunity to purchase an example. Today, I still think this is a scarce issue but I no longer seem to care about 1840-C half eagles when they are offered to me.

When my book "Charlotte Mint Gold Coins: 1838-1861" was published by Bowers and Merena in 1987, I estimated that 55-60 1840-C half eagles were known with just four or five of these in AU and none in Mint State. In 1999, I published a revised edition of this book and suggested that there were eight to ten known in AU and another one or two in Mint State. The May 2000 PCGS Population Report shows sixteen 1840-C half eagles having been graded in all AU grades and one coin in Mint State while the May 2000 NGC Census Report shows another sixteen in AU and three in Mint State. Has the 1840-C half eagle really become this much more available in the last decade and a half?

The answer is multi-faceted and somewhat complicated. I was clearly too conservative in my 1987 estimates; both in terms of this date's overall and high grade rarity. My 1999 estimates are more realistic but still probably on the low side. However, the PCGS and NGC population figures for this date are ridiculously inflated. The actual number of true About Uncirculated 1840-C half eagles is more likely in the area of a dozen pieces. There are three true Mint State coins that I know of and I was not aware of any of these in 1987 and two of them in 1999. The third is a coin that only recently "came out of the woodwork."

I believe that the following conclusions can be reached in regard to this date:

The PCGS and NGC population figures are inflated due to resubmissions. Many of the coins graded AU-50 and AU-53 by PCGS and NGC are coins that would have been graded Extremely Fine in the 1980's and early 1990's. A few very high grade pieces came on the market (the finest known Pittman coin, graded MS-64 by NGC and the PCGS MS-62 Milas coin which first surfaced in the 1994 James Stack sale). Both of these coins had been off the market since the 1940's and I had no idea that they existed until they reappeared. Price levels for this date have risen to the point that few collectors can afford to buy high grade 1840-C half eagles. Thus, this is now an "investor coin" in high grades and, as a result, the overgraded high grade pieces that exist tend to bounce between dealers and in and out of auctions.

Are rare date gold coins not as rare as we have been led to believe? In some cases, the answer is yes but in most cases I feel that a combination of factors have conspired to distort the true rarity of these issues. Hopefully, the next generation of collectors will be able to make sense of this increasingly confusing jumble of data.