Three Underappreaciated With Motto San Francisco Eagles

Three Underappreaciated With Motto San Francisco Eagles

While writing my October 2017 article on Liberty Head eagles I spent time discussing the With Motto San Francisco issues, struck from 1866 to 1907. Three dates stood out as being overlooked and underappreciated...

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The New Orleans Eagle Market is Sizzling

The New Orleans Eagle Market is Sizzling

The recent Stacks Bowers Baltimore auction contained a group of comparatively high grade New Orleans eagles which contained a few very important pieces. While admittedly a small sample size (just seven coins), the prices realized were all very strong. This leads me to conclude that this area of the market has become very strong. Let’s look at and analyze each coin.

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What do Auction Prices Represent?

What do Auction Prices Represent?

For better or worse, the current market has come to heavily rely on auction prices to determine the value of a wide range of coins. I am often asked: do auction prices represent wholesale or retail? A one word answer: both. The coin market is quite possibly the most transparent market there is in any hobby or collectible. PCGS, NGC, and Heritage provide comprehensive databases for nearly any major issue of United States coin, in a variety of grades. In theory, even an unknowledgeable collector now has access to records which only the most sophisticated dealers and collectors could access as recently as a decade ago.

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Some Thoughts on Rare Coin Pricing

I have been working on a few coin-related projects lately and one component which has made me stop and collect my thoughts on many occasions involves pricing. And then it hits me: if issues about coin pricing confuse me, how confusing must they seem to new collectors? Here are a few random thoughts about coin pricing.

Try to see if you can answer this question without cheating: what do you think an 1893-S double eagle in PCGS MS65 is worth? Without knowing much about the series, I'm going to predict that your guess is in the mid-to-high four figures; maybe as high as $12,500-15,000. What if I told you this was a $44,063 coin and could prove it?

Which brings us to Thought #1 of this blog: can a market be made by one coin trade? Quick answer: "yes but..."

The 1893-S double eagle, it turns out, is the Poster Child for Numismatic Condition Rarity. It is common as dirt in the lower Uncirculated grades and only marginally scarce in MS63. It is very scarce in MS64 with an estimated value  of $9,000-10,000 (which in and of itself might prove surprising to you for a coin with a population of 40 pieces, just at PCGS...). But it turns out that in MS65, this date is a beast with a current population of just two at PCGS and none finer.

Which is all well and good but how do you price a coin like this when one has never sold? Well, you wait until one does sell which is exactly what happened in Heritage's 10/12 auction, when a PCGS MS65 example brought an impressive $44,063.

I'm not going to make a value judgement about this coin as it isn't my intention to state whether it was a "good deal" or a "bad deal." But  if another piece were to come up for sale, I would have to use the $44,063 figure as a baseline comparison. As long as the population figure (i.e. the supply)  stays low for this issue, we can assume that the demand will remain fairly consistent. For better or worse, this $44,063 is what we are left to work with, even if the underbidder at the Heritage 10/12 suddenly thinks the coin is now worth $20,000.

Here's the thing about coin pricing: in very thinly traded markets (like coins with populations of two and none better) the market price becomes whatever the last trade is. In the case of very rare coins, this makes sense. In the case of a condition rarity in a series which is not typically collected by date, especially in Gem (like our aforementioned 1893-S double eagle) it makes sense but it is harder to embrace.

What about what I call "outlier prices?" Can a pricing structure be based on pricing anomalies?

This is a harder question to answer. Let's use another 1893-S double eagle as an example; this time in MS64. While scarce, enough have appeared at auction over the last few years that we can make some good assumptions.

The last MS64 to sell at auction was a PCGS MS64 with CAC approval which brought $12,925 in Heritage's 1/13 auction. It was a nice coin and one of the few examples of this date in MS64 with CAC approval; even so, the price realized has to be considered an outlier given other comparable coins.

The two previous APR's for the 1893-S in MS64 are $9,975 for a PCGS/CAC coin in Heritage's 2/10 sale and $9,890 for a non-CAC PCGS example in Heritage's 2/09 sale. The non-CAC coin, interestingly, was nicer than the CAC (in my opinion).

Why did the one coin bring nearly $13,000 while the other two brought a shade under $10,000? It could be a number of factors. It is possible that two "crackout" dealers felt that it had a shot to upgrade to MS65 (not likely given its scratch on the face) and they bid the coin up. Or, Type Three double eagles may be a bit stronger now than they were a few years ago (possible but are they nearly 30% higher, in the case of this date?). We'll never know the answer for certain but I don't feel strongly enough about this price to make the bold statement that all other 1894-S double eagles in PCGS MS64 with CAC approval are now worth $13,000. To me, they are still $10,000 coins and this one "outlier" price realized doesn't necessarily mean a new price level has been established.

There are many other scenarios in which an outlier price can be attained.

Let's take a random example: an 1855-S  eagle in AU55. This is a coin which could have a potentially huge range in valuation. And there are many factors why this range could be so dramatic. If it was a "real" AU55 with original surfaces and good eye appeal it could be worth double the amount of a crappy processed example. If it was a nice AU55 with an SS Central America pedigree (in the original holder) it could be worth even more. My point is that we could see dramatic variations in prices if enough examples of this date were sold at auction.

I mentioned that the range on this date could be vast. While a junky, low end "buying it for the plastic" AU55 could be worth $7,000-9,000 in the current market, a choice PCGS AU55 with a CAC sticker could bring as much as $12,500-15,000. And a coin with all the bells and whistles (PCGS/CAC/pedigree/old holder) could bring close to $20,000.

Which brings me to another thought.

Some coins are easy to price. An Iowa half dollar in an MS65 holder is worth around $150. An 1882-S Morgan dollar is a $350 coin (unless it has spectacular multi-colored toning but that's another issue).  Other coins are hard to price and they require value ranges. As I pointed out above, the value range for an 1855-S eagle in AU55 could run from a low of $7,000 to a high of close to $20,000. Same date, same grade, same value, right? In the case of very rare, esoteric coins this is far from the case. There are a ton of factors which influence value and, unfortunately, this is often not reflected in pricing guides.

Would it be possible to create a pricing guide which reflected the fact that there are variations in value for many coins? In the case of 1793-1814 Large Cents such pricing already exists. This pricing assumes that there are at least three variations within each grade; let's call them "A" for nice coins, "B" for average coins and "C" for below average coins. These variations may not matter much for MS65 Iowa half dollars but they matter alot for coins like Chain Cents or 1855-S eagles or even common date Dahlonega half eagles in EF45. I would love to sell multi-tiered pricing for various series and believe that this could be done, albeit with a great deal of effort.

I've written this before but I believe that one thing that holds coins back from literally exploding as an asset class among sophisticated investors is a lack of high quality pricing. Someday, someone is going to realize this and they are going to create a proprietary pricing system (its not hard to do but it is extremely labor intensive and requires input from extremely knowledgable market players and specialists) which will revolutionize numismatics. Until then, many new collectors will have to gamble that the 1855-S eagle which they just paid $15,000 for is a $15,000 1855-S and not a $7,500 1855-S. CAC approval is a start, but dissemination of information is a necessary next step.

Buying the Jump Grade

A few recent  coin sales that were made by my firm have given me an idea for a blog that I think is interesting. I've written about this before so I'll try to approach what I think is an important concept from a new perspective. The concept of value is extremely important to me when I buy a coin for my inventory and I try and share this with clients of DWN. In a nutshell, my core belief in coin buying is that, with most coins, there is a point at which you can "overbuy" . There are obvious examples of this and not so obvious ones.

The basis of my concept is what I refer to as the "jump" grade for a coin. The jump grade is the point at which the value spread for a coin becomes out of whack and the higher grade(s) for a coin no longer make sense.

 Let's look at a hypothetical pricing structure for a coin in higher grades:

     MS63:  $2500

     MS64:  $5000

     MS65:  $90000

This seems far-fetched, right? In truth, this is the exact value spread chart for a 1920 St. Gaudens double eagle, an issue that I consider to be the poster child for buying the jump grade which is MS64.

In this case, an MS64 example at $5,000 seems to make alot more sense than an MS65 at $90,000, especially given the fact that the single PCGS MS65 1920 Saint that has ever been graded isn't all that much nicer than a number of the 64's that I've seen or sold. So why would anyone buy a $90,000 version of a coin that can be represented in a set by a nice $5,000 version?

The answer is more complicated than you think. Obviously, part of it is vanity. Very high end collectors demand the finest coins and if a finest known coin jumps nearly 20x in value over the next grade down, that's just the reality of the market. If you are putting together a set of Saints that is competing for the finest in the set registry, the opportunity to add a finest known population one/none better coin (and the huge number of "points" that come with such a coin) is far and few between.

But what about the rest of us; we coin buyers without unlimited funds?

I'd like to share a few of my personal philosophies about value in numismatics.

     1.  Most collectors overbuy common coins and underbuy key coins. This is especially true for gold collectors who focus on 20th century issues. Let me give you an example. If you are collecting high grade Indian Head half eagles by date, why spend $25,000-30,000 on a common date in MS66 when you can buy a perfectly acceptable MS65 for half that amount? I think I'd rather pocket the $12,500-15,000 difference and apply it to a truly rare coin like a 1911-D. Conversely, the same collector who is working on the killer set of Indian half eagles would be foolish to scrimp on a classic issue like a 1929 and buy a "details grade" cleaned example so he could save money.

     2.  Issues with large underlying populations are dangerous purchases. Let me give you an example, along with a chart:

     1879-S Double Eagle

     Grade          PCGS Population          Value Range

     MS61                        225                        4000-5000+

     MS62                         59                          11000-13000+

     MS63                           3                           40000++

This issue actually has not one but two jump grades. For many collectors, the choice will be clear: buy an MS61 because in MS62 the price of this issue jumps almost threefold. An important point to consider is how many of the 225 coins graded MS61 (the actual number factoring in resubmissions is probably still 125-150) could become MS62 someday? Even if the number is just 10-20% percent of the total, that's still potentially as many as 15-30 new MS62 coins. Is the market deep enough to handle that high an influx and still maintain current value levels?

But for collectors with deeper pockets, MS62 is the jump grade for this issue, especially given the fact that they are unlkely to have the chance to buy an MS63 ( considering that the PCGS population is just three  and none have traded at auction since 2006). My personal choice would be a nice MS61 but I would buy a high end MS62 at, say, $15,000 if it were an obvious "just miss" coin.

3.  "Boring" coins deserve "boring" grades in most sets.  To me, a coin like a Dahlonega quarter eagle is interesting. That's why I don't think you can really "overbuy" in this series. There are very, very few D mint quarter eagles graded MS65 (or even MS64) and just about any coin graded as such, unless its horribly overgraded, is worthy of consideration for an advanced Dahlonega specialist.

But a coin like an 1898-S half eagle is boring. There were nearly 1.4 million struck, thousands and thousands exist and most range from nice to very nice. I have a hard time getting excited about a nice 1898-S half eagle; even the direct-from-the-mint to-John Clapp piece, now graded MS68 by PCGS. This coin last sold for $81,600 and I can think of alot of U.S. gold coins at this price point that I'd rather own. The only real "function" that this MS68 example might properly serve is as a type representative in a knock-your-socks off set.

4.  Type collecting looks at jump grades differently than date collecting.  Type collectors just buy one example of a specific design unlike date collectors who buy numerous. So a type collector will look at a jump grade differently. Going back to our earlier example of the Indian Head half eagle, for type purposes an MS66 might make sense and this becomes the jump grade; given that the next grade up (MS67) is likely to cost $70,000 or more.

5. You can throw the book away when it comes to dual rarities.  There are coins that are rare because of their grade and there are coins that are rare because few are known. Then there is the "rarest of the rare." These are coins that I refer to as "dual rarities" because they check boxes on both sides. An example of a dual rarity is a coin like the Byron Reed 1864 quarter eagle, which is graded MS67 by NGC. This is a coin that is not only very rare in any grade, it is an amazing piece from a condition and appearance standpoint.

I'm going to write an article on dual rarities and it should appear in the next few days on my website www.raregoldcoins.com.

Whether you have a coin budget of $1,000 or $1,000,000, you want to get the best value you can every time you make a purchase. Understanding the concept of the jump grade can help you as you mull decisions for your collection.

Pricing "Difficult" Coins: A Real World Model

I have written a number of blogs in the past few years about how I price rare coins. Despite this, I still get many questions from new and experienced collectors about pricing. I'd like to share a specific coin that I recently handled and explain how I came up with buy/sell prices. As I have written, I find many of the published price guides to be of little or no use when it comes to complex, infrequently traded coins. When I make decisions at shows, in my office, or in the auction room on what to pay for a coin, I tend to put a lot more credence in auction records. So, if you'd like to play at home, I suggest that you follow along with the PCGS auction archives on pcgs.com as this is a major source of information for me when I make pricing decisions. Here is a "real world" model and the thought process(es) that went along with my pricing decision.

1863 $5.00 NGC MS60 CAC

1863 Half Eagle, Graded MS60 by NGC and CAC approved

This is a coin I handled earlier this year and it is one of the first pieces in a while that, as soon as I saw it, I said "I have to own this." Before I discuss my thoughts about how to price it, let me discuss a little about the issue and about the coin itself.

Only 2,442 business strikes of this year were made and my experience is that the 1863 half eagle is rare in all grades, especially in AU50 or better. I jogged my memory and couldn't recall having seen an example I thought was better than AU53 to AU55 in more than a decade. And, I remembered that this was an issue that typically comes with zero in the way of eye appeal. A quick look online showed me that the PCGS population was none for Uncirculated coins and five for AU58; NGC had graded two in Uncirculated (an MS60 and an MS61) and five in AU58. At the time, CAC hadn't approved a single 1863 in any grade; a good indication that the eye appeal of the typical example was not good.

(How can you, even without my experience, make the same conclusions? Look at the pictures of the 1863 half eagles sold at auction during the last ten years. Are the coin fresh and original or are they bright, abraded and processed? Then, look at the number of auction records. A quick scan of the PCGS archives showed a total of 30 records since 1941. What was immediately impressive to me about this figure was that the highly-regarded 1864-S half eagle had 32 auction records in that time period!)

Of course, all these statistics are just gobbledygook if the coin itself isn't "all there." As you can see from the photo above, this coin had really good eye appeal. In fact, my first question was "why is this only in a 60 holder?" (I recently overheard heard a wholesale dealer, who I regard as one of the top three graders in the world, refer to the MS60 grade as "dumb" and that he "hated it." I tend to agree with him but, in this case, I was smitten with the coin; even it was in the funkiest of all Mint State grades.)

So, at this point I was sold. What would I pay?

With no auction records for an Uncirculated coin, I looked at AU58's. The two most recent sales were $14,950 by Stacks Bowers in August 2012 and $14,375 by Heritage in May 2010. A quick look at images for both coins showed two pieces that were no better, in my opinion, than AU53 to AU55. So, after digesting this, I decided that I would pay at least $17,500-20,000 for a coin that was a real, CAC-quality AU58 (the last "real 58" I had seen was the Bass II coin which sold for $13,800 back in 1999...).

Having concluded that a "real" AU58 was worth as much as $20,000, I figured it would be OK to pay at least $30,000 for a really nice MS60. I wanted confirmation and then decided to see if there were comparable coins that had recent auction records in this grade. Back to the archives I went.

I didn't really find any good comparables for the 1864-P and 1865-P, two dates that I regard as somewhat similar to the 1863; at least in terms of overall desirability. I then looked at the 1863-S; an issue with 17,000 struck but a low survival rate. I believe that this date is about twice as available as its Philadelphia counterpart but, like the 1863-S, it is extremely rare in AU58 and above.

In their June 2011 auction, Stacks Bowers sold a nice NGC AU58+ 1863-S for a remarkable $25,875. This was the single best example of the date that I had seen in years and I thought the price realized would be strong but I was clearly not expecting a winning bid of over $25,000. But this was as good a comparable as I could find and it made me think that if a "gem slider" 1863-S half eagle was worth nearly $26,000 then a somewhat nicer example of a decidedly rarer date (the 1863-P) had to be worth at least $30,000-32,500.

After negotiations, I was able to purchase the 1863 half eagle in this price range. I sent it to CAC where it was approved, thus becoming the first and only stickered example of this date. I listed it for sale in the mid-30's and within a few hours I sold it to a specialist who had been looking for a high grade 1863 half eagle for many years.

And what exactly does this all prove? Here are a few thoughts that I gleamed:

1. With CDN Monthly Summary showing a "bid" of $20,000 for this date in MS60, I knew that I wasn't going to get any help from published price sheets. But that's not a surprise, given that no MS60 coin had ever traded.

2. A few things convinced me to stretch on this coin: its true rarity in all grades, its Civil War date of issue and its great eye appeal. But if I had been offered an 1863-P half eagle in MS60 that was ugly and processed, I might not have figured it for much more than the $20,000 or so that I decided a properly graded, attractive AU58 was worth; maybe even less, in fact.

3. When you are contemplating a purchase of a coin such as this 1863 half eagle, you have to be prepared to stretch. My quick analysis made me think it was a great deal at $25,000 and probably too much of a stretch at $40,000. So, at $30,000 I was still all in and at $35,000 I probably would have been as well but not without some complaining to the seller.

4. How effective is the comparable method I mentioned above for determining value? It can be very effective but it is fraught with potential landmines. Let's say there was just one comparable and it was from over a decade ago--would that be effective? Or what if there were three records and one was 100% higher for a comparable coin) than the other two--would you, as an informed buyer, know the circumstances behind this sale? Is it effective to compare a coin like an 1863 half eagle to, say, an 1863 eagle? Or is this too much of an "apples to oranges" scenario.

5. The bottom line is that no matter how pseudo-scientific we as dealers or collectors try to make pricing, a lot of the numbers that get placed on really rare coins are instinctual. If you are knowledgeable, you'll have a gut feeling that the price is "right" or its "wrong."

Would you like to read more about my thoughts on coin pricing? If so, feel free to email me at dwn@ont.com and fire away with some off your questions.

How to Price AU58 Gold Coins

As a buyer of rare gold coins, nothing makes me happier than seeing choice AU58 pieces with original color and surfaces. I love "Gem Sliders" as these coins tend to have better eye appeal than most MS60 to MS63's and are typically priced at a much lower level. They can be among the best values for savvy collectors but the question that often comes up with these coins is "how much of a premium do they command?" Not all AU58's are similar in quality. In fact, I think there is a huge range of quality and appearance within this grade. There are AU58's that are bright and have clearly been scrubbed. Other AU58's are more original but they are excessively abraded or a bit lackluster. The coins that I call Gem Sliders are ones that probably saw little--if any--circulation and acquired what little wear (or friction) they possess either from collector handling over the years or being transported from location to location. Out of all coins that are graded AU58, I'd say that fewer than 10% are true "sliders" and even fewer of these are what I'd regard as "Gems" for the grade.

The focus of this article is on how to price these Gem Sliders. In some series, such coins are seen from time to time but in most, especially those struck prior to 1880, they are rare enough that pricing can prove to be a challenge.

As I see it, pricing these coins falls into three categories: coins that merit a small premium, coins that merit a moderate premium, and coins that merit a substantial (or even a very substantial) premium.

A Gem Slider 1897-O eagle is a coin that merits a small premium over a less appealing AU58 example. This is so for a variety of reasons. First of all, the 1897-O is not a scarce coin in AU58 nor is it rare in the lower Uncirculated grades. Secondly, of the numerous examples graded AU58, a decent number are original and attractive. Thirdly, there is not a big price jump between AU58's, MS60's, and MS61's for this date. This means that an average quality AU58 might be worth around $800-900 while a truly superb AU58 might only be worth an extra $50 or so.

Gem Sliders that can be acquired for a moderate premium are generally priced at 15-30% over a less choice piece. An example of a coin that might sell for a premium in this range would be an 1851-C gold dollar. The 1851-C is not a rare coin by the standards of Charlotte gold dollars but it is certainly many times more scarce than the 1897-O eagle mentioned above. It is also an issue with a higher overall level demand since it is popular both with date collectors and with type collectors. The premium accorded a Gem Slider is not as great as one might expect for a number of reasons.

The 1851-C is relatively available in the lower Uncirculated grades and MS61 to MS62's sell for a reasonably moderate level in comparison to AU58's. This means that a collector on a limited budget has some options, unlike on an issue where the premium between an AU58 and an MS62 might be too great for him to consider the latter grade. Another thing to consider is the size of the 1851-C gold dollar. On small coins, the "gemminess" of Gem Sliders are not as apparent as on larger coins. This means that the premium tends to be lower.

It should be noted that not all small coins have their premiums held in check by size. An issue like an 1855-D dollar or an 1861-D could command a very strong premium in AU58 because of its rarity, its popularity and its prohibitively high value in Uncirculated grades.

The AU58 Gem Sliders that deserve to sell for a very significant premium are coins that have a number of factors working in their favor. They are typically large-sized coins (although not always; see below), coins that are extremely rare or expensive in Uncirculated and/or coins that are very popular.

To pick a fairly random example of a coin that would sell for a big premium in Gem Slider, let's look at an 1853-O eagle. This is a coin that has a fairly high population in AU58 (especially at NGC) and a scrubby, commercial-quality AU58 might be available for under $4,000. But a very high end, looks-like-an-MS62 Gem Slider is quite rare and could command a price in the $6,000-8,000 range. This sounds like an excessive premium but its not when you consider that there are only two or three properly graded pieces known in Uncirculated and if one were available it might sell for $15,000 or more.

A series that I think deserves high premiums for premium sliders is the Type One double eagle. With very few exceptions, this is a series which becomes exponentially rarer in grades above AU58 and one in which eye appeal is both critical and often lacking.

Again, let's take a random example; this time an 1855 double eagle in AU58. This is an undervalued, under-appreciated date in higher grades but one that is finally becoming recognized for its scarcity. A low-end AU58 example is worth around $4,000. In MS61, this date is worth in the $12,000-15,000 range. So what does that make a gorgeous, mark-free, frosty Gem Slider worth? $6,000? $7,000? Maybe even $8,000?

I can think of many coins where a Gem Slider (or possibly an especially nice AU55) might sell for more than a low end MS61 or even an MS62. An example that comes to mind is a 1796 No Stars quarter eagle. I haven't seen many Gem Sliders of this issue in the last few years but I have seen a number of really unappealing MS61 to MS62's. As a collector, I'd rather spend $200,000+ on a superb AU58 than I would an over-graded, processed MS62. The same scenario holds true on a number of other early gold issues, like 1795 half eagles and eagles, 1808 quarter eagles, etc.

Since the entire concept of Gem Sliders is so rooted in eye appeal which is, in and of itself, a hard concept to get universal agreement on, it would be impossible to publish a Gem Slider Price Guide. One man's $6,000 AU58 Type One double eagle might be another man's $4,000 coin. The addition of the "+" and "*" grades at PCGS and NGC to reward good eye appeal is a beginning of quantification but it is still up to the market to determine what premiums are applied to Gem Sliders.