The Duckor Collection of Gold Dollars: A Post-Sale Analysis

The Duckor Collection of Gold Dollars: A Post-Sale Analysis

I had a personal investment in the recent sale of Dr. Steven Duckor’s gold dollar collection at the Heritage 2014 Platinum Night auction session. Steve is a good personal friend of mine (and of my wife Irma) so we wanted to be there to cheer him on. I also helped him assemble the set and, as a dealer, you don’t often get the chance to sit with a client while his world-class collection is being sold at auction.

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What's Up in the Carson City Gold Market?

What's Up in the Carson City Gold Market?

My CC interest is still strong but a few factors have made my interest wane a bit in recent years. The market has become very pricey—especially for double eagles—and coins which I would happily write a check for $15,000 back in 1992 I have trouble with at $30,000 or $40,000 today. Most of the coins I see in the marketplace today are very low-end (not all but most) and when I see pieces in AU53 holders which are not only overgraded but which are processed, I have trouble playing at current numbers. Finally, to be honest, the market has become a little too competitive for me.

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Is it Time to Buy Indian Head Half Eagles?

I am generally not a participant in the generic gold market as I tend to favor scarce and rare dates over more common ones. But I like Indian Head half eagles a lot and a recent experience made me ask the question: “is it time to buy Indian Head half eagles?” I bought a nice, fresh deal of Indian Head half eagles about six weeks ago. All were in very old holders and I broke them out and sent them off to grading. My results were excellent and nearly every coin graded MS64 or MS65. As I got ready to cash in on my windfall, I did some price research and was shocked. Unless they stickered at CAC (more on this in a few moments) the levels I was going to have to sell them left me breathless…and not in a good way.

1908 Indian Head $5.00 PCGS MS65 CAC

If you are like me and you don’t really follow the generic market on a day-by-day basis, it can be mystifying to see how cheap most issues have become in the last few years. My non-CAC MS64 Indian head half eagles were worth around $1700 per coin if they were in NGC holders and a bit more in PCGS holders. I was more shocked at how cheap MS65’s have become: around $9,000 for NGC coins and a smidge over $10,000 for PCGS coins. And that’s not to mention the fact that you basically have to twist buyer’s arms to get them to buy any quantity of these even at these cheap, cheap, cheap levels.

Why are Indian Head half eagles so inexpensive in MS64 and MS65? There are a number of answers.

1. Traditional Sellers of Generic Gold Now Sell Other Products

Firms like Blanchard, Swiss America, and Goldline used to sell lots of better quality generic gold coins; items such as MS64 or MS65 Indian Head half eagles. Today, they either sell few generics or if they do, they are focused on those coins with CAC approval. The supply of MS64 and MS65 Indian Head half eagles has stayed consistent as coins are continually found in Europe or upgraded from current holders. The demand has not kept up with the supply, however, and this has resulted in plummeting prices.

1911 $5.00 PCGS MS65 CAC

2. Owners of Generic Gold Don’t Want to Cost Average Their Positions

Let’s say you bought a few nice MS65 Indian Head half eagles for $15,000 each back around 2006-2007. You are clearly not a happy with today’s prices so much lower than when you purchased your coins. But why not by a few more and use cost-averaging to lower your overall price point(s)? This logic makes sense to me, but for most coin investors it is exactly what they do not want to do. They feel “burned” by Indian Head half eagles and probably want nothing more to do with them. This lack of continuity in the generic market, due to poor price performance, has clearly not helped this market.

3. The CAC Effect

One of the primary reasons why CAC was created was to identify those generic gold coins, particularly in series such as Indian Head half eagles, where the perception was that many coins in MS64 and MS65 holders were over-graded or not, at the very least, “solid” for the grade. CAC has proven to be very tough on Indian Head half eagles, and only a small percentage of the MS64 and MS65 coins sent in for approval have received a green sticker. As a result, stickered MS64 and MS65 Indian Head half eagles sell for very strong premiums; in most cases 25-50% over non-stickered coins. The market perception of non-stickered MS64 and MS65 Indian Head half eagles is they are not “good” coins and, as a result, the price gap between non-CAC and CAC stickered generic gold coins is widening. My gut feeling is that non-stickered MS65 Indian Head half eagles could ultimately be worth half as much as their CAC’d counterparts.

4. The Plus Grade Effect on MS64

It is a matter of opinion whether coins graded MS64+ are actually “better” than coins graded MS64, but the market perception is such that plus-graded coins have begun to sell for significant premiums, even in the generic market. If you are a new collector and you are offered a “regular” MS64 Indian Head half eagle for $1,750, or an MS64+ example for $2,250, the chances are good that you will spend the extra $500 and get the “better” coin. This has clearly hurt the market for MS64 Indian Head half eagles, and it is likely that we will see further price separation between MS64 and MS64+ coins.

5. Changing Tastes Amongst Gold Coin Buyers

More than anything else, the generic gold coin market has been hampered by a lack of demand. Past generations of new collectors and investors were introduced to numismatics by the assembling of the basic 11 or 13 coin U.S. gold coin type set. Today, new collectors are more inclined to collect something which is rare. For $10,000, an AU 1864 half eagle (slightly over 4,000 struck and under 75 known in all grades) is a more sensible purchase than an MS65 1909-D half eagle (nearly 3.5 million struck and over 100 graded in MS65 at PCGS alone) in the minds of these new collectors. It will take a large marketing promotion and lots of re-education to get new collectors to re-think this.

1912 $5.00 PCGS MS65 CAC

So what is my conclusion? Is it time to buy Indian Head half eagles in MS64 and MS65? I’d like to say yes, but I think that prices could easily drop another 20-30% on these coins in the next year or two. In my opinion, if levels get down to $1,500 for nice MS64’s and $7,500 for MS65’s, I would jump in the market, likely in a big way. For now, I’d avoid this coin unless you need one for a gold type set or if you are a contrarian with some tolerance for risk.

What’s your take on the Indian Head half eagle series and generic gold in general? I’d love to hear from you and encourage you to add your comment(s) in the section below.

 

Do you buy rare gold coins?

Do you have coins to sell?

Would you like to have the world’s leading expert help you assemble a set of coins?

Contact me, Doug Winter, directly at (214) 675-9897 or by email at dwn@ont.com.

The Third Annual RYK/DWN "Mashup"

Are you ready for a third RYK/DWN Mashup? Sure you are. Let’s get the background information out of the way and then get to the meat of the matter. This is, I believe, the third time collector Robert Kanterman and I have exchanged questions and answers about a variety of topics (the first was a two-part article). We’ve covered a lot of ground in the past; some of it warm and fuzzy, some of it, controversial, but all of it interesting and relevant. (Previous "installments" can be found here, here, and here.)

The format for this year is a bit different than in the past. I asked RYK five questions which he answered, and he did the same for me. After each of our respective answers, we each add some pithy comments. Simple, right?

Just remember the code: DW = Douglas Winter, head of Douglas Winter Numismatics, and gold coin specialist, while RYK = Robert Kanterman, collector extraordinaire, and popularizer of the DOG, or Dirty Original Gold coin.

Questions that DW asked RYK:

  1. What is the most undervalued series of us gold and what is the most overvalued? Why?

  2. If you had unlimited funds, what would you collect?

  3. What are three books on us gold you'd like to see written?

  4. Has grading gotten more conservative or looser in the last two years?

  5. Originality is finally in vogue. How much more are original coins worth versus commercial quality coins?

RYK’s answers with DW’s comments:

1. To be honest, I do not see anything that is truly undervalued at this point in time. If I had to pick one area, I would suggest that the most undervalued series of US gold to be No Motto Philly $5's and $10's. Some of these dates are really tough, and even the more common dates are tough to find in better grades and original condition.

The most overvalued areas to me are New Orleans and Carson City $20's. They are far more common than their valuations would suggest, especially the more prevalent dates (1851-O, 1852-O, 1875-CC, 1890-CC, etc.). I see 1851-O $20's in ugly XF going for $4500—which seems outrageous for an easy date/MM.

DW: Wow, what radiologist got up on the wrong side of the bed this morning? I disagree about the “what’s undervalued” comment. I think there are dozens of good values to be had in the Liberty Head gold series. As an example, Philadelphia quarter eagles from the 1840’s and from the 1867-1877 date range are really good deals right now. There are many San Francisco quarter eagles and half eagles that can be bought for less than $5,000, which are rare both in terms of absolute and condition rarity. I think a case could be made for calling nearly any C or D mint coin in truly original EF and AU grades a relatively good value given how hard they’ve become to find. Even seemingly mundane coins like nice AU No Motto eagles from Philadelphia at $1,000-1,500 are great values for collectors. And I can think of many more examples!

I see RYK’s point about calling O mint and CC double eagles “overvalued,” but you have to remember that the demand for these coins is huge. When you could buy CC double eagles in EF for $1,500 these were just flat-out undervalued coins. At today’s levels they are clearly not cheap anymore. But always remember these coins are big, have a great story, and are promotable. To a new collector, a nice CC $20 at $3,000-5,000 still seems like a fair value.

2. My first stab at this was to pick proof $20 Libs—a big, beautiful trophy coin, if ever there were one. However, as infrequently as these appear on the market, and if you add some criteria for quality and originality, despite the unlimited funds, you might not be buying many coins.

More realistically, I think that I would rebuild a series like Dahlonega $5's in MS-62/3/4 and model it after the original Duke's Creek and Green Pond collections.

If I am allowed to stray outside US Mint gold coins, I would probably do something in territorials, perhaps a high-end type set.

Finally, outside US coins completely, and not requiring a huge budget, a Pillar dollar date set in original XF/AU is something that would be really cool and interesting to me.

DW: I’m a little surprised that RYK mentioned Proof $20 Libs as this doesn’t strike me as a very RYK-esque series. I would have actually guessed he’d have picked a date run of early gold; possibly Fat Head half eagles.

Love the idea about re-building the Duke’s Creek and Green Pond collections. Just let me say that if you decide to do so, I’m here to help!

Like the idea on Territorials, but I’d caution that buying these coins requires extreme knowledge of the series and a good working relationship with an informed, savvy dealer.

And I’m crazy about the Pillar Dollar date set. That would be something that I would actually like to do for myself. Or maybe a date run of Mexican 8 Escudos gold coinage.

3. A Collectors Guide to San Francisco Gold Coins (1854-1880) — notice the date range.

An Encyclopedia of Original XF Branch Mint Gold Coins, 1838-1861.

Gold Coin Collectors and Dealers of the 19th and 20th Centuries.

DW: I’ve been kicking around a SF gold coin book for years. I’d need help to do it and, unfortunately, the two dealers I asked to help have contributed a collective sum of zero pages. I agree with RYK that the post-1880 coins tend to be easily over-lookable and the real interest lies in the earlier issues.

The second book seems a little self-serving (bad RYK, bad!), but it gives me an idea. It would be neat to do a web-based photographic record of totally crusty individual coins filed by date. A photographic record, if you will, of DOG gold. I probably have enough photos already available to partially complete this project and, in fact, if you go to my "Coinapedia," you can get an idea of how many of these photos I already have. Anyone with web savvy care to help…?

The third project is kind of interesting as well; I’m assuming RYK would want biographic sketches of collectors and dealers who specialized in US gold coins. Pete Smith did a project along these lines around a decade ago that was outstanding.

4. To be honest, I submit very rarely, and only to PCGS. I think that there is a psychology to grading that leads to grading decisions that are greatly affected by the other coins that the grader has seen on a given day, in a given session, immediately before and after your coins, the mood, the last phone call with the spouse, the time of day, etc. That said, I will have to say that when grading my coins, the grading service seems more conservative than when they grade the next person's coins. ;)

On a more serious note, I have seen some overenthusiastic grading of special collections when they get evaluated as a group. I am not going to call anyone out, but most people will know what I am talking about.

I would say that grading has become more conservative over the last five to seven years, and I am not sure that I have noticed much change specifically in the last two. I do see fewer obvious problem coins in newer holders. Maybe we should say that the grading services are getting better (and maybe Don Willis and Scott Schechter will remember I said so next time I submit some coins).

DW: That is an excellent answer and there isn’t much I can add to it. I like RYK’s point about special collections being graded “specially,” but if I had a $5 million deal of, say, fresh Dahlonega half eagles, you are darn tootin’ that I’d expect the grading to be “enthusiastic.”

5. Originality is indeed in vogue, and I am going to take some credit for spreading the gospel. DOGs (Dirty Original Gold coins) rule!

That said, the premium is complicated but certainly exists in ways that are difficult to characterize or articulate. I will attempt to make my point:

  1. Original gold coins will sell much faster than non-original gold coins of the same grade. This is indisputable.
  2. The premium for the original coin can range from zero (if purchased from a seller who does not appreciate originality) to 100% or more. I think an average would be around 20-25%.
  3. Sometimes the obviously unoriginal coin lingers on the market for a very long time, and it is hard to ascribe a value to it.
  4. There are an increasing number of collectors, like myself, that are buying the right look, irrespective of the grade, and it is very hard to say what the premium for doing so is.

DW: Wow, this guy RYK, he’s a confident fellow, no? Taking credit for spreading the Gospel of Crust…wonder where he learned that from?

I couldn’t agree more with answer #1. If you look at what sells on my website, the crustiest coins are the best received. Duh.

What sort of premium do these coins sell for? Let’s take a random example. A decent, but not really nice, common date C mint half eagle in PCGS EF40 is worth around $2,000. The same date in EF40 but with a deserved CAC sticker (dark, mellow surfaces and few appreciable marks) is easily worth $2,300; maybe even $2,500. For a coin like an 1861-D gold dollar or an 1864-S half eagle, a completely crusty example could sell for a much bigger premium than this.

As a rule, I’d say that True Crust certainly adds 10-20% and in certain exceptional cases, the premium could easily be 50% or more.

Questions that RYK asked DW:

  1. Four gold coins that have risen dramatically in value over the last ten years are the 1861 branch mints. If you had to pick four to hold for the next ten years, and could not pick these, which four coins would you pick? Which group of four would you rather have?

  2. Many people say that today's modern coins are tomorrow’s classics. Do you see any future classics among today's moderns (post-1986)? If I made you choose one…

  3. Pocket change is becoming less and less a part of daily life. What impact, if any, will this have on specifically gold coin collecting, in your opinion?

  4. The current high-end coin marketplace is strongly influenced by the duopoly of PCGS and NGC (with some nudging from the CAC). 80 years ago, Ford and GM dominated the car marketplace. Under what circumstances do PCGS and NGC become lesser players, or even inconsequential? Same question for Heritage and Stacks-Bowers.

  5. What is the most expensive-liquid (high demand) gold coin and least expensive-illiquid (low demand) gold coin that surprised you among coins that you have owned, bought, or sold in the last couple years?

And a special “mulligan” question to be named later…you’ll have to read on to see the question and the answer!

DW’s Answers with RYK’s Comments:

1. It’s hard to narrow this down to four coins, but the following four were chosen for one or more of the following reasons: popularity, “uniqueness,” multiple levels of demand, standalone qualities. The four coins that I would pick, and some reasons why, are as follows:

  • 1854-S quarter eagle: This date has finally been recognized as a Classic Rarity but it is still wildly undervalued when compared to a coin like an 1894-S dime. I just bought the fifth finest known of 12-14 known for under $300,000 and, in the rarified air of Classic Rarities, this seems cheap to me.
  • 1870-CC eagle: Here is a coin with so much going for it: rare in all grades, first-year-of-issue and history out the wazoo. A lovely EF40 just sold for less than $50,000 and I think this is cheap, especially when compared to the only slightly rarer 1870-CC double eagle.
  • 1854-D three dollar: This is another issue that has everything going for it: low mintage, odd denomination, one year status, etc. It’s not as rare as you think it might be but most of the “AU” examples are stripped-n-dipped and a really nice, wholesome example at its current market value seems like good value.
  • 1875 eagle: This is not a cheap issue but I don’t think many people know how rare it is (well under 10 known business strikes) and how scuzzy most of the survivors are. Given how wildly popular Ten Libs have become, this is a coin I could expect selling for $500,000 or more in the near future with just a wee bit of promotion.

RYK: Those are all excellent choices, but in the spirit of one of my favorite Thanksgiving activities, I am going to throw the yellow flag for roughing the collector by including coins that are as scarce as 94-S dimes! I like the 70-CC $10 as a choice—I wish I purchased the XF-45 example one you had on your website when I first started coming around 11+ years ago. I am less enthusiastic about the 1854-D $3, in part because my enthusiasm for $3's has waned over the years. I might include such coins that are more available like the 1795 $5 (which seems to have backed off from recent highs), the 1838-D $5 (which continues to lose ground to the 1838-C $5), the 1838 $10, and the 1861-O $20.

2. Oh, great, you would have to ask me a question about moderns…a subject I know absolutely nothing about. So, how about those Blazers…

I’m sure there are future scarcities among the post-1986 coins, it’s just that I have no idea which these are.

And please make sure to take a breath mint on your way out the door….

After taking the Modern Coin Walk of Shame, the ever generous RYK asked me a question about a subject I actually know something about.

SECRET HIDDEN QUESTION ALERT!!!

2a RYK: If you could have the entire series of Dahlonega $5's except, the 1861 (1838-1860), in circulated condition OR own only the 1861-D $5 in MS-62 from the series, which would you prefer? Assume the sum of the value of the 25 coins is roughly the same as the value of the 1861-D.

2a DWN: Hmmm…that’s a great question. My answer would depend on the quality of the coins themselves. If the 1861-D was just a so-so coin, I’d probably go for the quantity option. If the majority of the other coins were nice, I’d select that option. As an “investment” option, I’m pretty sure I’d want the 1861-D but from the standpoint of being a collector, I’s want the virtually-complete set of D mint fives.

RYK: In my question, I am assuming that all coins are quality for the grade and the sum of the value of the first 25 was about equal in value to the higher grade 1861-D...and I would select the One Coin (to rule them all...).

3. I don’t think that the direction we are taking to becoming cashless will impact collecting. I am not that old, but I can’t remember finding cool coins in change, and I still fell in love with coins at an early age.

Here in Portland, I am seeing a renaissance of old things. Young adults in their 20’s here love vinyl, they dig typewriters, and they go gaga for books and ‘zines. I can see this happening with coins as well. No more change makes these little round discs a lot more interesting.

RYK: I am going to agree with my friend from Oregon. Things that are obsolete become collectibles, and despite the fact that gold coins have not truly circulated for generations this has not limited their popularity. Just in case, I am going to buy my own smelter...

4. I could see something happening in the next decade to shatter the PCGS/NGC duopoly. What if exceptionally good counterfeits pass through the graders undetected? How would PCGS or NGC explain their inability to detect these coins? What if an insider trading/insider grading scandal rocked one of the services? It isn’t likely but it could possibly happen.

Or what if a better mousetrap is invented? Say someone patents really effective computer grading with the ability to interpret eye appeal?

Heritage and Stacks Bowers certainly control a good share of the market but they aren’t infallible. Say a hedge fund saw opportunity in the coin market and threw a lot of money at creating a firm to directly compete with the Big Two. It would be expensive but there is enough talent out there to topple them. And don’t forget about good old fashioned hubris. As you pointed out in your example above, Ford and GM seemed infallible but they never considered that the Japanese would make a better, cheaper product.

RYK: I am usually the last person to see the end of the line for a company, a fad, species, etc. That said, counterfeit holders (containing counterfeit or misrepresented coins) seem to be more likely to be a threat than counterfeit coins, at least in the near future. While on the surface, business seems to be booming at the Big Two, business conditions could change on a dime (no pun intended!), possibly leaving one of the other - or both - flatfooted. Perhaps if a consortium of very well respected numismatists came up with a better mousetrap, they could give some competitions, especially in the wake of a scandal or public controversy.

As for the auction environment, the Legend-Morphy entry, at the high end, and Great Collections, as a soup-to-nuts entry, both seem to have legs and are clearly taking away business from the Big Two. Neither of the new entrants currently seems to be a major threat to the dominance, but they are certainly chipping away.

Bottom line: ten years from now, Heritage and the latest iteration of Stacks-Bowers will still remain the Big Two, as will PCGS and NGC.

5. The most expensive ultra-liquid gold coin, in my opinion, is probably a Stella. They are worth $200,000+ for a nice one, but I could sell a bunch of them right now for a fair price and get paid within 72 hours. The least liquid would have to be in a very thinly traded area like patterns. If you had a High R-7 pattern (around 3-4 known) is might be a surprisingly hard sell if the one or two major collectors already had one.

RYK: I do not know much about Stellas (other than the fact that I once held five in one hand at lot viewing), but I probably should throw a penalty flag for illegal use of the pattern in a numismatic conversation, not once, but twice, in the same paragraph. My first thought was that the High Relief Saint was the most expensive and liquid gold coin, but coins like 70-CC $5 and $10, and 1861-D $1 and $5 sell very quickly when offered for a fixed price—almost no matter the price! I also continue to be surprised by the shipwreck coins, especially from the SS Central America, that sell for higher and higher prices as time goes by.

As far inexpensive but illiquid, in the context of gold coins, I would say that there seems to be a cadre of ugly, puttied, and/or otherwise abused gold coins from the southern branch mints that is perpetually available for sale.

So, there you have it. Another installment of the RYK/DWN Mashup!

 

Do you buy rare gold coins? Do you have gold coins you care to sell? Would you like to have the world’s leading expert work with you in assembling a set of coins? Contact Doug Winter via phone at (214) 675-9897 or email him at dwn@ont.com.

1871-CC $10.00 PCGS AU55

The 1871-CC eagle is an intriguing date. It is the second most available Carson City eagle from this decade (after the 1874-CC) but, like all the early issue gold and silver from this mint (i.e., pre-1875), it circulated very extensively in the Western states and, as a result, it is exceedingly rare in high grades. I am aware of just two Uncirculated 1871-CC eagles and it is a very rare coin in properly graded AU55 to AU58. This lustrous example is the first higher grade 1871-CC that I have seen in many years that is not overly bright from a recent dipping. It shows nice medium yellow-gold color with a slight reddish-orange tint as it is tilted towards the light. The surfaces show an acceptable number of marks for the grade with a few scuffs in the fields and two small reeding marks (from contact with another coin) on Liberty's neck. I think this coin is significantly nicer than Stack's-Bowers 2011 ANA: 7730 (graded AU58 by NGC and sold for $25,875) and it is the first PCGS AU55 to be available since Heritage 2007 ANA: 1975 which sold for $19,550 in a market which was far less appreciative of high quality CC eagles than the current one. There are a few auction records of over $25,000 for PCGS AU55's in 2006. A very important coin that will, no doubt, find a home in a very important collection of Liberty Head eagles.