How the Internet Has Changed Rare Coin Auctions

In my last blog, I discussed ways how the internet has impacted the concept of eye appeal when it comes to coins. Continuing this internet-related theme, I'd like to focus on how the web has impacted rare coin auctions. The impact of the internet on coin auctions in the past ten years has been monumental; more so, I'd venture to say, than virtually any other collectible. Ten years ago, the auction business had a number of vital firms offering coins; today it is essentially a duopoly. Ten years ago, auctions were primarily a place where dealers battled against each other in a sort of numismatic bloodsport; today, they are kinder and gentler. Most importantly, the numbers have grown beyond what I would have ever expected. It is now commonplace for an auction to realize $40-50 million; a decade ago this would have been startling, front-page-of-Coin World news.

Let's look at a few specific areas of how the internet has changed the coin auction market and, as you knew I would, I'll add my two cents worth about the positives and negatives of each.

1. Everybody (and I mean everybody) now has a computer. Ten years ago, it was not uncommon for me to speak with a well-heeled collector and have him say "I don't do computers." In 2011, if you don't have a computer, you are either a total Luddite or you are stubborn and doing yourself a huge disservice as you placing yourself at a hugely competitive disadvantage; sort of like fighting a war with sticks and fire clubs. And ten years ago, most people who had computers didn't have DSL or fast connections. Remember dial-up? Remember waiting two minutes for an image to load only to lose a connection? Not an image I look back at fondly...

The fact that everybody now uses fast computers is compounded by portability of these machines. Ten years ago, a collector might panic when he realized that an auction he cared about was the same time as his family's spring break trip to Florida. With laptops and iPads, your location is almost meaningless. This makes participation is an auction easier than ever as does, of course, the increased memory of today's computers.

What will see ten years from now? Three dimensional images of coins? Auctions broadcast live in 3-D? Tons of applications to make bidding and determining value easier? My guess is that we'll see things we can hardly imagine now and that they will continue to revolutionize the rare coin business.

2. Collectors have gained so much confidence in the auction process (kudos here to Heritage who I give total credit to for this) that a sizable percentage of coins at auction now sell to end-users. I don't know the exact percentage of coins in a typical Heritage sale that sell to collectors but I'm guessing its over 50% by value. And I'm guessing that ten years ago this figure was far less.

This brings me to a quick story. For me, the greatest coin sales of all time were the Bass auctions, held in 1999 to 2001. I can remember at the Bass II sale (to me, the single most memorable of the four sales) there were less than a dozen collectors in the auction room participating. And, of course, no internet and probably not much mail or phone bidding. Today, a sale of this magnitude would attract hundreds of well-heeled collectors from all over the world. The internet has made coin auctions so much more accessible and, as a result, they are now so much more collector-dominated.

3. Transparency is the numismatic buzzword of this decade; sort of like "green" is to consumer products. Ten years ago, the thought of transparency made numismatic auction firms recoil in horror. Only Heritage was smart enough to realize that by being transparent they would gain the trust of their clients and, in turn, do more business. The lack of transparency (and the failure to embrace technology early on) was one of the main things that did in Heritage's largest rivals in the coin auction business.

The coin auction business is now built on a platform that is far more transparent than other collectibles. This has had an impact on both collectors and dealers. In the past, a dealer could buy a coin from an auction, mark it up (or upgrade it) and offer it for sale, often with the potential buyer having no idea where it was from. Now, most coins in dealer's inventories can be easily traced to auctions. If a dealer offers a coin for $8,000 that just sold at a Heritage sale for $5,000, it might greatly offend a potential client. Margins, for internet-savvy buyers, tend to be smaller as a result.

4. This access to information has put the collector on much more level playing field than ever before. Even a new collector can see what coins bring at auction and now have a degree of comfort knowing that there is (hopefully) a legitimate under-bidder at 5-10% less than what they just paid.

To me, the existence of such huge databases as the Heritage auction archives and the PCGS auction prices realized archives are incredibly valuable. Ten years ago, I had my own databases for most branch mint gold but this was a ton of work. Now, someone else does the work for me and, frankly, they do it better. The amount of information available to collectors has leveled the playing field; not always the best thing for me as a dealer but certainly a great thing for the collector. Actually, let me correct myself. It probably, in the long run, is great for me as a dealer...

5. With the exception of Platinum Night sessions at FUN and summer ANA, the typical coin auction room is now nearly empty. You can go to a Heritage or Bowers sale at a B level show and see eight people in the room who don't work for the firm holding the sale; and four are there for the free food. People now use the internet to bid or they bid by phone.

I have mixed feelings about this. I don't miss the days when I'd be at a coin show from 8am until 6pm then run to an auction and work another five or six hours. Those 16 hour days were OK when I was 28 but they became less and less fun as I got older. But I do miss knowing who was buying what; especially at "name" sales or specialized collections where this knowledge was important for the future. I think this sort of "depersonalizes" the rare coin auction business and when I do get to dress up and bid on expensive, important coins in front of my peers I still get a little bit of a tingle.

6. You know the feeling when you are on eBay and you get outbid on an $8.00 post card? You get irritated and even though you know you shouldn't bid anymore, you bid another time (or two or three or four...) to get back at the anonymous competitor who is keeping you from adding that 1939 World's Fair postcard to your collection. Take the same scenario and apply it to a $50,000 coin. I call this the rise of the "I-must-have-it" internet bidder.

Heritage has created an amazingly efficient live auction internet platform that makes it easy to bid in their sales in real time. I can think of many occasions when two determined internet bidders have done battle on a coin worth, say $25,000, and wound-up pushing the selling price to $50,000 or even $75,000 because they were pissed at their anonymous competitor(s).

Heritage has made it so easy to bid and re-bid online that many collectors go "ah, what's another bid or two or three" before they realize that they've added a big amount of money onto a lot. But the beauty of this system is that there are two actual bidders in real competition. In the past, it could have been (and often was) one unfortunate bidder being run up by an unscrupulous auctioneer.

I could go on and on but need to get ready to go to the Baltimore coin show--and attend an auction. I'd love to hear your input on how the internet has changed the coin business. Leave a comment at the end of this blog and let me know your thoughts!

Rating the Numismatic Auction Companies

For better or worse, auctions have become a more integral part of the numismatic scene than at any time in recent memory. In 2006, hundreds of millions of dollars worth of coins traded at auction and a number of price records were set. How do I rate the auction companies and what are their strengths/weaknesses? I thought it would be interesting to share my opinions of the five major American numismatic auction firms. There are five categories that I feel are important to consider: catalogs (and the ability to accurately catalog coins), websites (ease of use, usefulness, technology, content and images), customer service (how well do these companies handle problems), prices realized (what types of coins bring the most money at each sale) and overall strengths and weaknesses. Each of these categories is then ranked as follows: excellent, very good, good and poor.

1. Heritage: In the past few years, Heritage has clearly become the industry leader. It is now common for Heritage to conduct a $20-30 million dollar sale which features a huge variety of coins ranging in value from a few hundred dollars to hundreds of thousands of dollars. Heritage has become dominant for two reasons: their use of technology is incredibly innovative and they are extremely aggressive when it comes to securing consignments.

Catalogs: Heritage produces a good catalog. Their use of graphics is exceptional and the design is far more professional than any other firm. Their photography is not as good as certain other firms but I would attribute this primarily due to the fact that they tend to have so many more coins for sale that they can not spend enough time on quality control. I regard their cataloging as good to very good. They write nice, accurate descriptions of coins but tend not to have enough time or manpower to do much in-depth, original research.

Website: No one has a numismatic website with more useful bells and whistles than Heritage. It is incredibly easy to bid online in their sales and their auction archives feature is wonderful. My one complaint about the Heritage website is that it is a bit cold and impersonal. But its overall ranking is excellent and no other numismatic auction firm even comes close.

Customer Service: Since Heritage sells more coins than anyone else, they make more mistakes. But I’ve found them to be excellent at dealing with these issues in a timely and fair fashion. I would advise the collector to find someone at Heritage they like and build a long-term relationship with that person. I personally recommend Sam Foose.

Prices Realized: Prices in a typical Heritage sale tend to be strong, especially due to the fact that they have dramatically more retail buyers participating than anyone else. The areas that Heritage does best in are 20th century issues and Registry Set quality coins. Their weakest areas tend to be the more sophisticated, esoteric areas that Stack’s/ANR excel in.

Strengths and Weaknesses: Heritage has the best website and the greatest number of bidders of any numismatic auction firm. They are extremely easy to do business with despite their size. My major complaint with Heritage as a consignor is that their sales are way too big and coins can get lost in 5,000+ lot sales. But they are clearly the leader in this segment of the market and this does not appear to be changing any time soon.

2. Stack’s Rarities: In the fall of 2005, Stack’s and American Numismatic Rarities merged. I am basing my ratings for this new firm primarily on ANR as I’ve had many positive experiences with this firm in the past unlike Stack’s who I have not.

Catalogs: ANR, hands down, had the best catalogs in the numismatic auction business. No one does a better job of cataloging coins that ANR, especially rare and esoteric items like tokens, medals and colonials. With the exception of colonials, I thought Stack’s cataloging was inconsistent, at best. Stack’s color photography was exceptional while ANR’s wasn’t as good. Assuming these firms can combine the best of each world, their new catalogs should remain the best in the industry.

Website: Stack’s website was very poor for many years but in the last two or three years it improved considerably. ANR’s was decent but could have stood to have been updated and given a technological makeover. The new combined website is good to very good but it still is long ways away from comparing to Heritage’s.

Customer Service: I always thought ANR had excellent customer service while Stack’s was poor. It will be interesting to see whether the new firm is friendly and “small townish” like ANR or rude and “New Yorkish” like Stack’s. My two “go to” people at ANR have always been John Pack and Cynthia LaCarbonera and I think very highly of both of them.

Prices Realized: ANR and Stack’s were both capable of realizing extremely strong prices for fresh, original collections. Their prices for the more mundane meat-n-potatoes items which constitute the bulk of most sales were never as strong as Heritage’s due to the fact that neither firm had an active online bidding presence.

Strengths and Weaknesses: It will be interesting to see how the combination of Stack’s and ANR works. There is a tremendous amount of talent present at the two firms although this talent tends to be more academic while Heritage’s is, in my opinion, more market-savvy. I would expect that the new Stack’s Rarities firm will never replace Heritage as the top dog in the numismatic auction world but it will continue to at least keep Heritage from getting too complacent.

3. Bowers and Merena: The last few years have been a roller coaster ride for Bowers and Merena. As recently as the early part of this decade, Bowers and Merena was one of the major forces in the coin auction business. A disastrous stretch during the middle part of the decade almost destroyed this firm’s reputation but the last year or two have seen considerable improvement.

Catalogs: The graphics and design of a B+M catalog are good but the overall quality of the cataloging and the images could stand improving. However, I have noted a marked change for the better in the past year. B+M still needs to hire photographers who can make coins not look like lumps of coal.

Website: The B+M website is attractively designed but it does not have many interesting features. Bidding online is easy and secure. I would rate their website as good but it could certainly stand to be improved.

Customer Service: I have had a few problems in the past with B+M but they have always been resolved to my satisfaction. The biggest problem that this firm has had in recent years is considerable turnover which makes it difficult to establish a relationship with a capable person. I would personally recommend dealing with Debbie McDonald as I have found her to be very competent and honest.

Prices Realized: In the past year or two, Bowers and Merena has begun to create a niche as a company who is able to get strong prices in the various 20th century series. Their ability to get collections which are strong in 18th and 19th century material is not yet as well developed.

Strengths and Weaknesses: After a rough few years, Bowers and Merena has established itself as a strong #3 in the coin auction business. But in order to become more competitive, they will have to show they are capable to doing something that distinguishes themselves from their competitors.

4. Goldbergs: As someone who runs a niche business himself, I admire the fact that Ira and Larry Goldberg have a clearly defined goal as a company. They do not want to be as big as Heritage and they want their sales to be small, manageable and held in their own backyard of Beverly Hills. They have created a well-run, solid company that consistently offers good coins.

Catalogs: I think the Goldberg catalogs are very nicely designed with excellent graphics. Their cataloging is weak and their images appear to be enhanced. I would not personally feel comfortable bidding on a coin in one of their sales based on the image in the catalog.

Website: The Goldbergs website is solid if unspectacular. It is sometimes hard to find a specific coin due to an unsophisticated search feature. I do not personally care for their online images although I think they look more realistic and accurate than the ones in their catalogs.

Customer Service: The level of customer service in this firm is very good and when problems arise it is easy to deal directly with one of the owners. I personally recommend dealing with Glenn Onishi who I have known for many years and who I think is extremely trustworthy.

Prices Realized: Like any coin auction firm, the Goldbergs can get great prices for fresh, original deals. They tend to have recycled dealer consignments in their auctions and these coins typically bring exactly what they are worth. My one complaint with their sales is that some coins are too aggressively reserved by consignors.

Strengths and Weaknesses: If you live on the West Coast, this firm is a good resource. I’m not certain that I would travel all the way from the East Coast just to attend a Goldberg sale but the fact that they are typically held in conjunction with the Long Beach shows makes them convenient for dealers. The best compliment I can give this firm is that if I were creating an auction company, it would have many of the same basic goals as the Goldbergs do.

5. Superior: This is another firm that appears to have seen better days. Back in the 1980’s and 1990’s, Superior sales were massive and featured extremely interesting coins. In the last few years, the volume and quality of their sales appears to have shrunken considerably although they still get the odd interesting fresh deal every now and then.

Catalogs: Superior’s catalogs are unimpressive from a visual standpoint. Their cataloging is underwhelming and their images are poor. To remain competitive in the marketplace, they will have to improve in these areas.

Website: Not to pick on Superior, but their website is by far the worst of the five firms discussed in this report. It is confusing, sloppy and difficult to navigate. This is another area that will require a comprehensive overhaul by the powers that be at Superior if they are going to remain relevant in this increasingly web-driven business.

Customer Service: I’ve found customer service at Superior to be well-intentioned but erratic. One person at Superior who is very competent and knowledgeable is Larry Abbott. I have also had good experiences with Paul Song.

Prices Realized: Prices at the last few Superior auctions have ranged from very strong to indifferent. These sales are generally not well-attended and have little retail participation.

Strengths and Weaknesses: The numismatic auction business is very competitive and Superior finds itself (currently) lagging. The future of this firm depends on whether or not they can retain their key personnel. I’d guess that if Superior’s next two or three sales are not successful then the signs are ominous for their future.

Heritage August Signature Sale Preview

I recently returned from Dallas where I was viewing auction lots for Heritage’s August Signature Sale. Heritage never seems to run out of coins to sell and, as usual, their catalogs were massive. In fact, I am thinking of charging them for a chiropractic visit as a result of a throbbing shoulder courtesy of having to schlep the catalogs through DFW and Portland airports in my now-deformed briefcase. Now that I’m back home, I’ve had a chance to analyze the Heritage sales and thought I’d share my thoughts about the coins that are being sold.

For the most part, I was more impressed with the non-gold in the sale than the gold. One item that really caught my eye was Lot 5055, which is an amazing NGC MS67 1862 Indian Cent die cap. For the most part, I am not a really big fan of errors but this was the error to end all errors. A die cap is caused when a planchet gets stuck in the die and the planchet is repeatedly struck. As a result, this die cap shows amazing detail on the coin itself and a stunning fan-shaped pattern with no less than eight distinct tabs. If I am not mistaken, this piece was in an ANR sale around three years ago but, for whatever reason, it really caught my attention this time. I would not be surprised to see this spectacular piece break the $50,000 mark.

Another coin that was pretty remarkable was Lot 5264, a 1906-S half dollar graded MS69 (!) by NGC. This is the only business strike barber half dollar ever graded this high by either service and the coin was awfully nice. Did NGC get carried away a little with the grade? Probably. Does a finer business strike Barber half dollar exist? Possibly. But, man, was this a seriously lovely coin!

Enough of this non-gold chit chat. You are reading this blog to know my thoughts on the gold coins in the sale. My overall impression was that the quality was spotty. There were some great single coins here and there and a nifty collection of Liberty Head double eagles but I did not find this to be one of Heritage’s more impressive offerings of gold.

It was interesting to compare the coins in old holders (i.e., the ones that were “fresh”) versus the ones that were “maxed out.” An example of a lovely fresh coin was Lot 5417, a PCGS MS61 1796 No Stars quarter eagle. Unlike most of the examples of this celebrated date that have been offered in recent years, this piece wasn’t stripped of its original color and had a lot of luster below its attractive color. But just so you don’t think that I automatically go ga-ga over any coin in an old green label PCGS holder, the next lot, a PCGS AU58 1796 With Stars quarter eagle showed an old cleaning on its obverse and, even by today’s inflated standards, was not really high end for the grade.

I have to mention the NGC PR67 1879 Flowing Hair Stella because I can’t resist writing the following: it was one Helluva Stella. If I were in the market for a killer example of this type, I’d buy this coin. It was superb.

I was fairly underwhelmed by the rest of the early gold and much of the branch mint issues although a few treasures did poke their little plastic heads up from time to time. You have to begin to wonder, are there any original Charlotte and Dahlonega coins left? Have the coin doctors gotten to every last piece? It was interesting looking at the high grade Philadelphia coins, which had original surfaces and comparing them to their doctored branch mint counterparts. One coin I did love was Lot 5507, an 1856-C half eagle in PCGS MS63. It was easily the finest example of this rare date that I have ever seen.

And, believe it or not, there were some Proof gold coins in the sale with original hazy surfaces (!) I was beginning to wonder if any of these had survived the dipping trays and chemistry sets of America’s coin dealers… If you’d like to know what a piece of original Proof gold looks like, study Lots 5514 and 5516.

For me, the most interesting deal in the sale was the Wyoming Collection of Liberty Head double eagles. I had sold some of the coins in this set to the owner and was excited when I heard his collection was for sale.

The star attraction of the collection is the 1861 Paquet reverse double eagle (Lot 5623). While not really widely known outside of the gold collecting community, this is actually the second rarest regular issue American gold coin, trailing only the 1870-S Three Dollar. Only two examples are known and it will be very interesting to see what this piece will bring. I predict it will bring between $1.5 and $2 million.

The sale includes a full run of New Orleans double eagles including the very rare 1854-O and 1856-O. Both are graded AU50 by PCGS and it will be interesting to see if prices for these two coins continue the amazing upwards march that they have shown for the past five years.

I will be attending the Heritage sale on August 13th and August 14th and would be pleased to provide you with auction representation service. If you are interested, please contact me immediately.

Changes in the Coin Auction Market

Has any segment of numismatics changed more in the past ten years than auctions? A hypothetical collector who pulled a ten-year Rip Van Winkle and suddenly rediscovered coin auctions would note a host of differences including the following: The Internet now plays a huge role in auctions. Ten years ago, the Internet was a non-entity when it came to coin auctions. In today’s auction world, a large percentage of the lots are sold online; often times to collectors who have never seen the coins in person and are relying solely on the images.

Many auctions now play out in nearly empty rooms. Ten years it was not uncommon to see a hundred people bidding live in an auction room. Today, many big buyers never set foot in a live auction.

The numbers and dollar values of coins sold at auction have grown astronomically. Ten years ago a $10 million auction was front-page-of-Coin World-news. Today, it’s nothing. In fact, for many of the big firms a $10 million dollar sale would be a disappointment. And the physical sizes of the sales themselves have grown immensely. For certain firms, a 5000+ lot auction is routine. Ten years ago, auctions were seldom more than 2500 lots. And let’s not even mention the size of the catalogs themselves. You could use many of today’s catalogs for weight training devices…

The catalogs have become better and more sophisticated. The average auction catalog in 2006 is much slicker and glossier than it was in 1996. Most of the descriptions have gotten better and the photography has, for the most part, improved. In 2006, most coin auction catalogs compare favorably to the catalogs produced by Sotheby’s and Christie’s for their major art sales.

The players in the coin auction business in 2006 are remarkably similar to who they were in 1996. But the power structure has changed radically. Heritage has gone from an also-ran to the dominant force in the business while Superior and Bowers & Merena have become far less significant. Stack’s has kept its business model fairly consistent and has lost business as a result. The new kid on the block, ANR, has basically become what Bowers & Merena was ten years ago.

The entire numismatic auction business has become more transparent and information-driven. Heritage posts the reserves for every coin it sells and has a prices realized archive with over 1 million lots included. It is only a matter of time before other firms become more transparent and it seems likely that someone will take the Heritage archive and enlarge it to include other firms’ lots. In 1996, coin auctions were about as un-transparent as you could imagine and it was not uncommon to see consignors bidding on their own coins at auctions in an effort to drive up prices.

While the entire coin market is a very different animal today than it was a decade ago, it seems that more of these changes are noticeable in the auction arena than anywhere else. It will be very interesting to see how different the landscape looks in 2016.