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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Numismatics and the Current Economy

If you follow economic news in even the most cursory fashion you are, no doubt, aware of the fact that the news has been pretty grim for the last few days. Lehman Brothers is gone, Merrill Lynch has been sold in a distress situation to Bank of America, AIG is looking perilous and the stock market yesterday had its single worst day since immediately after 9/11. How does this affect the rare coin market? The first thing to remember about the coin market is that no matter how “big” we’d like to say it is, in reality it is a tiny, tiny blip on the financial horizon. Most investors don’t know that there is a coin market, let alone understand the actual dynamics behind it. So from the “drag down” perspective I don’t think we have a lot to worry about. In other words, your set of Gold Dollars isn’t going to lose X% of its value because AIG stock is in the proverbial toilet.

It is pretty obvious to me that the short term affect of the meltdown of the financial sector is not good for the coin market. When the stock market loses close to 5% of its total value in one day and the economic picture looks painful (to say the least), many people’s focus turns away from pursuits like coins. By the same token, you could say that in these times, people turn to pleasurable pursuits like coins exactly because of the fact that it helps them forget about the Big Picture.

I think the medium to long term outlook for the coin market may be better than most realize. Once things settle down (at least until the next round of consolidation in the financial sector) people are going to be seeking new asset classes and markets like precious metals and coins may possibly prove appealing to a new wave of investors.

If you have read this blog over the last few years, you know how I feel about short-term investments in coins. I still do not like being short in any area of numismatics, but if gold continues to drop I would strongly consider buying something like generic double eagles to have a position. It seems to me that the long-term outlook for gold is rosy and given the scary things that we are seeing right now with banks and financial institutions, having something tangible like a little gold position might not be such a bad decision.

I do not expect to see really good coins getting cheaper any time soon. If you are a serious long-term collector, this is a good time to reflect on what your goals are. Hopefully, you didn’t expect to be in and out of the market in a year or two and, hopefully, you will not panic and decide to dump your coins.

I think this is an important point to address. Panic selling is never a smart thing to do and I think anyone who takes their collection to the next major show and announces that they “have to sell” is setting themselves up to get sliced and diced. Yes, the economy looks scary right now. But hopefully you haven’t been buying coins with funds you need for essentials (food, clothing, shelter, etc.). Just sit back, take and a deep breath and enjoy what you’ve got.

I’ve stated repeatedly that your coin collection needs to be viewed as a long-term work in progress. If the market goes up, that’s great. You’ll make some money on your purchases and everybody likes some paper or actual profits. If the market goes down, you might be able to buy the key date that seemed pricey a few months ago for 75 or 80 cents on the dollar. We’ve been in a bull market that’s lasted a long time and many new collectors are spoiled. Just ask a collector who was active in the 1980’s and 1990’s what it was like to slog through a seemingly unending bear market.

The bottom line is I’m not ready to call an end to the Good Times in the coin market. I think people will be more tentative in the next few weeks because of the financial crisis and the overall weakness in precious metals but we’ll continue to see strong prices for nice coins whether at auction or via private treaty sales. The 4th quarter of 2008 is certainly going to be interesting, to say the least.

The Proof Gold Market

For those of us who experienced the coin market’s ups and downs in the 1980’s and 1990’s, perhaps the biggest surprise has been the relatively quiet Proof gold market of the past few years. While prices for Proof gold have certainly risen since the beginning of this decade, new collectors don’t seem to regard these coins with the same degree of awe that was seen in the recent past. If you are a Proof gold collector, please do not misinterpret the introductory paragraph I just wrote. I personally love Proof gold and there is no arguing the fact that a $25,000 purchase made in this area in, say, 2001 isn’t worth considerably more today. What makes me sit back and scratch my head a little is the fact that Proof gold just doesn’t seem to be as active a market right now as early gold or key dates from the 20th century. Why?

I have a few theories. The first is the fact that a huge number of Proof gold coins quietly went off the market between 2000 to 2006 to a specific overseas buyer. Today, the supply of interesting Proof gold is the lowest I can remember. If you look at the typical major auction, there are just a few pieces of Proof gold for sale and they tend to be coins struck after 1890 and, more often than not, smaller denominations. When years go by between appearances for rare Proof gold issues, it is difficult for there to be an active two-way market which then results in a lack of pricing information or stimulus for new collectors.

This brings me to theory #2. This lack of material has meant relatively little promotion of Proof gold in the past five years or so. A dealer like me can write articles about how great Proof gold is, how rare Proof gold is and what an excellent value Proof gold is, but if I don’t have any coins available to sell to potential new collectors or investors, what’s the point? If you look back over time, various dealers were always promoting Proof gold. I think the relative lack of supply has caused marketers, retail dealers and other traditional advocates of Proof gold to search elsewhere for trophy coins to sell to new clients.

Something odd that happened in the Proof gold market was an oversupply in the late 1990’s/early 2000’s. The coin market was not especially strong back then and within a few years you had at least four huge collections of Proof gold come on the market at once (Pittman, Reed, Childs and Bass). Proof gold issues that seemed incredibly rare in 1995 all of a sudden seemed kind of common in 2002. As an example, I can remember owning no less than three Proof 1869 quarter eagles at the same time in 2002. This is an issue with an original mintage of 25 and an estimated nine or ten examples known. How was I going to convince a collector that this issue was rare when I owned three of the darn things? Needless to say, I wound-up losing money on two of them.

Another thing that hasn’t helped the Proof gold market is the lack of original coins. I think this is especially true with 20th century issues. I know that I personally pretty much quit buying coins like Proof Indian Head quarter eagles, half eagles and eagles as well as Proof Saints a few years ago because it was so incredibly hard to find coins that hadn’t either been doctored or over-conserved. And it’s often hard for me to pay $25,000, $50,000 or more for a 19th century Proof gold coin that looks like the Gallery Mint produced it last month. I can’t imagine that I’m the only dealer (or collector) who feels that way.

I think what would really give the Proof gold market the shot-in-the-arm that it needs is if a fresh, interesting collection were to come onto the market. It would be especially interesting if this were an out-of-the-woodwork collection where the coins had been bought in the 1950’s and 1960’s; before the era of dipping and conserving (and more) became so prevalent in this area.

Do you have questions or comments about Proof gold? Please feel free to contact me via email at dwn@ont.com and I would be happy to assist you in any way that I can.

Improving Your Collection Without Spending Alot

Someone recently asked me a question that I thought was interesting and that merited a detailed response. To paraphrase this question, they basically asked me this: can you tell me some ways that I can improve my collection while spending little or no money? Are there any actual ways that you can make your collection better without dropping a lot of coin (bad pun intended)? I believe that there are and here are a few that came to mind:

1. Bring Out Your Dead. Every collector has them. Duds. Bad deals. Low end duplicates. You know what I’m talking about: the Dead Zone of your collection. These coins may represent more value than you realize. As an example, I recently had a relatively expensive double eagle in stock that a collector wanted for his set but he had no extra money at the time. I had him send me a list of the dead coins he owned; bullion, generic Saints, Morgan dollar rolls, etc. The value of his “stuff” was considerably more than he realized and he was actually in a nice profit position on his bullion. The choice to trade spillage for one nice, rare coin was easy for him to make. And the good news was that he had enough money left over so that he can actively pursue another neat coin or two.

2. Attribute Your Coins. If you collect series like Bust half dollars or large cents you are probably already a die variety collector and all of your coins are properly attributed. But what if you are a collector of early half eagles and you have never bothered to attribute your coins to Bass-Dannreuther variety numbers? And what if one of your supposedly common half eagles turns out to be a very rare die variety that is worth a 30-50% premium? Seems like a no brainer to me. Even if you collect a series for which there is no standard reference work, it makes sense to examine your coins with a 10x glass and see if anything interesting is happening. Who knows, maybe you’ll discover a previously unknown mispunched date or a cool double date that has not been recorded.

3. Invest $500 to $1000 in improving your library. If you collect early gold coins you probably own the Bass Dannreuther book and a few other standard references. But do you own pertinent auction catalogs? It has long been my belief that one of the best uses of your money is a good library. You’ll get more enjoyment out of your coins if you know more about them and there is no better way to learn about a series, especially one that is somewhat obscure, than reading books and catalogs. If you don’t know which books or catalogs to pursue, ask a specialist dealer which ones he refers to or, better yet, contact a numismatic literature dealer and ask for some suggestions.

4. Improve your peripherals. If you are using an old, slow computer you are missing out on the “full experience” when it comes to coins. Not everyone has the luxury of owning a sporty, brand-new computer but with the price of monitors having dropped so considerably in the last few years treat yourself to a 16 inch or 18 inch flat screen monitor. It’s just a few hundred bucks and it sure beats viewing coin images on an old, low resolution screen. Spend some money on a good quality new magnifying glass and a high quality lamp to view your coins as well. You’re looking at $50-100 for a world-class loupe and around $100-150 for a professional quality halogen coin lamp.

5. Research the pedigrees of your coins. This area is not relevant if you a collect fairly common series. If you are working on a set of business strike Indian Head quarter eagles in MS60 to MS62, it will be virtually impossible to determine the pedigree of these coins. But if you specialize in an area like Dahlonega quarter eagles or Fat Head half eagles, it is quite possible that some of the coins in your collection come from famous collections. Not everyone reading this will agree with me, but I believe that the “right” pedigree adds value and collectability to a coin and to discover that your 1847-D quarter eagle is from the Norweb collection or the Green Pond sale is pretty darn exciting. And if you collect Colonials or early cents, there is a possibility that a coin you own could have a pedigree that goes back over 100 years.

6. Start a cheap secondary collection. I’ve mentioned before that there is nothing more frustrating than being a collector who is either cash-strapped or at a point in his collection where there are no easily available holes to fill. In a scenario such as this, I always recommend having a cheap but interesting secondary collection to fulfill your “need” to buy something and to keep out of trouble. How about 18th century British Condor tokens? They are fascinating, well-designed and you can buy lovely examples for less than $100. Start a “one country one coin” collection where you purchase one coin from every country that currently makes coins. Or, focus on a certain year (say 1899), figure out every country that existed at the time and buy one copper or silver coin from each of these nations.

7. Immortalize your collection. Let’s say you’ve worked on a neat specialized collection for a number of years but you are currently “out of gas” due to finances or unavailability of stopper dates in the series. Why not create a website that focuses on your coins and/or the series you collect. As an example, say that you are working on a set of No Motto Liberty Head eagles. There’s never been a book that has specifically focused on these coins; just works such as my New Orleans reference that has included them as specific issues within a larger context. You could buy the URL nomottoeagles.com and create a research site that lists the finest known pieces, varieties for each year, auction records, etc and which had photos of each of your coins. I have seen this done for a few specific types (as an example, a collector has done this for Trade and Seated Dollars and the results are extremely impressive). Doing this is a win-win for everyone involved. It gets people more interested in the series you already collect and it gets potential buyers more interested in your coins when you are ready to sell. Plus, it seems like a fun thing to do in your free time.

2008 FUN Show Recap

After the dust settles from a major coin show and a major auction, there are always a number of things that can be learned. I learned a lot from the 2008 FUN show and, more specifically, from the Heritage FUN auction.

1. If someone is wealthy and they really want a coin, price no longer appears to be an object. Case in point: the 1805 quarter that was sold as Lot 2775 in the Platinum Night 2008 session. It was graded MS66 by NGC and it brought an absolutely incredible $402,500. What is even more incredible is the fact that this exact coin sold for $74,750 one year ago (almost to the day) in Heritage’s 2007 Platinum Night session. With the click of a mouse, even the most inexperienced collector could have determined this, thanks to Heritage’s unparalleled degree of transparency. Clearly the coin market is strong right now but a nearly-six times increase in the price of a neat but not world-class coin? Gulp. And you want to know something even more amazing about this sale? The two collectors battling it out for the 1805 quarter were bidding on line and, in all probability, never saw the coin in person or had an independent dealer look at it for them. In fact, they may not have even had a bidding strategy other than: “I want this coin and must have it no matter what it sells for.” And this was just one of many prices in this sale that I regard as absolutely amazing.

2. The last time that coins sold for numbers like this at auction may well have been at the 1979 and 1980 Garrett sales. There is one HUGE difference between those numbers and today’s seemingly crazy auction prices. In 1979 and 1980 the end users for most of the six and seven figure coins that were selling at auction were dealers. Today it is virtually all collectors. That makes me think that the coin market of 2008 is a lot healthier than the admittedly twisted market of 1979 and 1980.

3. Heritage has created a model that rich new collectors trust and that they obviously find entertaining to use. Collectors can bid live on their computers even if they are in a hotel room in Kuala Lampur and they know the reserve and/or opening bid level for every coin in the auction. Unlike at most other coin auctions, these collectors know they aren’t going to get jerked around at a Heritage sale and that’s why we are seeing something unparalleled in numismatic history beginning to emerge in 2007 and 2008: exceedingly wealthy people who will never set foot in a coin show and whose identity will never be known to more than a small group of industry insiders are quietly dominating the high end of the market like never before.

4. Previously dormant areas of the market can turn around very quickly. As an example, Proof silver coins from the 1840’s and the 1850’s were extremely tough sales for many years. In fact, I can remember dark, overgraded coins from the Starr sale in 1992 languishing in the market for at least five to eight years and some of the less attractive coins from the Pittman sales taking years to find homes. Out of the blue, these early Proofs are now selling for huge prices. In the Platinum Night session, a group of four very rare Proof quarters (1841, 1844, 1845 and 1850) brought a remarkable $1,322,500 including $460,000 for the 1850 in NGC PR68. Before the auction I would have guessed that these four coins would have brought in the area of $750,000 collectively. From what I hear, there are now two or three deep-pocketed collectors who have suddenly started to put together date sets of business strike and Proof Seated coins. That fact, plus the availability of some very rare and really exceptional issues in the FUN sale created a Perfect Storm scenario and ignited a formerly-dead series. Which formerly dead series will be next?

5. In the area of branch mint gold, it was interesting to see the very strong performance of many issues. The strongest prices realized were for the key date or one-year type issues that have been in great demand for the last few years. In the gold dollar series, a very nice PCGS AU58 1855-D sold for $37,375 (Trends for this issue in this grade is $35,000). The fact that this piece was choice, original and well struck helped propel it to what has to be a record price for an 1855-D dollar in this grade. There were some very attractive 1861-D half eagles in the sale and this is an issue that has shown great demand in the last few years but very few pieces have been available. A PCGS AU58 sold for $43,125 (Trends is just $35,000) and a spectacular PCGS MS63 brought $207,000 which is a record auction price for any Dahlonega gold coin.

6. When I was discussing the “how to” details about the Carolina Circle collection with its owner, one of the most important decisions to make was whether to regrade the pieces that had been slabbed years ago or to leave them as is. Given how hard it is to find a fresh deal these days, I made the decision to keep them in their original holders. Was my choice right? At this early point, it’s hard to say with certainty as you can rest assured that virtually every one of the old holder coins will be broken out of the original holder and sent to PCGS or NGC to be regraded. But given the prices that many of these coins brought, I’d have to say that people are going to have to hit some pretty major Grading Home Runs. Here are just a few examples. An 1841-C $5.00 in an old PCGS AU53 holder sold for $13,800. With AU58 Trends at $12,000 this means the coin will have to grade at least MS61 to be a decent deal. An 1846-C in PCGS AU53 brought $12,650. With AU58 Trends at $14,000 this coin will need to grade at least AU58 and even at that level the dealer who purchased it won’t make any money. A very attractive PCGS AU50 1851-C sold for $12,650 which is considerably more than AU58 Trends. To be even a marginal deal for the buyer this coin will have to grade at least MS60 to MS61. One final half eagle of interest was a lovely PCGS AU58 that brought a rousing $17,250. With MS62 Trends at $15,000 this coin will have to grade at least MS63 to be a good deal. From AU58 to MS63 seems pretty optimistic to me...

7. The appearance of CAC coins in the FUN sale was of great interest to many market observers, myself included. I am planning to write an in-depth analysis of their performance in my next blog but the early results seem pretty strong with premiums ranging from a low of 10% to a high of well over 50%.