Luster Pros and Cons

Luster - Pros and Cons - Gold coins basically come with three types of luster: satiny, frosty and prooflike. In this blog, I’m going to discuss these three “looks” and the pros/cons of each. I’ll also add an illustration of each look. And away we go... The most common luster seen on United States gold coins, especially those from the 19th century, is frosty in texture. Frosty luster can be extremely attractive. I would describe it to the new collector as having a “hard” look and it is most associated, in my experience, with coins produced at the Philadelphia and San Francisco mints.

Frosty luster is considered a “plus” by most collectors. Unfortunately, this sort of luster is becoming harder to find as more and more gold coins are chemically treated. Coins with original frosty luster have what I call a “wagon wheel” effect where the luster flows clockwise and appears to almost radiate out from the center of the coin.

Some of the series that are famous for having above-average frosty luster include the Fat Head quarter eagles and half eagles from the 1820’s and 1830’s, Classic Head gold, No Motto Philadelphia issues and Three Dollar gold pieces.

Another type of luster seen on United States gold coins is satiny in texture. Satiny luster tends to be less attractive than frosty luster but it can be very appealing. I would describe it to the new collector as having a “soft” look and it is often seen on branch mint coins from the 19th century and on San Francisco issues from the 20th century.

For the new collector, satiny luster is more difficult to understand and appreciate than frosty luster. This is due to the fact that it is more subtle in its appearance. As an example, the luster on the coin shown above is excellent in-hand and shows very few breaks in the fields. But most collectors would think this coin has a considerable amount of wear; due to its subtle luster and, obviously, the weakness of strike at the centers.

In my experience, satiny luster is more often seen on New Orleans issues, Civil War era gold and some of the Reconstruction era Philadelphia issues.

The third and final major type of luster is prooflike. When dies are readied for production they are polished and/or rubbed with a cloth in order to make them appear bright and “new.” This polish fades rather quickly and certain issues are almost never seen with mirror-like reflectiveness. As an example, I have seen very few Prooflike coins from Charlotte and Dahlonega and only a handful from New Orleans.

Generally speaking, 19th century gold coins with very low original mintage figures tend to have prooflike surfaces more often than not. As an example, the 1890 quarter eagle pictured above is an issue with a mintage of only 8,720 and it is often found with reflective surfaces. Some of the other types of coins that are sometimes seen with prooflike surfaces include Philadelphia Type Three gold dollars, Philadelphia quarter eagles from the 1870’s and 1880’s, Three Dollar gold pieces and Liberty Head double eagles from the 1890’s.

I personally have mixed emotions about prooflike gold coins. Due to the fact that gold is a soft metal, the surfaces tend to easily pick up marks, nicks and scratches and these tend to be strongly amplified by deep, reflective fields. Unless a Prooflike gold coin is a Gem, it tends to have a “scruffy” appearance and may have compromised eye appeal as a result.

There are two interesting subtypes of prooflike coins that the collector should be aware of. The first are coins that are Deep Mirror Prooflike. These are coins with especially reflective surfaces and a look that can be deceptively similar to that of a Proof. As an example, there are certain gold dollars from the 1880’s that are extremely hard to tell apart from Proofs. Generally speaking, many of the gold coins that are designated as Deep Mirror Prooflike by NGC command strong premiums, especially for issues that are generally seen with frosty or satiny surfaces.

The other subtype is semi-prooflike. A semi-prooflike coin, as one might guess, is a coin that has a blend of mirror-like reflectiveness along with either satiny or frosty luster.

As a gold coin collector becomes more sophisticated and sees more coins, he is likely to see pieces that have a wide variety of luster types. By becoming more familiar with these various types of luster, he will become a better coin buyer and better able to purchase coins that are choice and original.

Long Beach Report

The Long and Short of It - My short (but productive) stay at Long Beach means that my Long Beach report is going to be short (but productive). I didn’t arrive at Long Beach until Thursday afternoon and I was severely jet-lagged after having just returned from Japan. I had originally intended to totally skip Long Beach but a lack of coins meant that I had to try my best to quickly and efficiently restock.

After I landed and cabbed down to Long Beach, I called a few Trusted Suppliers and asked about the show. Their replies were nearly unanimous: it was a bear finding anything of interest and I was certain to be frustrated. My mood, as I headed down the freeway, was not good.

One thing that is good about being at a major show for just over a day is that you don’t have a lot of time to mess around. So as I hit the floor at Long Beach and began to scour I was very focused.

My day at Long Beach turned out to be amazingly productive. I was able to buy over thirty interesting coins; which is about triple the amount that I expected. I sold a few older, expensive coins that I was happy to move out and in the eight seconds that I was actually at my table, I had productive retail sales with new clients.

I spoke with a number of dealers about their Long Beach Experience and got fairly mixed reviews. One dealer told me he had an excellent show and the dealer that I share a table with had one of his more productive shows in some time. Other dealers I talked to told me that they had shows that ranged from fair to poor and most complained about a lack of interesting material (surprise, surprise). I’m not sure why I was lucky and found so many good coins other than the fact that I worked my little fanny off searching for them.

My take on the coin market is that it has clearly slowed down in the last month or so with the exception of very high end items. But there are some areas that remain strong across the board. Decent to nice early gold is in strong demand and choice, interesting Seated Liberty coinage (which I’ve been begging people to buy for about ten years...) is blazing hot.

In the realm of dated gold, I’ve noticed that nice quality Dahlonega gold is virtually impossible to find right now; my current inventory is virtually non-existent. Charlotte seems to be perking up a bit (in anticipation of my new book?) and I noticed a few mid-five figure Charlotte coins selling at Long Beach. Carson City half eagles and eagles are very strong, especially Registry Set quality issues. New Orleans gold continues to be hard to find and with the exception of the odd coin here or there, I have noticed a real shortage of high quality, interesting material since the beginning of the year.

What’s not selling right now? Anything that isn’t regarded as being, at the very least, medium to high quality for the grade. And generic gold....well let’s just say generic gold isn’t exactly a big seller right now.

My guess is that the Baltimore show will be decent but not great. This is the one Baltimore show that many West Coast dealers traditionally miss but the caliber of this show is now such that even the least interesting of the three Baltimore shows is still better than the most typical conventions.

Collecting 'Transitional' Coins

Throughout the history of gold coin production in the United States there have been a number of instances where two different designs were produced simultaneously, or at least within the same year. I call these “transitional” coins and I think they would make for a very interesting collecting focus for the gold coin specialist.In the gold dollar denomination, the most obvious transitional issue occurred in 1854 when both the Type I and the Type II issues were produced. Both of these are relatively common although the Type Two becomes scarce in the higher grades and rare in MS64 or better. In 1856 two designs were produced: the Type Two and the Type Three. Since the Type Two was only made in San Francisco this year and there are no 1856-S Type Three gold dollars this isn’t a transitional issue in the sense of the 1854. There are some very interesting transitional issues in the quarter eagle denomination. In 1796 both No Stars and With Stars designs were produced. Both of these are rare in all grades and because of price constraints they would be considered one of the stoppers of a transitional set. The next transitional issue occurred in 1834 when both the Capped Bust and the Classic Head quarter eagles were struck at the Philadelphia mint. The former is an extremely rare coin in all grades while the latter is common in grades up to and including MS63.

More transitional issues exist in the early half eagles than in virtually all other denominations combined. The reason for these transitional issues tends to be different than, say, for the 1854 Type One and Type Two dollar when the design was changed to facilitate improved striking.

There are two types of half eagle dated 1795: the Small Eagle reverse and the Large Eagle reverse. The former was actually produced in 1795 and it is relatively common. The latter was struck in either 1797 or early 1798 using a backdated obverse die. Only 1,000 or so 1795 Large Eagle half eagles were made and this clearly would be one of the stoppers to a transitional set.

A similar circumstance exists with 1797 half eagles. Small Eagle reverse coins from this year are known with both fifteen and sixteen stars on the obverse. These are very rare but not impossible to locate. There are also 1797/5 half eagles with the Large Eagle reverse. These are extremely rare and include two die varieties that are presently unique and housed in the Smithsonian.

Another transitional year occurs in 1798. A small number of half eagles (probably no more than 400-500) were made using the Small Eagle reverse. This is a very rare coin today with only seven or eight examples known. The more common 1798 half eagles have the Large Eagle reverse. These are moderately scarce in terms of overall rarity but they can certainly be found with much greater ease than their Small Eagle counterparts from this year.

Yet another transitional year for half eagles occurred in 1807. This is a direct result of a design change. The first issues struck this year had the Heraldic Eagle reverse while the latter issue employed the new Capped Bust obverse and John Reich’s new reverse. Both of these issues are relatively common in all grades up to MS63.

1834 saw another design change in the half eagle denomination and the transitional collector has two issues to focus on: the rare Capped Bust (or “Fat Head”) and the more common Classic Head. The Capped Head is found with two varieties (the Plain 4 and the Crosslet 4) as is the Classic Head. Interestingly, on both design types the Crosslet 4 is significantly rarer.

The next transitional half eagle occurs in 1866 when the San Francisco mint produced coins with and without the motto IN GOD WE TRUST on the reverse. Despite having a much lower mintage, the No Motto coin is actually comparable in overall rarity to the With Motto issue. Both are very rare in the higher AU grades and virtually non-existent in Uncirculated.

The final transitional issue in the half eagle denomination occurred in 1908 when the design changed from the old Liberty Head to Bela Lyon Pratt’s new Indian Head design. Both of these issues are very common and the transitional collector with a virtually unlimited budget could aim as high as MS66.

In the early eagles there is only a single transitional year: 1797. The first 1797 eagles used the Small Eagle reverse. Only 3,615 were struck and around five to six dozen are known. This issue is typically seen in circulated grades and it becomes extremely rare in anything approaching Mint State.

Later in the year, the new Heraldic Eagle design was first used on this denomination. Slightly over 10,000 examples were produced and this is a relatively available coin, although it is very rare in grades above MS61 to MS62.

One of my favorite pair of transitional eagles are the two types of 1839. The first, also known as the Type of 1838, is easily distinguished by Liberty’s neck being very curved and ending over the right side of the final star. It is the more common of the two and while relatively available in most circulated grades, it is very scarce in AU55 and better and rare in Uncirculated. The second variety is known as the Type of 1840. On this issue, Liberty’s neck is less curved and it ends well before the final star. It is very scarce in all grades and rare in AU.

In 1866, the San Francisco mint was not informed of the changeover to the With Motto reverse until they had struck 8,500 pieces with no motto. The 1866-S No Motto eagle is a rare coin in all grades today. The With Motto variety is also rare although it is a bit more obtainable in the AU grade range. Both are unknown in Uncirculated.

1907 saw a changeover from the Liberty head design to the new Indian Head design. The transitional collector has some difficult decisions about which coins to include in his collection as three major variations of the Indian Head eagle from 1907 exist: the rare Wire Edge, the very rare Rolled Edge and the common No Motto.

In 1908 there are no less than two transitional Indian Head eagles. The Philadelphia and Denver mints both struck No Motto and With Motto coins. Luckily for transitional collectors, all four of these are relatively common except in Gem Uncirculated. The 1908-D No Motto is the rarest of the four and this issue is extremely rare in properly graded MS65.

The United States twenty dollar gold coinage contains more interesting transitional coins for the specialist. The first of these is the 1866-S No Motto and With Motto. The former is a very scarce coin in all grades and it remains unknown in Uncirculated. The latter is fairly common in circulated grades and scarce in Uncirculated with nearly all of the two to three dozen known in Uncirculated grading MS60 to MS61.

The termination of the Liberty Head design in 1907 meant that an interesting group of transitional coins from this year are available. The 1907 Liberty Head issues were produced at the Philadelphia, Denver and San Francisco mints and all three are common in grades up to MS63. The 1907-S is very rare and underrated in Gem Uncirculated.

Augustus St. Gaudens’ redesign of the double eagle was introduced in 1907. Most transitional collections would include one High Relief from this year as well as a 1907 No Motto. Both issues are readily available in Uncirculated grades and the latter is abundant even in MS65 to MS66.

To assemble a complete set of the various Transitional coins that I discussed above would be an amazing accomplishment, given the rarity and prohibitive cost of many of the issues. That said, I think this would be a great set that would be a fun challenge for the collector who is up to it.

The Dilemma of the Placeholder

If you collect a set (or sets) and are competing in the Set Registry, the chances are good that you’ve struggled with the Dilemma of the Placeholder. Let’s examine the Pros and Cons of buying a placeholder coin and try to decide whether this is a smart collecting strategy or not. First off, let’s define what a “placeholder coin” is. I view a placeholder coin as one that you buy as a stop gap. As an example, say that you are assembling a set of Indian Head eagles. One of the few dates that you are missing is a 1911-D. One comes up for sale at auction in a grade lower than what you really want. You decide to buy it anyway because of the fact that it a) fills a gaping hole in your set and b) gives you a sufficient number of Registry Set points that you move up a notch and pass Collector X. Was this is a smart purchase or not?

Let’s look at the pros of buying a placeholder coin. The first is the measure of satisfaction that filling a really nagging hole can give. There is nothing more frustrating for our hypothetical collector than seeing a big ol’ ugly blank every time he looks at his set inventory - especially if he has a nice date run before and after the missing coin. Coin collecting is a very emotional hobby and the Karmic Value of filling a hole is hard to put a value on.

Another pro is the fact that a placeholder coin might grow in appeal on the owner. I’m going to assume that as a collector you are smart enough to not buy something truly hideous and to at least hold out for a moderately attractive placeholder. You might learn that your placeholder is actually so rare that it represents the only coin that you are likely to have a shot to buy.

For some collectors a placeholder coin represents a practical decision. Let’s say for example that you are assembling a gold type set from the 19th and 20th centuries and that you don’t have the ability to spend $100,000+ on a nice 1808 quarter eagle. In this case, a decent looking coin in, say, an NCS holder with EF sharpness but with signs of an old cleaning at $40,000-50,000 might be a savvy purchase; especially given the fact that an uncleaned 1808 quarter eagle in this price range might take years and years to locate.

For every pro there is a con, so now let’s look at the cons of buying placeholder coins. To my way of thinking, the biggest con about a placeholder coin is the fact that you know you are going to have to replace it. Unless the market goes up in your series, you are probably going to lose money on it when you sell it. Let’s say, for example, that Collector Z buys the mythical 1911-D eagle we discussed above. He purchases one for $10,500 that’s decent but not really a great looking coin due to the presence of some marks on the obverse. A year later he finds the right coin and it’s going to cost him $27,500. Unless Collector Z has a buyback or “trade up” agreement with the dealer he bought it from he’s probably going to take a 10-15% hit on the coin. Let’s say he’s sells it at auction and nets $9,250; a loss of $1,250. This brings the actual cost of his new coin to $28,750.

Another con about collectors buying placeholder coins is that it teaches them bad collecting habits. I’m a big believer in buying the right coin the first time. I’ve seen some collectors “self-churn” themselves as they buy a 1911-D eagle first in MS61, then upgrade to an MS62 then upgrade to an MS63 and so on. As I just mentioned above, there are transaction costs that will hit you in the wallet every time you upgrade. It also flies in the face of something that I try to teach new collectors: be patient and wait for the right coin. The Coin Gods like to play games with impatient collectors and I can’t tell you the number of times I’ve seen a collector settle on an inferior coin only to have the absolutely perfect coin come along a week, a month or a year later.

So, the bottom line: placeholder coins, yes or no? I’d say in the majority of cases “no”. The exception would be if you are buying something that is so readily liquid and has a tight enough buy/sell spread (a coin like a $50 Pan-Pac Round) that even a short-term hold isn’t likely to have negative impact on its value.

2008 Central States Show Review

In my last blog, I predicted that the Central States show in Rosemont would be active. How did the show turn out and what are my current impressions of the market? Read on for all the answers...and more. After a lack of shows for over a month I knew that there would be a strong demand for nice coins and I was right. Every dealer I spoke to at the beginning of the show told me that they literally had to be three places at once to get a shot at the fresh coins that were available. For someone like myself who does coin shows without assistants, partners, lackeys or go-fers it can be very frustrating to try and buy coins, view auction lots, answer emails, make phone calls and more - often all at once. I can’t ever remember a time when I’ve had to work harder to buy!

I arrived in Chicago on Tuesday and began buying literally as soon as my plane touched the ground. Wednesday was PNG Day which meant that only a limited number of the table holders could set up. I got to wear some spiffy clothes and I got to focus exclusively on wholesale business which, for better or worse, is what shows are really about right now (I’ll explain a little bit more about this statement in a second).

There were a few very interesting deals that broke at the show. I was able to buy some nice early gold coins from an outstanding collection of pre-1834 gold that a West Coast dealer was selling. This was the sort of deal that usually sells at auction (all the coins were in old holders and many were significantly undergraded) and I believe that virtually the entire deal sold to the first three or four people who viewed it. I also heard about a neat collection of Bust Quarters by die variety that sold (I was able to buy a few leftovers from the dealers who handled it) and I was impressed that the collector who owned it didn’t place it in auction.

After lots of running around, I was able to assess what I had purchased and I was pretty impressed. I thought this Central States was the best buying show that I have had since last year’s ANA and I was able to purchase over fifty new coins and I spent north of $1 million in a few hours of frenzied buying. I have already listed many of my new purchases for sale on my website and some of the highlights are as follows:

• A choice 1861-C $5.00 in PCGS AU58
• A nice group of New Orleans eagles ranging in price from under $1,000 to over $10,000
• A superb 1799 half eagle in NGC MS61
• An 1812 half eagle in PCGS MS64
• The Garrett 1886 $3.00 in NGC PR63CAM

I was also able to buy a couple of excessively rare coins (that I can’t mention here) for long-term clients whose want lists I have. I admit that I’m not as great at working want lists as I should be (again, this goes back to not having enough help at coin shows) but I will say this: if I know that you are looking for a special coin and we have a good relationship, the chances are a lot better that you will get a shot at this coin than if I have no idea what you are looking for (or who you are).

Thursday was a day that began with me focusing on selling some of the older coins that I had in inventory. I took a group of twenty or so coins around in a box, showed them to three dealers and sold 85% of the group with relatively effort; in many cases for the same amount of money that I had been quoting collectors on my website. My take on selling? It was very easy if you had nice coins.

I thought that the retail aspect of this year’s CSNS show was pretty disappointing. Granted, I didn’t have a great table location and I was away from the table 75% of the time as I was out buying coins. But it seemed that there wasn’t a great “retail buzz” and I only met a few new potential clients.

As I mentioned above, I am noticing that coin shows are more and more about buying and wholesale business. In a market like this when it is hard to buy and easy to sell, a coin show is a brutally competitive environment for specialist dealers. I don’t have the luxury of the mega-dealer who just sits at this table and wades through boxes of other dealer’s coins. And I don’t have the desire to spend four or five days at a show like I did a few years ago. Shows are now extremely intense two or three day affairs for me and I find it hard to spare fifteen minutes out of my limited time to schmooze with a collector who wants to view a coin. I would much rather sell coins to collectors from the saner environment of my office where I do actually have the time to discuss things. The one exception is at the larger shows like ANA and FUN where I am committed to staying for the entire week and don’t have to do four things at once for two days.

I’m sure you’re wondering what was hot at the show and I’m sure that my answer won’t surprise you. There were a number of dealers looking for early gold and Proof gold, particularly coins that were choice or rare. I sold a number of interesting double eagles at the show and that market seems as robust as ever (with the exception of generic Saints which you can’t give away right now..) I also noticed a renewed interest in Three Dollar gold pieces and I was surprised to sell a few Charlotte coins that had been languishing in my inventory for a while. The areas of the market that seemed slow included generic gold, commemorative gold and nearly anything that is ugly or has been recycled through thirty dealers in the past year.

Interestingly, there are no more shows for close to a month and most dealers will be staying at home until Long Beach at the end of May and Baltimore at the start of June. It will be interesting to see how this lull in the action affects the market.

2008 Central States Show Preview

The 69th annual Central States Numismatic Society convention will be held in Rosemont, Illinois next week. What’s the buzz surrounding this show and are coin dealers excited about attending it? I regard the Central States show as one of the better coin conventions of the year. It’s not quite at the Summer ANA or FUN levels in terms of attendance or importance but I’d rank it up in the second tier along with the Baltimore shows, Long Beach and one or two others. Most dealers I know like this show and approach it with a good degree of enthusiasm.

I think this will be a good CSNS show for a variety of reasons. The first is the location. Chicago is traditionally a good coin show town and the convenience factor of Rosemont (which is about five minutes from O’Hare airport by cab) makes this a much better venue than some of the more recent Central States shows. Secondly, most coin dealers have not been to a major show since Baltimore in early March. Being home for over a month means that there will be a good deal of pent-up demand for coins. The third reason is that the coin market remains strong and this includes a better precious metals market than at any Central States show since the early 1980’s.

I go to coin shows primarily to buy and, as usual, I’m hoping that I can uncover a few interesting coins on the bourse floor at Central States. I’ve spoken with many of my suppliers and while no one is holding a collection of Carson City eagles in first generation PCGS holders for me, I think a few neat items may come out of the woodwork.

What will be in strong demand at this year’s Central States? I’m sure you’ll be absolutely shocked to hear me say this but most coin dealers at Central States are going to be scouring the bourse floor looking for nice coins. If you were to walk into the show with a group of choice, fresh, attractive coins and price them “right”, the chances are good that you would sell most—if not all—of your coins within an hour.

To be more specific, I think some of the areas that will experience strong demand include Proof gold, early gold, 19th century type coins and anything that is genuinely rare.

In my opinion, the CSNS auctions are interesting but they lack the impressive array of gold coins that have been included in past sales. I am quite interested to see Heritage sell the David Quellar specimen of the 1804 dollar. This exact coin last sold for $475,000 in 1993 and my best guess is that it will bring about ten times this amount today. If you are attending the show in person I’d strongly recommend that you watch the sale of the 1804 dollar but given the fact that the actual buyer is likely to not be in attendance I can’t vouch for how “exciting” the sale will be.

After Central States is over, there are no other major shows until Long Beach at the end of May; another reason why dealers are excited about Central States and hopeful that they will be able to spend some coin in Rosemont.

Bass Collection Dirty Little Secret

If you ask ten United States gold coin experts what the most important pedigrees are, you are certain to have the Bass collection mentioned nearly every time. Clearly, the Bass collection was among the greatest collections of United States gold ever assembled. But I’ve learned a dirty little secret about some of the Bass coins that I’d like to share with you. Harry Bass was a pretty compulsive buyer and many of his coins came from the major auctions of the 1960’s and 1970’s. When these coins were shipped to Harry, they were enclosed in the clear plastic "flips" that were popular during this era. What we now know is that these flips were made with polyvinylchloride (or PVC) which is an oil-based chemical that imparts a residue on coins.

I don’t know this for a fact but I believe that many of the Bass coins were stored in PVC flips for many years; in some cases as long as two or even three decades. During this period, a lot of PVC "grime" got onto the surfaces of the Bass coins.

So how can you tell if a Bass coin has PVC grime on it? Generally, gold coins with this residue develop a sort of cloudy whitish film that seems to become thicker with the passing of time.

The coins that appear to have the most noticeable residue are in PCGS holders and have "original" Bass pedigrees. If a Bass coin was removed from its original holder but resubmitted later to PCGS (in an attempt to upgrade it) it was still given a Bass pedigree but to distinguish it, it was designated as "Bass" on the insert by PCGS. Coins that are in their original "first generation" Bass holder have a pedigree on the insert that states "Harry W. Bass Collection." There are also NGC coins that have Bass pedigrees. These were in the Bass collection but were cracked out of their original holders. Ironically, I have never seen an NGC Bass gold coin with any PVC grime on its surfaces.

How serious of a problem is this PVC? I am not a chemist and would defer the chemistry-related issues inherent to this question to someone else. From what I do know about gold, it is a very inert metal and one that is far more forgiving than, say, silver or copper. If the Bass collection had been copper coins and they had been stored in PVC flips for years, I think the coins would have been at considerable risk. Being gold coins, I think they were at far less risk. I’m not certain if the residue from these plastic flips did any long term damage but in the instances that I have seen coins on which the residue was removed, the underlying surfaces seemed just fine.

For me, the biggest problem with these coins is aesthetics. Some of the Bass coins in their original holders that I have seen with this PVC grime simply aren’t very attractive. If you purchased coins from the Bass sales in 1999-2000 and you haven’t inspected them recently, I’d suggest you take a quick peek and see how they look.