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.

Traits of Successful Coin Dealers

Coin dealers are an “interesting” (yes, this is an ironic use of quotes) group. If you were to take the top fifty professionals in this field and examine their personalities, I believe that a number of the same traits would be seen in a majority of these individuals. What are some of these traits? And do you have what it takes to be a successful coin dealer? With very few exceptions, most of the top coin dealers have been involved in coins since they were very young. I can’t think of more than one or two coin dealers who I regard as being at the top level of the industry who were not buying and selling coins by the time they were in their early teens (or in some case, before this). Many people have asked me why this is the case. I think that being a good coin dealer is something that is almost genetic in its origin. You can’t really teach an adult the skills to be a truly good dealer. It’s almost as if the top dealers were born with a “coin dealing gene.” If you are a 42 year old insurance salesman with a passing interest in coins, it’s pretty unlikely that, within a few years, you are going to be a force on the bourse floor.

And speaking of genes, I think that every good coin dealer has what I call the “collecting gene.” Even though I don’t really collect coins anymore, there are a number of other areas that I avidly collect. Virtually every great dealer I know is also a serious collector of something; and many have multiple non-numismatic collections. These range from paper money to vintage photographs to globes to muscle cars. If you do not have a passion for collecting, you probably aren’t going to amount to much when it comes to dealing.

Coin dealers have exceptional memories when it comes to coins. I think I qualify pretty highly in this regard but my memory is very selective. As an example, it usually takes me a number of times meeting a collector until I remember his name. But I can generally remember this collector’s coins that he showed me in 1984 and, more distressingly, in great detail. I find the same to be true with many other of the dealers who I respect. They have an absolutely uncanny ability to remember coins they have handled, deals they have done, auctions they have attended, etc. If you have a poor memory when it comes to details, you are not likely to become a good dealer, let alone a great one.

You may not agree with me on this point, but I contend that most very successful coin dealers are extremely intelligent. Note that I did not say that they are “highly intellectual.” As you can probably imagine, post-show coin dealer conversations do not tend to involve favorite philosophers, the merits of particle physics or favorite 17th century English poets. But I think f if you measured the IQ level of most dealers, you would find it to be well above average. In a nutshell, if you are not extremely bright, you are not likely to be a good coin dealer.

Really good coin dealers are also really good entrepreneurs. Very few of them work well in a corporate setting and this is why it never seems to work when a “real” company tries to buy a coin company or when a coin company brings in a “real” businessman to manage it. If you’ve spent years working at XYZ Corporation in a management capacity, you are going to be freaked out by the coin business. But if you are 22 and a recent college graduate who paid for your education by selling vintage rock T-shirts on Ebay, you might find the coin business to be right up your alley.

The best coin dealers are also excellent at risk management. As an example, they can look at coin or a collection and quickly figure out what their upside and downside risk is. I find that most of the coin dealers who I regard as exceptionally talented are risk takers but they understand how to control their risk. The coin dealers who scare me are the loose cannons who take crazy “shots” at coins in auctions (i.e., buying a coin in an MS63 holder and paying an MS65 price in the hope that it will upgrade two points) or who are overly-leveraged. The insane risk-takers are the guys who get much of the publicity at shows or auctions but the smart guys are the ones who, at the end of the day, walk away from their bourse tables (or their office desks) with a smile on their face.

Good coin dealers have to work very hard and slackers do not do well in what has become an extremely competitive industry. There are a number of underachievers in the coin market but they tend to be guys who bounce from company to company as employees or low-level wheeler-dealers whose inventory rarely changes. In the current market, you need to be willing to travel extensively and work long hours to stay ahead of the competition.

Some of the coin dealer traits that I’ve mentioned above have been augmented by changes in the coin market. There are new dealers specializing in areas like moderns who clearly have not been involved with coins since they were nine and who do not have a “collector gene.” These are people with non-numismatic backgrounds who look at coins like widgets and whose computer savvy or marketing expertise allows them to be active market participants. They may not be “coin dealers” in the classic sense of the word but they certainly have an important role in the future of the coin market.

The Jascha Heifetz Collection Sale

For a period of around seven years (1986-1993), Superior became one of the major forces in the United States coin auction market. During this time, they conducted a number of extremely impressive sales which included some of the more interesting specialized collections of this era. Today’s generation of collectors seems to have little knowledge of these Superior auctions and this is a shame as some of them are invaluable references. In my opinion, the single greatest sale that Superior conducted during this era was the Jascha Heifetz collection which was held from October 1st to October 4th in 1989. Heifetz (1901-1987) is regarded as one of the greatest violin players of all-time and he was paid rock-star fees for performances during his lifetime. This meant that Mr. H was able to lead the good life, including a stately mansion in Beverly Hills, a weekend getaway in Malibu, a Bentley and the ability to indulge in hobbies such as coin collecting.

If I remember correctly, the majority of the United States coins in this sale were not actually owned by Heifetz. There were extremely interesting consignments from other collectors including an incredible run of San Francisco gold coinage, remarkable type coins, choice Patterns and a small run of early dollars which included stunning Gem examples of the 1795 Flowing Hair and Draped Bust as well as a mind-boggling 1799.

Something that I find very interesting about this sale is that it is one of the last major auctions conducted by Superior that included a large number of fresh, unslabbed coins. By 1989, the concept of slabbing high quality coins had become pretty standard. But it is interesting to see that a number of very nice raw coins were still available.

What I find even more interesting is looking back at the Heifetz catalog and seeing how nice the coins were back then. And I’m not talking about common coins in uncommon grades. The sale included long, long date runs of items like PR64 and better Morgan dollars with lovely original color, really nice mintmarked gold in VF, EF and AU grades with original color and surfaces and Proof gold from the 1860’s and 1870’s in PR63 to PR65 grades that doesn’t look like it recently escaped from a Science Project Gone Awry. In 1989, you could still find many coins like this in a good auction. Today, you simply can’t.

The Heifetz sale realized $16.3 million dollars. In this day and age, this amount is no big deal. But back in 1989 it was a ton of money for an auction. And if you spend a little time looking at the coins in the sale, guesstimating what they would grade today and figuring numbers...this sale would probably bring well over $50 million today!

You don’t believe me when I tell you the coins in this sale were cheap, cheap, cheap? How about a few random examples. Lot 3770 was a beautiful NGC MS65 1892-O Micro O half dollar in MS65. It sold for $20,900 in the Heifetz sale; today it’s easily a six-figure coin. A nice PCGS EF40 1794 dollar was offered as Lot 3814 and it sold for $39,600. Today, you couldn’t buy a 1794 dollar that had been run over by a train for less than $40k. Lot 3995 was an NGC EF45 1841 quarter eagle that was bid up to $25,300. Today, this coin is probably in an AU53 or 55 holder and is worth something north of $100,000. Lot 4426 was a raw 1857-C half eagle graded EF45. From the photo I’d say it’s an AU55 by today’s standards. It sold for $770 at the Heifetz auction. I am a seller of coins like this in 2007 for around $3,500-4,000.

My favorite coin in the sale was Lot 3816, a 1795 Draped Bust that was graded “MS66 Superb” by Superior. In case you aren’t aware of this, Superior had a reputation for being very conservative with their grading back in the 1980’s and early 1990’s and for an early dollar to be graded MS66...well, it had to be a really special coin. And this piece was just breathtaking. Amazing color, nearly prefect surfaces, incredible details; I remember thinking that if I could own just one United States coin this 1795 dollar would have to be pretty high up on the list. It wound-up selling for $231,000 which was an amazing price at the time but which seems cheap today.

One last lot—then I’ll stop. A raw VF30 1870-CC double eagle was sold as Lot 5060. I paid $18,700 for it and sold it to a client for $20,000. He recently sold the coin back to me (after we sent it in for grading where it was called an EF40). I sold it for nearly 12x his original cost. Not bad for a heavily circulated Carson City double eagle!

Looking back at the Heifetz sale, it’s amazing how much has changed in the past two decades. Superior imploded a few years after the Heifetz sale and is now an entirely different company than the firm that conducted the great run of auctions from 1986 to 1993. $16 million dollar auctions are now commonplace. Auctions are now full of slabbed coins. Grading standards are clearly different and prices have, in many cases, risen dramatically since 1989. Most interesting, what seemed pedestrian in 1989—from the standpoint of available coins—is now unusual if not downright rare today. In many ways, the Heifetz sale was the end of an era and this epic, impressive auction deserves to be better-remembered than it is today.

1825/4 Half Eagle

Lost amid the hoopla of the recent Baltimore ANA and the numerous auctions that accompanied this show was the sale of one of the greatest United States gold coins in existence. Even more remarkable was the fact that in this day of “ho hum, another million dollar coin just sold,” this sale received relatively little publicity and the final price realized was, in retrospect, pretty reasonable, all things considered. There are two distinct varieties known of the 1825 half eagle. The more available is 1825/4 Unevenly Spaced Date (Bass-Dannreuther 1) which, for many years, was known as the “1825/1.” Recent research has shown that the underpunched digit is, in fact a 4 as it is positioned at the same angle as found on the 1824 half eagle.

The second variety of 1825 half eagle (BD-2) has always been known as an 1825/4 overdate but it is more properly termed the 1825/4 Evenly Spaced Close Date.

For many years, the 1825/4 BD-2 half eagle was regarded as unique. The discovery piece was originally in the Col. Mendes Cohen collection and it was eventually sold to Louis Eliasberg after stints in the Earle and Clapp collections. In the 1982 Eliasberg sale, the coin was cataloged as Proof-60 and it sold for $220,000. I have never personally seen the Eliasberg 1825/4 half eagle but John Dannreuther states in his book on early gold that, in his opinion, it is not a Proof.

In 1978, a second example of the 1825/4 BD-2 half eagle turned up and this story of its discovery is almost as fascinating as the coin itself. In the early part of the 20the century, a collector named N.M. Kaufman was an active (but little known) purchaser of early gold rarities. His collection was exhibited at the Marquette County Savings Bank. Unfortunately, the curator of this exhibit was clearly not a savvy numismatist as he mounted them to a board using tacks (for those of you who just passed out after reading this, I will pause for a second...) Many of the Kauffman coins suffered rim damage from this procedure, ranging from very minor to rather severe.

The Kaufman example of the 1825/4 BD-2 half eagle was sold by RARCOA in their famous August 1978 auction where it realized $140,000. It later brought $148,500 in the B&M 3/89 auction and in 1992 it sold in another B&M auction for a very reasonable $105,600. The last time the coin sold it realized $241,500 in the Superior 2/99 auction.

The coin itself was housed in an old NGC holder and it appeared to be considerably better than its current AU50 grade. However, I’d be careful cracking it out if I were the new owner as the rim marks from the aforementioned display at the Marquette Bank will become more visible if the coin is unencapsulated (this is not intended to scare the new owner of the coin—in looking at the photo of it in the Kaufman catalog, it appears that the tack marks are minor and limited to the upper obverse and corresponding reverse. I have personally seen—and owned—coins from this collection that had significantly more visible tack marks).

Given the rarity of this coin (one of only two known) and the fact that it brought close to a quarter of a million dollars all the way back in 1999, I expected that this coin would be the object of considerable bidding and that it had a legitimately good chance to break the million dollar barrier.

The reserve for the 1825/4 BD-2 half eagle in the Heritage sale was $550,000. The coin wound up selling to a phone bidder for $600,000 plus the buyers’ fee, for a final price realized of $690,000. Why didn’t such a great coin bring more?

As I studied the history of this coin, there was something I learned that I found to be very interesting. On page 395 of his book, John Dannreuther explained the reason why Harry Bass never bought the 1825/4 BD-2 half eagle (he had at least three chances to do so between 1978 and 1992 and price, of course, was not an object for Harry...). Bass regarded this issue as a variety and he was not willing to pay an “excessive premium” for this particular variety.

The more I thought about this, the more sense it made to me. Bass realized before nearly anyone else that there was no such thing as an 1825/1 half eagle. Keeping this in mind, he already had a superb 1825/4 (the BD-1 variety that is plated in the Dannreuther book and which is regarded as a one-sided Proof). The bottom line is that he had an 1825/4 half eagle and a hell of a nice one at that. Given this fact, why pay such a large premium for what is technically a variety?

But not everyone is as sophisticated as Harry Bass and the 1825/4 BD-2 half eagle in the ANA seemed to me to be the kind of coin that would sell for “moon money.” I’m certainly not pooh-poohing $690,000 as this is a lot of money but it’s not the $1 million or so that I thought it would bring prior to the sale.

My best guess why it didn’t reach the magical million mark was the fact that it was “only” graded AU50. In order for two Masters of the Universe to go head to head in a bidding Battle of the Titans, my gut feeling is the coin would have had to have been Uncirculated.

So here’s a hearty congratulations to the new owner of this fantastic early half eagle. You have purchased a wonderful coin with a great pedigree and a great story and it will, no doubt, become an integral part of your collection. And if the circumstances had been just right, I’m certain that you would have had to pay a lot more for the privilege of owning your extraordinary 1825/4 half eagle!

Philadelphia No Motto Half Eagles & Eagles

I’m beginning to gain a new-found appreciation for --gasp!-- No Motto half eagles and eagles from the Philadelphia mint. Read on for some thoughts about these coins and why I’m beginning to see them in a new light. As I’ve mentioned more than once, No Motto half eagles and eagles from Philadelphia have never ranked high on the list of popular coins in the world of DWN. I’ve found these coins to be somewhat mundane and boring and haven’t really bothered all that much with them. So what’s happening to change my mind?

I love originality. It saddens me to see that such a large percentage of branch mint gold issues have been scrubbed and processed and now look like Frankencoins. Ironically, because of their lack of popularity, the major coin doctors have (temporarily) ignored No Motto Philadelphia half eagles and eagles. In essence, the connoisseur of truly original mid-19th century coins has almost nowhere to turn other than Philadelphia.

This was really clear to me when I was viewing the recent auctions in Milwaukee as part of the ANA festivities. I disliked most of the branch mint coins. But I saw a decent number of No Motto Philadelphia half eagles and eagles in the AU50 to MS63 range that were choice, original and quite attractive. Had my anti-Philadelphia gold prejudice begun to fall by the wayside?

Now, before you drop your jaw on the table and think that I’ve committed numisheresy, let me expand on what I just stated. I’m certainly not abandoning my strong interest in branch mint coins and starting to focus on Philadelphia coins; that’s far from the case. What I am realizing, though, is that these Philly issues may be more interesting than I thought.

Here’s a few reasons why I like these coins:

The collector of average means can put together nice date runs from the 1840’s and the 1850’s. As an example, there are really no rare Philadelphia half eagles struck between 1839 and 1861. Nearly every date can be found in nice AU55 to AU58 for well under $2,000 (in some cases under $1,000). If you can’t afford a nice collection of Charlotte, Carson City, Dahlonega or New Orleans gold, you can still participate in the Philadelphia gold market.

The coins are well made and are found with original surfaces with greater frequency than their branch mint counterparts. For the collector who insists on originality, you will find many more attractive pieces than in the branch mint series.

This is a virtually uncollected area. Good news: you have very little competition. Bad news: when you go to sell your collection, no one may care.

If you like varieties, this is a very fertile area. Other than Harry Bass, almost no one has ever searched through these issues for major varieties and I’m willing to bet some very interesting coins are awaiting discovery.

No Motto Philadelphia half eagles and eagles are close to a century older than Indian head half eagles and eagles yet they offer the gold coin collector a lot more bang for the buck. $2,500 won’t buy you very much in the way of an interesting or rare Indian Head half eagle. But it will buy you a pretty scarce Liberty Head half eagle from the 1840’s.

Unlike some of the 20th century gold series, No Motto Philadelphia gold has never really been promoted or heavily marketed. Price levels have stayed flat for many years and there are some real sleepers in both the half eagle and eagle series awaiting discovery by the student of the series. As I stated above, I’m not planning on abandoning my focus on branch mint gold coins any time soon. But after some careful thinking, I’ve decided that maybe No Motto Philadelphia gold coins aren’t the Numismatic Pariah that I thought they were for many years.

Market Musings

It’s a rainy Monday morning here in Portland and the sudden lack of sunshine is leaving me highly unmotivated. To try and shake out the cobwebs, I’m going to touch on a few miscellaneous topics of interest. If I were a syndicated folksy newspaper columnist, I’d call this Monday Mornin’ Market Musings. Lucky for you, I’m not. Sales of the Wexford Collection of Dahlonega Coinage have been excellent with close to $500,000 placed within the first few weeks of being posted on my website. I have noted a few definite trends thus far.

I have been surprised (but not shocked) by the extreme popularity of the key dates in this collection. One of things that was especially nifty about the Wexford coins was that nearly all the key Dahlonega issues were present and, for the most part, they were extremely nice. I could have sold half a dozen examples of the 1861-D gold dollar in PCGS AU55 and probably even more examples of the 1838-D half eagle in PCGS EF45.

While many of the coins were bought by existing clients, I did sell coins to at least two brand new people including one who had never bought a Dahlonega piece.

Two other observations can be gleaned from the first few weeks of sales. The first is that the Dahlonega quarter eagle series is clearly alive and well. I sold a number of expensive, key issues to serious collectors. The second is that gold dollars are a little weaker than I would have expected. I did sell the three most expensive gold dollars in the set but other examples, including a few that I felt would sell quickly, have not yet found new homes.

One last thing. In my rush to get the coins cataloged and imaged and out on the web for a few days before I took them to the ANA show, I didn’t have time to fully research them. It turns out that the 1840-D quarter eagle is the ex: James Stack coin while the 1856-D quarter eagle was formerly in the Bass collection. The new owners of each coin were quickly able to deduce this and I congratulate them on these terrific new additions to their collections.

I’ve been asked by a number of collectors how I think CAC is affecting the coin market. I can’t really speak for areas like Indian Cents or Buffalo Nickels but I think CAC is having a very strong affect on selected areas of the United States gold coin market.

In my experience, CAC is extremely tough on generic issues, especially common date Saint Gaudens double eagles. I have heard of dealers sending groups of 25 or 50 common date Saints in MS65 to CAC and having as few as two or three stickered. Because of this fact, MS65 and better Saints with CAC stickers are currently trading for significant premiums.

Another area that is definitely being affected by CAC is early gold. CDN Bids for early gold are continuing to go up but these bids are posted by John Albanese and are reflective of only CAC quality coins.

What this has done to the early gold market is to make it, effectively, two-tiered. As an example, John’s current bid for an 1812 half eagle in MS62 is $15,000. My guess is that a really nice, CAC-quality MS62 is pretty easy to sell for $15,000-16,000 on a wholesale level and might be worth as much as $17,500-18,500 on a retail level. But a nasty, overgraded MS62 example of the same date is not going to be of interest to John (or any other quality-oriented CAC dealer) at $15,000; it is more likely a coin with a wholesale value of $13,000-14,000. What the challenge for buyers of coins of coins like this is to determine which 1812 half eagle in MS62 is ultimately worth $13,000 and which one is worth $16,000+.

Speaking of early gold, I’ve had a few people ask me lately if they feel that prices on this material are going to continue to rise in the coming year. My answer to this is “yes but with an asterisk.”

As I mentioned above, the early gold market is becoming much more selective; partially on account of CAC. If coins like the aforementioned 1812 half eagle in MS62 are going to continue to bring these strong new price levels (remember, this is an issue that was trading for $8,000-9,000 just three years ago) they have to be very solid for the grade. By this, I don’t mean that every 1812 half eagle in an MS62 has to be an upgrade candidate. But for me (or John Albanese or whoever else) to pay $15,000 for one, it has to have good luster, a lack of significant wear or rub, nice color and a reasonably pleasing overall appearance.

I believe that there are certain areas of the early gold market that have become very pricey. For me to pay $35,000 for a 1799 eagle in MS61, it has got to be a nice coin that I feel is really “new.” If it is recolored, obviously worn, full of unsightly hairlines or covered with goop, I’m out at the current price levels. Same goes with Heraldic Eagle and Capped Bust Left half eagles in AU55 to MS64. If they aren’t really solid, original coins then I have a hard time liking them at current levels.

Conversely, there are other areas of the early gold market that I still like. As you no doubt know, I am a big fan of nearly all early quarter eagles, especially the Draped Bust series of 1821-1827 and the “mini-Fat Heads” of 1829-1834. And despite very strong price advances in recent years, I still feel that the half eagles of 1813-1834 form one of the most interesting and exciting series of United States coins for collectors with large budgets.

Most importantly, the demand for early gold remains strong. In addition to many avid collectors, there are a few coin funds that love early gold and they are continuing to buy it as long as the coins are “all there.”

The Five Year Hold

Back in the Old Days of coin collecting (say 1998...) we dealers continually preached the mantra of the Five Year Hold. What the Five Year Hold said was that in order for your coin purchases to have a chance to mature financially (a euphemism, of course, for making a little dough...) you needed to hold your coins at least five years. But in the Age of the Internet, this maxim seems to have gone the way of the numismatic fixed price list.Revisiting this maxim in 2008, perhaps our sage advice wasn’t so anachronistic after all. I personally believe that many collectors have been fed unrealistic expectations by auction companies and large retailers and that they honestly believe that a coin they purchase in 2008 can—and should—be flipped in 2009 for a profit.

It’s hard to argue with the auction companies when they show you results like the 1805 quarter dollar selling for $402,500 in 2008 after bringing $74,750 exactly a year earlier. I mean every coin in this market is going to show a 5 ½ fold increase in a year, right?

I would contend that for every one of the incredible grand slams like the aforementioned 1805 quarter, there are other coins that show minimal appreciation after a short holding period. In fact, it is more likely that the typical coin is actually worth less after a year than its purchase price. Which is why the Five Year Hold might not be such a bad strategy to (re)consider after all.

Let’s say that you decide to put together a set of Type One Liberty Head double eagles. If you came to a specialized dealer and said that you wanted to complete your set in a year my guess is that the answer you’d get would be somewhere along the line of “well, it could be done but you’d have to cut some corners.” But I’m willing to bet that there a number of less ethical dealers who figure “hey, the guy is going to spend his money with someone so it might as well be me.” And our new collector would probably then be off to the races.

A year later Mr. Double Eagle is done and, if form holds, he’s already bored and looking for something else to do. So he’s ready to sell. Overlooking the fact that he’s probably bought more than his share of dud coins because he was in such a rush, he’s likely to learn the hard way that his collection, while no doubt very valuable, might not bring him the insta-profit that he was promised.

When you hold coins for a very short period of time, you run into at least three problems:

1. Your collection isn’t fresh. The chances are good that at least some of your coins have come directly (or indirectly) from auctions and can easily be pedigreed from these sales. Other coins may have bounced around from dealer to dealer and have a “staleness factor” that only insiders in a specialized market area are aware of. By holding your coins for at least five years, suddenly they appear a lot fresher. Most coin collectors and dealers have relatively short memories and 2009’s stale set of , say, Indian Head half eagles could well be fresh and interesting in 2014.

2. You are paying fees coming and going as a collector that you have to recapture before you can make a profit. Let’s say you are a newbie and you are exceptionally lucky to have hooked up with an honest, knowledgeable dealer who sells you very nice coins at competitive prices. You are still likely to be buying coins at 10-20% above this dealers cost. And when you go to sell your coins, you are going to be paying anywhere from 5% (unlikely) to 20%. So even in a situation where the collector is dealing with someone very fair his in/out fees are at least 15-40%. That’s a big hit to make up in a year and this is another reason why longer terms holds make sense. And that’s not even taking into consideration the fact that most collectors never find these trustworthy, honest dealers and wind-up dealing with the big budget, big mark-up guys.

3. By going in and out of an area quickly you are not allowing a full market cycle to occur. Chances are, collectors who rush into a series are doing so because of a promotion and the series in question has already begun an upward climb. Unless this is a series with a strong collector base that can maintain an upward climb without external stimuli it is likely that by the time the collector is ready to sell, the train has already left the proverbial station.

The reason that #3 has not always held true to form in recent years has been the phenomenon of the Set Registry. I can think of a number of sets that have been assembled quickly and then sold for a good profit to Registry Set collectors. But what if your set was the dumping ground for other quickly-assembled sets and there is no one else waiting in the wings to clean up after your mess?

The bottom line is that serious, high level coin collecting is more complicated than most new collectors and investors think and it is extremely important to find a trusted professional to work with you when assembling a set.

Key Date Price Performance

At the end of my last blog, I mentioned that the price gains in the coin market that many collectors and investors have been seeing are somewhat misleading. My guess is that if you took a random sample of 100 miscellaneous coins and calculated their price appreciation since 2003, fewer than 20% would show plusses. Some would even show minuses. If you had asked me in 2003 which coins would have shown the greatest gains, I would have split my answer(s) in two: traditional “trophy” coins and popular key dates in the most avidly collected series. My answers have turned out to be partially right as key dates have performed exceptionally well. What has really surprised me, though, is that the traditional trophy coins that have inevitably led the way in past bull markets have not necessarily been the best performers this time around.

I consider traditional trophy coins to be things like Stellas, High Reliefs, Pan-Pac Round and Octagonal $50’s, Proof gold (especially high denominations), etc. In the past, rich guys who didn’t know much about coins tended to gravitate towards these categories because they were big and sexy.

But things have been different this time around and I attribute this mainly to a coin market that is far, far more information-driven than in the past. In 1998, the rich guy who wanted to buy a few neat coins for his portfolio had no easy way to figure out how rare something was. Additionally, he was likely to be dealing with a salesman (as opposed to a numismatist) at a large marketing-oriented firm who had little knowledge about coins. Since both parties tended to be dealing from ignorance, it made sense that the unsophisticated seller would focus on a big, shiny High Relief or a Stella as the unsophisticated buyer was most likely to relate to such a coin.

Fast forward to 2008 and the market has changed. Information about coins has spread virally on the Internet and now, with an investment of a few hours, people can read a lot of good information about a wide variety of topics. In addition, the person selling coins to the big money buyers is likely to be more sophisticated as well. He needs a more interesting product to set himself apart from his competitors and the Old School Trophy Coins of the 1990’s suddenly seem passé. Just as importantly, the new breed of buyers can go on-line and see the population figures for coins like Stellas and High Reliefs. Due to significant resubmissions, these former rarities now seem common. The new buyers want exceedingly rare coins that no one else can have.

And this is where the New Right Coins come into play. If you follow auctions, you’ll note that in the last year or so, the types of coins that have been bringing jaw-dropping money are things like 1804 Dimes in AU55 and 1850 Quarters in PR68 and 1920-S Eagles in MS67. All three of these are truly great coins but they are not coins that, five years ago, I would have expected collectors or investors to have paid record-shattering prices for. In the old coin market these coins were “really neat but really exotic.” Today, they are the Right Coins.

Not everyone, of course, can afford to spend $632,500 on an 1804 Dime or $480,000 on a Proof 1850 Quarter. And, interestingly enough, lower grade examples of these same issues are not necessarily going to drive big money new collectors into a feeding frenzy (my guess is that the collector who paid $480,000 for his PR68 1850 quarter would have been A LOT less interested in a PR64 example of this date).

So what are the right coins for those of us who don’t have an extra $480,000 lying around to buy a Proof 1850 quarter? (and, by the way, I don’t mean to “pick” on Mr. 1850 Quarter as I think this is a great coin...just not one I expected to see sell for nearly half a million bucks...)

In this market, I would look to be a value-oriented collector or investor and would stick with coins that are very scarce to very rare, “interesting” from the standpoint of history, aesthetically appealing and old.

In the realm of rare date gold, some of the coins that I think will continue to perform well in spite of the vicissitudes of the market include the following:

-Virtually any 18th century issue

-Virtually any Liberty Head coin that is either the finest known or solidly in the Condition Census

-Any very low mintage coin (for business strikes, this is generally 2,500 or lower; for Proofs this is generally 50 or lower)

-Any coin pedigreed to a great collection (Bass, Garrett, Norweb, Eliasberg and a few others are great collections. The Rainy Day collection of CC Double Eagles IS NOT a great collection...)

-Virtually any coin that is historically significant (1861-D gold dollar, 1838-C and 1838-D half eagles, 1854-D three dollar gold, 1879-O double eagle, etc.)

-Coins that have original skin and a great, original appearance

-Any coin in a popular series that is rare and in demand. This is a huge range; from Rarity-7 Bust Half Dollar die varieties to key date Morgans in perfect, original AU55 to important one-year type coins like the 1808 quarter eagle to rare date Saints in MS63 and better with CAC stickers.

Baltimore ANA Show Review

Being an eternal realist when it comes to the coin market, I wasn’t expecting this year’s ANA show to be a good one; let alone a great one. With the unrelentingly bad economic news in the United States (let alone the world) it seemed inevitable to me that most collectors would be slowing down. As usual, I was wrong. This year’s ANA was outstanding for me and many of the dealers that I spoke to (and who I trust) told me that it was a great show for them as well. The show began for me with the Stack’s sale of the S.S. New York shipwreck on Sunday. I had a feeling these coins would go strong, given the fact that the quality was far nicer than other shipwreck coins and the quantity was smaller. I expected that the typical “shipwreck premium” would be about 15-25%. In some cases this was true but in most, the premium was substantially higher; especially in the case of lower value coins that were being bought for their “knick-knack” appeal.

There were a few very important coins in the hoard and certainly among the best was the highest graded 1845-D quarter eagle, an NGC MS64. It sold to a very knowledgeable dealer for $63,250 which I thought was quite strong. Other Dahlonega coins in the sale went very strongly as well. Notable prices included $18,400 for an 1839-D half eagle in NGC AU58, $31,050 for an 1840-D half eagle in NGC MS62 and $51,750 for an 1842-D Large Date half eagle in NGC MS61.

Some outstanding New Orleans gold was featured and it brought remarkable prices. An NGC MS64 1844-O half eagle sold for $28,750, an NGC MS63* 1845-O half eagle brought $43,125, an impressive 1844-O eagle in NGC MS63 sold for a record $63,250 and an NGC MS62 1845-O eagle was bid to $54,625.

The show began in earnest on Tuesday with PNG day. I have never been a big fan of PNG day for one simple reason: because of the fact that only a limited number of dealers have tables, the cavernous bourse floor seems like a ghost town. I did some business but mainly concentrated on buying. As I expected, there was a shortage of interesting coins; a theme that you will no doubt read on other show reports from specialist dealers like myself.

The regular show started on Wednesday. With all of the dealers now set up, the huge hall felt more inviting. When the doors opened to the public, a stampede of collectors headed right towards my table. Could this possibly represent a tidal wave of Dahlonega collectors? A Tsunami of Charlotte aficionados? No such luck; all the collectors were headed for the Bust Half Dollar collection being sold by Sheridan Downey right in front of me.

I spent a good part of the show either at the table or out buying coins. My observations about the current rare gold coin market as are follows:

1. It is amazing how little nice material there is available. I would have been happy to have bought, say, ten interesting Dahlonega coins and a bunch of New Orleans eagles. I came home with very few of either.

2. CAC stickers are beginning to have a positive effect on liquidity, particularly in the high end of the market. As an example, I had three expensive pieces of early date gold with stickers on them and I wound up selling them to a collector who I have never done business with before. I fully believe that the stickers helped make the transaction happen.

3. Collector demand for interesting gold coins remains very strong. It seemed like every hour or so, another dealer would come up to my table and tell me that he had someone interested in some sort of gold issue. I sold a number of coins to dealers that I don’t do much—if any—business with at a typical coin show.

4. Without sounding completely self-serving, it continues to amaze me what so-so quality coins bring at auction. I expect great quality, one-of-a-kind coins and major rarities to do well at auction but I wonder why collectors are content to pay 10-20% more for average to above-average coins. Maybe said collectors should give more serious consideration to looking through dealer’s inventories.

One of my favorite things to do at an ANA show is to look at the exhibits. This year the Smithsonian had a small but awesome group of coins from the National Numismatic collection including an 1821 Proof set (the half eagle had to be seen to be believed), an 1843 Proof set (including all three denominations in gold) and an 1860 Paquet Double Eagle pattern in gold that, when viewed from the reverse appeared to grade at least Proof-68. There was also a group of Massachusetts colonial silver belonging to a well-known collector that was stunning.

Where does the market go from here? I think the next month or so will be interesting. There are no coin shows of note until Long Beach in September and my guess is that most dealers left ANA with money to spend. My guess is that there will be strong demand for good coins between now and then. Some of the money that is circling the market will get absorbed by the strong pre-Long Beach and Long Beach auctions that loom on the horizon but there will still be an excellent opportunity for collectors who have had coins for longer than five years to sell into the market.

In closing, I’d like to point out that this generally upbeat show report does not take into account one simple fact: to take advantage of this still-strong market, you have to have the right coins. At this point, you are probably sick of my saying this over and over and are wondering “what exactly ARE the right coins?” Check back later this week and I will be writing a blog that discusses what I think the right coins are. (A cliffhanger...I love it!!)