What Percentage of Classic Rare United States Coins Have Been Graded by the Services?

     After 25+ years of encapsulating coins and 50+ million submissions, it is clear that PCGS and NGC have had a huge impact on the way we view coin rarity. I have personally learned many things: which coins are rare and which are not; which coins are true condition rarities and how issues within a specific series can be viewed on a comparative basis. This got me to thinking: how many coins within a series need to be graded (on a percentage basis) to make definitive rarity statements? And once this has been determined, what percentage of coins within certain series have already been graded by PCGS and NGC?      To start making trenchant observations about absolute and conditional rarity, I think we have to feel confident that over 50-60% of all known coins in a specific series have been graded. When it comes to expensive (let's say $5,000 and up) gold coins, I think the percentage of all coins graded by PCGS and/or NGC ranges from a low of around 65-70% to a high of close to 90%.

 Let's take a look at a few specific areas and try to guess what percentage of coins have been graded.

     1.  Charlotte and Dahlonega Gold

     The Charlotte and Dahlonega market was reasonably hesitant to embrace third-party grading and this initially made sense, given how erratically these coins were graded by PCGS and NGC during their formative years. But by the end of the 1980's, submitters were more confident and large quantities of these pieces were being encapsulated. And given the high average value of C+D gold, it makes sense that even the low end coins would eventually be sent in for slabbing.

     My guess is that a great majority of Charlotte and Dahlonega gold in all denominations resides in PCGS or NGC holders as of 2013. There are certainly still a few old school collectors who have held out and won't have " those confounded newfangled slabs" in their collections but these are seen less and less as the years pass. And given the fact that there were never many C+D coins in overseas sources, such as European banks, the thought of bags of Dahlonega half eagles lurking in Dortmund seems remote.

     When you look at PCGS and NGC populations figures for C+D mint gold, you have to remember a few things. The first is that these figures are inflated by resubmissions. The second is that they, of course, do not include damaged or cleaned coins which do not qualify for slabbing. Taking these two factors into consideration, I'd still say that the percentage of C+D gold which has been graded by PCGS and NGC is comparatively high; ranging from 75 to 85% of the known examples. In the case of choice, high end pieces (MS60 and above) this might be as high as 90% with the few renegade raw coins being those held by museums such as the ANS and the Smithsonian.

     2.  Proof Gold

     I always felt that one aspect of slabbing which was undervalued was its ability to protect fragile coins. Back in the old days, coins were typically transported to shows loose in 2x2 plastic flips and it would always make me cringe to see a coin like a Gem Proof Liberty Head double eagle in a soft flip. You knew that these coins were collecting hairlines with every trip to Long Beach or New York. Slabs were far safer environments for such coins. Because of this, Proof gold was an early adherent and by the late 1980's/early 1990's many Proof gold coins were already in slabs.

      Then came the Great Proof Gold Era of 1995-2000 when collections such as Childs, Bass and Pittman were sold at auction. In some cases you had very rare issues with ten or so known coins having three different survivors sold in a short period of time. Virtually all of these coins wound up being encapsulated or, in the case of the Bass collection, were sold in PCGS slabs.

     There are still two rich sources of unslabbed Proof gold: the ANS collection and the US Mint collection in the Smithsonian. But other than these two, I doubt if there are more than a handful of gradable Proof gold coins that still lurk in the raw. I'm going to guess that the percentage of pre-1916 proof US gold coins that have been graded by PCGS and NGC are at least 85% and may actually be as high as 90%.

      3. Early Gold

     I can remember auctions full of interesting unslabbed early gold coins as recently as the mid-1990's but these days are long, long gone. Today, virtually all early gold that is capable of being encapsulated is now encased in slabs. There were holdouts in this area of the market who lasted longer than in the two categories mentioned above and for good (and bad) reasons. I can remember dealing with some old time collections as recently as the 1990's who felt that they knew more about early gold than PCGS and NGC did and, in a few cases, they were right. Also, lower grade early gold wasn't as expensive then as it is now and a raw problem-free 1810 half eagle wasn't looked at like a man with two heads might be today.

     The grading services have vastly improved their ability to grade early gold and most of the old time collectors who scoffed at slabs have passed away or are no longer active. Today's generation of early gold collectors and investors would just as soon eat dirt as they would buy any early gold coin unslabbed and they have come to rely on PCGS and NGC to help them grade these complicated issues. As a result, I'd have to estimate that at least 75-85% of all early gold is now encapsulated and I wouldn't be surprised if the actual number is as high as 90%.

    4.  Generic Gold

    When I speak of Generic Gold, I aam refering about coins such as common date With Motto Liberty Head half eagles and common St. Gaudens double eagles. Staggering numbers of these coins exist in the higher circulated grades and the lower Uncirculated grades and many of these have been graded by PCGS and NGC. If you look at population figures for coins like 1901-S eagles in MS62 to MS64 or 1927 Saints in MS62 to MS64, the numbers are pretty impressive.

     But I think there are still very large quantities of these coins that have not been sent in to PCGS and NGC. I know for a fact that there are at least six or seven American firms who import large amounts of United States gold coins from European and other overseas sources every month. While supplies from Europe ebb and flow, the quantities coming over every year are still immense; in the tens of thousands at the very least.

     So while there are hundreds and hundreds of thousands of generics in slabs, I think that the quantity of raw coins remains very large. I'm sort of guessing here but I wouldn't be surprised if the number of slabbed generic coins in slabs is only 50% of the total that have survived.

     5.  Miscellaneous

     As I mentioned above, one of the parameters of slabbing coins is the economics involved. If a coin is worth $400, it is less likely to be slabbed than if it is worth $3,000. But a reasonably interesting $400 coin, like an AU50 1851-O dollar is more likely to be slabbed than an uninteresting $400 gold coin like a common date $2.50 Indian in AU50. Becuase of this fact, I think there are still tens of thousands of cheap American gold coins which have yet to be slabbed although this number is diminishing over time due to the rise in gold prices and the demand for slabbed coins versus raw coins.

     There are still some non-gold series where lots of nice collector-grade coins have not been slabbed due mostly to collector preference. Examples of this include Large Cents, Seated Liberty coinage and Barber coinage in all denominations. This includes significant numbers of problem-free coins in the $100-2,500 price range in grades ranging from AG to AU.  You can still go to coin shows and find interesting raw coins like 1862-S half dollars in nice EF45 or 1874-CC trade dollars in VF30. While I don't see the end of the line--yet--for such coins, I can tell you that more and more are being "made" at PCGS and NGC.

     So what can we conclude from my percentage guesstimates regarding numbers of coins graded at the services?

     The most important conclusions is that, yes, sizable percentages of many United States gold coins have been encapsulated and due to this fact we can make statements about rarity--fundamental, absolute and condition--which really couldn't be made as recently as a decade ago.

     That said, there are still important and impressive individual coins "in the wild" and in  collections that are not widely known which always make me hesitate to make definitive statements along the line of "this is the finest known" or "this is the rarest Liberty Head half eagle in Uncirculated" (and believe me, I make more of these statements than the average coin dealer...) With the recent sale announcement of the Eric Newman collection, this reminded that important new discoveries (or re-discoveries) await us with each passing year.

     I want to know your thoughts on this subject. If you'd like, share them below or email me at dwn@ont.com.

Some Thoughts on Rare Coin Pricing

I have been working on a few coin-related projects lately and one component which has made me stop and collect my thoughts on many occasions involves pricing. And then it hits me: if issues about coin pricing confuse me, how confusing must they seem to new collectors? Here are a few random thoughts about coin pricing.

Try to see if you can answer this question without cheating: what do you think an 1893-S double eagle in PCGS MS65 is worth? Without knowing much about the series, I'm going to predict that your guess is in the mid-to-high four figures; maybe as high as $12,500-15,000. What if I told you this was a $44,063 coin and could prove it?

Which brings us to Thought #1 of this blog: can a market be made by one coin trade? Quick answer: "yes but..."

The 1893-S double eagle, it turns out, is the Poster Child for Numismatic Condition Rarity. It is common as dirt in the lower Uncirculated grades and only marginally scarce in MS63. It is very scarce in MS64 with an estimated value  of $9,000-10,000 (which in and of itself might prove surprising to you for a coin with a population of 40 pieces, just at PCGS...). But it turns out that in MS65, this date is a beast with a current population of just two at PCGS and none finer.

Which is all well and good but how do you price a coin like this when one has never sold? Well, you wait until one does sell which is exactly what happened in Heritage's 10/12 auction, when a PCGS MS65 example brought an impressive $44,063.

I'm not going to make a value judgement about this coin as it isn't my intention to state whether it was a "good deal" or a "bad deal." But  if another piece were to come up for sale, I would have to use the $44,063 figure as a baseline comparison. As long as the population figure (i.e. the supply)  stays low for this issue, we can assume that the demand will remain fairly consistent. For better or worse, this $44,063 is what we are left to work with, even if the underbidder at the Heritage 10/12 suddenly thinks the coin is now worth $20,000.

Here's the thing about coin pricing: in very thinly traded markets (like coins with populations of two and none better) the market price becomes whatever the last trade is. In the case of very rare coins, this makes sense. In the case of a condition rarity in a series which is not typically collected by date, especially in Gem (like our aforementioned 1893-S double eagle) it makes sense but it is harder to embrace.

What about what I call "outlier prices?" Can a pricing structure be based on pricing anomalies?

This is a harder question to answer. Let's use another 1893-S double eagle as an example; this time in MS64. While scarce, enough have appeared at auction over the last few years that we can make some good assumptions.

The last MS64 to sell at auction was a PCGS MS64 with CAC approval which brought $12,925 in Heritage's 1/13 auction. It was a nice coin and one of the few examples of this date in MS64 with CAC approval; even so, the price realized has to be considered an outlier given other comparable coins.

The two previous APR's for the 1893-S in MS64 are $9,975 for a PCGS/CAC coin in Heritage's 2/10 sale and $9,890 for a non-CAC PCGS example in Heritage's 2/09 sale. The non-CAC coin, interestingly, was nicer than the CAC (in my opinion).

Why did the one coin bring nearly $13,000 while the other two brought a shade under $10,000? It could be a number of factors. It is possible that two "crackout" dealers felt that it had a shot to upgrade to MS65 (not likely given its scratch on the face) and they bid the coin up. Or, Type Three double eagles may be a bit stronger now than they were a few years ago (possible but are they nearly 30% higher, in the case of this date?). We'll never know the answer for certain but I don't feel strongly enough about this price to make the bold statement that all other 1894-S double eagles in PCGS MS64 with CAC approval are now worth $13,000. To me, they are still $10,000 coins and this one "outlier" price realized doesn't necessarily mean a new price level has been established.

There are many other scenarios in which an outlier price can be attained.

Let's take a random example: an 1855-S  eagle in AU55. This is a coin which could have a potentially huge range in valuation. And there are many factors why this range could be so dramatic. If it was a "real" AU55 with original surfaces and good eye appeal it could be worth double the amount of a crappy processed example. If it was a nice AU55 with an SS Central America pedigree (in the original holder) it could be worth even more. My point is that we could see dramatic variations in prices if enough examples of this date were sold at auction.

I mentioned that the range on this date could be vast. While a junky, low end "buying it for the plastic" AU55 could be worth $7,000-9,000 in the current market, a choice PCGS AU55 with a CAC sticker could bring as much as $12,500-15,000. And a coin with all the bells and whistles (PCGS/CAC/pedigree/old holder) could bring close to $20,000.

Which brings me to another thought.

Some coins are easy to price. An Iowa half dollar in an MS65 holder is worth around $150. An 1882-S Morgan dollar is a $350 coin (unless it has spectacular multi-colored toning but that's another issue).  Other coins are hard to price and they require value ranges. As I pointed out above, the value range for an 1855-S eagle in AU55 could run from a low of $7,000 to a high of close to $20,000. Same date, same grade, same value, right? In the case of very rare, esoteric coins this is far from the case. There are a ton of factors which influence value and, unfortunately, this is often not reflected in pricing guides.

Would it be possible to create a pricing guide which reflected the fact that there are variations in value for many coins? In the case of 1793-1814 Large Cents such pricing already exists. This pricing assumes that there are at least three variations within each grade; let's call them "A" for nice coins, "B" for average coins and "C" for below average coins. These variations may not matter much for MS65 Iowa half dollars but they matter alot for coins like Chain Cents or 1855-S eagles or even common date Dahlonega half eagles in EF45. I would love to sell multi-tiered pricing for various series and believe that this could be done, albeit with a great deal of effort.

I've written this before but I believe that one thing that holds coins back from literally exploding as an asset class among sophisticated investors is a lack of high quality pricing. Someday, someone is going to realize this and they are going to create a proprietary pricing system (its not hard to do but it is extremely labor intensive and requires input from extremely knowledgable market players and specialists) which will revolutionize numismatics. Until then, many new collectors will have to gamble that the 1855-S eagle which they just paid $15,000 for is a $15,000 1855-S and not a $7,500 1855-S. CAC approval is a start, but dissemination of information is a necessary next step.

A Record-Breaking Dahlonega Quarter Eagle

Lost in the post-sale chatter about the 1794 dollar was a record-breaking Dahlonega coin which became the highest-priced single quarter eagle from this mint ever sold at public auction. Stack’s Bowers was able to do something which no one else has ever done before: elicit a six-figure bid for an 1839-D quarter eagle.

The coin in question is an 1839-D quarter eagle graded MS64 by PCGS and approved by CAC. It was consigned by the owner of the Stellar collection and it was previously Lot 859 in Stack’s October 1994 sale of the famous James Stack collection where it brought $55,000. Nearly two decades later, it was offered as Lot 13291 in the Rarities Night session of the Stack’s Bowers January 2013 auction where it brought a sizzling $105,750.

The previous auction record for a Dahlonega quarter eagle of any date was $86,250, set by the Goldberg 2/12: 1209 coin; an 1855-D graded MS63 and approved by CAC, which I purchased and later blogged about.

I hadn’t seen this 1839-D in many years, and when I had a chance to view it again in person at the 2013 FUN show, I was suitably impressed. It was coin which had aged well; the color was as wonderful as I had remembered from before and it was very high end for the date and grade. But did I expect it to shatter the record for all Dahlonega quarter eagles? To be honest with you, I didn’t and now, a few days later, I finally understand why this coin was a record-setter.

Before I give some thought as to why it broke a record, I think a little background information about the 1839-D in particular and the D mint quarter eagle series in general is in order.

Of the 20 quarter eagles made at the Dahlonega mint between 1839 and 1859, the 1839-D is only the 13^th rarest in terms of the number known in high grades. There are a few hundred known in total from an original mintage figure of 13,674 and as many as 8-11 exist in Uncirculated. I do not consider this to be an especially rare issue but I consider it to be very popular and very fundamentally desirable; two points that I will touch on in more detail in a minute.

Looked at as a series, the Dahlonega quarter eagles are the rarest of the three primary denominations struck at this mint. While there are a few common issues, virtually all Dahlonega quarter eagles are hard to find in AU55 and higher grades and very choice Uncirculated pieces, regardless of date, are very rare. The Dahlonega quarter eagle series doesn’t appear to be “hot” to me and I haven’t seen a flood of new collectors in this market but I have noted a strong level of demand for all very high end Dahlonega coins, regardless of date or denomination, in recent months. Noting this, I’m not surprised that the James Stack/Stellar 1839-D did well.

I don’t know who bought this coin but I wouldn’t be totally shocked if the new owner was a type collector as opposed to a Dahlonega specialist. The 1839-D is a unique issue among Dahlonega quarter eagles in one regard and this is what gives it a far more broad level of appeal than a rarer issue like an 1855-D.

The 1839-D quarter eagle is a first year of issue coin AND it is a one-year type. It is the only quarter eagle from this mint that employs the short-lived Classic Head design and, as a result, it is the only quarter eagle from this mint with the mintmark placed on the obverse. It is one of the few Dahlonega quarters eagles (maybe the only one, in fact) that a collector who wasn’t a specialist would buy and in this regard, it is similar to issues like the 1838-C and 1838-D half eagles.

There are some other interesting facts about this coin which were not discussed in the Stack’s Bowers description. It is regarded as the single finest known 1839-D quarter eagle (despite being tied with one other as the finest graded by PCGS) and it has been graded MS64 since it was first slabbed back in the mid-1990’s unlike so many other high grade Dahlonega quarter eagles which have “gradeflated” over the years. In looking back at my notes from the 1994 Stack sale which the coin first appeared in, I called it a “Gem” back then and I still think it deserves serious consideration today at the MS64+ to MS65 level. There is certainly the possibility it was bought by a dealer who will break it out, send it to NGC and hope for an MS65 grade; if there was ever an 1839-D that deserved consideration at this level, it is the James Stack/Stellar coin.

The new owner of this coin has added a very special 1839-D quarter eagle to his collection The purist in me can think of other Dahlonega quarter eagles which are more “valuable” but I totally understand why this coin is the current record holder. Branch mint collecting has changed dramatically in the last few years and “dates” aren’t always as important as “types.” The 1839-D is a coin which “checks all the boxes” for the new breed of Dahlonega collector and, ultimately, its record breaking sale at the January 2013 Stack’s sale is a great shot-in-the-arm for the Dahlonega market.

Some Thoughts on the $10 Million Dollar 1794 Dollar

Stacks Bowers auctions made numismatic history last night by selling a PCGS SP66 1794 silver dollar for $10,106,875. This amount is by far an auction record for a single coin and it is very significant for many reasons. And it's also time to fess up: I thought the coin would bring considerably less money than it did. Do I think this was a savvy purchase? Yes I do and I find some of the comments that I have read and heard about the sale to be amusing and poorly considered.

I didn't attend the auction in person but I've watched the on-line video of the auction and a potentially controversial moment occured when the sucessful bidder "jumped" the increment from $5.5 million to $8.5 million. It later turned out that this wasn't the result of the agent representing the interests of two collectors (the buyer, who is smart and experienced, was never going to be bidding for multiple clients on this one lot) but it was the decision of the buyer to induce a "shock and awe" response that would make the competition quickly fold.

So, think about this. A few weeks from now, no one is going to remember how the 1794 dollar was jumped from $5.5 million dollars or why it was jumped. There are going to remember what it sold for and that it was the first coin to ever sell for $10 million dollars or more.  And the eventual new owner of the coin, in a few months or years?  I guaranteee you he will care less about how it was jumped, if he knows at all.

Was this a good strategy? Its easy to be a Monday morning quarterback and over-analyze this move. Personally, I wouldn't have done it this way and it is possible that this decision cost the buyer some money. But here's my analysis and why, in the long run, I think that the act of buying the coin was a lot more important than what it actually sold for.

This coin was either going to be a sensational bargain (which is what I expected; something in the $5 million-6 million range was my pre-sale guesstimate) or it was going to be a home run. If it got anywhere close  to the old auction record of $7,590,000 (set by the 1933 double eagle in July 2002) or the private treaty record of $7,850,000 (set by the same 1794 dollar a few years back) it literally had to leapfrog over this amount.

Let's say the coin was stalling at the 7 million dollar mark. If you were serious enough to be player at $7 million, you'd be crazy not to pay $8 million and immediately have the coin set the all-time record. But if you were at $8 million, why not pay $10 million? Yes, I know this sounds odd but hear me out.

When you are talking about really great collectibles items no one remembers what coin or what car or what painting is the second most expensive or the third most expensive. What people want to know is what is THE most expensive? What is the single "greatest" coin? While I do not personally think the 1794 dollar is the single "best" coin there is, it is the best that was available in late 2012/early 2013 and this is a period in which, in its short duration, we are seeing epic prices for the best of the best in all fields.

So put yourself in the buyers position. He is the owner of a firm which specializes in super high end rarities and in order to cement his position as the source for seven (or eight!)  figure coins, he has to buy the 1794 dollar. And he has to pay a record price for it. But as a smart businessman, he knows that $10 million sounds a lot more robust than $8 million or even $9 million. If he wants to catch the attention of a hedge fund multi-billionaire, he is more likely to do it with a coin which is "the first 10 million dollar coin" than one which is the "first 8 million dollar coin."

So what impact is this likely to have on the coin market? Probably none in the near future. But I can see some ripples that will occur sooner than later.

1. Stack's Bowers gains some strong momentum in the rare coin auction market. As recently as a few months ago, I would have expected Heritage to set the record for the highest priced coin and suddenly Heritage has to be thinking, "maybe we need to step up our game a little bit." Heritage is still the force to be reckoned with in the auction market but clearly, they can't just assume they are going to be getting all the big deals from here on out.

2. I have always believed that the most valuable American coin is the Childs 1804 silver dollar graded PR68 by PCGS. This coin sold for $4.1 million in August 1999. I am not a great fan of 1804 dollars but I can make an easy case for it being the one coin that someone like Bill Gates would buy if he was going to buy just one coin. The Childs coin is the "best of the best" and I think that its suddenly a $15-20 million dollar coin, maybe even more.

3. Gem early type is likely to see a shot in the arm from the sale of the 1794 dollar. If you own a nice fine 1796 dime, it isn't suddenly worth 10-20% more. But if you own a Gem 1795 half dollar or a superb 1799 dollar, you can make the case that your coin(s) seem cheap compared to the $10 million dollar 1794 which just sold. I'm thinking that all Gem/Superb early type in all metals just went up at least 10-20%,  if not more.

4. I was sort of surprised that all the players for the Specimen 1794 dollar were known collectors. Frankly, I thought there was a good chance that the buyer would be someone like the individual who bought the 1933 double eagle in 2002: a mystery man who had never bought another coin and who, it seems, have never again bought a coin. It will be interesting to see who the next owner of the 1794 dollar will be. If someone wants to start a great collection of early silver coins, in anticipation of the upcoming Newman sale(s), what better place to start than with the 1794 dollar?

5. The next great trophy coin that will hit the market is the famous Walton specimen of the 1913 Nickel which Heritage is offering as part of the Central States sale this spring. Will it eclipse the $10 million dollar mark set by the 1794 dollar? I would guess not as it isn't a Gem coin like the 1794. But I'm thinking it will set a record price for the issue.

6. You should be seeing a lot of feel-good stories about coin investments in the coming days and weeks and stories about the $10 million dollar 1794. I'm assuming that this story will get picked up by Forbes and by Bloomberg and that a few ultra-wealthy people could possibly have rare coins suddenly appear on their investment radar screens. And if you are reading this, Carlos Slim , I can be reached at dwn@ont.com and am happy to discuss coins with you in English or Spanish!

My most heartfelt congratulations to the new owner of the 1794 dollar. Great purchase, Bruce, and one which puts you in the pantheon of the all-time great collectors. I also would like to congrulate Stacks Bowers and a great job of selling the 1794 dollar, from the cataloging to the marketing to making it through the nerve-wracking days leading up to the sale itself.

Is the Market for Dahlonega Varieties Starting to Heat Up?

For years, I've been commenting on the die varieties of Dahlonega coins. My take has usually been somewhere along the line of "they are neat and they are fun to collect but I'm not sure that I ever see the market for these coins taking off." From time to to time, I talk to a collector who dabbles in Dahlonega varieties and I've even dealt with one or two who have been pretty hard-core. But, with some exceptions, I've never seen prices for these coins reflect this interest. Until possibly now. I'll be the first to tell you that you can't make a declaration about a market based on one auction but, the recent Heritage 2013 FUN sale had a large and varied collection of Dahlonega half eagles by die variety and there seemed to be a trend towards some of the rarer, more obvious varieties selling for premiums. Let's take a look at a few examples and try to make sense of them.

Lot 7189 was an 1854-D Medium D in an NGC VF30 holder. It was a nice coin, solid for the grade and original. NGC doesn't designate this variety so my brilliant plan was to break it out and send it to PCGS where it would grade, I hoped, VF30 and be designated as a Medium D. I bid $1,600 for the coin which would have put me into it at $1,880 with the buyer's premium. The coin brought $1,998 . The price was around 10% more than I expected. Certainly not a huge price premium but enough to make me raise an eyebrow.

The next coins that I found interesting were Lots 7193 and 7194; the former was an 1855-D Large D in NGC AU53 while the latter was an 1855-D Medium D also graded AU53 by NGC. In my experience, the Large D is the scarcer of the two (despite the fact that there were two Large D examples in the sale).

The first coin, lot 7193, sold for $3,182 while the second, lot 7194, sold for $3,290 which sort of disproves my theory that the market for Dahlonega half eagle varieties might be picking up. I partially attribute this to the fact that the Medium D coins are always weakly struck at the centers which means most collectors don't "get" this variety. Had Lot 7193, the Large D, been more attractive, I'm guessing it might have sold for some sort of premium. Clearly, this market is not yet developed enough that collectors are saying "this is a rare variety and even though the coin is kind of ugly I still need to pay a premium for it."

The two coins which were really interesting to me were Lot 7213 and Lot 7214. Both were 1859-D Large D half eagles. These varieties are designated by PCGS, they have very low populations figures and they are clearly visible to the naked eye; sort of the perfect storm for D mint half eagle varieties, if you will.

The first 1859-D (Lot 7213) was graded EF40 by PCGS and I thought the coin was extremely nice for the grade; maybe an EF45/AU50 on a good day. I figured it at $2,100, which meant a shade under $2,500 all in. The coin sold for $4,700 with the buyer's premium which I thought was remarkable.

The second 1859-D (Lot 7214) was graded AU55 by PCGS and I liked the coin even though it had an odd area of light toning directly above the head of Liberty at 12:00. I figured the coin at $3,750 or $4,406 with the fees. The coin wound up selling for $5,875 including the premium.

Were these prices strong? Just as a point of reference, an NGC AU58 1859-D half eagle in the same sale (Lot 7212) sold for $3,819 including the premium. The coin was a bit over-graded, in my opinion, but actually pretty decent and certainly an AU55 all day long.

Now, I don't know who bought the two 1859-D half eagles. They could have been bought by break-out dealers or telemarketers who figured the low PCGS populations meant a potential big score. But assuming they were purchased by variety collectors, I think these prices were extremely significant and they could portend an oncoming wave of interest in varieties.

My guess is that if varieties are to become of interest to collectors, they are going to be just the ones that are designated by PCGS/NGC and the ones that are easily seen with the naked-eye. Will someone care about one of the six varieties of 1848-D half eagle because of the position of the date or the placement of the mintmark? I doubt it. But I think they will care about a coin like the 1848-D/D half eagle which is genuinely rare and which can be appreciated by beginning and advanced collectors alike.

Kudos to Heritage for doing a nice job of cataloging these coins and my hats off to the collector who assembled this variety set, especially the two 1859-D half eagles.

Undervalued U.S. Gold Coins in the $1,500-3,500 Range

 An article of mine was recently published by a content partner   and a reader left a comment about how my subject was elitist and  I am only concerned with selling $50,000+ coins. Hey, I LOVE selling $50,000 coins but I probably sell ten times more $1,500-3,500 coins every year than I do big ticket items. So to placate my angry reader, I thought I'd give some brief suggestions. Steven Mlaker, this one's for you!      1.  Type Three San Francisco Gold Dollars, EF45 to AU58

     There are only five San Francisco gold dollars of this type (1857-S, 1858-S, 1859-S, 1860-S and 1870-S) and all are of basically similar rarity. When available, these issues are seen in the EF45 to AU55 range and all can be had for $750 on the low end to $2,500+  for a nice AU58.

     What I like about these issues is that they are all low mintage and all are rare to very rare in Uncirculated. If I had to choose one date as the real "sleeper" it would probably be the 1870-S with a mintage of just 3,000.

     I like the concept of doing an evenly matched set of five coins, all grading AU55 to AU58. It can be done for around $10,000. To make the set a real challenge, make sure every coin is CAC quality with natural color and nice surfaces.

     2.  Properly Graded EF45 Dahlonega Quarter Eagles.

     Of the three main denominations from the Dahlonega mint, the quarter eagle is the hardest to find in choice, original Extremely Fine grades. Despite the rarity of these coins (and they are not easy to find with natural color and surfaces, no matter what the population reports say!) they are still priced in the $2,000-3,000 range.

     There are many dates in this series which are rare and expensive even in EF grades but I can think of at least ten (1843-D, 44-D, 45-D, 46-D, 47-D, 48-D, 49-D, 50-D, 51-D and 57-D) which can be bought for less than $3,000 in presentable grades.

     When buying these coins, look for pieces with deep, rich natural color and surfaces that are not overly abraded. Strike shouldn't be a major concern; if it is try idea #3, below.

    3.  Philadelphia and San Francisco Quarter Eagles, 1865-1876.

     Many of the quarter eagles made from 1865 through 1876 at the Philadelphia and San Francisco mint are scarcer than their southern counterparts at half the price.

     My favorite sleeper dates are the 1867, 1869, 1870, 1870-S, 1872 and 1876. Not a single one of these will cost you more than $2,000-3,000 in nice AU grades and the beauty of these dates is that, when available, they tend to be quite well made and reasonably attractive.

     Are these coins good "investments?" I doubt it, unless you move up the ladder and buy nice Uncirculated pieces (which, as Mr. Mlaker will remind me, is an elitist sentiment...) which seem like very good value to me.

     4.  Nice AU Classic Head Half Eagles.

     With the exception of the 1834 Crosslet 4, none of the Philadelphia half eagles made from 1834 through 1838 are scarce but they are extremely popular and when I have a nice, original AU55 to AU58 on my website, it typically sells within a few hours.

     What's not to like about these coins? They are very old, the design is cool and in the middle to higher AU grades, they look great; if original.

     A five coin 1834-1838 year set in AU55 to AU58 could be assembled for $10,000-15,000. For more of a challenge, you could add some of the major die varieties which are known.

     5.  Philadelphia No Motto Liberty Head Eagles

     After years of neglect, the Liberty Head eagle series became popular in 2008-2009 and, today, it is one of the more in-demand U.S. gold series. But collectors are mainly buying the key low mintage dates or the mintmarked coins and nice AU55 to AU58 Philadelphia coins from the 1840's and 1850's can still be bought in the $1,000-3,000 range.

     If your budget won't go higher than, say, $3,000 per coin, you can still come pretty close to completing a date run from 1840 through 1861.

    Sleepers? How about the 1840,  1842 Small Date, 1845, 1850 Small Date, 1857 and 1859. Collecting suggestions? Stick with coins which grade AU55 or better if possible and look for nice dark green-gold pieces with rich, frosty luster and light, even wear.

     6.  Mid-AU Grade Type One Philadelphia Double Eagles.

     The "play" with these coins is that they contain $1,500+ worth of gold (at current spot) but can be bought, in very presentable grades, for less than double melt. Are they rare? Not really. But they are popular as anything, they are a good "double play" hedge and they don't appear to have been adversely affected by shipwrecks like their San Francisco counterparts.

     I like nearly any 1850's Philadelphia double eagle in AU53 and better as long as it is choice, original and lesss marked thaan usual. The dates I like best are the 1855, 1856, 1857 and 1858 and $3,000 or so will get you a really presentable example of any of these four.

     7.  Early Type Three Double Eagles From San Francisco.

     My logic on these coins is the same as for the Philadelphia double eagles listed above but with one difference. These are "jump grade" coins in which a tiny difference in quality (say MS61 to MS62) can mean thousands of dollars.

     The dates I like are the 1877-S, 1878-S, 1880-S, 1881-S and 1882-S in MS60 to MS61. They aren't tremendously expensive and if you are very patient and very selective you might find an MS61 example of any of these that looks almost identical to an MS62 of the same date; at a greatly reduced price!

     Just so you know I'm not pay lip service to Mr. Mlaker, I have handled numerous examples of nearly every coin on this list during 2012 and will continue to make an active two way market in undervalued sub-$3,500 coins in 2013 and beyond.

     For more information on undervalued U.S. gold coins (in any price range, even over $50,000!) please feel free to call me at 214-675-9897 or email me at dwn@ont.com.

How I Blew My Free Appraisal

One of the oddest things about being a coin dealer are the almost daily phone calls I get from people who demand free information. Typically, these calls are from non-collectors who have found my name on the internet and have chosen me to help them determine the value of the coin they just found in the attic/coin they bought from on Ebay/coin they inherited from their Aunt Marge in Whitefish/etc.

So, what's "odd" about these calls?  It isn't the fact that I get them regularly; all coin dealers do. It's how unbelievably rude most of the callers are and how they feel that just because I'm listed on the internet, that I am obliged to help them.

(As an aside, the last time I tried to call Steve Cohen and ask him for stock picking advice for the upcoming year, I didn't get very far but, hey, maybe it was the way I asked....)

Let me run you through a typical call:

Phone rings.

Me: This is Doug Winter, how can I help you?

Caller: (Doesn't give me his name, just brusquely goes right into the question). I have an 1849 Pacific $5.00 gold piece, what's it worth?

Me: That's an exceedingly rare and often counterfeited coin.

Caller: No, its real gold. It's been in my family for XXX years. (More than 10 but less than 100...)

Me: That's great. Why don't you send me a photo?

Caller: I don't need to send you a photo because its real gold. What's it worth?

Me: *Sigh....* Since you already know what it's worth perhaps you should take it to a dealer who is smarter than me.

Caller hangs up. Calls back thirty seconds later. I don't take the call, recognizing his number on Caller ID. He leaves a message. I listen to it. Its not pretty. After he curses me out, tells me that not only is he never going to do business with me, he's going to "tell everyone on the Internet" not to do business with me. I'm crook. I'm rude. I "blew it" because I missed the chance to buy his coin.

What caused this phone conversation to go so horribly wrong? I'd like to think it was because he was surly, self-absorbed and arrogant, but perhaps the reason was simpler than than this.

I was brought up by Mom who taught me to be polite. I say please and thank you, I hold doors open for women, I help old people cross the street. Maybe I'm old-fashioned but I believe that when you are calling someone you don't know for a potential favor on the phone there is a certain basic etiquette that you follow. Some suggestions for a fruitful call, as follows:

1. Introduce yourself. Tell me your your name. And not just your first name, unless you are Madonna, Prince or Ichiro. You don't have to tell me your life story but can I at least know who I'm talking to?
2. Politely tell me the intent of your call. Tell me that you inherited some silver dollars and that you are interested in selling them.
3. Show me enough respect to do five minutes of background checking on your coin(s). I can't tell you the number of times someone calls me and tells me that they have a coin for sale but they don't know or forgot the date. I haven't yet mastered the art of seeing through your phone (or computer screen) and manually retrieving the date of the coin that you "forgot."
4. As your family doctor will happily remind you, no professional is obligated to spend five minutes with an anonymous, rude jerk.

OK, I know that I'm sounding like your grandma here but I'm kind of wondering how people suddenly became so rude. I'm guessing it's a function of email and social media where all sorts of formerly face-to-face interactions are now done anonymously. I get the fact that a guy calling me with a coin doesn't want to tell me his name and home address for security reasons. I also get the fact that if I don't treat this guy like he's Mrs. Norweb, he is going to write a review of DWN on Yelp or a message board and tell everyone how rude, insensitive and jerky I am. At some point, the proverbial twain must meet...

So, Mr. Pacific $5.00, I'm sorry I didn't offer you $250,000 sight-unseen for your amazing rarity, even though you wouldn't tell me your name and you already knew that the coin was real. I blew it.

The Second Annual DWN Art Basel "I Was There" Blog

For the second year in a row, I went to the incredible Art Basel show in Miami Beach. For those of you who are not familiar with this show, it has become quite possibly the leading art show in the world and it turns Miami into the Epicenter of the Art World for a week or two every year in early December. This year's edition of the fair was probably better for me than last year's (which I loved) because of the fact that I knew what to expect, was better prepared and was less overwhelmed. As I did last year, I'm going to share with you a couple of thoughts, using my vast experience in attending coin shows as a basis of comparison. 1.  Your money goes a lot (and I mean A LOT) further at a coin show then at a high end art show. Good art (I'm not even going to approach the subject of great art since it is so far out of my league pricewise) is fabulously expensive and it makes good to very good quality coins seem astonishingly cheap. I think my eye is pretty good when it comes to art and nearly every painting I priced at Art Basel was $100,000 and up. These were for artists that I thought I actually had a chance to buy. For great artists that I recognized (like the stunning Mark Rothko that hung, in its fiery orange glory, in the very first booth on the left as you entered the fair...) I didn't have the nerve to even ask what it was priced at. I know these great museum-quality works of art were going to run in the $5 million to $50 million and, tire-kicker that I was, I didn't want to waste the dealer's time.

2.  Coin dealers are much, much more approachable at shows than art dealers are at fairs. Unless you exude wealth or are known by the dealer, you don't get so much as a nod of recognition at Art Basel. At one booth, I was passed onto the most junior member of the firm when I asked the price of a painting. Sigh... (The real laugh here is that after I was told the painting was sold, the 23 year old junior dealer tried to upsell me to a $350,000 painting that was so large I would have had to hire a semi truck to get it to my house in Portland even if I had the 10,000 square foot house it would have required to show it!) I'm as guilty as any coin dealer of pre-judging someone approaching my table at a show but even if you are dressed in cheap jeans or a t-shirt, you are going to get my attention if you are a) polite b) interested in coins and/or c) knowledgeable about the types of coins I specialize in.

3.  Just like at a coin show, a little knowledge goes a long way at an art fair. Quick story: my fiance Irma saw a painting by an American woman artist named Edna Reindel that she loved at a ritzy New York dealer's booth. She was quoted $95,000. If I had that sort of art budget, I would have given it real consideration. That night, we went back to the room and on my computer, I searched for information about Edna. Within thirty seconds, I found an image of the painting. It had just sold, less than three weeks ago, in an auction for $28,500. Let's say you gave your interior designer a budget of $100,000 to buy "something special" at the show. Then let's say she bought this painting for $80,000, marked it up to $90,000 and hung it over your sofa. Looks great in your living room but how are you going to feel when (or if) you learn it just sold for less than 30 clams? Ouch!!

4.  Ethnic profiling is so fun and easy at these shows. The Italians are all wear bright red pants. The Germans have crazy architectural eyeglasses. The Brazilians (men and woman) are gorgeous. The Russians seem desperate. The American woman all have fake boobs and botoxed lips. Have you ever people-watched at Heathrow Airport in London or JFK in New York? Art Basel is ten times better with the added advantage that almost everyone is either rich or an artist. (Or a rich artist...)

5.  The art market for dead artists makes sense. A painting sells at auction for, say, $50,000 and this sets a level for comparable works by the artist. There are variables: is it a major work or a minor work? Was he in the middle of a glorious love affair with his mistress or had he just broken up with her and was clearly depressed? Is the condition nice or is it ratty?  But the market for living artists--especially emerging ones--is so fraught with variables. I saw one drawing at the show that was priced at $65,000 but I thought it was a great deal given the fact that it took the artist eight months to make (!) and it was staggeringly gorgeous and cerebral. Even without any auction comparables, I saw the value. On the other hand, I saw paintings for $100,000, $200,000 and up that I thought were hokey and derivative. Here's a thought: every generation produces maybe a half dozen truly great artists. Isn't it scary that artists are selling for $1 million and up today are almost guaranteed to be afterthoughts in thirty years (see Schnabel, Julian)? Give me a Dahlonega quarter eagle any day; at least I can figure values in that market.

6.  As with coins, freshness is absolutely essential in the high end art market. If you are a rich newbie at Art Basel, it is a virtual certainty you will be offered stale, overpriced secondary market pieces or B quality works by new artists. This is true even if you have a "consultant" who, in all likelihood, has his or her own agenda. It was interesting how often I heard obviously savvy collectors ask a gallerist at Art Basel about the provenance of a work of art or who it had been offered to already. If a painting had appeared at auction in the last few years and it failed to sell...instant kiss of death. Which is not the case, by the way, in the coin market where an auction dud can still attract interest.

7.  The level of passion for art at Art Basel is amazing. Sure, it's a see-and-be-seen atmosphere and more and more of the attendees are there for the parties. But I'm pretty impressed by the fact that in a single night out in Miami Beach, I ate dinner with a group of people ranging in age from around 30 to around 80 from all over the world wearing clothes that ranged from The Gap to Prada talking passionately about art and the art market. The demographic at a coin show tends to be, how shall I say it, a bit "different" and certainly far less diverse.

8.  Because of its proximity to Latin America and South America, the fairs in Miami tend to have a Hispanic orientation that I find fascinating. There is clearly a rapidly emerging upper middle class in countries like Colombia, Brazil, Mexico and Venezuela. Not only were there a number of dealers from these countries, there were a number of collectors at the fairs buying up a storm. This wealth is almost certain to touch the coin market and if I were a betting man (wink, wink...) I would start buying selected high end coins from these four countries.

9.  Art Basel dealers, I feel your "pain."  Up at 9am. Walk or jog on the beach. Interesting clients to schmooze with all day. Brazilian women. Talk about art. See art. Sell art. Eat great food in Miami Beach. Brazilian woman. Stay at Art Deco hotels. Party 'til dawn at exclusive boites. And then there's my life... delayed flights on glamorous domestic carriers, botched reservations at Westins and Sheratons, crappy convention food, hot spots like Long Beach, Baltimore and Rosemont, fascinating conversation about die breaks on early half eagles. Not a Brazilian woman in sight. SIGH....

10. I had a great time at Art Basel 2012 and hope to be back next year. Its a fascinating week and I think it not only makes me a better connoisseur but a better coin dealer. I'm refreshed, excited and ready for the 2013 FUN show in Orlando in a few weeks.

Buying the Jump Grade

A few recent  coin sales that were made by my firm have given me an idea for a blog that I think is interesting. I've written about this before so I'll try to approach what I think is an important concept from a new perspective. The concept of value is extremely important to me when I buy a coin for my inventory and I try and share this with clients of DWN. In a nutshell, my core belief in coin buying is that, with most coins, there is a point at which you can "overbuy" . There are obvious examples of this and not so obvious ones.

The basis of my concept is what I refer to as the "jump" grade for a coin. The jump grade is the point at which the value spread for a coin becomes out of whack and the higher grade(s) for a coin no longer make sense.

 Let's look at a hypothetical pricing structure for a coin in higher grades:

     MS63:  $2500

     MS64:  $5000

     MS65:  $90000

This seems far-fetched, right? In truth, this is the exact value spread chart for a 1920 St. Gaudens double eagle, an issue that I consider to be the poster child for buying the jump grade which is MS64.

In this case, an MS64 example at $5,000 seems to make alot more sense than an MS65 at $90,000, especially given the fact that the single PCGS MS65 1920 Saint that has ever been graded isn't all that much nicer than a number of the 64's that I've seen or sold. So why would anyone buy a $90,000 version of a coin that can be represented in a set by a nice $5,000 version?

The answer is more complicated than you think. Obviously, part of it is vanity. Very high end collectors demand the finest coins and if a finest known coin jumps nearly 20x in value over the next grade down, that's just the reality of the market. If you are putting together a set of Saints that is competing for the finest in the set registry, the opportunity to add a finest known population one/none better coin (and the huge number of "points" that come with such a coin) is far and few between.

But what about the rest of us; we coin buyers without unlimited funds?

I'd like to share a few of my personal philosophies about value in numismatics.

     1.  Most collectors overbuy common coins and underbuy key coins. This is especially true for gold collectors who focus on 20th century issues. Let me give you an example. If you are collecting high grade Indian Head half eagles by date, why spend $25,000-30,000 on a common date in MS66 when you can buy a perfectly acceptable MS65 for half that amount? I think I'd rather pocket the $12,500-15,000 difference and apply it to a truly rare coin like a 1911-D. Conversely, the same collector who is working on the killer set of Indian half eagles would be foolish to scrimp on a classic issue like a 1929 and buy a "details grade" cleaned example so he could save money.

     2.  Issues with large underlying populations are dangerous purchases. Let me give you an example, along with a chart:

     1879-S Double Eagle

     Grade          PCGS Population          Value Range

     MS61                        225                        4000-5000+

     MS62                         59                          11000-13000+

     MS63                           3                           40000++

This issue actually has not one but two jump grades. For many collectors, the choice will be clear: buy an MS61 because in MS62 the price of this issue jumps almost threefold. An important point to consider is how many of the 225 coins graded MS61 (the actual number factoring in resubmissions is probably still 125-150) could become MS62 someday? Even if the number is just 10-20% percent of the total, that's still potentially as many as 15-30 new MS62 coins. Is the market deep enough to handle that high an influx and still maintain current value levels?

But for collectors with deeper pockets, MS62 is the jump grade for this issue, especially given the fact that they are unlkely to have the chance to buy an MS63 ( considering that the PCGS population is just three  and none have traded at auction since 2006). My personal choice would be a nice MS61 but I would buy a high end MS62 at, say, $15,000 if it were an obvious "just miss" coin.

3.  "Boring" coins deserve "boring" grades in most sets.  To me, a coin like a Dahlonega quarter eagle is interesting. That's why I don't think you can really "overbuy" in this series. There are very, very few D mint quarter eagles graded MS65 (or even MS64) and just about any coin graded as such, unless its horribly overgraded, is worthy of consideration for an advanced Dahlonega specialist.

But a coin like an 1898-S half eagle is boring. There were nearly 1.4 million struck, thousands and thousands exist and most range from nice to very nice. I have a hard time getting excited about a nice 1898-S half eagle; even the direct-from-the-mint to-John Clapp piece, now graded MS68 by PCGS. This coin last sold for $81,600 and I can think of alot of U.S. gold coins at this price point that I'd rather own. The only real "function" that this MS68 example might properly serve is as a type representative in a knock-your-socks off set.

4.  Type collecting looks at jump grades differently than date collecting.  Type collectors just buy one example of a specific design unlike date collectors who buy numerous. So a type collector will look at a jump grade differently. Going back to our earlier example of the Indian Head half eagle, for type purposes an MS66 might make sense and this becomes the jump grade; given that the next grade up (MS67) is likely to cost $70,000 or more.

5. You can throw the book away when it comes to dual rarities.  There are coins that are rare because of their grade and there are coins that are rare because few are known. Then there is the "rarest of the rare." These are coins that I refer to as "dual rarities" because they check boxes on both sides. An example of a dual rarity is a coin like the Byron Reed 1864 quarter eagle, which is graded MS67 by NGC. This is a coin that is not only very rare in any grade, it is an amazing piece from a condition and appearance standpoint.

I'm going to write an article on dual rarities and it should appear in the next few days on my website www.raregoldcoins.com.

Whether you have a coin budget of $1,000 or $1,000,000, you want to get the best value you can every time you make a purchase. Understanding the concept of the jump grade can help you as you mull decisions for your collection.