While doing some research for a new article on the State of the Market of Charlotte Gold (which will be posted on my website on either the 5th or the 6th of September), I thought of an interesting question which applies to any buyer of rare date gold coins. What area of the market has been the best investment in the past decade? As those of you who know me realize, I am not a big advocate of rare coins as an investment. But I am enough of a pragmatist to realize that it is important for any person, no matter how much of a true collector he is, to feel that his rare coin purchases are going to appreciate in value over the course of time.

So, I decided to do a little research project, of which the parameters are as follows: A collector had $10,000 to spend on Charlotte gold coinage in 1996. Would he have done better buying a number of cheaper coins or should he have put all of his eggs in one basket and bought a single big-ticket item? To conduct this project, I’ve decided to use the Redbook as my pricing guide (don’t turn up your nose; the Redbook is actually a surprisingly good pricing source—take a look at the list of contributors and see whose input is being used for gold coinage). I’ve also decided that only PCGS/NGC graded coins can be used in the sample, for the sake of ease and consistency.

Hypothetical collector #1 decided that he was going to purchase coins graded EF40 and EF45 in 1996. According to the 1997 edition of the Redbook (which would have been the most current available edition in 1996), common date Charlotte quarter eagles were valued at $900-1,100 in EF40. So let’s use an average price of $1,000 per coin and say that our collector bought 5 coins with an aggregate cost of $5,000.

This collector also decided to purchase some common date Charlotte half eagles. According to the Redbook, these were valued at $1,200-1,500 in EF40. Let’s use an average price of $1,300 and say that our collector bought four coins with an aggregate cost of $5,200. This would have brought the total cost of his holdings to $10,200.

Hypothetical collector #2 decided to purchase one single “big coin” and focused on a common date Charlotte half eagle in MS60. According to the 1997 Redbook, an 1847-C (the most common date of this denomination in higher grades) had a value of $10,000.

Both collectors put their coins away for a decade and in 2006 decided they were ready to sell. Who did better?

According to the 2007 edition of the Redbook, a common date Charlotte quarter eagle has a value of $2,200 in EF40; a figure which is very accurate in today’s market, in my opinion. This makes our collector’s five coins worth an estimated $11,000. An EF40 common date Charlotte half eagle has a value of $2,500. Our collector owns four of these and the quartet is now worth an estimated $10,000. This brings the total value of his $10,000 investment to an estimated $21,000.

(There is, of course, one other factor to consider. The chances are reasonably good that if he purchased his nine coins in 1996 from a reasonably good dealer, at least half of the coins would upgrade in today’s more liberal grading environment. Factoring in another 30% for these upgrades—a number which might actually be conservative—this collector’s holdings are now valued at around $27,000).

The 2007 Redbook states that the value of an 1847-C half eagle in MS60 has risen to $13,000. But, unlike the Redbook’s EF40 valuations which are quite accurate, this figure seems pretty high to me. I think the actual value of an 1847-C half eagle in MS60 is more like $8,000.

Let’s assume that this collector bought a nice MS60 back in 1996 and he gets his coin upgraded to MS61 when he resubmits it to PCGS or NGC. In my opinion, an MS61 1847-C half eagle is worth $8,500-9,500; possibly a little bit more if it is a nice coin for the grade.

So which collector did better from a financial standpoint? Clearly, it was the person who purchased the group of nine EF coins. His investment of $10,000 at least doubled and possibly tripled if he was lucky with his upgrading. The collector who purchased the one MS60 half eagle did very poorly. In fact, his original investment of $10,000 is probably worth less than this today.

I think that a few conclusions can be reached from this somewhat unscientific price study.

1. In the area of branch mint gold, the best performers in the past decade have been the collector-quality issues. By collector quality, I am referring to affordable coins in the VF and EF grade range. These have the strongest level of demand because they are the most affordable examples of these coins.

2. Not all high grade branch mint gold performed poorly in the past decade but off quality pieces (and most branch mint gold graded MS60 is generally on the low end of the eye appeal spectrum) are actually worth less today than they were in 1997.

3. Making a decision to start an EF set of Charlotte or Dahlonega gold coinage is much more difficult in 2006 than it was a decade ago. The reasons for this are fairly simple. Firstly, most of the “real” EF coins are now in AU50 or AU53 holders. Secondly, many of the nice EF coins are currently owned by active collectors who do not wish to sell them, given the fact that they know such coins are very hard to replace.

In 1987, my book "Charlotte Mint Gold Coins: 1838-1861, A Numismatic History and Analysis" was published by Bowers and Merena Galleries. In the ensuing decade, the changes in the Charlotte market have been so radical that I have been compelled to rewrite and totally update this book. In preparing my new book on Charlotte gold coins (to be published in 1998 by DWN Publishing), I have been amazed at the breadth of the changes which have characterized this market in the past decade. My first book on Charlotte has become so out-of-date that when people inquire as to its availability, I tell them not to buy it and to wait for the revision.

As I have been researching the various Charlotte issues, I have made some interesting observations. The following areas represent, in my opinion, the biggest changes which have pervaded the Charlotte market (many of these changes can also be applied to the "rare date gold" market as a whole).

I. The Advent of Certified Grading

The population and Condition Census data in the 1987 edition of my book was based on research done in the mid-1980's. This was before the creation of PCGS and NGC. Needless to say, the changes brought about by these two services have had profound effects--both good and bad--on the Charlotte market and on numismatics as a whole. Some of the changes are obvious. After ten years of grading Charlotte coins, enough pieces have been seen by the services to create a useful population and grade distribution database. Everyone knows that the numbers in the PCGS Population Report and the NGC Census Report are skewed due to resubmissions, crossovers, etc. However, this data is far more advanced than anything available in 1987. For the first time, it is possible to get meaningful comparative rarity data. As an example, the population reports are best used in determining how rare an 1840-C half eagle in Extremely Fine-45 is relative to an 1850-C half eagle in the same grade. In 1987, this data was far more speculative and open to interpretation. Today, the collector can easily find out if the information he is being told about a specific coin or date is accurate.

II. An Increase in the Population of High Grade Coins

For a variety of reasons, the number of important high grade Charlotte gold coins has dramatically increased in the past decade. Some of the reasons for this include the following: rising prices have brought new coins into the market, many old collections have been sold and some previously unknown hoards or accumulations have quietly entered the market. Population "explosions" for a few dates are readily noticeable. One example of this is the 1838-C quarter eagle. When the 1987 edition of my book was released, I estimated that only three to four were known in Mint State. In the 1998 edition, my estimate of Mint State examples has been revised upwards to seven or eight coins. In 1987, I estimated the number of Mint State 1844-C half eagles to be two or three; today, I can account for five separate pieces. These numbers may not sound significant when compared to very common coins but in a narrow, tightly traded field such as Charlotte gold, these increases are dramatic.

III. An Increase in Prices

Many series of coins have seen dramatic downward movement in prices when viewed as a whole from 1987 to 1997. Collector-based series such as Charlotte gold, on the other hand, have seen very solid increases. The following chart takes the most common dates in all three denominations from this mint and compares the 1987Redbook prices with those in the 1997 edition of this book.

DATE/DENOM. 1987 REDBOOK PRICES 1997 REDBOOK PRICES EF-40 AU-50 MS-60 EF-40 AU-50 MS-60 1851-C $1.00 500 825 2,000 700 1000 2,500 1847-C $2.50 450 900 2,500 900 1,900 5,750 1847-C $5.00 750 1,000 3,000 1200 3,000 10,000

As this chart shows, the prices for even the most common Charlotte coins rose considerably in the past decade. Many coins doubled in price and one, the 1847-C half eagle in MS-60, tripled. These prices are even more dramatic when one examines the levels for rarer dates or for extremely high grade coins (i.e., Mint State-62 and above). Simply put, high grade examples of Charlotte gold have proven to be an excellent investment during a coin market which has seen a lot more downswings in price than upward movement (at least since 1990).

IV. A Change In Grading Standards

The most important thing to remember about grading is that, despite claims to the contrary, it remains highly subjective. It is hard enough to get a group of experts to agree on Mint State common date Morgan Dollar grades; let alone complex issues such as Charlotte coins. In the late 1980's/early 1990's, PCGS and NGC began grading significant amount of Charlotte gold coins. For the most part, the grading standards of that era tended to be very conservative. Today, standards have relaxed considerably. In my opinion, the EF-45 of the late 1980's is an AU-50 (or even an AU-53) today. And the AU-55 of the late 1980's is an MS-60 (or even an MS-61) today. The primary effect of this is to provide an unrealistic picture of availability for certain issues. As an example, as of September, 1997, PCGS had graded 41 1849-C half eagles in the various About Uncirculated grades. In the forthcoming revision of my Charlotte book, I estimate that the total number of 1849-C half eagles known to exist in all AU grades is 35-37. It is my opinion that many of the 17 coins graded AU-50 by PCGS (as well as some of the 10 coins graded AU-53 by this service) are coins which would have graded Extremely Fine a decade ago.

V. The Fall and Decline of "Crust"

I am a fan of original surfaces on gold coins. To my eyes, there is nothing more attractive than a Charlotte piece with layers of old "crust." (I define "crust" as original toning over a heavy layer of natural "skin" on a coin's surface which develops over the course of time). To me, originality provides great eye appeal. Unfortunately, the two grading services have unwittingly contributed to the destruction of a great number of gold coins by penalizing them for originality. It is my experience that if you submit a "crusty," original AU-50 coin, it is invariably graded EF-45. But, if you take the same coin, scrub off the crust and make it bright, it will grade AU-50 to AU-55. Ironically, the financial incentive for submitters is to destroy their coins in order to maximize their value. This is especially true in a market such as Charlotte gold where the difference between an EF-45 and an AU-50 can be thousands of dollars. As time passes, I think the number of truly original Charlotte coins will continue to shrink. The few remaining coins with original surfaces will invariably trade for strong premiums among knowledgeable buyers and unwitting new collectors and investors will get stuck with the overgraded, unnaturally bright dregs.

VI. A Shift in the Supply and Demand of Charlotte Gold

One of the major reasons why common coins have dropped significantly in price in the 1990's is the fact that more and more come onto the market while fewer collectors, investors and dealers are around to absorb them. Charlotte gold coins are one of the few series where the supply/demand ratio has been such that enough new collectors have come into the market to absorb the coins which have come onto the market. A typical "common date" Charlotte half eagle has a surviving population of 150-200 pieces. At least half of these coins are in very low grades and, therefore, are of little interest to collectors. Another large group are either in museums or tightly-held private collections and are off the market. Suddenly, an original population of 150-200 may now have shrunk to twenty or fewer coins which are of the quality which an advanced collector will find acceptable. If there are 50-100 serious collectors of Charlotte gold (and my guess is that the actual number is greater than this), than there exists a demand for coins which is two to five times greater than the actual supply. The result is that prices for Charlotte gold coins have risen and should continue to do so as fewer and fewer coins are chased by more and more collectors.

VII. Many Major Collections are Sold and ManyNew Players Enter the Market

In the decade from 1987 to 1997, many of the finest collections of Charlotte gold coins ever assembled have been sold. Important collections sold at auction include Norweb (Bowers and Merena, 1987-1988), Willard Blaisdell (Stack's, 3/90), Billy Fuller (Heritage, 7/93) Reed Hawn (Stack's, 10/93), James Stack (Stack's, 10/94), R.T. Wilder (Stack's, 11/94) Ed Milas (Stack's, 5/95 and Stack's/RARCOA/Akers, 11/95) and the forthcoming Pittman sale (Akers, 10/97). In addition, the Stanley Elrod collection, which is recognized by experts as the final complete set of Charlotte coins ever assembled, was sold intact and then broken-up and sold individually from 1995 to 1997. Coins from these sales now dominate the revised Condition Census listings for Charlotte gold coins and this will be reflected in my forthcoming book.

At the same time, there has been a change of leadership in the Charlotte market; both from the standpoint of the sellers and the buyers. Of the ten leading dealers in Charlotte gold in the current market, at least half of them were not active in 1987 and others, such as myself, have only recently had the financial resources available to compete in the higher end market. Of the ten leading collectors of Charlotte gold in 1987, at least half of them are either deceased or no longer active. Many of the most significant buyers had never seen a Charlotte gold coin in 1987, not to mention the fact that they were unable or unwilling to spend serious money on their current passion a decade ago.

VIII. Summary

Collectors of Charlotte gold who have been active since the mid-1980's are, no doubt, marvelling at the tremendous changes that they have seen in the past decade. The number of high grade rare coins which have been made available to them, especially in the 1990's, has been nothing short of incredible. As one collector recently said to me, half-jokingly, "it's like they reopened the Charlotte Mint for a few years and decided to give us a second chance at the really nice, rare pieces we needed for our collections. Conversely, the prices which these same collectors now have to pay for choice pieces makes the prices of 1987 seem very, very reasonable. In 1987, the collector of average means could afford to put together a nice Extremely Fine to About Uncirculated set. Today, this set is out of the price range of the lower budget collector.

Nearly all of the major collections which have been formed since 1987 have been built around slabbed coins. Unless a Charlotte coin is from an old-time collection and is being sold at auction, the chances are good that it if it is unslabbed, it has a problem.

In my opinion, the future for collector-oriented series such as Charlotte gold coins looks very bright. Assuming that my new book creates even a moderate number of serious new collectors, the supply/demand ratio will become even more skewed. If three or four major players decide to assemble high grade sets of Charlotte gold in the next two or three years, the supply will noticeably dwindle. This will lead to further price increases and, perhaps, even more radical market changes than the ones discussed above.