Hunting For Value In Today's Rare Coin Market

As we roll towards the mid-way point of the numismatic year, this is a good time to step back for a second and reflect on value. The Numismatic Prognostications of late 2008/early 2009 have not proven as dire as first thought (at least not yet...) but there has still been quite a bit of shake-out in the coin market. For the collector who is a stickler for good value, does this represent a good time to jump into the market and pursue some of the bellwether items that are standards in any collection? Let’s take a look at a few of these and see if they are good values at current levels or if the collector should ride the market out and take a “wait and see” approach.

The first coin I’d like to look at is a 1795 half eagle graded AU55. The 1795 half eagle is a very popular issue due to its status as one of the two first gold coins struck by the United States mint. It is scarce but not unobtainable and it is priced at a level that many collectors can (still) afford. The current value of an average quality 1795 half eagle in AU55 is around $40,000. Last year, examples consistently traded in the $45,000-50,000 and at the peak of the market in 2007 they hit the $50,000-55,000 mark.

Now, let’s look back a few years. What were 1795 half eagles in AU55 worth five or six years ago? As I recall, it was possible to buy a nice, solidly graded example for around $25,000-30,000. My gut feeling tells me that it’s not likely that we’ll see these levels again for this coin but that a dip down to around $35,000 might be possible this year, especially for examples that are low-end and unoriginal.

In my opinion, at current levels (give or take 5-10% on the downside or upside), the 1795 half eagle is a pretty good value in AU55. But I’d be very picky right now. The last three or four examples that I have seen in AU55 holders have been fairly unattractive. A choice, lustrous piece with good eye appeal and nice color is hard to find at the new levels and I think it’s a solid value.

How about the Big Brother of the 1795 half eagle: the eagle from this year? I personally love 1795 eagles. It’s a beautifully designed coin, it’s historic, it’s scarce but not to the point of being esoteric (as are some of the rare date early eagles of this design) and it’s an issue that has been in demand since the early days of coin collecting.

Prices levels for this issue in AU55 have held up a little better than they have for the similarly dated half eagles. I haven’t handled an AU55 in a few months but I’m guessing that they are worth around $50,000-55,000 right now. Last year, examples traded in the $55,000-60,000 range and at the peak of the market in 2007, I traded at least three of them in the $65,000-70,000 range.

Looking back a few years, 1795 eagles in AU55 were trading for around $35,000-40,000. If I had to guess what the current “basal value” for this issue is, I’d say around $45,000. At this level, I have to think there are a lot of dealers who would jump in, even for coins that weren’t especially high end.

In my opinion, a nice, choice 1795 eagle at around $50,000 is very good value. Again, I’d be picky if I were buying one. I’d spend a few extra thousand dollars and wait for an example that was as original as possible.

What about High Reliefs? As you might know, I’m not a huge fan of High Relief double eagles from the standpoint of value. But I do love the design and if I were a collector I can’t imagine not owning a nice MS64 example at least once during my collecting career.

If you shop around, I think you should be able to buy a decent non-CAC quality MS64 for around $26,000-28,000. These were worth around $32,000-34,000 a year ago and at the peak of the market in 2007 I can recall seeing examples trade in the $36,000-38,000 range. Around five or six years ago, as the Great Bull Market in coins was beginning, MS64 High Reliefs were available in the $22,000-24,000 range.

These numbers are sort of surprising to me. Given the near-ubiquity of this coin in this grade (PCGS alone has graded over 1,200 in MS64) I would have personally expected it to have dropped more than it has so far. Many collectors are not aware of the fact that some of the dealers who were the biggest two-way market-makers in High Reliefs have cut back their buying due to cash-flow constraints. Given these factors, I’m impressed that MS64 High Reliefs have only dropped 15-20% since last year. My gut feeling is that they could drop another 10-20% but I don’t see them getting much cheaper than the low 20’s in MS64. At this level, I would have to think that they are a “safe” purchase.

Let’s look at one last item. How about something that straddles the line between “generic” and “rare coin?” I’m thinking Three Dollar Gold and, more specifically, I’m thinking an 1878 $3.00 in MS64.

If you follow the generic market, you probably are aware that Three Dollar Gold is not in demand right now. I would term this series as “cold” and it might even be approaching “glacial.” With a little price shopping and comparing various dealers’ inventories, you should be able to buy an MS64 in the $6,500-7,500 range. These were worth $8,500-9,500 a year ago. The peak of the market for common date MS64 Three Dollar gold was in late 2005/early 2006 when these were being promoted and they got as high as $12,000-14,000 in MS64. Going back to the beginning of the bull market, MS64 Threes were selling for $5,500-6,000.

I’d like to tell you that I thought MS64 Threes were a great value right now because I do think that they are cheap. But the problem with this series is ample supply and almost no current demand. Unless someone starts promoting Threes again, I could see MS64’s drop down to the $5,000-$5,500 range. So unless you really need one for a type set, I’d suggest waiting a while and letting them get cheaper.

Why Are Some Rare Coins Undervalued?

Why are some coins clearly undervalued? I could answer this question existentially and say “because some have to be.” But the answer to this question is worth a little more exploration. Here are some things to consider about the valuations of coins. First and foremost, many of the areas of the rare coin market are thinly traded. In some cases, published prices for coins are speculative due to no examples having ever traded or they represent older price levels that have not been updated in many years. There are times when I am trying to figure what to bid for a very special rare coin at auction and I’m not sure I can scientifically pinpoint the exact price level. This can even be the case with coins that aren’t all that special but which haven’t traded in a long enough period of time to make their current value baffling.

Coin values are predicated by a supply and demand ratio. I have used this scenario enough times that it is now a semi-cliché but consider the following. If there are ten examples known of a certain coin but only three people care, it has an oversupply and its value is probably not very high despite its rarity. But if the same coin has thirty avid collectors than it will probably have a strong level of value.

This supply vs. demand situation is why some truly rare coins remain undervalued. As an example, look at a coin like the 1867 quarter eagle. Only 3,200 were struck and the most recent PCGS population figures show that just twenty-four have been graded. Despite this fact, the current value in AU55 is a whopping $1,500 or so. Shouldn’t this be a $3,000 or even a $5,000 coin? In theory, yes it should. But practical experience dictates that the level of demand for 1867 quarter eagles, which is virtually non-existent, keeps the price low. Advocates of the 1867 quarter eagle will counter with the argument “well, if this were an Indian quarter eagle with a population of twenty-four in all grades, it would be worth 10x in AU55.” In theory, this argument has merit. My counter-argument would be that the Indian Quarter Eagle series is many times more popular with collectors and that this is essentially an apples to oranges comparison.

The coin market is clearly becoming more and more researched-based as time goes by but I think the entire pricing system we have is antiquated. Let’s get back to the point I made in the second paragraph, about the market having thinly traded areas. These infrequently traded series are often compounded by a lack of good pricing information. I am always impressed by collector-dominated series like early Large Cents or Bust half dollars that have databases of pricing information available to collectors. The rare gold coin market doesn’t have this (yet) and I think it would be a real shot in the arm if someone were able to produce a price guide that helped dealers and collectors accurately determine values.

What I’d like to see even more is for an appearance-specific price guide to exist for these coins. Collectors of early Large Cents classify coins by three categories: choice, average and “scudzy.” Let’s say collectors are offered a certain die variety of 1796 Large Cent. A choice coin may be worth $5,000, an average coin $3,500 and a very low-end coin might only be worth $2,000. I’m not certain that these variations would be as extreme for, say, an 1854-C quarter eagle in slabbed AU55 but I do personally think a nice coin for the grade is already worth considerably more than an ugly one.

Getting back to my original point: why are certain coins undervalued? As I stated earlier, the major reason for this is that they are just not that popular. Another reason--one that is harder to give an explanation to--is that in any long series, it is inevitable that a percentage of the coins are “sleepers.” I previously mentioned that the lack of accurate pricing information in the market means that it is always going to be inevitable that a number of coins fall through the cracks. The value of being a specialist is that you will learn what coins are the sleepers before they become more widely known.

Opportunities for Collectors in a Generic-Oriented Market

After I left what was, for me, a very productive Baltimore coin show, I was sitting in a restaurant at BWI airport, eating a crab cake. As I was finishing up, a dealer who I don’t know that well but who I respect for his knowledge and his connections came up and asked if he could join me before our respective flights left. As you can no doubt guess, our conversation almost immediately turned to the market. As this dealer was quick to point out, as far as gold coins go, we are currently in one of the more confusing market segments that either of us could remember. He made a comment that I thought was really profound. He said something along the lines of “the market is so strange right now, that if I had a fresh deal of Saints or $20 Libs it would probably get other dealers more excited than if I had a group of fresh Proof gold coins.”

At first, I thought this comment was sort of odd. But the more I thought about, the more it made sense. The market is so oriented right now towards generics and “stuff” that many dealers have all but overlooked rare coins. And I think this presents a few really interesting opportunities for buyers who have some extra cash.

Generic gold is on fire for a number of reasons. The “guns and gold” crowd is buying gold because they have a fundamental distrust of the dollar and don’t like the direction that the U.S. economy is headed. Investors are buying American Eagles and other issues to put into their IRA’s in the hope that this year’s contribution outperforms last year’s stock purchase. And large-scale telemarketers are selling the heck out of double eagles to new buyers who have left more traditional investments and like the idea of owning some physical gold.

As is always the case when an area of the coin market gets hot, other areas are forgotten. When you go to a coin show now, it is very interesting to observe what some of the very savvy major buyers are doing. I know of at least two very smart, A-level dealers who have virtually stopped buying anything numismatic and are focusing almost exclusively on ten dollar and twenty dollar gold pieces. As I mentioned above, I think this has created some great opportunities for more numismatically-oriented dealers like me and for serious collectors.

One opportunity for rare coin buyers right now is for PQ coins. With so many traditional buyers of PQ rare gold coins focused on generics I have noticed that many really nice coins are bringing almost no premium over many really schlocky coins. This is especially the case with Charlotte and Dahlonega gold. At the Baltimore show I was able to purchase a few exceptional PQ coins for literally no more than a 5% premium over the usual crappy dipped-n-stripped stuff that I saw all over the bourse floor and in the auctions.

Another opportunity right now for a more select group of buyers is expensive coins. Most dealers (myself included...) are having a hard time selling coins priced at $10,000 and up. If you follow my website you will probably note that while, as recently as last year, I might have had ten or even twenty coins priced at $10,000 or more, right now I have very few.

If you have the money and you are a collector of five and six figure coins, I think you call the shots. Unlike in 2006 or 2007 when dealers had an easy time selling big coins, dealers are far more aware today of the difficulty inherent in selling these coins. My guess is that if your favorite dealer has a $15,000 coin in stock that you’ve had your eye on since December he’s probably more willing to sell it for $13,000 now than he was a few months ago. (And if he’s not, this is a good sign that your favorite dealer may be doing something else besides selling coins in the near future).

As I mentioned before “real coins” are currently out-of-favor with many dealers and some collectors as well. What does this mean for the serious collector? It may not translate to saving money on the coins you want (although it is likely that this is true). More likely, it means that you will actually get a chance to buy some of those hard-to-find issues that might have been causing you grief in years past. Let me give you an example. At the Baltimore show, I was able to get second shot at a group of interesting double eagles. The dealer who got first shot would have ordinarily bought every coin as they were interesting, not unreasonably priced and pretty choice. Instead, he passed on about half the coins and I bought everything that was left over. Why did he pass? My guess is that some of the coins were above the price level that he is currently selling well and that much of his focus is on generics as opposed to rare coins.

There is one other opportunity for collectors right now that I think deserves a quick discussion and that is selling some of the generics that everyone seems so focused on right now. If you bought Saints or Libs more than a year ago you are probably in a good profit position right now. Let’s say you have a bunch of MS65 Saints that your average cost is $1,200 and you can sell them today for around $2,000. It seems like a smart move to me to sell your position at an $800 per coin profit (not a shabby rate of return for a one-year investment during an economic meltdown...) and use the profits to buy a rare coin or two that you have your eye on.

The Warehouse Theory of Coin Collecting/Investing Revisited

A few years ago, I wrote an article entitled “The Warehouse Theory of Coin Investing.” The gist of this article was that there are certain coins that remain in such demand with collectors that a sound investment theory might be to stockpile attractive examples of these and work with a specialized dealer who could then, over the course of time, resell them to other collectors. A coin that I used as the Poster Child for this was the 1854-D $3.00. If you had listened to this advice, you probably outperformed the market. There are clearly a small but definable group of coins that have been in strong demand over the last few years and their price levels have risen accordingly. Even in the now-weaker market of early 2009, I think many of these remain in demand and their overall level of value has stayed higher than other, “non-essential” coins.

What are some of the coins that I would suggest collectors put away multiples of in 2009?

I remain a big fan of any coin that has multiple levels of demand. What I mean by this, is a coin that is sought-after by collectors who might not normally be interested in this series. An example is the 1861-D gold dollar. Because of this issue’s association with the Confederacy, there is demand for it from collectors who are likely to never buy another Dahlonega coin of any date or denomination. But this coin is also sought by gold dollar specialists, last-year-of-issue collectors, Dahlonega specialists and collectors who like cool, historic coins, regardless of when or where they were produced.

What are some of the other coins that I would suggest collectors might be clever if they owned a few decent examples? Let’s look at this on a mint-by-mint basis. (Please note that this assumes that any duplicate coins purchased for “warehousing” meet the following criteria: choice for the grade, fairly priced and good overall eye appeal).

Carson City: Any 1870-CC gold coin is desirable and they always sell quickly for me when I have them in stock. Because of its currently high price I might not want to own two or three 1870-CC double eagles. I would be most likely to want multiple examples of the 1870-CC eagle in VF and EF grades as this issue remains a good value at current levels. I wouldn’t be opposed to owning multiple examples of any relatively affordable half eagle or eagle from the 1870’s that was totally original with great color and choice surfaces, especially if it were priced below $15,000.

Charlotte: The one Charlotte issue that comes to mind as being a great warehousing candidate would be the 1838-C half eagle in Very Fine to About Uncirculated grades. This issue’s status as a one-year type and a first-year-of-issue makes it extremely popular with collectors. My other two choices would be an 1838-C quarter eagle and an 1839-C half eagle. I might also suggest stockpiling any $3,000 or lower coin from this mint that was 100% virgin original.

Dahlonega: There are five very obvious warehouse choices from this mint: the 1855-D and 1861-D gold dollars, the 1854-D three dollar and the 1838-D and 1861-D half eagles. The first, third and fifth coins are one-year types while the second and the fourth have Confederate association(s). Another issue that I would give consideration to is the 1855-D quarter eagle. This has the lowest mintage of any Dahlonega coin and it is the single rarest issue produced at this mint. I would remind the potential warehouser of any or all of these coins that damaged or low-end examples need not apply. The same comment that I made for sub-$3,000 Charlotte coins applies to those made in Dahlonega as well.

Denver: Your basketball team is doing well this year but I don’t see many warehouse possibilities. With the possible exception of the scarce 1911-D eagle. Oh, and I like LoDo a lot...

New Orleans: There are five distinct one-year types from this mint: 1855-O gold dollar, 1839-O quarter eagle, 1854-O three dollar, 1909-O half eagle and 1879-O double eagle. I find all five of these to be popular and liquid, although I’m not sure that I consider all of them to be warehousing candidates. As an example, I wouldn’t suggest that anyone own multiple examples of the 1909-O in Extremely Fine. But I like this date in properly graded AU55 and above and I certainly would encourage a warehouser to salt away a few.

The New Orleans issues that I would be most inclined to suggest that someone own multiples of are the key issues that are still not fully valued. Some of these include the 1845-O quarter eagle, the 1847-O half eagle, the 1841-O, 1879-O and 1883-O eagles and the 1855-O double eagle.

Choice, original No Motto coins from New Orleans that are priced at below $3,000 seem like a good area to warehouse as well; especially half eagles.

Philadelphia: One of the problems about discussing gold coins from this mint is that you are looking at a lot of denominations (gold dollars through double eagles) and a long, long time of issuance (1795-1933). For the sake of this article, we’ll focus briefly on the early issues (pre-1834) and the Liberty Head issues (1840-1908).

There are lots of early gold coins that make sense as warehouse candidates. Most people are going to guess that I suggest famous issues like the 1796 No Stars quarter eagle. Actually, the coins I’d be more likely to want to warehouse are the Fat Head half eagles from the late 1820’s/early 1830’s. These coins are expensive and could certainly decline in value if the economy gets more uncertain but they are incredibly rare and, after many years of neglect, are now appreciated by many levels of collectors.

The Liberty Head issues that would make interesting warehouse candidates include the classic rarities from this mint: the 1841 and 1863 quarter eagles, the 1875 and 1876 three dollars, the 1887 half eagle and the 1875 eagle. I would also suggest a small number of very rare issues that, while not extremely popular (at least yet...) appear to represent good value relative to their rarity. These include the 1863 gold dollar, 1864 and 1865 quarter eagles, the 1863 and 1865 half eagles and the 1863, 1873, 1876 and 1877 eagles.

San Francisco: The obvious issues to warehouse from San Francisco would be the mega-rarities: 1854-S quarter eagle, 1864-S half eagle and 1864-S eagle. Even though there are a lot of undervalued and very rare issues from San Francisco, this mint’s comparative unpopularity leads me to believe that warehousing coins from the Barbary Coast might not be a stellar idea.

If you do decide to warehouse a specific issue (or more) my advice is to be under the radar. Let one dealer with who you have a good relationship know about it. I wouldn’t suggest you broadcast to the world that you own five 1838-D half eagles. If you are discrete about what you own, it will be to your advantage when it comes time to sell.

I currently know a number of collectors who warehouse certain gold issues and it is enjoyable for me to work with them. If this is something that intrigues you, please feel free to contact me via email at dwn@ont.com.

Cleaning Up Your Collection

As I write this, there is a real disconnect in the coin market. Simply put, despite what is very probably the worst economic year since the height of the Depression, the coin market remains comparatively vibrant. I think this represents something that many collectors are overlooking: this could be a great opportunity to clean up some of the messes in your collection and come out without taking a nasty financial hit.

This statement is making a big assumption: that the financial mess we are in now will impact the coin market more intensely than it has so far. Who knows; maybe it won’t. But my guess is that we will see a further drop in prices on coins that aren’t really exciting, either off-quality, not rare or a combination of the two.

If you are like most collectors, you’ve probably made some mistakes over the years. And if you are like most collectors you may have hidden your mistakes in the back of your safety deposit box and figured “out of sight, out of mind.” As I mentioned above, this might be a really good time to consider trimming the fat.

I have long been an advocate of the “quality trumps quantity” school of numismatics. In my experience, most collectors own too many coins. Some collectors own way too many coins and they have a considerable amount of money tied-up in “stuff” that has little relevance to their current collection. I think it’s a great idea every few years to weed out some of the stuff that has accumulated in your collection.

The coins that are most likely to lose value in the coming year are coins that have either gone up too much in value in the last few years to sustain their market or coins that have a limited amount of demand. You might want to include these along with the “what was I thinking when I bought that...” coins.

When you look through your collection, you should use what I called the “ahhh.... test.” Coins that you like are going to make you go “ahhh...” when you view them and you can probably remember the exact circumstances in which you purchased them. Coins that don’t speak to you or which don’t tweak your memory haven’t passed this test and they might be candidates for a purge.

You might own coins that you don’t really care much about but which are still strong. A great example of this is generic gold. Many collectors have salted away a few St. Gaudens double eagles or Liberty Head eagles over the years. They might not care at all about these but they might also be able to make a nice profit if they sell them at the currently-high premiums in the market. If I had a decent position of generics in my collection, I’d seriously consider taking a few and selling them right now.

I’d be even more interested in selling these Misfit Coins in my collection if I had an alternative coin coming down the pike that seemed like it was too good a deal to pass up...and I didn’t necessarily have the ready cash to make this deal happen.

Here’s another circumstance where you might have coins that are no longer useful to your collection. Let’s say you started a collection but lost interest and now you have a 50% complete set lying around. If the coins are nice quality and price levels aren’t way off on the series in question, it might not be a bad idea to sell the coins you have and use the money on coins in the set(s) you are actively collecting.

What is the best way to clean up your collection? You have a number of options and these options depend, at least in part, on the type(s) of coins that you own. If you live in a town with a reputable brick and mortar coin shop and you have pounds and pounds of “stuff” then selling this material outright or on consignment might be a good idea.

If what you have fits more into the specialist category, choose a specialist dealer to make an outright offer or to take the coin(s) on consignment.

And, of course, you can always go the auction route if you are thinking of selling very high-powered or highly specialized material.

In conclusion, this might be a good time to get rid of some of your less-exciting material at levels that aren’t going to insult your sensibilities. For what’s its worth, this is exactly what I’ve been doing with my own inventory for the last four to six months and even though I’ve had to make a few decisions that were painful at first, I’m very glad that I sold some of the coins I did at the prices they went away at.

Building A High Quality 19TH and 20TH Century U.S. Gold Type Set: The BVG Theory

In the last few decades, specialized (and highly specialized) collecting has become all the rage in numismatics. But back in the day, anyone who was anyone collected coins by type. I believe that the type method of collecting still applies well to United States gold; especially those coins produced from 1838 through 1933. I wrote an article in March 2000 in which I coined the phrase “Best Value Grade.” This concept (if not this phrase...) seemed to have a big impact on the people who read it and to this day I still have people refer to it when discussing individual coins with me.

In case you’ve forgotten what Best Value Grade or BVG means (and I accept your apology if you have forgotten) I described it as follows back in March 2000: “every U.S. coin has a price point above which it no longer makes economic sense to purchase it.” Let me give you a quick example of the BVG.

Let’s say you can buy a nice MS64 1899-S double eagle for around $3,000-3,500. Seems like a pretty reasonable price for a coin that is relatively scarce in this grade, is probably quite attractive and which has a very limited range of popularity. The same coin, if you can find it, costs around $20,000 in MS65. My belief is that unless you are a large-budget collector who absolutely has to have the best of everything, it makes more economic sense to buy this coin in MS64 and use the saved money for other more interesting items.

My BVG theory applies really well to gold type collecting. Let’s take a look at the various major gold types produced between 1838 or so (the introduction of the Classic Head design) and 1933 (the abolishment of gold issues for circulation).

I. Gold Dollars

There are three gold dollar types that are included in all type sets. The first, known as the Type One, was struck between 1849 and 1854. I personally feel that MS65 coins are the best value in this type. Given the small size of these coins, many collectors have a tough time determining the difference between an MS65 and an MS66 and the former is about half the price of the latter. At the present time, you can find a really nice MS65 Type One gold dollar for under $5,000. I’d pay a small premium and choose an 1849 as this is a neat first-year-of issue.

Type Two gold dollars were produced from 1854 through 1856 and they are among the more expensive coins in a gold type set. Even though MS65 examples have dropped quite a bit in price from a few years ago, I think a nice high end MS64 is a really good value right now. I have seen examples selling in the $15,000 range and this price point makes sense to me. For type purposes, either an 1854 or 1855 will suffice.

Type Three gold dollars were produced from 1856 through 1889. This is one type that as a collector I might splurge a bit on. Very high quality pieces are more available than one might expect and they often have exceptional eye appeal. I would select an MS67 for my type set and these coins are now available for around $4,000. I’d try and pick a date from the early 1880’s as these are a bit scarcer than the late 1880’s issues, yet sell for essentially the same price.

II. Quarter Eagles

Some type collectors begin their quarter eagles with the Liberty Head type but I would suggest adding a Classic Head as well. Produced from 1834 to 1839, this type is attractive, historic and highly collectible. Gem examples of this type are rare and expensive but MS63 and MS64 pieces are available. I would be inclined to go with an MS64. An 1834 or 1836 are the two relatively available dates of this type and a nice MS64 should be available in the $15,000-17,500 range.

The next quarter eagle type is the Liberty Head that was made from 1840 through 1907. I would personally choose an MS66 example for my type set. These had been in a price slump and had dipped well below the $3,000 level. With the current strength in the generic gold market they are back up to around $4,000 but are still good deals at this level. If possible, I’d choose a coin made in the 1890’s as opposed to one made in the early 1900’s.

The third and final quarter eagle type in this set is the popular Indian Head. This is another issue that has seen some price declines in the past few years in higher grades. I’d suggest a nice, handselected MS65. This is going to cost in the $3,500 to $4,000 range and it seems to me to be better value than an MS66 at more than double the price. I’d select a 1908; again, due to its first-year-of-issue status. III. Three Dollar

The charismatic Three Dollar gold piece was struck from 1854 to 1889. This is one of my personal favorite types in this set. The type collector has a number of options here. He can choose a common date in MS65 and probably find a really exceptional coin for less than $20,000. Or, he might choose a common date in MS64 for around $8,000-9,000. Due to the scarcity and uniqueness of this denomination, I might splurge and go for the MS65. The most common dates in high grades are the 1854, 1874, 1888 and 1889.

IV. Half Eagles

The first design type in our set is the Classic Head. It was made from 1834 through 1838. Gems are quite scarce and very expensive so most type collectors will focus on coins graded MS63 or MS64. The former should be available in the $12,500-15,000 range while the latter will cost $20,000 and up. I can see the argument for both sides when considering an MS63 or an MS64 for a BVG gold type set. I think I’d opt for a nice MS63 and I might try and look for any date other than the common 1834. Even though the 1839 is a distinct one-year type, most collectors include it in along with the standard Liberty Head design. There are two major subtypes: the No Motto issues of 1840-1866 and the With Motto issues of 1866-1907. I’ve become a pretty big fan of No Motto half eagles over the years and this is one type that I feel is worth stretching for. For the BVG type collector, the best options are an MS63 or an MS64. A nice example of the former can be found around $6,000-8,000 while the latter will cost $12,500 or so. The Philadelphia issues from the 1840’s and 1850’s are the logical choice for a type set. With Motto Liberty Head half eagles are an easy type to find even in very high grades. For this set, I’d go with a nice MS65 and expect to spend in the area of $4,000-5,000. I would look for a date struck in the 19th century versus one from the 20th century and would expect to pay little—if any—premium for this. The final half eagle type for this set is the Indian Head. The BVG for this type is kind of a no-brainer, given the fact that an MS65 costs around four times more than an MS64. I would look for a nice, high end MS64 and expect to find one in the $4,000-5,000 range.

V. Eagles

The first Liberty Head design type of 1838-1839 constitutes a distinct design but most collectors do not include this as a separate type in their set. Instead, they begin their set with the No Motto Liberty Head issues produced between 1840 and 1866. This is an extremely rare type in Gem and most collectors will be content to add an MS63 or an MS64. As far as the Best Value Grade goes, I’d be inclined to suggest a nice, high end MS63 in the $15,000-20,000 range but could also see the benefits of an MS64; in spite of the healthy $30,000++ price tag and the difficulty in finding such a coin. For most collectors, a Philadelphia coin from the 1847-1856 era is going to be included in their type set.

The With Motto Liberty Head eagles were made from 1866 to 1907 and they are substantially easier to find in high grades than their No Motto counterparts. I would recommend an MS65 and such a coin will cost around $5,000-6,000. As usual, I’d look for a 19th century date versus a 20th but the most important thing to consider for such a coin is the appearance and surface preservation as opposed to the date of issuance.

The final eagle for this type set is the Indian Head. These were issued from 1907 through 1933. This is an interesting design and it features dates that range from very common to very rare. For our BVG set we would focus on one of the common dates and would probably select anything other than the ultra-available 1926 or 1932. An MS65 will cost in the area of $5,000-6,000 and this should suffice.

VI. Double Eagles

There are two distinct designs that exist for this denomination. The first is the Liberty Head. These coins were struck from 1850 through 1907 and are found with three important subtypes.

The first Liberty Head type is the Type One, which was issued from 1850 through 1866. Until the discovery of a number of shipwrecks, this type was extremely rare in higher grades. Now, these coins are plentiful in higher grades. For a BVG type set I would be inclined to go with either an MS64 which will cost around $8,000-9,000 or an MS65 which will cost $12,500 or a bit more. The best issue for a type set is the 1857-S from the S.S. Central America shipwreck.

The Type Two Liberty Head double eagles were made from 1866 until 1876. They are extremely rare in high grades and for most collectors, a nice MS63 is about the best quality that is realistic. For a piece in this grade, we are looking at an expenditure of around $12,500 or so as opposed to $40,000++ for an MS64. The most available dates for a type set include the 1873 Open 3, 1875, 1876 and 1876-S.

The third and final Liberty Head issue is the Type Three. These coins were made from 1877 through 1907 and they are exceedingly common in higher grades. Most BVG collections will feature a nice MS65 and such a coin can generally be purchased for less than $5,000. There are many good dates to choose from but I would suggest, if possible, finding one made in the 19th century as opposed to the 20th century.

The final major gold type is the popular St. Gaudens, struck from 1907 through 1933. Some collectors include a 1907 High Relief in their type set but, for most collectors, a common date in high grades will suffice. I would recommend a very attractive MS66. For well under $4,000 the BVG collector should be able to purchase an outstanding example.

Assembling a high grade set of gold type coins produced from 1834 through 1933 is a good challenge for the beginning, intermediate or advanced collector. By using the Best Value Grade theory, the collector should be able to assemble a very high quality set without overreaching on any of the specific coins.

I would be happy to answer any questions about gold type coins or the theory of Best Value Grade and can be reached by email at dwn@ont.com.

Prooflike Gold Coinage: A Look at an Evolving Market

One of the newer promotions in the rare gold coin marketplace are coins that are Prooflike. NGC began designating Prooflike gold a few years ago (PCGS has yet to add this designation) and enough have been graded for a collector to get an appreciation of the relative rarity of these issues. What is a Prooflike gold coin, what is the market for these coins like and what does the future hold for Prooflike gold? Generally speaking, when a pair of new dies is used to strike coins, they are highly polished. The first few hundred examples from this die pair (this number can be significantly less or more, depending on the type of design and the mint that produces the coin) are reflective. This degree of reflectivity can range from subtle to intense. Obviously, the more intense the degree of reflectiveness, the more desirable a coin is.

There are basically two tiers of “Prooflikeness” that gold coin collectors are concerned with. The first is the blanket term of “Prooflike” which means that a coin has a certain degree of reflectiveness on both the obverse and reverse. While there is no absolute standard of what constitutes a Prooflike gold coin (at least in terms of the depth of reflection) it is essential that a true P/L coin be reflective on both sides. A coin that is “deep mirror Prooflike” shows considerably more reflectiveness on both sides than one that is merely Prooflike. It resembles a Proof in appearance and it may have an attractive “black and white” appearance that is the result of contrast between the frosted devices and the mirror-like fields.

There is a very strong market for Prooflike Morgan silver dollars. Collectors began paying premiums for these coins as far back as the 1960’s and, today, deep mirror Prooflike (DMPL) dollars can sell for huge premiums over “normal” frosty or satiny coins. Interestingly, there is not much of a market for Prooflike silver coins above and beyond Morgan dollars.

I think the market for Prooflike dollars is as strong as it is for three significant reasons. The first is that a number of dealers back in the 1960’s and 1970’s did a good job of promoting these coins and getting the market jumpstarted. The second is that there are more Prooflike coins in the Morgan dollars series than in all other silver coins combined. Lots of coins equals the ability to promote these as a collectible. The third reason is the appearance of these coins. A high quality DMPL coin can be extremely attractive and a collector can easily appreciate why he should be paying a premium for such a coin.

The market for Prooflike gold coins remains in its infancy. Is there a possibility that Prooflike gold could become as popular as the market for Prooflike dollars? I think this is a small possibility that this could happen but in small, selective increments.

I feel that the one area of Prooflike gold that is likely to see the most “play” with collectors in the next few years is Liberty Head double eagles. I think this is going to happen for a number of reasons. The first is that Liberty Head double eagles are already popular, so it isn’t a big stretch for a collector to jump from “normal” examples to ones that are Prooflike. The second is that these coins are available enough to be actively traded but they are, at the same time, relatively scarce. The third and probably most important fact is that a high quality DMPL double eagle is extremely impressive from a visual standpoint.

As I mentioned at the beginning of this article, NGC has been grading Prooflike gold coins for long enough that a few conclusions can be reached.

Taking a look at double eagles, I note that NGC has designated 1,287 $20 Libs as Prooflike. But what is most interesting is the fact that only twenty-eight examples of this series have been designated as DMPL and of these just five have been graded higher than MS62. The conclusion that is most easily reached about DMPL examples is that they are quite scarce and pieces above MS62 are genuinely rare. This is especially true for any date other than the ultra-common 1904.

The current price record for a DMPL gold coin is, as far as I know, the $126,500 that was attained by an NGC MS64* 1866 double eagle that was sold by Heritage in their 2008 ANA auction.

From examining auction prices, it seems that predictable price levels for DMPL $20 Libs are starting to be recognizable. MS61 and MS62 examples of non-1904 dates seem to be bringing in the $2,000-3,000 range. The few MS63 examples that have traded have brought in the $4,000-6,000 range. Coins in MS64 and higher are rare enough that it is hard to establish price levels.

In closing, I have a few personal thoughts about Prooflike gold coinage.

A number of 19th century gold coins are easily found with Prooflike or even deep mirror Prooflike surfaces. The most prominent of these include gold dollars from the 1880’s and three dollar gold pieces from this era. I do not think that collectors should, in most cases, pay a premium for these. The exception would be for a DMPL coin that had really great eye appeal.

Many DMPL gold coins have poor eye appeal due to the fact that the reflectiveness of their surfaces accentuates marks or abrasions. I would be careful paying a large premium for an ugly DMPL coin, even if it is a rare issue.

I mentioned above that I think that Liberty Head double eagles are likely to be the only series that collectors will pay close attention to PL and DMPL issues. My second choice for the series most likely to have some degree of date-by-date popularity would be Liberty Head eagles. The PL and DMPL issues that I would suspect collectors would like most would be the New Orleans coins from the 1890’s.

"I Know What I'm Going to Collect. What's Next?"

So you've made the decision that you are going to collect a specific series. What are the next step(s) that you should take? If you are going to form a serious, high-end collection one of the first things that you need to do is to examine comparable collections. As an example, if you have decided to assemble a set of Liberty Head eagles, it would make sense to know the grades of other sets that have been put together.

When it comes to 19th century gold, some of the old stand-bys are the Norweb, Eliasberg and Bass collections. It is very instructive to compile lists of the coins in these three collections as they pertain to what you are planning to collect yourself. For example, if you have decided to assemble a set of high grade New Orleans half eagles, you can make a spreadhseet of the relavent coins in these three collections.

Luckily, this information is reasonably easy to access. (Thank you, Internet...) On the PCGS website, the Set Registry pages list the "probable" grades of the Eliasberg and Bass gold coins (not to mention another pretty decent set, that found in the Smithsonian). The grades of the coins in the Norweb collection can be found in the three sales of this collection that were conducted by Bowers and Merena back in the mid-1980's.

Knowing what quality coins were owned by a great collection is important informantion for a new collector. As an example, let's sat you are being offered an MS63 example of a specific Liberty Head eagle. If the best piece Bass owned was an MS61 and Eliasberg only had an AU55, then the chances are good that this is a significant coin.

There are exceptions to this rule, however. Let's say that the MS63 Liberty Head eagle mentioned above is from a small hoard that was discovered after Bass or Eliasberg stopped actively buying coins. In this situation, the significance of the Bass and Eliasberg holdings are not as great. An example of this would be an 1894-O eagle in MS63. This date was essentially unknown in Uncirculated when Eliasberg was buying and very few examples better than MS60 were available to Bass. Today, because of hoards found overseas, this issue is scarce but not impossible to find in MS63.

If the series that you are goping to collect has a number of active Set Registry collectors, it is important to study the top sets that are on both the PCGS and NGC websites. Let's say that you are focusing on St. Gaudens Double Eagles. Without being congnizant of the best active sets in the Registries, you won't have a good idea of what grades you'll need to make your set competitive.

But there is much more to assembling a high-quality set than checking out Set Registry information. I'd strongly suggest that before you buy any coins for your new set that you invest a few hundred dollars in books and auction catalogs. There is no more important guide for the new collector than important specialized auction catalogs. I have written articles on which catalogs are important for the gold coin specialist to own and won't be redundant be listing them again; use the search function on my website to look for these.

One other thing you need to decide is just how high-end you want your set to be. If you have deep pockets and lots of patience, you will probably want to purchase coins that are either the finest known or which rate high in the Condition Census. If you are have a more modest budget, you will want to stick with coins that are above-average for the issue but not necessarily in Uncirculated grades. Learning the quality of other specialized sets will give you a good idea what the best grades for each specific issue are.

Rekindling Your Numismatic Passion

I’ve seen it happen many times in the past few years. An avid new collector storms into the hobby and buys lots of coins but then hits critical mass and thinks about leaving numismatics. What can you do as a collector who has reached the “burnout” phase to rekindle your passion for numismatics? The first thing I would suggest is to get all of your coins together and lay them out on a table or desk. Take a good hard look at them and decide what deserves to be in the collection and what does not. If you are like any new collector, it is likely that in your initial burst of enthusiasm, you bought coins that you shouldn’t have. In retrospect, they may be ugly or they just don’t fit in with the core collection you have. My best advice is to jettison them.

Now I’m not suggesting a fire sale. The best way to sell the coins is an orderly, organized fashion. You might do it yourself or select a dealer to help you. Or, you could always choose to put the coins in an auction. If possible, give yourself at least 90-120 days to plan and execute a strategy that makes sense.

It is likely that some of the “duds” that you originally purchased are going to be losers when it comes time to sell. Assuming that you are out of love forever with a specific coin, it’s alright to sell it for a loss. Just make certain that use this as a learning experience and try not to repeat this specific mistake in the future. (FYI, even smart dealers sometimes have to sell coins for losses. Really smart dealers get out of their bad deals as quickly as possible and reinvest their money in other coins that, hopefully, will be better deals).

The next thing I would suggest to recharge your battery is to take the next $500-1,500 you were going to spend on a coin and use it to form a basic library. Buy the five to ten essential books that should be in every collector’s library and then buy useful books in your chosen field(s) of specialization. I would also suggest buying a core group of auction catalogs from the 1980’s and 1990’s as well. Find a numismatic literature dealer and tell him that you collect Liberty Seated quarters or Type Three double eagles and the chances are good that he can recommend some older but still very useful catalogs that can greatly enhance your collecting experience.

Taking the numismatic literature theme one step further, get a current auction catalog from a specialist dealer like George Kolbe, Charles Davis or Fred Lake and buy some interesting 19th or early 20th century books or catalogs. As an example, the upcoming Kolbe sale of the John Pittman library has some really wonderful books and catalogs that will make a great test for your numismatic DNA. If you find everything in the catalog to be boring and the history of numismatics and its personalities has no appeal to you, maybe you are being sent a message: coins just aren’t in your blood. But if you find some of the obscure books, catalogs, letters and manuscripts to be very exciting, then you can take this as a message: coins are in your blood but you just need to reinvigorate your interest.