The Evaporation of the Premium Factor in the Carson City $20 Market

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One of the many interesting facts about the rare coin business at this point in time is that the focus in the gold market is clearly on generics and semi-numismatic items and, at least for the time being, off many rare coins. How has this shift of focus affected the Liberty Head double eagle market and, more specifically, the market for common date Carson City issues? I look at common CC double eagles as a sort of bellwether for the dated gold market. The most common Carson City issues (such as the 1875-CC, 1876-CC, 1883-CC, 1884-CC, 1890-CC and 1892-CC) are affordable, exist in enough quantity that they are subject to occasional promotional activities and have a good enough background story that they are easy to sell to beginning collectors.

Traditionally, the price ratio for Extremely Fine and About Uncirculated Carson City double eagles versus generic common dates of this design was around two to one for XF coins and around three to one for AU coins.

A year ago, well before the current soaring gold market, a common 1904 double eagle in Extremely Fine was worth in the area of $700-800 and not an easy issue to sell. The same coin in About Uncirculated was worth just a bit more; say $750-850. At the same point in time, an 1890-CC double eagle was worth around $1,400-1,600 in EF and $2,000-2,250 in AU. This meant that the price ratio for the two issues was approximately 2x in EF and 3x in AU.

Today, this premium ratio has changed, primarily due to the fact that the price of gold has risen to nearly $1,200 per ounce and the demand for nondescript bullion-related double eagles is at an unprecedented high. Right now, a 1904 double eagle in Extremely Fine is worth around $1,500-1,600 while an AU is worth around $1,550-1,650. The market for an 1890-CC in these grades has risen as well, just not as dramatically as a seemingly mundane common date.

In Extremely Fine the current market value for an 1890-CC double eagle is around $2,000 while an AU50 is worth in the area of $2,500-2,750. This means a price ratio of about 1.3x for an Extremely Fine and in the area of 1.7 to 1.8x for an AU.

Why have the premiums for the Carson City double eagle(s) evaporated as much as they have? The answer is simple: the demand for double eagles is at unprecedented levels but the buyers of these coins tend to be unsophisticated investors who want anonymous, cheap coins with as small of a numismatic premium as possible. Even the most Carson City double eagle, like an 1890-CC, is still a numismatic coin and it is hard to convince a dispassionate investor that he should pay a 1.3 to 1.8x premium for two little “C’s” on the reverse.

If the price of gold continues to stay at its current level and demand for common issues remains as strong as it currently is, I do expect a small amount of this frenzy to spill over into coins such as Carson City double eagles. It is likely that the marketers who are selling bulk lots of 1904 double eagles in EF and AU are likely to attempt to “up sell” new investors into the rare coin market as these coins provide greater markups and more profit.

At this point in time I would have to say that common date CC double eagles are a pretty good value and if the price of gold continues to rise, it seems like they are a pretty good “double play” that incorporates the value of nearly an ounce of gold with some real numismatic scarcity. It will be interesting to see where the market premium factor for these coins are in another year.

The Rare and Undervalued 1826 Quarter Eagle

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In my opinion, the 1826 is one of the rarest and most underrated early quarter eagles. Most every “fact” that is traditionally associated with this issue is incorrect. I recently purchased a lovely PCGS AU55 example (see the photo below) from the Bowers and Merena Baltimore auction acting as an agent for a collector who is attempting to put together a high quality date set of early quarter eagles. It had been quite a while since I had owned a nice 1826 quarter eagle and this inspired me to gather some facts about this issue. 1826 Quarter Eagle

For many years, the 1826 quarter eagle has been called an “1826/5” overdate. This is clearly wrong and there is a very easy way to prove this. The 1825 obverse die employs large stars while the stars on the 1826 are far smaller. In addition, there is no evidence of an overdate when the date is examined with light magnification. I believe there is either some minor recutting or a small die defect. This issue should more properly be called an 1826/6.

The mintage figure has long been reported to be just 760 coins. Given the fact that around thirty or so exist, I feel that this figure is incorrect. It is probable that some of the quarter eagles struck in early 1827 were dated 1826. The actual mintage figure is more likely in the area of 1,250-1,500; possibly as many as 1,750.

One thing that is certain about this date is its rarity. It is the third rarest early quarter struck after 1797, trailing only the extremely rare 1804 13 Stars and the 1834 No Motto. As I stated above, there are an estimated thirty pieces known. Most are in the lower AU grades, indicating that this issue did not see much actual circulation. I am aware of two or three Uncirculated pieces and none of these, with the possible exception of one coin, appears to be finer than MS61.

The finest known 1826 quarter eagle is in the Harry Bass core collection at the American Numismatic Association. It has an incredible pedigree (Garrett 2: 746, ex Appleton, Mickley) and it sold for $75,000 back in 1980 which remains an auction record for this issue. I estimate this coin’s grade to be at least in the MS61 to MS62 range. The second highest price that I am aware of is $69,000 for a PCGS AU58 sold by Stack’s in their November 2008 auction.

I have personally handled one Uncirculated example, a PCGS MS61 that I sold to a specialized early gold collector around three or four years ago. In all, PCGS has graded fifteen 1826 quarter eagles including three in Uncirculated (an MS60 and two in MS61). NGC has only graded seven in all including six in AU58. It is very likely that this includes a number of resubmissions.

To put the rarity of this issue in better perspective, the 1826 quarter eagle is a considerably scarcer coin than the 1796 No Stars or the 1808. It is clearly not a more valuable coin as both the 1796 and the 1808 are distinctive one-year types that are very desirable as such. The 1826 is clearly the rarest of the five Capped Bust Large Size quarter eagles produced between 1821 and 1827. But, the type collector is likely to select one of the more available dates (like the 1825) which means that the 1826 will probably remain undervalued for the foreseeable future.

The Very Rare 1821 Half Eagle

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The Very Rare 1821 Half Eagle I recently purchased an 1821 half eagle graded AU53 by PCGS and I’d like to share some information about a coin that ranks as one of the rarer numismatic items that I have handled in some time. This piece was Lot 3684 in the recent Bowers and Merena November 2009 Baltimore auction where it realized $112,125 including the buyer’s charge. It is now owned by an East Coast specialist who is assembling a set of early gold by date.

The mintage for the 1821 half eagle is recorded as 34,461 but it seems likely that at least some of the coins struck during this year were actually dated 1820. Today, there are probably no more than 15 1821 half eagles known. Two die varieties exist with two different obverses sharing a common reverse (which is also seen on certain varieties of 1820 half eagle). The more common of the two (BD-1) has the final star on the obverse close to the back curl. The rarer (BD-2) has this star distant from the curl and placed higher up in relation to the back curl.

Why is the 1821 half eagle such a rare coin? The answer, as with virtually all half eagles of this type, lies in the fact that nearly the entire mintage was melted by 1834 after the weight of gold coins were reduced. The old tenor half eagles were suddenly worth more than their face value and this led to wholesale meltings. In the case of some dates (like the 1822) virtually the entire mintage was wiped-out. In the case of the 1821, nearly all of the coins were melted as well but a few of the survivors appear to have been set aside intentionally.

PCGS has graded a total of eight 1821 half eagles. This includes three in Uncirculated: MS62, MS63 and an amazing MS66. NGC has graded seven with three in Uncirculated as well: an MS61, an MS63 and an MS66. The PCGS and NGC populations are virtual mirror images of one another and we can assume that there are a number of duplications. Obviously, the MS66 is the same coin and I believe that the MS63 is the same as well.

There are two superb business strike 1821 half eagles known. One is in the Bass core collection at the American Numismatic Association’s museum and it is estimated to grade MS65 or better. It was obtained from Stack’s in October 1971. The other is the Amon Carter: 659 coin that last sold at auction in January 1984 for $24,200. I believe that it is the one graded MS66 by both services.

Remarkably, there are two Proofs known as well. One is in the Bass core collection and it has an impressive pedigree: Norweb I: 773, ex Farouk, Green, Newcomer, Woodin and Randall. It is estimated to grade PR63 and it brought an impressive $198,000 in 1987. The other is in the Smithsonian collection and it is part of a complete 1821 proof set that has been part of the Mint’s collection since it was placed in the Smithsonian in 1838.

The 1821 half eagle that is illustrated above, as I mentioned earlier, has been graded AU53 by PCGS. It is conservatively graded in my opinion and I regard it as at least an AU55 with some claims to an AU58. It is from the Globus collection and it was obtained by this collector via private treaty (probably from Stack’s) at least three to four decades ago. I have not had the opportunity to perform pedigree research on this 1821 half eagle but I am assuming it can be traced to an auction sale from the 1960’s or 1970’s.

The coin has wonderful coloration with rich orange-gold and medium greenish hues that are accentuated by deep coppery hues at the border. There are a few light marks visible including a small semi-circular scrape to the left of Liberty’s eye.

The all-time auction record for a business strike 1821 half eagle remains $155,250 which was what an NGC MS62 brought the Superior 5/06 sale.

It is always a pleasure for me to handle great numismatic rarities such as this 1821 half eagle in PCGS AU53.

Coins with Character

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In 2010, you will see a new slogan on the homepage of my website (www.raregoldcoins.com). Besides being catchy, “Coins with Character” represents a philosophy that guides me as a buyer and which I try to impart to collectors. Let me explain what, in my opinion, this expression means. Before the recent November Baltimore coin show, I sat down and made a list of the sort of coins I wanted to make an extra effort to purchase. These were coins that I didn’t already have in stock and given their popularity and ability to sell it made sense to me to reload.

High on this list were nice, affordable Dahlonega coins in the EF40 to AU55 grade range. My parameters were that the coins were choice, original and, in some way, “special.” In other words, I was looking for coins that spoke to me; coins with character.

After a lengthy search through the various auctions, dealer inventories and private collections that I encountered in my three days in Baltimore, I was able to acquire a whopping total of four Dahlonega coins that I felt had character: one gold dollar, one quarter eagle and two half eagles. Was I surprised that my quest would prove so fruitless? Not really. I was, of course, disappointed. But given my parameters for “coins with character” I wasn’t surprised.

I generally try to purchase coins that I believe are in the top 5% known for a particular issue. This doesn’t means that they are necessarily in the top 5% as far as grade goes. What I am looking for are coins that because of one or more reasons would rank among the most desirable survivors of a specific issue.

There are a number of things that give a coin “character.” These include the following:

-Attractive natural coloration. Coloration is a major factor in valuing copper and silver coins but it has been undervalued when it comes to gold coins. This has never been the case for me. I personally love gold coins with attractive natural hues; especially rich rose, green or orange shadings. Now this does not mean that I like every toned gold coin. I see dark, dirty double eagles from time to time that are unattractive and which, quite frankly, I’d probably dip or bathe them in soap and water if I purchased them.

I readily dislike bright, shiny, “processed” coins. To me, a coin that is bright and shiny lacks soul. I like attractively toned coins because of their individuality.

One of the reasons that I don’t buy as much Proof gold as I used to is the fact that most pieces have been conserved and they all look the same. Here’s what I mean. Take a coin like an 1880 quarter eagle in Proof. Only 36 were minted and this issue’s rarity and relative affordability makes it very intriguing to me. But I’ve passed on the last three that I have been offered because they were all bright, monochromatic and character-free. They were the Stepford Wives of Proof gold. Conversely, if I were offered a Proof 1880 quarter eagle with nice original hazy golden-orange color, I’d almost certainly buy it; even if it were “only” a PR63 with signs of a light old cleaning.

-Uncommonly Sharp Strikes and/or High Quality of Manufacture: As someone who buys and sells quite a bit of early gold (i.e., U.S. gold produced prior to 1834) I am pretty knowledgeable about how certain issues are supposed to look. As an example, most 1796 eagles have surfaces that appear pockmarked. This is mint-made but it means that the majority of 1796 eagles are not very attractive. So when I see a 1796 that has smooth, non-pocked surfaces I get excited. On an issue that is typically seen poorly made, a well-made example has “character” in my book.

I feel the same way about strike although I readily admit that strike is not extremely important when it comes to pre-1900 gold coins. But when I see an issue that is notorious for a poor strike with above-average detail, this imparts character as well.

-Important Provenance: The history and romance of collecting is, in many ways, just as interesting as the history and romance of coins. It means a lot to me that an 1838 eagle or a 1797 quarter eagle that I buy has an illustrious pedigree. I have owned coins that have traceable pedigrees dating back to the middle of the 19th century and I find it very exciting that I am able to add my name to the list of illustrious and not-so-illustrious individuals that might have been in a coin’s pedigree chain.

One of the reasons that I really respect collectors of early copper and Colonials is that they value pedigree more than nearly any other segment of the market. It certainly helps that there have been active collectors in these market areas dating back to the 1850’s whereas in an area like branch mint gold, specialized collection began far later.

Would I pay extra for a coin with a great pedigree? For the most part I would. Of course, a lot depends on the coin. I doubt I’d pay any extra for, say an Eliasberg quarter eagle that was an overgraded common date or even a scarcer date that had been dipped or processed after it had appeared in the Eliasberg sale and which now lacked character.

-Coins That Break the Mold: Every dealer has a list of “pet dates” that he or she just can’t resist buying. For some dealers it might be an issue that triggers a sense of nostalgia. For others it might be a date that they have traditionally bought and sold with ease in the past. A pet date for a collector is more likely to involve his perception that an issue is undervalued or it has important historical associations.

I won’t bore you with the full list of dates that I’m a sucker for (there are lots of them, I’m afraid...) but these are coins that I tend to be a little more lax about when it comes to the Test of Character. As an example, I actually bought a damaged 1864-S half eagle earlier this year. It was the first “problem coin” that I have ever listed on my website and if it wasn’t for the fact that it was so rare, I would be never bought it and listed it for sale.

-Coins with Original Surfaces: I thought I would save the best for last. I like original coins (or at least what I perceive to be original coins). When I say “original” I am referring to coins that appear to have not been dipped, processed or harshly clean in recent years. A coin that I describe as “original” could very well have been cleaned fifty or a hundred years ago but it has subsequently acquired natural second generation that might mask underlying hairlines.

Why do I like coins with this sort of look? It all goes back to the original thread of this blog: they have character. It is hard for me to get excited about a 150+ year old gold coin that is bright and shiny. It is hard for me to pinpoint the exact reason why I prefer the original look but suffice to say I do and I will continue to buy coins with character for my inventory.

Interesting Subsets for Gold Coin Collectors

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While I am personally still a fan of collecting gold coins by sets, I understand that this method is not for everyone. Some individuals find set collecting monotonous; others lack the patience to assemble anything but a short set. And other collectors simply do not have the financial resources available to work on a set that might not only have a long duration but may contain many expensive coins as well. One interesting compromise is for a collector to work on a subset. This subset might take many forms. As an example, let’s say a collector really likes Type One Liberty Head double eagles but he is realistic enough to know that he will never be able to afford the expensive New Orleans issues that populate this set. The solution is to pick an alternative within this set that is completable. Later on in this article I will discuss an actual subset that I have worked on with a number of collectors that still allows them to finish a Type One set; just without spending $1 million+.

For the sake of brevity, I am only going to mention four potential subsets in this article. But there are many, many others that are highly collectible.

1. Civil War Era Gold Coins.

A set of Civil war gold coins is among the more challenging of the subsets that a collector might choose but it is certainly one of the most popular as well. A complete Civil War gold set would consist of the following:

-Gold Dollars (6): 1861, 1861-D, 1862, 1863, 1864, 1864

-Quarter Eagles (10): 1861, 1861-S, 1862, 1862/1, 1862-S, 1863, 1863-S, 1864, 1865, 1865-S

-Three Dollars (5): 1861, 1862, 1863, 1864, 1865

-Half Eagles (12): 1861, 1861-C, 1861-D, 1861-S, 1862, 1862-S, 1863, 1863-S, 1864, 1864-S, 1865, 1865-S

-Eagles (11): 1861, 1861-S, 1862, 1862-S, 1863, 1863-S, 1864, 1864-S, 1865, 1865-S Normal Date, 1865-S Inverted Date

-Double Eagles (12): 1861, 1861-O, 1861-S, 1861-S Paquet, 1862, 1862-S, 1863, 1863-S, 1864, 1864-S, 1865, 1865-S.

In total, there are 56 coins in the Civil War gold set. The coins range from very common to very rare and most are extremely hard to find in higher grades.

The grade range that most collectors are likely to tackle is Extremely Fine to About Uncirculated. It is possible to assemble this set in Uncirculated but there are a number of extreme rarities in Mint State from this era including at least a half a dozen issues that, to the best of my knowledge, consist of no more than one to three known.

In the gold dollar denomination, the key issue is the 1861-D. This date isn’t really rare from the standpoint of overall rarity but it is extremely popular and the collector can expect to spend at least $25,000+ for an acceptable example. The rarest quarter eagle is the 1864 which, while not widely known, is actually among the rarest Liberty Head gold coins to acquire. The 1863 is a Proof-only issue that is expensive and very rare as well. The third rare issue in this group is the 1865 of which only 1,520 business strikes were produced. However, an extremely nice example of this issue can be purchased in the $20,000-25,000 range.

The five three dollar gold pieces in this set are all obtainable with patience. The key issue, by a large margin, is the 1865 which has an original mintage of only 1,140 business strikes. If the collector is willing to spend in excess of $10,000 per coin, all of the Civil War era Three Dollar pieces can be purchased in Uncirculated and some can even be found in comparatively high grades.

The half eagles in this group contain some very scarce issues. The most popular is the 1861-D while the rarest is the 1864-S. The former’s popularity is a result of its status as a Confederate issue while the 1864-S is unique in Uncirculated and very rare in any grade. The 1863 and 1865 Philadelphia issues are quite rare in all grades and extremely rare in full Mint State.

The toughest denomination in this set is the ten dollar. With the exception of the 1861 and 1862 Philadelphia, every issue is rare in circulated grades and many are exceedingly rare in Uncirculated. The 1864-S is the rarest and it is closely trailed by the 1863. The 1865, 1865-S Normal Date and 1865-S Inverted Date are all rare and all three are seldom available above AU50 to AU53.

There are a number of double eagles in the Civil War set that will prove challenging. The 1861-O is scarce in all grades and a nice, middle grade piece will require a commitment of at least $25,000-35,000+. The 1861-S Paquet is a rarity in all grades and it is extremely rare in properly graded AU55 and higher. The 1862 is the “sleeper” in this group and the collector who seeks an Uncirculated example will be greatly challenged.

2. No Motto Philadelphia Half Eagles and/or Eagles

I’ve written a few blogs and articles in the last year about No Motto half eagles and eagles being a sort of “final frontier” for the U.S. gold coin collector. I still believe this to be the case. There are lots of issues that cost less than $2,500 per coin which are genuinely scarce and appealing.

As far as subsets go, here are two suggestions for the collector.

1. No Motto half eagles, 1840-1849. This is an interesting date run with no individual coins that are rarities. If a collector has a fairly limited budget, he could purchase many dates in the middle to higher About Uncirculated grades for less than $1,000. This set is even feasible in Uncirculated as many of the No Motto half eagles of this decade can be found in MS62, MS63 and even MS64 grades.

I personally like this subset for a number of reasons. Firstly, as I mentioned above, it is reasonably easy to complete. Secondly, the Philadelphia coins of this era are less likely to be found with unattractive processed surfaces. Thirdly, the coins tend to be better produced than the branch mint pieces from this era. Finally, I think they are much undervalued and have some real upside potential down the road.

2. No Motto eagles, 1840-1849. The eagles from the 1840’s tend to be appreciably scarcer than the half eagles from this decade. There are exceptions. Dates like the 1847, 1848 and 1849 are not hard to find in any circulated grade and are even available from time to time in Uncirculated. But there are some really tough issues from this era as well. These include the 1844, 1845 and 1846, all of which are extremely rare in Uncirculated and very scarce to rare in properly graded AU55 and above.

This set would be much more expensive than the half eagles mentioned above but I like it as well. It is completable, the coins are sometimes seen with choice original surfaces and they also represent excellent overall value.

3. Type One Philadelphia Double Eagles

With gold speeding towards the $1,100 per ounce level, the popularity of the double eagle denomination seems greater than ever. I have always thought that the Type One issues were among the most interesting of all the twenty dollar gold pieces struck. The problem with this series is that many of the New Orleans issues are priced at levels that many collectors can’t afford. The best solution is to look at the Philadelphia issues.

A specific subset that I think is especially interesting is the Philadelphia double eagles from the 1850’s. All ten are within the budget of most collectors. There is only one date (the 1859) that is going to cost more than $5,000 for a nice mid-level About Uncirculated example.

The dates in this subset range from very common (1851 and 1852) to scarce (1856) to rare (1859). Most collectors will be able to purchase the majority of the dates in AU53 to AU58 and, as such, they will be assembling a collection with some visually impressive coins.

I have a few tips for collectors interested in Type One double eagles from this era. First and foremost is to be patient and wait for coins that have choice, relatively non-abraded surfaces. Most double eagles from the 1850’s saw some hard time in circulation (or in bags being transported from bank to bank) and they are heavily marked as a result. But there are coins out there with nice surfaces and these are worth paying a premium for. I would also suggest being careful to avoid coins that are bright, shiny and unnatural in appearance.

One of the great things about this set is that every time you purchase a double eagle, you are buying nearly an ounce of gold. If you complete the Type One Philadelphia subset, you will not only have a nice collection, you’ll have a nice gold position that contains nearly ten full ounces. In this era of economic uncertainty that seems like a wise decision to make.

4. Three Decade Carson City

I have met few collectors who weren’t fascinated by the history and the mystique of the Carson City mint. It’s hard not to feel a real attraction to the gold coins produced there. But it is hard to be a collector assembling a complete set of any of three gold denominations from this mint. Let’s face it: the coins are very expensive and not everyone is going to be able to continually spend $10,000+ on the scarcer issues.

I have a solution that allows a collector to do more than dabble in Carson City gold. It’s a subset that I refer to as the “Three Decade Set.” Carson City produced coins from 1870 to 1893. The three decades are generally very clearly differentiated as well. The coins from the 1870’s tend to be scarce in all grades and very rare in Uncirculated (with the exception of the double eagles which are more available in higher grades). The coins from the 1880’s are more available in higher grades but not really “common.” And the coins from the 1890’s tend to be readily available in circulated grades and are even within the price parameters of many collectors in MS60 to MS62 grades.

Here are my suggestions for a Three Decade Set of Carson City gold.

1. 1870’s issues: For a half eagle, I’d probably look for an issue that is available in nice EF or even AU grades. And I’d want to look for an issue that was well-produced and a good value from a price standpoint. I would probably select a date like the 1876-CC or the 1877-CC as they seem to fit the bill perfectly. The eagle denomination is harder to locate than the half eagles from this decade and there are no “easy” dates to fill a hole. I’d probably lean towards a date like the 1877-CC in nice Extremely Fine. I’d be very selective with my 1870’s eagle as this is going to represent a $5,000-10,000+ investment and many of the available coins on the market are inferior for the grade. A double eagle from the 1870’s is an easier decision. I’d stick with an 1875-CC or an 1876-CC as both are reasonably available in circulated grades and are known for being well struck and nicely produced.

2. 1880’s issues: For a half eagle, I’d look at an 1883-CC or 1884-CC. Both are scarce in the lower AU grades but not all that expensive. For the eagle denomination I think I’d focus on these same two dates. Both have low mintages and are very rare in Uncirculated but they can be obtained in nice AU grades for under $5,000. For the double eagle denomination, I would look at virtually any other dates from this decade other than the 1885-CC which is scarce. A nice twist to the set would be to have all three coins from the 1880’s be the same year; in other words, an 1883-CC or 1884-CC half eagle, eagle and double eagle.

3. 1890’s issues: This is the one decade that the collector who likes Uncirculated coins will be able to purchase high quality issues without completely breaking the bank. The 1891-CC half eagle and eagle are both common in the MS60 to MS62 range and both dates can be found in MS63 for less than $7,500 per coin. The 1890-CC, 1892-CC and 1893-CC double eagles can be found in the lower Uncirculated grades (MS60 to MS62) for mid-four figure sums. If the collector would prefer to step down to nice AU coins, the 1890’s issues are very affordable.

As I mentioned above, the number of interesting subsets that a collector could assemble is almost limitless. I like the fact that a subset allows a collector to be involved in set collecting without the intensity (or cost) that a “full” set might entail. For more information on this subject, please feel free to contact me at dwn@ont.com