As the 2009 Coin Market Comes to a Close, Where Are We and Where Are We Headed?

With the year nearly over, we are heading towards a slow few weeks in the coin business followed by what is certain to be an interesting FUN Show in January 2010. As we close the year out, I thought it would be interesting to look at a few points and ask where we are and where we’re headed. I have been through some odd coin markets (1982-84 and 1992-1994 come to mind) but what we are currently experiencing is pretty much unique. We are seeing a market where coins that were considered unfavorable a few months ago (bullion and semi-numismatic) are now what everyone wants and “real” coins are as hard to find as at any time I can remember.

The demand for generic U.S. gold, especially double eagles, remains as strong as I have ever seen. The premiums are as high as I can remember. As I write this, gold spot is at $1,140 per ounce (after having broken the seemingly unreachable $1,200 barrier last week) and an average quality MS60 to MS62 Saint is trading for $1,600-1,700. This 40%+ premium over melt for a low-end Saint is easily the highest I can recall and I think it’s pretty remarkable considering that you had to beg people to buy the exact sort of coins a few months ago at a 10% premium.

I am beginning to see some profit taking in the generic market and I think this will continue for a short period, possibly evaporating the premiums. That said, with the current sad state of the American dollar and the worldwide demand for gold, I wouldn’t be stunned to see gold break $1,500 in the next few months and a lower quality Saint to be worth close to $2,000 (!)

What about the rare coin market? It is, in its own way, experiencing topsy-turvy conditions not dissimilar to generics. The big difference is that there is good supply in the generic market but very limited supply in the rare coin market.

As I stated above, it is hard to buy interesting coins right now. Let me explain what I mean before this comment is misconstrued. If you collect Very Fine to Extremely Fine type coins or common date Walkers or Indian quarter eagles, locating coins is probably not a big challenge. But if you collect New Orleans gold or early quarter eagles or superb gem gold dollars you are probably finding it very, very hard right now to buy much. Sure, there are a few pieces around that are either terrifically overpriced or ridiculously overgraded (or a combination of both) but I’m guessing most serious collectors haven’t had an easy time adding to their collections in the last year.

The reasons for this appear pretty simple. There was a good deal of profit taking in 2005 and 2006, which brought quite a bit of material on the market but at very high price levels. The people who then bought in at the high levels either had to sell quickly (and at a significant loss) in late 2007/early 2008 or they have just decided to hold what they have and not sell their good coins at a loss. Another thing to consider is that many of the faux-collectors of the mid-decade have come and gone and most of the buyers for coins these days are serious collectors. They like the coins they own and they just aren’t interested in selling the cream of their holdings.

When I am able to buy interesting coins, they are selling well. I have noticed an uptick in demand for virtually all collector-oriented gold issues in the $1,000-5,000 range. Bigger coins seem to be selling better than smaller coins and nothing appears to be selling better than nice $2,000-5,000 Liberty Head double eagles. Yes, I am nostalgic for the days when I was regularly selling a $25,000+ rarities but I am happy to see many new collectors coming into the market and most of them heading towards the gold aisle in the numismatic mall.

Another issue we are seeing right now in the gold coin market is a real problem with price reporting. With bullion prices rising rapidly, price reporting is naturally lagging. This is compounded by the fact that certain rare date gold prices were unceremoniously devalued after one or two low-end examples sold cheaply at auction. Until we see some accuracy in this area, it will keep down the supply of interesting coins re-entering the market.

Speaking of auctions, it is interesting to note that the upcoming pre-FUN, FUN and post-FUN sales appear to be having a harder time attracting consignments than in years past. A few years ago, specialist dealers like me could use the excuse that auction companies were offering very strong competition when we moaned that we were having a hard time buying coins from collectors. Today, even the most formidable auction firms are extending their consignment deadlines in an attempt to gather more high-powered collections and individual coins.

I’ve heard fewer complaints from collectors and dealers about third-party grading in the last few months. Part of this probably has to do with the fact that most dealers are sending in Saints, Saints and more Saints to PCGS and NGC and the services tend to grade these pretty favorably. But I also think that the creation of CAC has helped to check some of the grading issues that existed in the past and I think the services are, frankly, being more careful with what they grade.

So what’s coming in the near future? As I mentioned above, I think the 2010 FUN will be strong but I am anticipating that I will come home with fewer coins than I’d like to. The name of the game in the early part of 2010 is clearly going to be gold and I wouldn’t be surprised if there is some spillover from the generics market into some slightly more exotic areas.

Coins with Character

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.

What Does An Original Early Gold Coin Look Like?

As you no doubt know, I am pretty obsessive when it comes to "original" gold coins. I like coins that have an appearance that suggests that they haven't been fooled with. I recently bought and sold an early gold coin that, in my opinion, was the epitome of an original piece and I'd like to share a photo and some descriptive information. The coin in question was an 1814/3 half eagle graded MS62 by NGC and later approved by CAC.

There are a few things about the color of this coin that are a give-away for its originality. The first is the glow that this particular hue of coppery-orange shows. It is the result of over a century's worth of toning and mellowing of the surfaces. This sort of color just can't be reproduced by artificial means. When chemicals are applied to gold coins in an attempt to recapture a reddish-orange hue, the result is usually a shade that I refer to as "Cheeto Orange." In other words, the orange is just too intense to look real and there is no gradiation or seperation of the hues.

You may also note that the coloration is different in hue in terms of configuration and intensity on the obverse and reverse. On this early half eagle, there are areas in the obverse fields that are dark and somewhat discolored. I'm not exactly certain what caused this but if I had to guess it would be contact with another source like a coin album or some other sort of sulphur-impregated display. Most recolored coins look similar on the obverse and reverse.

Another thing that I have noticed on original early gold coins is that the color seems to become deeper towards the edges. This isn't always the case but this color scheme is hard to reproduce and many of the coin doctors who play with early gold are not sophisticated enough to know that this is the sort of color that develops of a long period of storage in an album. If you pay particular attention to the reverse of this coin, you will note that the golden-orange hue at the center changes to a deeper reddish-orange at the border. If you experienced at looking at early gold you will recognize this pattern as being "right."

Note as well the underlying surfaces on both sides. There is a good deal of luster and the luster still exists in a circular pattern. When a coin has been cleaned, the luster is generally broken and the natural cartwheel that is found on unadulterated coins disipates. When this 1814/3 half eagles is rotated, the luster swirls and it does not "break up" like it would on a coin that has been cleaned and later recolored. A good giveaway for artificial color is when there is a splotch of deep color in a specific area on the surfaces. This is often applied in an attempt to hide a problem in this specific area.

How unusual is it to find an early gold coin with color like this 1814/3 half eagle? Obviously if this were an everyday experience, I would not be writing a blog about it and showing the image of the coin as a textbook illustration for originality. There are an estimated 100-125 known examples of this date and if I had to guess, I'd say there are maybe ten known that fit my standards of "originality." The number of coins with the degree of eye appeal that this shows is another story and I'd be surprised if more than two or three existed.

The Great Branch Mint Gold Popularity Contest of 2009

I realize that the title of this blog sounds like an outtake from the Dukes of Hazzard but I thought it might be an interesting topic to take each branch mint and analyze it in terms of its popularity. Then, for the icing on the proverbial cake, I thought it would also be interesting to name the five or so most in-demand issues from each mint. Just as an FYI, I am not including Denver among the five branch mints as it is relevant only to 20th century issues and this article is primarily focused on 19th century gold coinage.

1. Dahlonega: At this point in time, I’d have to rank Dahlonega as the single most popular of the branch mints. I am basing this on the following observation. Dahlonega coins, at least for me, seem to be as easy to sell now as they were a few years ago. There are certainly exceptions to this rule; namely overgraded examples priced in the $10,000+ range, high grade common date gold dollars priced at $10,000 and above and virtually any coin in any price or grade range that is not at least fairly original and appealing. But nice, properly graded and fairly priced D mint remains a best-seller for my firm.

I would have to rank half eagles as the most popular coins from Dahlonega right now, followed closely by quarter eagles. The price range that seems most in-demand is $1,500-5,000 but expensive Dahlonega gold will sell if it is a scarce, popular issue or if the coin is very high end. Coins with good pedigrees are popular right now and this is clearly an area in the market where many collectors are searching for CAC-quality coins.

The Five Most Popular Dahlonega Gold Coins in 2009: 1861-D gold dollar, 1854-D three dollar, 1838-D half eagle, 1839-D half eagle, 1861-D half eagle.

2. Carson City: As recently as a year or so ago, I would have placed Carson City as the number-one most popular of the branch mints. I’ve noted a slight slippage in popularity in this mint, especially at the high end. I think the reason for this is that a few of the collectors who were buying the five-figure rarities and condition rarities a few years back are less active. Another thing which has hurt this segment of the market is the number of extremely overgraded higher grade coins that have been floating around from auction to auction for what seems like an eternity. The problem with these coins is that when they do finally sell, they sell cheaply and this drags down the price of nice coins.

Carson City double eagles remain the most popular denomination from this mint, followed by eagles and half eagles in that order. Coins that are attractive and original and priced at $5,000 and under are the quickest movers while expensive Carson City coins, unless they are fresh to the market or really exceptional, tend to be harder to sell right now.

The Five Most Popular Carson City Gold Coins in 2009: 1870-CC half eagle, 1870-CC eagle, 1873-CC eagle, 1870-CC double eagle and any common date or slightly better date double eagle in the AU58 to MS62 range that is choice for the grade and priced below $10,000.

3. New Orleans: There’s no doubt in my mind that New Orleans gold is no longer “up and coming.” It is clearly a very popular segment of the branch mint market and I think there are probably just about as many collectors working on specialized sets of New Orleans gold as there are in any other area of 19th century American gold.

Double eagles were, until recently, the clear favorite among the many gold denominations from New Orleans. I think the popularity of this denomination has faded just a bit in the last year, mostly due to the prohibitively high price of the rarities in the series. That said, these are still the most popular New Orleans gold coins, followed by eagles, half eagles, quarter eagles, three dollars and gold dollars.

There are many New Orleans issues that can still be purchased in relatively high grades (EF and AU) for less than $5,000 and these are increasingly popular. The major rarities from this mint remain in demand, especially in the eagle denomination.

The Five Most Popular New Orleans Gold Coins in 2009: 1839-O quarter eagle, 1841-O eagle, 1883-O eagle, 1856-O double eagle, 1861-O and 1879-O double eagle (tie).

4. Charlotte: In my opinion, demand for most Charlotte gold coins is fairly light right now. There are exceptions to this. Attractive, lower priced half eagles (in the $2,000-4,000) range seem to be selling nicely and very high end half eagles with a great appearance are selling as well. The area that is weak in this end of the market is the bright-n-shiny AU55 to MS62 coins. No surprise, there....

Quite frankly I’m a little perplexed that this area of the market has remained soft for the better part of a decade. There are very few major Charlotte collectors from this part of the country and this was the case even a few years ago when the banking industry was booming in Charlotte. When I released the third edition of my Charlotte book a few years ago this gave a bit of life to the market but it still lacks the overall enthusiasm seen in the Dahlonega market.

The Five Most Popular Charlotte Gold Coins in 2009: 1838-C quarter eagle, 1838-C half eagle, 1839-C half eagle, any very original crusty XF common date half eagle priced below $3,000.

5. San Francisco: Every time I undertake an article like this that ranks the branch mint’s popularity, poor San Francisco always seems to finish last. This doesn’t make total sense to me. The city of San Francisco is by far the most upscale and “art/collectibles-friendly” of the branch mint locales, the coins are interesting and there is some real value for the money within this collecting area.

There are certainly some bright spots in this area. Type Three San Francisco double eagles are very actively collected and many of the Type One and Type Two issues from this mint are still in demand as well. I think two factors have combined to work against this mint in terms of its popularity: the lack of a good standard reference book and the fact that the various shipwrecks found in recent years have scared people away from purchasing high end coins from this mint.

The gold coins from this mint that seem to be in the highest demand right now are 1854-S quarter eagles (a Classic Rarity that has finally been appreciated), choice and rare issues from the Civil War era and better date eagles grading AU50 and above.

The Five Most Popular San Francisco Gold Coins in 2009: 1854-S quarter eagle, 1864-S half eagle, 1864-S eagle, 1854-S double eagle, 1861-S Paquet double eagle.

As you can well see, there is a pretty common theme with each of these mints. In 2009, most of the collectors of branch mint gold are sophisticated and they are back to buying real coins; not just the plastic that houses them. Collectors want coins that are either choice for the grade or rare enough that they know their opportunities to find another will be limited.

Where Have All the Nice Coins Gone?

This has been one of the “driest” times in the coin market that I can recall in terms of availability. While I have bought and sold some pretty remarkable coins so far in 2009, it has been a source of wonderment to me how few choice, interesting pieces have been available this year. And I don’t see this changing anytime soon. Why is this? I’m not certain that there is a “right” answer to this question. Being a serious ruminator, I have thought a bit about this and have some suggestions as to why we are currently experiencing the Great Coin Famine of 2009.

1. Large numbers of coins have been conserved, dipped, processed and generally monkeyed around with in the past few years. In fact, I think the number of coins that have gone from choice and original to bright-n-shiny (or, at the very worst, from decent to ugly) is far greater than anyone realizes. You know how you read the depressing articles in the newspaper where they tell you the number of Sumatran tigers in the wild has suddenly dropped to fewer than 100 because of aggressive deforestation? I think we have seen a similar situation happen with many series of U.S. coins. Really nice coins that were once accepted as being relatively available aren’t as available anymore because most of the “nice coins” aren’t so nice anymore.

2. Good coins are in strong hands and now that the economy seems to be better than it was in September 2008, people aren’t panic sellers anymore. Let me expand this thought. After people’s stock portfolios dropped dramatically in late 2008, you saw some collectors (primarily newer ones) quickly and dramatically sell large portions of their collections. But many of the collectors who had been in the coin market for a longer period of time did not panic and did not sell. (They may not have been actively buying, either, preferring to be in a “hold” position...) A year later, many of these individuals have seen their stocks rise and they are no longer feeling as worried about their investment as before. In my experience, the strong collectors of pre-2008 are more active than they were six months to a year ago and this has taken more nice coins off the market.

3. The market for nice coins is broader than most people imagine. Because of the Internet, there are more people selling more coins to more collectors. That’s not even mentioning the incredible growth of Heritage and Ebay in the last five years; two firms that have the ability to sell a tremendous amount of coins.

4. With very few exceptions, the old-time collections of coins from the 1940’s, 1950’s and 1960’s are well-dispersed and, with them, the concentrated numbers of high quality coins has dissipated as well. If you look at auction sales from the 1970’s and 1980’s it was not uncommon for firms like Stack’s, Superior and Bowers and Merena/Bowers and Ruddy to routinely sell very cool collections of coins that had been assembled years ago. Today, these collections are almost never seen.

Will the Where Are the Nice Coins scenario change any time soon? I’m afraid not. I would expect to see some more interesting coins become available during major auctions like FUN and ANA but I think the era of abundant interesting coins is disappearing about as quickly as the aforementioned Sumatran tigers.

Value Compression in the Rare Date Gold Market

The recent Coin World “Coin Values” (or Trends as we long-time dealers call it) features a number of price reductions in the various Liberty Head gold series. This has caused some interesting pricing anomalies that have major ramifications for collectors of rare date gold coins. The grade range that appears to be severely affected by the Trends revisions is AU50 to AU58. This makes sense as this is the grade range that, in my opinion, has been most severely compromised by the grading services over the years. I think this especially true for the AU55 and AU58 grades; a range that includes many coins that are marginal quality at best.

A number of factors caused these values to be reduced by the Trends editor(s). One is, of course, auction prices. As I have stated a number of times in the past, one of the biggest problems with coin pricing is the fact that one bad apple can literally spoil the whole bunch. Let me give you an example. Let’s say that Trends in AU58 for a specific Charlotte quarter eagle was $9,000 in AU58. Then let’s say that a really, really low end example in an AU58 holder sells at auction for $4,000. Does this mean that the price of this issue should suddenly be cut in half?

I would argue that it shouldn’t. But I would also argue that a compression of values for rare date gold is inevitable.

Value compression is not without precedent. Two of the most famous examples that I can think of are the Iowa half dollar (worth $85 in XF and $100 in MS65) and the Roanoke half dollar (worth $160 in XF and $180 in MS64). The reason why values become compressed for a specific coin is that the market believes that a premium is unmerited. In the case of the Roanoke half dollar, the reason is obvious: because of the cluttered design, an AU58 Roanoke looks essentially no different from an MS64. For better or worse, this is what has happened with certain branch mint gold coins due to erratic grading standards.

Let me give you an example. The more sophisticated segment of the rare date gold market believes that a choice, original coin graded EF45 is preferable to a bright, shiny processed AU53. Because of this, it tends to place a value premium on the nice 45 coin. The same collector who is willing to spend, say $2,500 on a Choice EF would probably pass on a crappy AU53 example of the same date at $3,000; even though the higher graded example is seemingly the “better deal.”

There are now at least three distinct segments of the rare date gold market. There are the serious hard-core collectors with some budget constraints who will spend $1,500-3,500 on a coin without flinching. This segment of the market is as strong as ever; maybe even more so than in the 2004-2006 Boom Years. The next segment is the casual uninformed investor, the deal-seeker or the “world-is-coming-to-an-end-so-I need-to-own-gold” buyer. They are the likely buyers of the not-so-nice coins that might range from slightly overgraded to blatantly overgraded. This segment of the market is extremely weak right now. The third segment of the market is the high budget connoisseur who is searching for coins that are in or near the Condition Census for the issue; maybe even the finest known. This segment of the market is clearly not as strong as it was a few years ago but if the right coin comes along, these buyers will pay strong prices.

With the existence of these three segments what has happened is that the market has become stronger at the lower end, much weaker at the middle end and slightly weaker but still capable of a wallop on the higher end. As a result, a coin that is worth $2,000 in EF45 and $10,000 in MS60 might only be worth $3,000-4,000 in schlocky AU53. And it might be a hard sale for a dealer even at this compressed level.

Now, here’s where the interesting play comes in for the savvy buyer. I think some nice quality AU53 and AU55 coins are going to get dragged down along with the schlock. Let’s say that you are able to buy a nice Charlotte or Dahlonega quarter eagle in properly graded AU53 for $2,750-3,250 (when a nice EF45 is worth $2,250-2,500). In this case, paying the extra 20% or so for a coin that is demonstrably better is an excellent value. If the collector learns which AU53 quarter eagles are nice for the grade, they are getting coins that are more cosmetically appealing than a nice EF45 and a compressed value that makes plenty of sense to me.

Collecting $10 Liberty Head Gold Coins

If you have deep pockets and lots of patience, assembling a set of $10 Liberty Head gold is one of the greatest challenges in all of U.S. numismatics. Even if you are lucky as far as locating the rarities in this series, you are looking at a $1-3 million commitment of funds and a time frame that should last at least three to six years; if not more. I once asked a $10 Lib specialist how he came to choose his set. To paraphrase his answer, he replied something along these lines: “gold dollars were too small, quarter eagles were too monotonous, three dollars and five dollars were incompletable (due to the 1870-S three and the 1854-S five) and double eagles were overpriced. That left the ten lib series...”

It’s hard to argue with brilliant logic like that. And there are a few more points to add. First, the coins are underpriced. As an example, there are a slew of issues that are really cheap (right now) when compared to coins like $10 Indians or Saints or even Liberty Head double eagles. The second is that these coins are big and contain nearly half an ounce of gold. So every time you buy a “boring” common later date issue you are still accumulating a nice chunk of this precious metal. Thirdly, you don’t (currently) have a huge number of collectors competing against you which means that if a rare undervalued coin comes up for sale, you just might be able to buy it very reasonably.

If I were a collector just beginning this series there are a few things that I would do right away.

The first is choosing a great dealer to work with you. Yes, this is a self-serving comment and yes I think I’m the right man for the job. That said, this is a long, complicated series that involves a lot of coin knowledge and good decision making. You can’t assemble a good set of $10 Libs with a mediocre dealer guiding you and you surely can’t do it on your own.

Secondly, I would set parameters for my set even before I began. I would draft a list that included every date in the series and make a decision what grade range I’d want for each date. The most common mistake that collectors make is that they overspend on the common issues and underspend on the keys. I would avoid paying big premiums for uninteresting dates in very high grades but I would make it a point to make the real rarities in the set as nice as possible.

As you can probably guess, I’d also stress learning what a choice, original $10 Lib looks like and sticking with that “look” throughout your set. It’s amazing how rare many of these coins are with choice, original surfaces. Let me give you an example. Take a seemingly uninteresting date like the 1868. PCGS has graded 116 as of September 2009 but only forty-one are in AU50 or better. Let assume that out of these forty-one there are a bunch of resubmissions and the actual number is around 25-30 distinct coins. Most are going to be dipped, heavily abraded unnatural examples that barely make the grade. I’m guessing that there are fewer than ten 1868 eagles known that would qualify as “choice and original” and which would be high enough grade-wise for an important set of $10 Libs. So, this seemingly mundane issue suddenly becomes a challenge to find. And this holds true for many dates throughout the series.

The complaint I hear from some collectors about the $10 Lib series is that it’s “too long.” Here’s a point to consider. It’s no more “long” than the Lincoln Cent series and I haven’t heard too many collectors complaining about Lincolns being uncollectable due to length. And this isn’t even beginning to consider all of the new die varieties that have crept into the Lincoln Cent set and are now “required” to make a set competitive in the Registry.

I’ve also heard collectors state that this series is “too hard” to collect. I actually don’t think this is true at all. If you want to assemble a complete set in Uncirculated, yes it is too hard (in fact, it’s impossible...). But if you want to do a set in VF-EF grades or even in AU and Mint State grades it is completable.

What are the stoppers to this set? The rarest $10 Lib is the 1875 which has as few as 6-8 business strikes known. In the last two decades I’ve only handled a single example and I am aware of a whopping three pieces having traded since the late 1980’s. The 1864-S is another very rare coin but it does come around a bit more frequently than the 1875. After this, there are dates like the 1844, 1863, 1873, 1876 and 1877 that are really rare but which are certainly attainable.

I was discussing the $10 Lib series with another dealer the other day and we came up with an interesting conclusion. If one serious collector started a set each year for the next five year, the entire supply/demand demand ratio of this series would be dramatically changed. And if a good book about the series were to be published in the next few years...well, all bets could be off.

Assembling a "Back-Up" Coin Collection

I’ve recently had a few collectors ask me a similar question; one that has given me some pause to think. Basically, these are people whose main collecting focus is an expensive, very challenging series. Due to lack of availability (of funds), their purchases may be very infrequent. But they still love coins and the thrill of the hunt. What, they’ve asked me, can they play with as their “back-up” set? The parameters that they’ve given me for this back-up set have been pretty consistent. They want a group of coins that are fun to collect, reasonably affordable, interesting but not wildly esoteric and different enough that they won’t compete against their primary set(s). Most importantly, they don’t want their back-up set to grow so expensive that it depletes funds from their primary set.

My answer(s) has typically been based on the needs and wants of the collector. I’d like to share a few suggestions that I have given focusing on the ideas that appear to have been popular as opposed to ideas of mine that have gone over like the proverbial lead balloon.

1. Dahlonega half eagles in EF and lower AU grades. With the exception of two dates (the 1842-D Large Date and the 1861-D), the Dahlonega half eagle set does not include any major rarities or extremely expensive coins. Every issue can be purchased in the EF-AU range for $5,000 or less and there are no “stoppers” that will prove frustrating for the collector. The series is reasonably short (just 26 coins) and the coins themselves are highly collectible. One of the best things about this series is that if a collector gets tired of these coins after buying just a few, he will have little downside risk. I’d say the key to collecting a set of Dahlonega half eagles is to be patient and to wait for choice, original coins.

2. No Motto Philadelphia Eagles. This is a set that the collector might not want to actually form a date set but it is a great area to dabble in. There are lots of very interesting coins that are priced in the $1,000-3,000 and what’s important to remember is that, generically, just about any still-round ten dollar gold piece from this era is worth in the area of $700. If you become seriously interested in this series, you can pursue the rarities which include the 1844, 1858, 1863 and 1865. If you’d rather just dabble, buy coins like the nice AU50 1857 eagle I just sold off my website for less than $2,000 (it was a great value, in my opinion).

3. A date set of gold dollars. I might be stretching on this one but I think a set that one example of every year in which the gold dollar denomination was produced (1849 to 1889) would be pretty interesting. I suggest this as a date set given the relatively high cost of issues such as the 1855-D, 1856-D and 1861-D. In a date set, these can be replaced by inexpensive issues from Philadelphia. A date set of gold dollar could be assembled in Uncirculated grades for a pretty reasonable sum and they only two challenging years would be the 1863 and the 1875. And, yes, I know these coins are small and not necessarily for everyone.

4. Coins with Low Mintage Figures. If you scan through a copy of the Redbook, you’ll be stunned to see how many United States gold coins from the 19th century have original mintage figures of 5,000 or less. You’ll be even more stunned to learn how many of these rare, low mintage issues can be purchased in very presentable grades for less than $5,000. No, you won’t be able to be ultra-low mintage issues in very popular series like Type One or Type Three double eagles. But there are literally dozens of gold dollars, quarter eagles, threes, half eagles and even a few eagles with stupidly low mintages that are highly affordable. And you don’t have to worry about forming a “set”; just buy what you like and look for the issues that seem most undervalued.

5. Related Numismatic Literature. Assembling a collection of books and catalogs related to your primary collection might be a fun adjunct project. Let’s say you collect early gold. Wouldn’t it be interesting to have a library that featured all books about early gold going back to the 19th century (admittedly there are not many...) and all important catalogs that featured early gold collections? Work closely with one of the major numismatic book dealers and have him help you come up with a list of, say, the 100 Greatest Sales of US gold coins.

Instead of waiting months or even years between your “big” purchases, think small(er) and create a secondary set that will keep you busy during the dry spells that all collectors face. It will make you a better collector and it will make you appreciate numismatics as a hobby even more than you already do!

Collecting U.S. Gold Coins On A Limited Budget

Of course everyone would like to not think twice about buying all sorts of cool, expensive gold coins. But most of us have a coin collecting budget that we have to hold to. Is it possible for the collector of average means to seriously collect US gold? I would contend that even with a reasonably small budget, a collector can have lots of fun in this area of the market and over the course of time put together a pretty neat collection. I’d say that you really need a minimum budget of $1,000-2,000 to buy reasonably interesting pre-1933 gold coins. You can buy coins in the $250-500 range but you are going to have to make compromises in quality or collect very esoteric areas like Period Two California Fractional gold. If you can live with the idea of quality over quantity and buy a bit less frequently, you’ll be pleasantly surprised how much damage a thousand-dollar bill can do in the US gold coin market.

So, what can you do with a budget of $1,000-2,000 per coin?

Let’s say you a relative newbie to the coin market and you don’t have a high degree of comfort regarding your knowledge. An area like St. Gaudens double eagles might be a good place to start. You get the comfort of buying an ounce of gold with every purchase and you will own a coin that is incredibly liquid. A quick perusal of the most recent CDN Monthly Summary shows no less than twenty-five Saints that have a current wholesale bid of less than $2,000 per coin. Assuming that prices for these issues stay in this range (and my gut feeling tells me that MS63 Saints will be dropping in price in the near future) this means that a pretty significant collection could be built on a reasonable budget.

Another series that a collector without a huge budget can have a lot of fun with is Type Three gold dollars. I’ve recently sold coins like 1857 and 1858 gold dollars in PCGS MS64 (with CAC stickers!) for not much more than $1,000 and for just a bit less, you can buy many of the popular low-mintage dates from the 1880’s in the same grade. If you purchase coins graded MS63, many are $750 per coin or in some cases less. Yes, gold dollars are small. But you have to like the value of a 125-150 year old American gold coin in Choice Uncirculated (or better) for $750-1,250.

For overall value, it is hard to beat the Liberty Head quarter eagle series. Even though many of the branch mint issues from the 1840’s, 1850’s and 1860’s are rare and fairly expensive, the Philadelphia coins from all decades are mostly affordable. The post-1875 issues are especially reasonable from a price standpoint and it is possible to purchase some legitimately scarce coins for $1,000 or less. I am a very big fan of the 1840’s dates from Philadelphia and many can be bought in AU50 for less than $1,000; despite their obvious scarcity.

I’ve mentioned a number of times in the past year that I think No Motto half eagles and eagles from the Philadelphia mint are a very good value. To give you an idea, I sold a really choice NGC AU58 CAC approved 1852 half eagle this morning for $625. This is a 150+ year old gold coin with a basal value of $300. At $625, how can you go wrong? There are many other Philadelphia half eagles from the 1840’s and 1850’s that can be found in AU55 and AU58 grades for $1,000 and less. The eagles from this era are more expensive but choice, original AU55 coins are sometimes available for less than $1,000. A collector on a limited budget could put together a very nice date run of No Motto half eagles and eagles without breaking the bank.

Another area that still offers good value is the Liberty Head Type One series. There are, of course, many extremely expensive dates in this series and even the common issues tend to be expensive in higher grades. But nice EF45 to AU55 coins are available from time to time and many can be purchased for $1,500-2,000. As an example, I sold a pleasing 1855-S in PCGS AU50 the other day for $1,700. It’s not a really rare coin but it’s the second year of issue from this mint and it’s a date that jumps up in price appreciably once you hit the MS60 level.

If you don’t have a huge numismatic budget, don’t necessarily rule out pre-1933 gold coins. As I mentioned above, there are a lot of very interesting coins available for less than $1,000 and if you can get your budget up to $2,000 per coin, you have some seriously interesting options to choose from.