Smart Collecting 101: Avoiding the Churn

When talking to collectors, I often find myself giving them advice as to what makes a "good collector." I thought it would be interesting to share some of my thoughts and observations in a series of blogs entitled "Smart Collecting 101." These will run, from time to time, over the next few months. One of the mistakes that many collectors make is allowing themselves to be "churned;" either by their dealer/adviser or by themselves. Churning is an expression that means too much buying and selling from an account (or in this case a collection) by a salesperson in order to generate profits for the company and commissions for the broker.

Many of the big marketing firms in the coin business (and some of the better known boutique retail firms) are notorious churners. They will sell a collector a coin and then, a few months later, encourage him to upgrade it.

What many new (and even old) collectors fail to realize is that there are hidden transaction costs involved in any numismatic transaction. Most collectors who deal with the larger marketing firms are paying at least 20% over cost and in many cases more. Now this isn't meant to imply that a 20% or 30% markup is unfair; it's not. But what the collector needs to understand is that the market has to rise at least 20-30% in a short period of time in order to break even on a transaction.

And this fails to take into account another hidden cost: selling. A firm that churns isn't expecting to take back a coin at a price level in which they can break even. Typically, though, they will mask this in a cunning way.

Let's say a dealer sells a coin for $10,000 and his cost is $8,500. And let's say that the current wholesale value for the coin is still around $8,500. What a clever salesperson might do to churn a client is to tell him that his coin is now worth $12,000 or $2,000 over the collector's cost. The salesperson has a coin in stock that represents an upgrade. It's worth $15,000 on a wholesale basis. He charges $19,000. He knows he will lose money on the trade-in but he is selling the new coin for enough of a profit that he is still able to generate a healthy profit. There is nothing really "wrong" with this but what it means is that the collector now has a new $15,000 coin that he is way upside-down on as opposed to an old $10,000 coin that he is only slightly upside down.

Not all churning is the result of sleazy or even "aggressive" dealers. Much of it is self-imposed by collectors.

One of the pieces of advice I try to give to new collectors is that they should "but the right coin the first time." What this means is that instead of impulsively rushing through a set of, say, Dahlonega quarter eagles an then upgrading their mistakes as they go along, they should take their time and buy the coin they will want in their set for the long term the first time.

Of course there are exceptions to this rule. You might have bought a great AU55 1854-D quarter eagle that has pretty natural color and surfaces as well as a great strike. But a few years later, a really superb MS61 becomes available; a coin with an even better strike, a nice pedigree and fantastic coloration. In this case, an upgrade might be a very smart move.

My feeling is that there are clearly times when an upgrade does make sense. Obviously, it is sensible if there is not much of an increase in price. As an example, if you bought a coin in your set for $2,000 and you are able to significantly improve it for $3,000, that's a no-brainer. Or, you might have a coin that you paid $5,000 for a number of years ago that's worth $9,000 today. An upgrade costs you $11,000; you can roll your profit into the new coin and downcost it to $7,000. (Yes, that's how coin dealers think...)

Sometimes, new collectors start a set tentatively and are not ready to spend $10,000 or $20,000 per coin; say on the aforementioned Dahlonega quarter eagles. Their comfort level to begin with is $2,000 or $3,000. This is understandable but my advice in this situation is to not rush headlong into the set. I have seen many great collectors start with small steps and grow into buyers of serious Condition Census-level pieces after they become more sure of themselves and more comfortable with the dealer they are working with.

Even if you are not working on a specific set, you can still get caught-up in the World of Churn. I've talked to a number of collectors over the years who have had their entire "portfolio" changed around by their expert adviser a number of times. And some of the changes that they made were ill-advised to say the least. As an example, I recall talking to a man who had owned some fantastic coins like a Gem Proof Stella, a high grade High Relief and a sensational 1907 Wire Edge eagle. He had bought them at a low point in the coin market, held them for a few years and was in a great long-term position. The salesman at the firm he was working traded him out of these great coins not once but three times over the course of five years and had taken what would have been a small but superb group worth around $1 million and turned it into a bunch of mediocre, overgraded swill that would have been hard to liquidate at half that amount.

I think one of the best signs of a good, reputable dealer is the individual who tells you "no" from time to time. This is a dealer who is interested in a good long-term relationship but will tell you that a coin he has in stock that is a small upgrade over the one you currently own just isn't worth spending a few thousand dollars on. Desperate dealers always say "yes." Stable, dependable dealers sometimes say "no."

In closing, I'd like to ask you, as a collector, for some suggestions about topics for future editions of Smart Collecting 101. What questions do you about collecting that you'd like answered? Feel free to email me at dwn@ont.com with your questions, comments, etc.

A Quick Look at the Current Market for Type One Double Eagles

How's the market doing for Type One double eagles? Good question and one that I feel well-qualified to answer, having been a very active participant in this market for over two decades. We've had a lot of interesting external factors shape the Type One market in the last few years. Naturally, the severe economic conditions of 2007-2009 had a profound influence; especially at the high end of the market. And even if the economy had been strong there's a chance that prices for rarities might have slowed down on their own, given the extreme rise in prices we had seen in the Type One market for the previous five years. It was natural that there would be some profit taking; what I didn't expect was some of the forced sales we saw in 2007 and 2008.

And then there is the X factor in the Type One market: the incredible run-up in gold prices that has seen metal prices top $1,200 per ounce, and the associated pressures on supply that this has brought with it.

All that said, I'm pretty amazed at how strong this segment of the market is right now. In my mind, there is no question that most Type One double eagles valued at less than $5,000 are in greater demand than I can ever remember. I also think that prices are about as strong as I can recall for these coins. If you look at recent auction, nearly all decent quality EF45 to AU58 Type One double eagles are bringing in excess of Trends (more on pricing in a second...) and these coins are typically selling at auction to dealers; not necessarily end-user collectors.

The coins priced at $5,000-20,000 are generally quite strong as well, although not as much so as at the lower price point. The key factors for Type One double eagles in this price range are: eye appeal, eye appeal, eye appeal and the "sexiness" of the date. This is clearly a collector-oriented market and really pretty coins (i.e., those that are not excessively bagmarked, those that are not all bright and shiny and those that are well-made) are in great demand. Average and below-average quality coins still sell; especially if they are useful dates. But they do not bring the premium prices that the nice coins bring.

The real weakness in this market a few years ago was with the expensive coins. As I touched on above the reasons for this were twofold. When the world economy seemed to be melting down, people weren't all that crazy about dropping $50,000 on a coin. And prices had risen so much on many of the key issues that many market participants wondered if certain key issues were still good values at the levels they had risen to.

Before addressing some specific areas in the market, I mentioned earlier about difficulties with pricing. Coin World Trends ability to keep up with this area in the market appears to not be as good as it was before and many Type One issues now sell for over Trends. This is particularly true with less expensive coins in circulated grades.

Let's look at how the coins from each of the three mints are doing.

New Orleans: If you bought good quality New Orleans double eagles at any time before 2005, pat yourself on the back. You are in a profit position and, in some cases, you are in a huge profit position. New Orleans Type One coins remain strong but not as robust as they were in 2005-2007. The dates that I see some weakness in right now are the 1857-O and 1858-O and, to a lesser extent, the 1859-O and 1860-O. The former seem a bit weak due to the fact that a number of coins in the AU grades have been available and these are two of the few Type One issues where supply seems able to keep up with demand. The latter have cooled off as a result of the fact that some truly awful AU coins have sold slightly cheaply at auction. Very nice AU55 and AU58 1859-O and 1860-O double eagles are extremely rare and choice, properly graded examples will bring well in excess of what the schlocky auction pieces have realized. It is interesting to note that few 1854-O and 1856-O double eagles have traded in the last year or two. I heard through the grapevine that an NGC AU55 1854-O traded for over $600,000 between dealers at the recent Long Beach show. If this is true then, it appears, the market for this ultra-rarity is just fine, thank you.

Philadelphia: I'd have to say that the better date Philadelphia Type Ones are the coins du jour in this series right now. The specific coins that seem to be in real demand are the 1854 Small Date, 1855, 1856, 1857 and 1858. Nice AU examples of these five issues are still buy-able at less than $5,000 and offer alot of bang for the Type One buck. The 1850 is as popular as ever due to its first-year status and the common 1851-1853 issues are in real demand in Uncirculated due to the fact that they are still reasonably priced and occasionally available. The two key issues from this mint, the 1854 Large Date and the 1859, have really come into there own in the last year. I personally love the latter issue and think it is still hugely undervalued in all grades from Very Fine to Mint State. If I were a betting man (and as a coin dealer, I obviously qualify as such) I would say that the Civil War issues will be exceptionally active in the next few years, given the 150th anniversary of the beginning of that conflict is in 2011. The 1862 is already an expensive, well-recognized issue and the 1863 is well-known but the 1864 and 1865 are affordable in circulated grades and seem like good values right now.

San Francisco: In all other denominations, the San Francisco coins lag the other branch mints in popularity. This is not the case in the Type One series where the San Francisco coins are quite popular. We can attribute this, of course, to the shipwreck coins which have been a blessing to the market and which have have made many new collectors aware of and interested in other San Francisco double eagles of this era. The post-shipwreck dates (1858-S, 1859-S, 1860-S, 1861-S) are very popular right now and appear to be bringing close to or even above Trends in AU55 and AU58. The few sales records for Uncirculated pieces in the last year have been very strong and they seem to be consistently at levels higher than 2006-2008. Two interesting individual dates to look at quickly are the 1861-S Paquet and the 1866-S No Motto. For many years these were greatly undervalued and I can remember imploring collectors to buy them at $10,000-20,000 in the early part of the 2000's. They soared in price then came down quite a bit in 2007 and 2008. After being unobtainable in Choice AU for many years, there were a lot of over graded, marginal pieces for sale. I've noticed that there are two very distinct markets for these two issues: the market for low-end pieces and the market for choice, CAC-quality pieces.

I believe that we will continue to see a very strong market for Type One double eagles in the coming years. These coins are big, they contain nearly an ounce of gold, they have a great story behind them and there are still a lot of different dates that can be bought for under $5,000 per coin. I am as bullish on Type One double eagles as on any coin in the market right now.

The DWN Online Rare Gold Coinapedia

For many years, it has been my strong belief that the best DWN client is one who is educated. An educated collector is a confident collector and a confident collector is a more active collector. This is one of the reasons that I have tried to share as much of my knowledge about United States gold coins as possible. I’ve written the standard reference books on Charlotte, Carson City, Dahlonega and New Orleans gold as well as hundreds of specialized articles and blogs that can be found on my website www.raregoldcoins.com. With few exceptions, I don’t think there are many other dealers who can make the claim that they are as interested in educating their clients as much as I can.

My current work-in-progress is something that I am especially proud of. I call it the DWN Online Rare Gold Coinapedia and I am proud to officially announce that it is available for collectors to use immediately.

What this online project consists of are hundreds of high-quality images (obverse and reverse) of 18th, 19th and 20th century United States gold coins along with descriptions of each. These descriptions, while taken from write-ups that originally appeared on my website, are informational as opposed to commercial and should provide the new collector with lots of basic facts about the coins they are interested in.

The beauty of this project is that it is totally non-commercial. None of the coins that appear on the on-line encyclopedia are currently for sale. No hype, no sales pressure, just useful facts about coins. And the quality of the images is superb.

At this point in time there are around 300 different images posted. These include the following:

*Over 40 gold dollars

*Over 65 quarter eagles

*Over 15 three dollars

*Over 85 half eagles

*Over 55 eagles

*Over 60 double eagles

And, there are miscellaneous images of coins such as Territorials as well.

As time passes, I will be adding images and descriptions to this resource. I hope to double it in size by the end of 2010. While it will never be totally complete (there are clearly a number of very rare issues that I will not be able to image in the near future) I anticipate that it will become an important, widely used reference in the months to come.

Please visit the DWN Online Rare Gold Coinopedia. Use it often and give me input as to how to make it better and more useful to you. I look forward to hearing your comments.

Which Gold Coins Are Popular and Why: Part One

A question that I am often asked by new collectors is "which gold coins are popular?" I think this is a great question and one certainly deserving of a blog. I'm going to not only answer this question for each denomination, I'm going to give a few reasons why I think certain coins/types are or are not popular. I. Gold Dollars

People tend to be in one of two camps when it comes to gold dollars: they either love them or they hate them. This is mainly due to these coins small size. I am clearly in the "love 'em" camp and have, over the years, handled many finest known and Condition Census pieces.

In my experience, the most popular gold dollars are the Dahlonega issues. Produced from 1849 through 1861, they are very collectible and a number of the issues are quite affordable. The most popular is the 1861-D which, at this point in time, is the single most popular gold dollar of any date. This is clearly due to this coins historic significance.

At one time, the Type Two issues were extremely popular with date collectors. But the values of the 1854 and 1855 Philadelphia issues have dropped considerably in recent years. At the same time, the branch mint issues of this design (1855-O, 1855-C, 1855-D and 1856-S) have become exceedingly popular.

Type Three gold dollars tend to be overlooked but offer the collector a number of very good values. The best known--and most popular--issue is the ultra-low mintage 1875.

II. Quarter Eagles

As a denomination, quarter eagles are fairly popular and they are clearly increasing in popularity each year.

The pre-1834 issues are all rare. They are not as popular as the half eagles and eagles of this era but there are a number of people who specialize in them and they are seldom overlooked when offered for sale. The most popular early dates are the 1796 No Stars and the 1808. Both are one-year types that have low original mintage figures.

The dates in the 1790's are always popular due to their historic significance and their overall rarity. I am personally a big fan of the Capped Head Left type produced from 1821 to 1827. There are only five dates, and these are hard to locate in all grades.

The Classic Head quarter eagles have become quite popular in the last few years and I expect that they will continue to grow in stature as more becomes known about them. The branch mint issues are the most popular. None of these is really rare (except in the upper Mint State grades) and collectors appreciate the unique positioning of the mintmark on the obverse. There are a total of ten Classic Head issues.

The Liberty Head quarter eagle series is popular as it is one of the few 19th century gold series that can actually be completed. There are a few rarities: the 1841, 1854-S and 1863 are all six-figure coins and many of the branch mint issues are very rare in Uncirculated.

In my experience, the most popular Liberty Head quarter eagles are the Dahlonega issues. The rarest is the 1856-D. None are common in higher grades but this series can be completed with time and patience and this makes it popular with specialists.

The San Francisco quarter eagles seem to be the least popular issues of this type; discounting, of course, the very rare 1854-S. I attribute this lack of popularity to the fact that there is no published reference work on San Francisco gold. These coins tend to be relatively available in lower grades but nearly all of the issues from the 1850's, 1860's and the early 1870's are very rare in Uncirculated.

The Indian Head quarter eagle series is probably the most familiar type of quarter eagle due to the availability of these coins. Unlike the 18th century issues, the Indian Head coins are readily available in higher grades.

For a number of years, this series was extremely popular due to an excellent promotional effort by one firm. This firm is no longer focusing as much attention on these coins and prices have dropped.

I personally like the design of the Indian Head quarter eagle and I find fresh, high grade examples to be very cosmetically appealing. But, to be honest, the availability of these coins make them a bit boring to me and I have never really found locating any of the dates to be enough of a challenge to get me interested.

III. Three Dollar Gold

The popularity of this odd denomination tends to ebb and flow. A few years, Threes were very popular with collectors. Today, they are not as popular and appear to be an excellent area for the contrarian.

My guess is that most people would agree with me that the 1854-D is, hands-down, the most popular issue in this series. It is the only Three from this mint and it has a small original mintage of 1,120. It is certainly the only date of this type that seems to have broad appeal outside of the realm of specialists.

The 1875 and 1876 are Proof-only issues that are rare and popular. But many three dollar collectors feel it is OK to exclude these from their set and focus exclusively on circulation strikes.

The ultimate three dollar is the 1870-S which is unique and housed in the ANA money museum in Colorado Springs. When and if this coin becomes available for sale, I would expect it to sell for a strong seven-figure price.

Some of the demand that was created for this denomination a few years ago was artificial as it was generated by telemarketers. I would expect that if a really nice specialized collection of three were to become available, new collectors would come back to this series and you'd see a more "pure" level of demand.

IV. Half Eagles

This denomination has incredible variety and breadth. Some collectors find it overwhelming while others appreciate the challenges afforded by the half eagle.

The early dates (pre-1834) are generally divided into two categories: the semi-affordable and the not-very-affordable. The Small Eagle coins from 1795 to 1798 include few of both. The most popular issue is the 1795 Small Eagle due to its status as the very first half eagle produced. It is can be found without a great effort.

The Heraldic Eagle type of 1795-1807 includes a number of great rarities but many of the issues (especially those struck after 1799) are available and surprisingly affordable. The Capped Bust Left type of 1807-1812 is very collectible and there are no "stopper" issues.

Almost nothing but "stoppers" can be found in the 1813-1829 Capped Head Left issues. The best known issue is the 1822 of which just three are known. Many of the other issues (like the 1815, 1819, 1821, 1825/4 and 1829 Large Date) are extremely rare and almost never offered for sale.

The reduced size Capped Head Left issues of 1829-1834 are also extremely rare, despite relatively high original mintage figures.

For many collectors, the earliest half eagles that they focus on are the Classic Heads of 1834-1838. I really like this series as it is short-lived, nicely designed and a nice bridge between the expensive "old gold" issues and the more ubiquitous Liberty Head coins. The two branch mint Classic Head half eagles (1838-C and 1838-D) are extremely popular but affordable and available in circulated grades.

Liberty Head half eagles are found with two types: the No Motto issues from 1839 through 1866 and the With Motto issues from 1866 to 1907.

No Motto half eagles range from not very popular to very popular. As one might expect, the most popular issues are those from the southern branch mints. The order of popularity seems to be Dahlonega solidly in the lead followed by New Orleans and lagged by Charlotte.

Branch mint No Motto half eagles tend to be seen usually in the Very Fine to Extremely Fine grades. Even the common dates tend to be hard to locate in properly graded About Uncirculated and all are scarce to rare in Uncirculated. I personally believe that there is some excellent value to be had with both the branch mint and Philadelphia No Motto issues, especially in higher grades.

The With Motto half eagles are less popular with collectors with one big exception: the Carson City issues that were produced from 1870 through 1893. The 1870-CC is far and away the most popular Carson City half eagle due to its status as the first year of issue from this mint.

There are a few very rare issues in the No Motto series including the 1875 and the 1887 but these tend to be somewhat overlooked due to the extreme availability of many of the post 1880 Philadelphia and San Francisco dates.

The final half eagle design is the attractive Indian Head made from 1908 to 1929. Despite this coin's beauty, it is probably the least popular of the four "modern" 20th century gold series. I'd say part of this lack of popularity has to do with the rarity of many Indian Head half eagles in high grades. Even the most common Philadelphia dates are scarce in MS64 and above and nearly all of the San Francisco issues are very rare to extremely rare in MS64 and above.

The most popular Indian Head half eagle is the 1909-O. It is well-regarded due to its status as the only Indian Head half eagle from New Orleans.

In part two of this article, we'll look at eagles and double eagles.

The Not-So-Secret Secret 1883-O Eagle

About a month ago, I received an auction catalog from Olivier Chaponniere and Hess-Divo, two well-known Swiss firms located in Geneva and Switzerland, respectively. I often toss these catalogs directly into the recycling bin but thought I'd check this one out; if only because Hess-Divo has the reputation of selling some exceptional ancient and European coins. I went right to the United States gold section and started browsing. A few minutes in, I was startled to see an 1883-O eagle that had been graded AU58 by PCGS. From the photo, the coin looked very fresh and very nice and I was, needless to say, very interested.

For those of you that are not familiar with the 1883-O eagle, a little background information is in order. This is the single rarest eagle from New Orleans with an original mintage of only 800. There are around 35-45 known in all grades including a unique Uncirculated piece that I sold around three years ago. There are a total of five graded AU58 at PCGS with none higher. I did a little bit of research on this specific coin and learned that it was new to the PCGS population report and, in all probability, totally fresh to the market.

At this point, I was feeling pretty cocky. After all, it was a European auction and not many American dealers were even going to know about the coin, right?

I started feeling a lot less cocky when I saw these two firms at the Central States show with the American gold coins from the auction on exhibit. My hat goes off to Chaponniere and Hess-Divo. I can't think of many times that European firms have brought American coins to an American show to market them to an American audience. And especially at a non-ANA show; can you imagine the excitement that these Swiss guys must have had regarding four days in Milwaukee? (But that's another story...)

I viewed the coins in person at CSNS and loved the 1883-O. It was fairly baggy but it had nice color, attractive semi-prooflike surfaces and a virtual absence of wear. It was the best 1883-O eagle I had seen in a few years and I felt it was at least the third or fourth finest known; and certainly the only one that was going to be available.

Now I had to determine what to pay for this coin. In regards to the 1883-O eagle, this date is a sort of Numismatic Rare Date Gold Franken-coin. No one cared about this date as recently as a few years ago but I've told collectors for years how rare and desirable it was. Around three years ago, low quality examples started to sell for three or four times more than they had only a few years before this. The last two AU58 examples that I handled were an nice AU58 (ex Pinnacle collection) and a beautiful NGC coin that I sold to a Washington, D.C. collector. I had sold them for less than $40,000 each but figured that in this market that they were going to bring around $60,000. So I bid $55,000 (which translated to $60,000 with the 10% buyers premium).

So how did I do? Not well. The coin sold for an amazing 90,000 Swiss Francs which, according to my on-line currency calculator, is around $78,225. I'm assuming the consignor was even more amazed as the catalogers had estimated the coin to bring 10,000 CHF.

I learned a few valuable lessons from this experience.

The first is, that in this day and age, you could hold a coin auction on the third moon of Saturn and it would still be publicized. The Internet means that the secret auction(s) of yore are now well-attended and the information that is available to collectors regarding pricing makes formerly secret dates not so secret anymore as well.

The second is that good coins will always be found by good collectors. I know the buyer of this coin very well and he was likely to have have bought it no matter where the auction was. The fact that the coins were brought to the CSNS show was amazingly helpful to him and I'm guessing it added at least $20,000 to the bottom line; if not more.

The third is that there are still really cool coins lurking in Europe. You'd think that with American dealers having scoured Switzerland, France, Luxembourg, etc. since the 1950's that there wouldn't be much left anymore. Not true. While coins like this AU58 1883-O eagle don't show up everyday, there are clearly still some eyebrow-raising coins left overseas.

The (Very) High End of the Coin Market Needs Feeding

With less fanfare than in past cycles, the super high end of the art market has suddenly gone ablaze. In the past few months, two iconic works have broken records. On May 4th, Christie’s sold the Picasso painting “Nude, Green Leaves and Bust” for $106.5 million. This painting was owned by the Lasker estate and it was fresh to the market, not having been offered in many decades. I don’t claim to be a Picasso expert (nor have I ever seen this work in person), and my gut tells me that while it was a very nice quality work, it was not considered to be an A+ quality painting, unlike some of the early masterworks painted by Picasso in the early part of the 20th century) that were sold for epic sums last decade.

In February 2010, Sotheby’s garnered considerable attention when they sold Giacometti’s iconic “L’Homme qui Marche I” for $104.3; an all-time record for a sculpture at auction. I personally love Giacometti’s work and though this was an amazing piece of art it was one of five known and it was a challenging, complex sculpture that I think most people just don’t appreciate.

These two sales bring up an interesting question: if a flashy but non-masterpiece Picasso can bring $106.5 million and an iconic but odd sculpture can sell for $104.3 what would fresh, undisputed masterpieces bring in today’s market?

What these two sales have shown is that there is still an incredible amount of wealth in the world and an incredible desire to put this wealth into something tangible like art. This is probably all the more so due to the Greek debt crisis which has impacted European buyers even more than Americans.

These upper market sales have interesting applications to the very high end coin market. Now, obviously, coins don’t sell for $100 million dollars. But there are a number of coins that have brought (or would bring) $1 million or more if they were offered for sale.

It has been a long time since a truly great, truly fresh collection filled with $1 million plus coins came to market. Despite all the amazing coins that have been sold in the last three to five years, just a handful of these were “fresh.”

You’ll notice that I use the expression “fresh” a lot. What exactly does this mean? A coin that has been off the market for ten, 20, 30 or 100 years is “fresh.” This is especially true if it was owned by a specific collector or family and it was not shopped around in the interim. The aforementioned Picasso was fresh to the market as it had hung in the Lasker house since at least the early 1960’s and hadn’t been surreptitiously offered to a few big collectors by sneaky family representatives.

Back in the 1970’s and 1980’s, it was not uncommon for amazing multi-generational family collections to become available. We dealers were spoiled by these collections and almost grew complacent when they were offered. But since the Bass estate was sold in 1999-2000, I can’t think of many “old time” collections that encompassed a broad scope having been sold at public auction.

That’s not to say that some great specialized collections haven’t been made available; both at auction and via private treaty (and don’t let the auction firms fool you into thinking that all the great coins sell at auction. They don’t...) but the very top end of the market hasn’t been tested since the middle of the 2000’s and the amazing top-end results in the art market art exclusive to painting and sculpture.

There are a number of potentially huge buyers waiting in the wings of the coin market if the right coins were to become available. Let’s say, for example, that the coins in the ANA museum (the Bass core collection) became available in 2011. I think you’d see absolutely amazing prices for these coins and I’m not so sure that they would all sell to the usual suspects.

All of a sudden, there seems to be a small “perfect storm” brewing in the world of collectibles. Gold is at an all-time high and I wouldn’t be stunned to see it race past $1,350-1,400 before it cools off as the result of profit taking. The economy is certainly not strong but it has recovered enough that people are spending money again. The wealthy have gotten even wealthier in the last year as a result of a robust stock market but seem uncertain what to do with their profits. The demand for great tangible objects (be they coins, sculptures, paintings, etc.) appears to be quickly rising with very little in the way of supply to satisfy consumers.

What I think this basically means is that if the right collection of coins were to come around in the next year or two, it would completely shatter all existing price records. This would be especially true if this collection met the following parameters: the coins were totally fresh, they were gold, they were interesting, they were well-pedigreed and they were properly marketed. In fact, I think these coins could even bring more than they might have at the peak of the market in 2006 and 2007.

Carson City Double Eagles: An Introduction and Overview

Carson City twenty dollar gold pieces, or double eagles, are the most available gold coins from this mint. Only one date in the series, the 1870-CC, can be called truly rare, although a number of other dates are very rare in high grades. Amassing a complete collection with an example of each date is an enjoyable pursuit. And if you decide not to include the 1870-CC because of its prohibitive cost, don’t despair; many collections do not include this date. A collector of average means can put together a nice set of Carson City double eagles with the average coins in the Extremely Fine and About Uncirculated range. The collector will soon learn that only the 1870-CC presents a great challenge in terms of availability. There are an estimated 40-50 examples known in all grades. This means that no more than four dozen or so complete collections of Carson City double eagles could possibly exist. In comparison, the maximum number of Carson City half eagles that could exist is around five dozen while around three dozen (or a few more) eagle sets from this mint might be formed. In each series, the 1870-CC is clearly the “stopper” or key date.

The completion of an average quality Carson City double eagle set is somewhat easier than a comparable half eagle or eagle set, provided that the collector is willing to accept coins that do not grade Mint State-60 or better. There are just 19 dates required to form a complete set. Carson City double eagles are without a doubt among the most popular United States gold coins. Their large size, combined with their romantic history, makes them irresistible to many collectors. This fervent collector base is most evident when one examines the great popularity of the 1870-CC. This issue has increased dramatically in price and popularity since the last edition of my Carson City gold coins book was published in 2001. As this is being written (2010) there are a few examples actually available to collectors but a few years back it was nearly impossible to locate an 1870-CC double eagle at any price.

As with the other Carson City gold series, it is very challenging to pursue the double eagles in higher grades; in this case About Uncirculated-55 and higher. It becomes even more of a challenge when the collector demands clean, original coins with a minimum of bagmarks and abrasions. As a rule, CC double eagles are less rare in high grades than their half eagle and eagle counterparts (at least the issues from the 1870’s and 1880’s). This means that locating really choice coins is not as difficult as with the half eagles and eagles from the first decade of this mint’s operation.

More than most other Liberty Head double eagles, the Carson City issues have tended to remain popular and increase in value over the course of time; regardless of their bullion value. One of the major reasons for this has to do with the great story behind these coins. CC double eagles are reasonably easy to promote due to their relative availability (especially in lower grades) and their wonderful history. These coins have long proven easy to sell to non-collectors and pure investors. Interestingly, the Japanese were major buyers of Carson City double eagles in the past and this is due to their interest in the legends and history of the Old West. I am aware of several American dealers who sold a number of Carson City double eagles to the Japanese and other Asians.

At the present time it remains impossible to assemble a complete set of Uncirculated Carson City double eagles. At least one of the nineteen dates is unknown in Uncirculated. However, more dates in the double eagle series exist in full Mint State than in the half eagle and eagle series, both of which contain a number of issues that are either unknown or excessively rare in Mint State.

The 1870-CC is unknown above the AU53 to AU55 range while the 1871-CC and 1872-CC has just three to five and five to six, respectively. The 1878-CC and 1879-CC are extremely rare in Uncirculated as well with fewer than ten pieces believed to exist. The 1873-CC and 1891-CC are very rare in Uncirculated and almost unobtainable above the MS60 to MS61 range. The 11874-CC, 1877-CC and 1885-CC are considered to be quite rare in full Uncirculated as well. Conversely, a few Carson City double eagles are very plentiful in Uncirculated. These dates include the 1875-CC, 1890-CC and 1893-CC of which hundreds are known in the MS60 to MS62 range. It should be stressed that well over 90% of all Uncirculated Carson City double eagles are in the MS60 to MS62 range and any date in extremely rare and desirable in properly graded MS63 or above. I have still never seen or heard of a Gem and have only seen one piece (an 1875-CC) that I regarded as being close to MS64.

High grade Carson City double eagles are in very high demand by date collectors and type collectors. I doubt if there are as many as twenty Carson City double eagles that are true MS63 coins by today’s standards. CC double eagles are essentially unknown in high grades because of the rough way in which they were handled and if a Gem is to ever show up it is likely to be an Assay coin or a piece that was given special treatment by a VIP or prominent local family.

There was probably not a single coin collector alive in Nevada at the time these coins were produced. The few MS63 to MS64 coins that do exist were preserved by good fortune or sheer happenstance. Many were stored in the vaults of European, Central American and South American banks after they had been shipped there as payment for international debts. While stored in these banks they were protected from the American gold recall of 1933 and the wholesale meltings that took place during this period. Many of these coins have worked their way back to America since the 1960’s as their numismatic value increased. Despite the fact that literally thousands have been repatriated, more Carson City double eagles are still being found in Europe, Central America and South America.

An examination of the series reveals some interesting rarity trends. Survival statistics depend, to some extent, on the original mintage figures. But they vary widely according to the year of issue.

The rarity trends for CC double eagles do not break down as neatly as they do for the half eagles and eagles from this mint. Unlike these two other denominations, the double eagles do not always get characterized as “rare early dates” and “common late dates.” One of the rarest double eagles is the low mintage 1891-CC while the most common is the 1875-CC. After studying the half eagles and eagles from this mint, I feel that the rarity of the Carson City double eagles are based less on mintages and actual use than on mintage values and subsequent shipment overseas. The collector who studies the rarity tables that I included in my 2001 book on CC gold will note the following very general trend: the lower a coin’s mintage and the older its date, the rarer it tends to be in terms of pieces known today.

The 1870-CC double eagle had the lowest mintage figure of any Carson City double eagle: a scant 3,789 coins. In the entire 57 coin Carson City gold series, only the mintages of the 1877-CC, 1878-CC and 1879-CC eagles were lower. As with the other 1870-CC gold issues, the comparably high survival rate of the double eagle (on a percentage basis) is most probably due to a few pieces being saved as first-year-of-issue keepsakes. The fact that no AU-55 or better specimens exist implies that these coins went directly into circulation and saw active use.

The next rarest dates are the 1871-CC and the 1891-CC. The 1871-CC is rare due to a low original mintage figure (just 17,387 coins) and the fact that this issue saw active commercial use. The 1891-CC is rare more because of the fact that only 5,000 were produced. It is also interesting to note that the similarly dated half eagle and eagle are extremely common by the standards of Carson City gold and can be found with no difficult even in the lower Uncirculated grades.

The next rarest issues are the 1885-CC, 1879-CC and 1878-CC. All three have low mintages and tend not to be found in groups of CC double eagles located in overseas sources.

The 1875-CC, 1876-CC, 1884-CC, 1892-CC and 1893-CC appear to have been saved and then shipped overseas. A decent number of these coins are still being brought back to the United States, including examples in the lower Uncirculated grades. The 1892-CC and 1893-CC, in particular, are less rare in Uncirculated than their comparatively low mintages would suggest.

As with other gold denominations, a general rule is that the older a coin is, the lower the average grade of surviving specimens. This intuitive statement is not nearly as easy to predict in the double eagle denomination. As an example, the 1872-CC is the third rarest Carson City double eagle when it comes to high grade rarity but it is only the eighth rarest in terms of overall rarity. This suggests that this coin was released into circulation and used in commerce; not stored in banks and shipped overseas like the 1892-CC and 1893-CC.

Carson City double eagles served two primary functions. They were meant to circulate but they were also meant as a storehouse of value. The large $20 denomination was the most convenient form in which to coin, transport and trade the large quantities of gold that had recently been mined in Nevada. During the western gold rushes, paper money was viewed with suspicion. This made gold coins an important factor in daily commerce, which quickly became the accepted mode of payment in the Old West. Thus, it is not surprising to learn that Carson City double eagles can be found in comparatively low grades today. These low grade coins (Very Fine and Extremely Fine) are often heavily abraded from years of use in commerce. Conversely, most of the known Uncirculated coins are also heavily marked, the result of loose coins striking against each other while being transported in bags. It is not uncommon to see CC double eagles with no real wear but with such extensive abrasions that they are downgraded in the commercial marketplace to About Uncirculated.

The greatest challenge for the collector of these coins is not finding specific dates but, rather, locating clean problem-free coins. As mentioned above, the typical Carson City double eagle, whether it grades Very Fine-30 or Mint State-61, tends to have negative eye appeal due to excessive marks, scuffing or mint-made spotting. Coins which have truly good eye appeal are quite rare and deserve to sell for a strong premium over average quality specimens. The collector is always urged to “stretch” for exceptional pieces with high quality eye appeal.

Most of the pieces struck from 1870 through 1875 are not sharply impressed. This is most evident in the central portion of the coin where the greatest amount of pressure is needed to raise the metal of the planchet and bring out the details. On the obverse, the weakest area is usually on the hair. On the reverse, this weakness is most often seen on the neck feathers of the eagle, the radial lines in the shield and on E PLURIBUS in the motto. This weakness of strike is often confused with wear. Still, Carson City double eagles of this era tend to be sharper (and easier to grade) than their half eagle and eagle counterparts.

The survival estimates in my new book are based on information current as of 2010. Since the last edition of the book in 2001, a number of new coins have surfaced. This has included some reasonably significant hoards. Populations for Uncirculated have increased due to relaxed grading standards. Some coins that I considered to be About Uncirculated in 2001 and now Mint State.

Due to the sheer number of Carson City half eagles that exist, I have always found it difficult to estimate surviving populations; especially with the more common issues. I anticipate that my current overall population figures will prove to be conservative, just as they were in 2001 (and in 1994 when I wrote the very first Carson City gold book).

To reach these conclusions, I study auction data, population reports, dealer ads and websites as well as my own personal records of sale. In an average year, the number of 1870-CC double eagles might be as low as one or two coins. For other dates, such as the 1871-CC and 1891-CC, the number might be around one per month; possibly less. Obviously, the rarer the date and the higher the grade desired, the harder it will be for the collector to locate an acceptable example. Finest known or Condition Census examples may stay in specific collections for many decades.

As I mentioned earlier, the collector with a budget can form a complete (or near-complete) set of CC double eagles excluding the 1870-CC in the VF and EF grades. A number of the dates in the series can still be found in lower grades for less than $2,500 per coin and they would appear to have very little downside risk at these levels.

The collector with a larger budget is likely to focus on coins grading AU50 and above. With the exception of the 1870-CC, no Carson City double eagle is prohibitively expensive or unobtainable in this range. Such a set could probably be assembled in two years or less.

A connoisseur with a large budget will focus on coin that grade About Uncirculated and Uncirculated. For the 1870-CC, a coin grading EF45 to AU50 will prove satisfactory. The collector of such coins should focus on pieces with minimal marks and original color. Since many of the early issues are so rare in full Mint State, finding even properly graded AU55 to AU58 pieces is very difficult. Given normal market conditions, a collection of this magnitude might be assembled in three to five years.

An even more impressive collection would be one in which all the coins except the 1870-CC were MS60 or finer. Such a collection might take decades to assemble.

Collecting Carson City double eagles is a very enjoyable pursuit and the number of serious collectors currently working on sets will attest to this.

Finally...An Appeciation for San Francisco Gold Coinage (?)

After decades and decades in the dumps, it looks like there are small signs of life in the San Francisco gold coin market. But the activity in this market area is sporadic, to say the least, and is being led by exactly the sort of coins that you wouldn't think would be the pacesetters. There are plenty of overgraded, unappealing high priced San Francisco gold coins on the market right now. You haven't been able to give these away for years. You still can't. San Francisco gold coins that are faux-rarities, uninteresting dates or processed with no eye appeal are impossible to sell.

The coins that are suddenly selling have three things in common:

1. They are genuinely rare dates and most are either from the Civil War era or the years right before the war (i.e., 1858 through 1860).

2. They are well-worn but problem-free coins in the VG to VF grade range. These are true collector coins and this little renaissance of interest is obviously collector-based.

3. They are in PCGS holders. There are a few exceptions to this rule but the people buying these coins seem to want PCGS graded coins. This may be because they are forming Registry Sets.

The denominations that seem to have generated the most interest are half eagles and eagles but from time to time a quarter eagle is included as well.

The recent Heritage Central States auction included a few early, rare San Francisco gold coins that nicely illustrate this new trend. Let's take a quick look at each.

The first was Lot 3476, an 1862-S quarter eagle that was graded F15 by PCGS. This is a rare date in all grades with just 8,000 struck. It sold for $1,092.50 against a Trends value of $550 in F12. Why did it sell for double Trends? The reason is obvious: Trends is way too low for a coin as rare as this. I would have figured it was worth around $700-800 but even at a shade under $1,100 I think its great value.

The second example was an 1859-S half eagle, graded VF25 by PCGS and sold as Lot 3633. It brought $2,323 against a Trends of $1,200 in VF20. I figured it was worth around $1,500-1,750 and actually sold it to the consignor recently for a figure in this range. This coin had a number of things going for it. It was in an old green label holder and it was really nice for the grade. It is a rare, seldom seen issue that is very expensive in higher grades (I sold the second finest known late last year, an NGC MS62, for over $25,000). When you do see EF and AU examples they tend to be pretty yucky quality-wise and at around $2,500 this coin was a fantastic bargain.

The third example was a little bit of a surprise to me: an 1866-S No Motto half eagle in PCGS VF35. Offered as Lot 3636, it brought $3,220 against a Trends of $1,600 in VF20 and $4,250 in EF40. Although this is a numismatically significant date as the final No Motto half eagle from this mint, it is much less rare than the 1859-S and I wasn't really wild about the coin from a quality standpoint. Also interesting was the fact that this date is sometime seen in lower grades, unlike the 1862-S quarter eagle and the 1859-S half eale which are extremely arre in grades below EF40.

Now I know that three auction records do not exactly constitute a full-blown trend but this is not a totally isolated series of incidents. I know that when I have an interesting lower grade San Francisco half eagle or eagle that is affordable and seemingly good value, it typically sells quickly and often well in excess of current published values.

I have noticed that Trends (and Greysheet) values for lower grades (Fine and Very Fine) are way out of whack with reality. Often times, these numbers are years old and have not been changed since gold was priced at below $500 per ounce. Think about it: a coin like an 1862-S quarter eagle in Fine at $550? That just seems like absurdly good value. And coins like this are likely to stay undervalued, at least according to price sheets, due to lower collector activity than silver coins from this era. Enough F12 1862-S Dimes trade that it is possible to have an idea what such a coin is worth. But an 1862-S quarter eagle in this grade? You are talking about a coin with a population of just a few pieces and if two people care about such a coin at any given time, prices at auction can run up quickly.

I'd like to thank Jason Carter of Carter Numismatics in Tulsa OK for suggesting this topic and pointing out this market trend to me.

Overdated United States Gold Coins

One of the most interesting varieties of United States gold coinage is the many overdated issues that exist. Some are very rare and others are common; some are well-known and some are very obscure. But all share a common trait: a high “coolness factor” that makes them desirable with collectors. What are overdates and how can the collector of United States gold coins focus on these issues? An “overdated” coin is one on which two dates are present. A famous example is the 1942/1 dime. An overdate occurs when one of more digits from the current year is punched into an older working die. Overdates are often intentional creations and they may exist for a number of reasons.

In the early years of the US Mint, steel to make dies was scarce and funds were scarcer. The Mint operated on a shoestring budget and if any dies were leftover at the end of the year, there was good reason to reuse them. There are many overdates from the 1790’s and early 1800’s and many were probably caused by economic reasons.

Quality control at the Mint during the early years was often lax and some overdates appear to have been produced by accident. These accidents occurred when an engraver inadvertently employed a date punch that was not consistent with the die he was working on. This appears to be the case with some of the overdated coins produced during the 1830’s and 1840’s.

Let’s look at some of the more interesting overdates that occur on Liberty Head gold coins. We’ll save overdated early U.S. gold coins for another time as the list and scope of these is very comprehensive.

Gold Dollars: There are no gold dollars that were overdated. It is interesting to note that there are very few varieties of note in this entire denomination. The branch mints, where one would have expected an overdate or two to have occurred, never produced one in this denomination.

Quarter Eagles: The Philadelphia, Charlotte and Dahlonega issues from 1839 have been called 1839/8 overdates in the past but this is incorrect. The only genuine overdate for the Liberty Head type is the 1862/1. This is a clearly visible overdate that was probably caused by the stress involved with producing gold coinage during the most intense year of the Civil War. It was once believed to be extremely rare but now is only regarded as very scarce. In higher grades, the 1862/1 is very rare. I have personally seen two or three in Uncirculated including a PCGS MS62 that was the best of these.

Three Dollars: You would think that this odd denomination contained an overdate or two but it does not. In fact, there are virtually no significant varieties.

Half Eagles: The pre-1834 issues of this denomination are fertile ground for overdate collectors. The Liberty Head issues are not as interesting when it comes to varieties. There are only two legitimate overdates: the 1881/0 and the 1901/0-S.

The 1881/0 is an overlooked issue that I think is undervalued and quite interesting. There are hundreds known in circulated grades and it is available even in the lower Mint States grades without much effort. It is rare in MS63, very rare in MS64 and may not exist in Gem. A very presentable Uncirculated 1881/0 half eagle can be obtained for less than $2,000.

The 1901/0-S half eagle is probably the most common overdated Liberty Head gold coin of any denomination. A total of 3,648,000 half eagles were coined in San Francisco in 1901 and my guess is that a decent percentage of these were overdated. This variety is common in circulated grades and easily located in grades up to and including MS63. It is scarce in MS64 and rare in MS65 or better. In lower grades it sells for virtually no premium over a common 1901-S and it is a good introduction to the world of overdates coins for the neophyte.

Eagles: The first few “overdate” issues in this series are either controversial or simply wrong. This parade of suspects is led by the 1839/8 Large Letters (Type of 1838). As with the similarly dated quarter eagles, what has been described as an overdate is, in fact, a defect in the die which can be mistaken for an “1839/8.”

For many years, the 1846/5-O was believed to be an overdate but this has been disproven by me and other specialists. Some collectors believe that an 1849/1848 overdate exists but the pieces that I have are not convincing and I don’t think this variety exists. Same goes for the 1857/5; a variety that has been claimed to exist but which I am certain is not a true overdate.

The only legitimate overdate in the entire Liberty Head eagle series is the 1853/2. The variety has received some fanfare over the years but it is still underappreciated; especially given its status as the only true overdate in the series. I estimate that there are around 125-150 known with most in the EF45 to AU50 range. This variety is very rare in properly graded AU55 and above and extremely rare in Uncirculated. I have seen only one Uncirculated example, an MS61 graded by PCGS.

The 1865-S/Inverted 186 has been called an overdate but it is not; it is actually a blundered date caused by mis-entering the first date punch.

Double Eagles: There is only one overdated Liberty Head double eagle: the 1853/2. This is a somewhat controversial issue and it is one that I have seen a few prominent numismatists (including Dave Bowers) state that it is not an overdate but a recut date. I am of the belief that it is an overdate but that some of the pieces that have been designated as “overdates” but PCGS and NGC are later die states that are questionable. The real 1853/2 double eagle has a bold oblong obverse die dot below the foot of the R in LIBERTY. It also shows fairly clearly within the bottom loop of the 3 the straight-lined base of a 2. There are an estimated 200-250 known in all grades and the 1853/2 is quite scarce in the AU range. It is very rare in Uncirculated with probably no more than a half dozen known. I have seen three or four that grade MS61 or slightly better.

Putting together a set of overdated Liberty Head gold coinage would be a fairly easy task. It would consist of only five coins and only one—the 1853/2 double eagle—is expensive in higher grades. The really fun and challenging overdates tend to occur on the pre-1834 issues but as I mentioned above these are often expensive and some are extremely rare.