Proof-Only Gold Coins

The presence of a number of important Type Three Proof Liberty Head double eagles in the upcoming 2011 FUN auction got me to thinking about Proof-only United States gold coins. What are these coins, why are they important and do they deserve the market premiums they enjoy? A Proof-only coin is an issue that exists only in a Proof-only format where business strikes could have been produced as well. These coins exist in a variety of denominations but for this blog, we'll focus on the ones in various United States gold series.

Some of the most famous Proof-only gold coins are the double eagles from 1883, 1884 and 1887. The mintage figures for these dates are 92, 71 and 121 respectively. I believe that there are around twenty 1883 double eagles known, maybe fifteen 1884's and as many as thirty to thirty five 1887's.

There are two ways to look at these coins. The commonly accepted way is to consider them solely as a date. In other words, even though there are many Proof double eagles that are rarer than these three, there are no other Type Threes that compare to the 1883 and 1884 in terms of the total number known. If a date collector wants to buy an 1883 for his set of Type Three double eagle he has to buy a Proof. This is different than a rare date like the 1881 or the 1882 that exists in dual formats; i.e., as business strikes and Proofs, and thus presents the collector with two options.

Collectors who are new to double eagles might balk at having to pay $150,000-200,000 for a nice 1883 double eagle when they can purchase a Proof of comparable rarity from this era for half as much--or less. Why, they wonder, does a Proof-only issue get such a high premium?

The mistake that they are making is to compare the 1883 to, say, an 1880. They need to look at the rarity of the 1883 on an absolute level. The 1883, from the standpoint of total number known, is even rarer than such celebrated issues as the 1854-O and the 1856-O; two issues that now sell for $300,000-500,000. If the Type Three series were to ever become as popular with date collectors as the Type One series currently is, the current prices for Proof-only issues such as the 1883, 1884 and 1887 could double or triple.

One Proof-only issue that I have always found interesting is the 1863 quarter eagle. Only 30 were made and this is one of the major rarities in the entire quarter eagle series. In the Liberty Head design it is the third rarest issue, trailing only the 1854-S and the 1841. The 1863 is an issue that has alot going for it; most notably its charismatic Civil War issuance. It has been a heralded rarity for well over a century. Values have steadily risen for the 1863 over the last decade and I expect this issue to become more and more sought-after in the future.

Another Proof-only issue is the 1887 half eagle. It has a mintage of 87 and an estimated thirty or so survive. Unlike the 1863 quarter eagle, this is a date that doesn't "feel" like it should be a Proof-only coin; especially given the fact that many of the other Philadelphia half eagles of this era are common in business strike format.

What I think hurts the 1887 most in terms of its appeal is that Liberty Head half eagles are not currently a series that are actively collected by date. The 1887 feels like an overvalued date to me, given that a Gem is worth over $100,000 as compared to less than half this amount for comparable Proofs of this era that aren't Proof-only.

Two of the most interesting Proof-only issues are the 1875 and 1876 three dollars. Both are less rare than their original mintage figures of 20 and 45 would suggest and this is due to the fact that restrikes exist for both issues. I find the 1875 to be a very intruiging issue because of the magic of the date 1875 as a Proof. Every Proof 1875 issue has an exceptionally low original mintage and at least two denominations (the half eagle and eagle) are virtually unobtainable as business strikes.

Back to the Proof-only Type Three issues. When I first became ingterested in US gold coins, these three issues were heralded rarities and they were bringing $25,000 and higher back when 25 grand could buy you some serious rare Liberty Head double eagles. The 1883, 1884 and 1887 have certainly increased in value over the years but not at the pace of the rare Type Ones or, ironically, even at the pace of the formally-overlooked business strike rarities of the Type Three series.

It will be interesting to see how the next appearances of the rare Proof-only gold issues that I've mentioned are met by an increasingly rarfity-driven coin buying audience. My hunch is that we will see very strong prices on most of these coins and that they represent good value for the collector or investor who fancies true blue-chip numismatic items.

The Mystery of the Proof 1875 Gold Dollar

As I have mentioned before, certified population figures can be helpful but they can also be confusing. Take, for instance, the 1875 gold dollar in Proof. This is a coin with a reported original mintage of 20. But it has a combined PCGS/NGC population of 24 (twelve at each service). Something is obviously not right here. But, for once, the fault does not lie with the population reports. Despite being created with the best of intentions, the PCGS and NGC population figures are full of inaccurate information which can be misleading to collectors. This isn’t necessarily the fault of the grading services. It is the fault of dealers (and collectors) who resubmit coins and do not send in their extra inserts. I’ve rambled on (and on) about this in the past and do not plan to offer my two cents this time on how I think that dealers who do this are doing themselves and the coin market a major disservice.

In the case of the Proof 1875 gold dollar the disconnect between the number struck and the number graded has to do with information from the Mint which is not necessarily accurate.

We know for a fact that 20 Proof gold dollars were struck on February 13 as parts of complete gold proof sets. For a number of reasons (some of which will be discussed below), the demand for Proof 1875 gold dollars was higher than expected and it is likely that another 20 or perhaps even a few more were made later in the year and sold to collectors. These appear to have been struck from the exact same dies and cannot be distinguished.

Looking at auction records for Proof 1875 gold dollars over the last few decades, it looks like the actual number known to exist might be as high as 20-25 pieces. Given the fact that survival rates for small denomination Proof gold coins of this era is typically around 50%, this is in line with an original mintage figure of around 40-50 coins.

Striking additional Proof gold coins to satisfy demand is not without precedent. It was clearly done in 1875 and 1876 for the Three Dollar gold piece.

There were a number of times that the Mint engaged in “questionable” practices in order to produce coins as special favors for VIPS or to use as trade bait to acquire coins for their collection. And there were also times that clandestine strikings of certain coins occurred in order for certain Mint employees to make extra money on the side. But in the case of the Proof 1875 gold dollars I don’t think that anything sleazy occurred.

By the mid-1870’s, collecting proof gold coins by date was fairly popular with collectors. This was not necessarily the case with the higher denominations as ten dollars or twenty dollars was an excessive amount of money for all but the wealthiest individual collectors. But the gold dollar, quarter eagle and three dollar denominations were within the range of many contemporary collectors.

My guess is that once the Mint reported that the total number of gold dollars struck in 1875 was so low (only 400 business strikes were made), a certain number of collectors were intrigued enough to buy an example. There were probably also dealers who were willing to speculate on a low mintage issue like an 1875 gold dollar, especially given the fact that a Proof could be obtained from the Mint for a relatively small premium above face value. Since few collectors differentiated between Proofs and business strikes in 1875 and the business strikes may have already been unavailable from the Mint, it seems likely that there was enough demand for the Mint to decide to have a second run of Proofs.

So why then was done in 1875 but not, say, 1876 or 1877 when Proof mintages were also tiny? My guess is that there were enough business strikes made this year to fulfill the demand. Or, maybe the speculators who bought Proof 1875 dollars didn’t make the “killing” they thought they would.

The story of the Proof 1875 gold dollar is an interesting one and one that is likely not yet fully known. It is these little mysteries that make numismatics such an interesting hobby and keep me compelled to learn more about a subject that I have found compelling for the better part of my life.