Factors That Influence Coin Prices: The Not-So-Obvious

Coin prices are impacted by a number of factors. The most obvious of these are supply and demand. Simply put, if a coin has a greater degree of demand than available supply, the price is going to be strong. But what are some of the not-as-obvious factors that impact coin prices? Here are some observations. 1. Quality of Demand. There are different levels of demand for any rare coin. There's "I'm sort of kicking tires and I'm wondering if you might have the following D Mint quarter eagle," and there's "I've been looking for a nice 1840-D quarter eagle for five years, its the last coin I need to finish my set and I have to have it!" The latter is, obviously, a higher quality of demand and this buyer would be willing to pay a significantly higher price than the lukewarm, casual buyer.

While this example is deliberately extreme in its contrast, there are clearly different levels of demand that impact coin prices. Another factor is venue.

I am very interested in marketing and branding and one of the things that interests me is creating demand for new products. Brands now do "mash ups" where a hot young designer of furniture, as an example, designs a limited edition sneaker design for Adidas or Nike. Only 500 might be released and collectors will pay a significant premium for this because of its perceived scarcity. And, it might be offered only at a "pop up" venue where you have to wait for an hour to just see the sneakers and where's there is no time to sit and ponder if you will or won't make the purchase. You are pre-sold and you represent a high quality of demand.

I see this sort of collector behavior for coins at auction. The major firms do a great job of creating an environment that fosters competition and turns a coin purchase into blood sport. As an example, how many times have you, as a bidder, placed an on-line bid and received an outbid notice only to say "I know I shouldn't this but I'll be damned if I'm going to let myself get outbid on this D Mint quarter eagle?" At a live auction, it is even easier to lose control when bidding (which is why I suggest hiring an agent, but that's another story...) and I can recall numerous incidents when bidding has turned into a ego-fest between collectors or dealers.

2. Promotions. A decade ago, when large-scale telemarketers seemingly controlled the coin market, having information about the next coin or series that was going to be promoted could make or break a wholesale dealer. As an example, I can remember at least a few times that Commemorative Gold coins were about to be pushed, and quietly buying coins at pre-promotional levels so that I could sell into a potential rising market.

This isn't the case so much in the 2012 coin market due to the Democratization of Information as a result of widespread web access. But rare coins are still being promoted and this can be a subtle factor in price increases.

In December 2010 I wrote a blog entitled "Which Civil War Gold Coins Will Be Promoted in 2011," which represented my unbiased opinion(s) that the upcoming 150th anniversary of the beginning of the Civil War was a good opportunity for someone to promote Civil War gold coins. It seems that at least a few people read this blog, as I know of two marketers who, perhaps as a result of my suggestion, began promoting the exact coins I suggested in the article. Plus, said article inspired me to become a more active buyer of high end Civil War gold coinage and to write a major four part series in 2012 about collecting these coins:

Part I Part II Part III Part IV

3. Registry Set Collecting: In many series of coins, the passion of Registry Set collectors results in amazing prices for the right coin(s). This hasn't impacted 18th and 19th century gold coins all that much as there is little Registry Set collecting for early gold and Liberty Head issues (although I wouldn't be surprised if we begin to see serious registry collecting in popular areas like CC double eagles or Dahlonega half eagles in the very near future).

The areas in the better gold coin market that seem most likely to be impacted by Registry Set collecting in the immediate future are 20th century issues. I find it very surprising that dealers or marketers who specialize in series like $2.50 Indians haven't seriously promoted the Registry as a way to impact the demand on rarer dates in high grades. For a while, there were a small but dedicated number of Registry Sets in the St. Gaudens double eagle series that were highly competitive and which greatly influenced the prices of high grade better date PCGS encapsulated Saints. My guess is that this will happen again in the not-so-distant future.

4. Pushing Hot Buttons. Most collectors of high(er) dollar coins are Baby Boomers. And I believe that a major part of the strong, strong market in key date American coins in the past decade has been the ability of these coins to push the hot buttons of buyers. Let me explain:

Just the other day, I got back a coin from PCGS that hit my nostalgia button as hard as any has in some time. It was a perfect, even-brown VF30 1877 Cent. When I was a wee lad, I collected Indian Cents and the 1877 was a mythical rarity that I could only dream of owning. Today, this is a coin that I can easily afford and the $1,500-1,750 that this coin would cost me, as a collector, would exorcize some of the oh-why-can't -I-fill-that-1877-hole frisson that haunted me when I was eight or nine.

There are, of course, other hittable hot buttons for gold collectors as well. Cool design? That's an affirmative, High Relief double eagle. Great background story? Hello, Carson City double eagle! The "neatness" factor of owning an 18th century issue? That would be you, 1799 eagle.

5. Historical Significance. As numismatics becomes less about investors and more about collectors, I am finding the historic significance of certain issues are becoming more available because of their historic significance. This includes a number of factors, a few of which include the following:

-Background Story: I don't think its a coincidence that coins like 1861-D gold dollars and half eagles or 1861-O double eagles have become much more in demand due to their fantastic background stories. -Provenance: This may not be the case for all collectors but for some of us (and you know who you are...) the allure of an Eliasberg or Norweb pedigree is a definite factor that influences the price that we pay for a neat coin. -"The Look:" As the internet has (re)proven, numismatics is very visual. Coins that have a great appearance (such as wonderful deep coloration or lots of dirt clinging to the recessed areas) are pieces that a certain type of collector will pay a premium for.

There are other not-so-obvious factors that influence what collectors will pay for a coin. What are some of the ones that went undiscussed in this blog that impact you?

1837 $5.00 NGC AU53 CAC

As a date, the 1837 is the most undervalued of all the Classic Head half eagles from the Philadelphia mint. This nice, original example shows attractive deep original green-gold color with a considerable amount of dirt seen on the reverse. Nearly every example of this date that I have seen has been dipped or conserved and pieces with good eye appeal are actually quite scarce.

This is the only 1837 half eagle in this grade to have received approval from CAC. A total of nineteen higher have been approved as well.

1874-CC $20.00 PCGS EF45

A well-detailed example with enough luster seen to suggest a slightly higher grade. This date should bring a much higher premium over the more common 1875-CC than it currently does.

1852 $20.00 PCGS MS61

While very common in all circulated grades, the 1852 double eagle is very scarce in Uncirculated and is almost never seen above the MS61 to MS62 level. So far in 2012, there have been exactly two MS61 examples that have sold at auction: a PCGS/CAC piece that brought $10,925 in Heritage's 4/12 sale and an NGC/CAC MS61 that realized $9,775 in this firm's 3/12 sale. The present example is certainly more "new" than these others with fuller luster and very, very choice surfaces. A few light scuffs in the left obverse field seem to be all that separates this piece from a higher grade and the level of eye appeal is quite high for the grade. There is a big price jump to MS62 for this date and a nice PCGS MS61 like this should appeal to most Type One collectors.

1846-O $5.00 NGC AU50 CAC

This was a date that I used to see from time to time but, for some reason, the supply of decent 1846-O half eagles has dried up in recent years. I'm not sure if someone is hoarding these or if the popularity of New Orleans gold amongst collectors has dried-up the supply. The present example is the first 1846-O half eagle that I've offered in some time and it has nice medium orange-gold and greenish hues atop relatively choice surfaces. There have been just five APR's for 1846-O half eagles in AU50 in the last decade and the high water mark is $3,738 set by Heritage 1/06: 5159.

CAC has approved just this one 1846-O half eagle in AU50 with five finer.

1852-O $10.00 NGC AU58

After the New Orleans eagle production soared to 263,000 in 1851, it dropped back down to 18,000 in 1852. The 1852-O eagle is tied for the fifth rarest of twenty-one No Motto issues from this mint and it becomes extremely rare in properly graded AU58 and above. I know of two or three in Uncirculated (the best is an NGC MS61 that is ex Byron Reed: 160 and it sold for over $30,000 back in 1996) and just three or four others in AU58. This example is oustanding for the date and grade with just a small amount of friction in the left obverse field keeping it from an MS61 grade. The surfaces are every clean with nearly no abrasions and nice medium orange-gold color. Very few examples in this grade have reached the market in the last decade with the last APR of note being the PCGS example sold as B+M 8/10: 1730 that brought $20,700. This is the best 1852-O eagle that I have handled in years and it will become an important addition to an advanced set of New Orleans eagles.

1890-CC $20.00 PCGS AU55

The first of three choice, original examples of this date and, unlike the other two, seen with some semi-prooflike flash below deep green-gold and orange hues. This piece has some minor discoloration at the CA in AMERICA (probably from storage) and is a bit more abraded than the next two.

1890-CC $20.00 PCGS AU58 CAC

This totally original Gem Slider is about as close to Mint State as you can get and it is more attractive than many 1890-CC double eagles that I have seen in MS60 and even MS61 holders. The surfaces are lightly marked, nominally rubbed and frosty. Really a nice example and perfect for the type collector who wants one very appealing CC double eagle for his set.

CAC has approved seventeen examples of this date in AU58 with a dozen finer.

1890-CC $20.00 NGC AU55+ CAC

One of a small group of original "Euro" examples of this date that I recently purchased (along with the PCGS AU55 listed above and the PCGS AU58 listed below) and a coin that sure seems like it should be graded as a full AU58. NGC's conservative grade is your gain as you get a coin with the look of an AU58 at a discount. The color and surfaces are as original as you can find on a CC double eagle and coins like this have become very, very hard to find in today's market.

CAC has approved 25 1890-CC double eagles in AU55 with 29 finer. It is not known how many AU55+ examples have CAC approval.