Some Thoughts on Rarity

Having just published a blog about coin rarity based on grade distribution, I’ve been thinking more about the many concepts of rarity and how they apply to coin collecting. Let’s take a look at a few and discuss them. Rarity is probably one of the two or three most misused terms in all of numismatics, especially from the selling side. I consistently see coins referred to as “rare” which most definitely are not.

Collectors need to remember that rarity is a relative concept. A coin like an 1895 Morgan Dollar is always termed a “rare” coin. Within the context of the Morgan Dollar series, it is rare. But one needs to remember that there are hundreds of examples known in grades up to and including PR67 and, if compared to a coin like an 1867-S quarter eagle (which is priced at a tiny fraction of the 1895 dollar) it is common. What always needs to be remembered when analyzing rarity is context. There are, in theory, hundreds if not thousands of serious Morgan dollar collectors and this makes a coin like an 1895 contextually rare. On the other hand, there are probably less than two to three dozen serious collectors of Liberty Head quarter eagles and an issue like an 1867-S exists in enough quantity that anyone who wants a decent example should be able to find one. In other words, there are basically enough to go around; at least for now.

Rarity is both relative and series specific. It is difficult to compare absolute rarity from one series to another. As I mentioned above, a coin with 20 known in all grades can be a great rarity in a popular series, or it can be a “sleeper” if it is in a series which has the potential of being more intensely collected in the future. There are also numerous esoteric coins that have 20 known but the number of collectors is so few that 20 coins is the equivalent to hundreds of pieces known in a more popular series.

There are essentially two types of rarity. The first is overall rarity. This refers to a coin which is rare in all grades and whose rarity is not solely predicated on its grade. A coin which is rare in all grades is also called fundamentally rare.  As a dealer, these are the types of coins I like to buy and what I specialize in.

A coin can be fundamentally rare for a number of reasons. A Proof 1878 gold dollar is fundamentally rare because of its original mintage figure (a scant 20 coins). An 1828/7 half eagle is fundamentally rare because virtually every known example was melted in 1834 when the weight was changed for gold coins and old tenor half eagles were worth more than face value. An 1865 half eagle is rare not only because of a low original mintage figure (1,270 business strikes) but because of the fact that it is a well-used Civil War issue that not only saw active use in circulation was later melted.

In the area of branch mint gold, few issues are fundamentally rare. Most exist in quantities of 150-200 in all grades. But nearly all branch mint coins are grade rarities.

In nearly all series of American coins, grade rarity has become more significant to collectors than condition rarity. An 1843-D half eagle in Very Fine is a relatively available coin and within the context of Dahlonega issues it is common. But this same date in, say, Mint State-63 is very rare and it is described as a grade rarity.

But the real grade rarities in American numismatics tend to be in 20th century series. An average quality MS64 1912 St. Gaudens double eagle is worth around $5,000 in MS64 and $25,000 or more in properly graded MS65. The disparity can be far, far greater with coins from the 1940’s, 1950’s and 1960’s. As an example (and I selected this totally randomly) a 1942-S quarter is worth $300 in PCGS MS66, $2,500 in PCGS MS67 and close to $20,000—maybe more—in PCGS MS68. That’s a big difference in quality for a difference in appearance that might not be readily recognizable to more than a handful of dealers and specialized collectors.

The difference between the 1843-D half eagle and the 1942-S quarter is that the former has a reasonably significant degree of value in all grades. Even a cleaned, no-grade 1843-D is worth around $1,000; an average quality circulated 1942-S might not fetch six bucks at your local coin shop.

To my way of thinking the “best” coins are what I call dual rarities. This is a coin that is not only rare from an overall standpoint (i.e., it might have a total number known of 40-50) and it is among the best known for that particular issue. Going back to a  coin I mentioned earlier in this blog, the 1865 half eagle, a nice AU55 example would be a dual rarity as it would be among the finest known examples of a coin which is rare in all grades.

The newest category of rarity, one that dates from the 1970’s but which is probably at its height right now, is what I refer to as appearance rarity. Appearance rarity can be related to strike (Full Bands for Mercury dimes, Full Head for Standing Liberty quarters) or it can be related to coloration (Red and Brown or Red for Lincoln Cents). The newest categories of appearance rarity relate to the actual finish of a Proof coin (Deep Cameo/Ultra Cameo) or for business strikes (Prooflike or Deep Mirror Prooflike).

I have mixed feelings about appearance rarity. If I was collecting Lincoln Cents by date, would I spend $100,000+ for a PCGS Red MS65 1926-S or $5,000+ for a mostly red MS65 Red and Brown? Easy answer for me (without a doubt I’m in for the Red and Brown coin) but, then again, I’m a fundamental rarity guy and not a condition rarity so the concepts of appearance rarity seems totally wacky to me. But there are instances I will and do pay a premium for appearance; an example would be a better date Type Three double eagle in MS63 designated as Deep Mirror Prooflike or a rare date Proof Liberty Head half eagle designated as Deep Cameo.

One of the oldest subcategories of rarity is also one of the hardest for the layman to figure. Certain series, like Large Cents and Capped Bust half dollars are avidly collected by die variety. There might not be more a few dozen very serious collectors in these two areas but they tend to be extremely passionate and often very well-heeled. For a non-specialist like me, I am often amazed at the huge prices certain early cents bring but I can appreciate them. My only caveat for a variety collector is to avoid paying premiums in series which are not avidly collected by die variety. You may collect Trade Dollars by variety but if you do you are one of probably ten or fewer collectors who do. Paying a large premium for a seemingly rare variety might not prove financially prudent down the road.

In closing, I’d like to quickly address a question which I am often asked by new collectors: how can you tell if a coin is truly rare? I think frequency of appearance at auction is an excellent guide.

• If a coin appears for sale at virtually all major sales, it is common. An example of this would be a 1901-S eagle in MS64.
• If a coin appears a few times a year at auction (say three or four times), it is at the very least scarce. An example of this would be an 1849-D half eagle in AU50.
• If a coin appears less than once per year at auction, it is rare. This is true from both an in-grade and overall rarity perspective.
• And if a coin appears at auction once every three to five years? That, in my opinion, is a coin which is very rare or even extremely rare.

Do you buy rare gold coins?

Do you have coins to sell?

Would you like to have the world’s leading expert with you assembling a set of coins?

Contact me, Doug Winter, directly at (214) 675-9897 or by email at dwn@ont.com.

The Third Annual RYK/DWN "Mashup"

Are you ready for a third RYK/DWN Mashup? Sure you are. Let’s get the background information out of the way and then get to the meat of the matter. This is, I believe, the third time collector Robert Kanterman and I have exchanged questions and answers about a variety of topics (the first was a two-part article). We’ve covered a lot of ground in the past; some of it warm and fuzzy, some of it, controversial, but all of it interesting and relevant. (Previous "installments" can be found here, here, and here.)

The format for this year is a bit different than in the past. I asked RYK five questions which he answered, and he did the same for me. After each of our respective answers, we each add some pithy comments. Simple, right?

Just remember the code: DW = Douglas Winter, head of Douglas Winter Numismatics, and gold coin specialist, while RYK = Robert Kanterman, collector extraordinaire, and popularizer of the DOG, or Dirty Original Gold coin.

Questions that DW asked RYK:

1. What is the most undervalued series of us gold and what is the most overvalued? Why?

2. If you had unlimited funds, what would you collect?

3. What are three books on us gold you'd like to see written?

4. Has grading gotten more conservative or looser in the last two years?

5. Originality is finally in vogue. How much more are original coins worth versus commercial quality coins?

RYK’s answers with DW’s comments:

1. To be honest, I do not see anything that is truly undervalued at this point in time. If I had to pick one area, I would suggest that the most undervalued series of US gold to be No Motto Philly $5's and $10's. Some of these dates are really tough, and even the more common dates are tough to find in better grades and original condition.

The most overvalued areas to me are New Orleans and Carson City $20's. They are far more common than their valuations would suggest, especially the more prevalent dates (1851-O, 1852-O, 1875-CC, 1890-CC, etc.). I see 1851-O $20's in ugly XF going for $4500—which seems outrageous for an easy date/MM.

DW: Wow, what radiologist got up on the wrong side of the bed this morning? I disagree about the “what’s undervalued” comment. I think there are dozens of good values to be had in the Liberty Head gold series. As an example, Philadelphia quarter eagles from the 1840’s and from the 1867-1877 date range are really good deals right now. There are many San Francisco quarter eagles and half eagles that can be bought for less than $5,000, which are rare both in terms of absolute and condition rarity. I think a case could be made for calling nearly any C or D mint coin in truly original EF and AU grades a relatively good value given how hard they’ve become to find. Even seemingly mundane coins like nice AU No Motto eagles from Philadelphia at $1,000-1,500 are great values for collectors. And I can think of many more examples!

I see RYK’s point about calling O mint and CC double eagles “overvalued,” but you have to remember that the demand for these coins is huge. When you could buy CC double eagles in EF for $1,500 these were just flat-out undervalued coins. At today’s levels they are clearly not cheap anymore. But always remember these coins are big, have a great story, and are promotable. To a new collector, a nice CC $20 at $3,000-5,000 still seems like a fair value.

2. My first stab at this was to pick proof $20 Libs—a big, beautiful trophy coin, if ever there were one. However, as infrequently as these appear on the market, and if you add some criteria for quality and originality, despite the unlimited funds, you might not be buying many coins.

More realistically, I think that I would rebuild a series like Dahlonega $5's in MS-62/3/4 and model it after the original Duke's Creek and Green Pond collections.

If I am allowed to stray outside US Mint gold coins, I would probably do something in territorials, perhaps a high-end type set.

Finally, outside US coins completely, and not requiring a huge budget, a Pillar dollar date set in original XF/AU is something that would be really cool and interesting to me.

DW: I’m a little surprised that RYK mentioned Proof $20 Libs as this doesn’t strike me as a very RYK-esque series. I would have actually guessed he’d have picked a date run of early gold; possibly Fat Head half eagles.

Love the idea about re-building the Duke’s Creek and Green Pond collections. Just let me say that if you decide to do so, I’m here to help!

Like the idea on Territorials, but I’d caution that buying these coins requires extreme knowledge of the series and a good working relationship with an informed, savvy dealer.

And I’m crazy about the Pillar Dollar date set. That would be something that I would actually like to do for myself. Or maybe a date run of Mexican 8 Escudos gold coinage.

3. A Collectors Guide to San Francisco Gold Coins (1854-1880) — notice the date range.

An Encyclopedia of Original XF Branch Mint Gold Coins, 1838-1861.

Gold Coin Collectors and Dealers of the 19th and 20th Centuries.

DW: I’ve been kicking around a SF gold coin book for years. I’d need help to do it and, unfortunately, the two dealers I asked to help have contributed a collective sum of zero pages. I agree with RYK that the post-1880 coins tend to be easily over-lookable and the real interest lies in the earlier issues.

The second book seems a little self-serving (bad RYK, bad!), but it gives me an idea. It would be neat to do a web-based photographic record of totally crusty individual coins filed by date. A photographic record, if you will, of DOG gold. I probably have enough photos already available to partially complete this project and, in fact, if you go to my "Coinapedia," you can get an idea of how many of these photos I already have. Anyone with web savvy care to help…?

The third project is kind of interesting as well; I’m assuming RYK would want biographic sketches of collectors and dealers who specialized in US gold coins. Pete Smith did a project along these lines around a decade ago that was outstanding.

4. To be honest, I submit very rarely, and only to PCGS. I think that there is a psychology to grading that leads to grading decisions that are greatly affected by the other coins that the grader has seen on a given day, in a given session, immediately before and after your coins, the mood, the last phone call with the spouse, the time of day, etc. That said, I will have to say that when grading my coins, the grading service seems more conservative than when they grade the next person's coins. ;)

On a more serious note, I have seen some overenthusiastic grading of special collections when they get evaluated as a group. I am not going to call anyone out, but most people will know what I am talking about.

I would say that grading has become more conservative over the last five to seven years, and I am not sure that I have noticed much change specifically in the last two. I do see fewer obvious problem coins in newer holders. Maybe we should say that the grading services are getting better (and maybe Don Willis and Scott Schechter will remember I said so next time I submit some coins).

DW: That is an excellent answer and there isn’t much I can add to it. I like RYK’s point about special collections being graded “specially,” but if I had a $5 million deal of, say, fresh Dahlonega half eagles, you are darn tootin’ that I’d expect the grading to be “enthusiastic.”

5. Originality is indeed in vogue, and I am going to take some credit for spreading the gospel. DOGs (Dirty Original Gold coins) rule!

That said, the premium is complicated but certainly exists in ways that are difficult to characterize or articulate. I will attempt to make my point:

1. Original gold coins will sell much faster than non-original gold coins of the same grade. This is indisputable.
2. The premium for the original coin can range from zero (if purchased from a seller who does not appreciate originality) to 100% or more. I think an average would be around 20-25%.
3. Sometimes the obviously unoriginal coin lingers on the market for a very long time, and it is hard to ascribe a value to it.
4. There are an increasing number of collectors, like myself, that are buying the right look, irrespective of the grade, and it is very hard to say what the premium for doing so is.

DW: Wow, this guy RYK, he’s a confident fellow, no? Taking credit for spreading the Gospel of Crust…wonder where he learned that from?

I couldn’t agree more with answer #1. If you look at what sells on my website, the crustiest coins are the best received. Duh.

What sort of premium do these coins sell for? Let’s take a random example. A decent, but not really nice, common date C mint half eagle in PCGS EF40 is worth around $2,000. The same date in EF40 but with a deserved CAC sticker (dark, mellow surfaces and few appreciable marks) is easily worth $2,300; maybe even $2,500. For a coin like an 1861-D gold dollar or an 1864-S half eagle, a completely crusty example could sell for a much bigger premium than this.

As a rule, I’d say that True Crust certainly adds 10-20% and in certain exceptional cases, the premium could easily be 50% or more.

Questions that RYK asked DW:

1. Four gold coins that have risen dramatically in value over the last ten years are the 1861 branch mints. If you had to pick four to hold for the next ten years, and could not pick these, which four coins would you pick? Which group of four would you rather have?

2. Many people say that today's modern coins are tomorrow’s classics. Do you see any future classics among today's moderns (post-1986)? If I made you choose one…

3. Pocket change is becoming less and less a part of daily life. What impact, if any, will this have on specifically gold coin collecting, in your opinion?

4. The current high-end coin marketplace is strongly influenced by the duopoly of PCGS and NGC (with some nudging from the CAC). 80 years ago, Ford and GM dominated the car marketplace. Under what circumstances do PCGS and NGC become lesser players, or even inconsequential? Same question for Heritage and Stacks-Bowers.

5. What is the most expensive-liquid (high demand) gold coin and least expensive-illiquid (low demand) gold coin that surprised you among coins that you have owned, bought, or sold in the last couple years?

And a special “mulligan” question to be named later…you’ll have to read on to see the question and the answer!

DW’s Answers with RYK’s Comments:

1. It’s hard to narrow this down to four coins, but the following four were chosen for one or more of the following reasons: popularity, “uniqueness,” multiple levels of demand, standalone qualities. The four coins that I would pick, and some reasons why, are as follows:

• 1854-S quarter eagle: This date has finally been recognized as a Classic Rarity but it is still wildly undervalued when compared to a coin like an 1894-S dime. I just bought the fifth finest known of 12-14 known for under $300,000 and, in the rarified air of Classic Rarities, this seems cheap to me.
• 1870-CC eagle: Here is a coin with so much going for it: rare in all grades, first-year-of-issue and history out the wazoo. A lovely EF40 just sold for less than $50,000 and I think this is cheap, especially when compared to the only slightly rarer 1870-CC double eagle.
• 1854-D three dollar: This is another issue that has everything going for it: low mintage, odd denomination, one year status, etc. It’s not as rare as you think it might be but most of the “AU” examples are stripped-n-dipped and a really nice, wholesome example at its current market value seems like good value.
• 1875 eagle: This is not a cheap issue but I don’t think many people know how rare it is (well under 10 known business strikes) and how scuzzy most of the survivors are. Given how wildly popular Ten Libs have become, this is a coin I could expect selling for $500,000 or more in the near future with just a wee bit of promotion.

RYK: Those are all excellent choices, but in the spirit of one of my favorite Thanksgiving activities, I am going to throw the yellow flag for roughing the collector by including coins that are as scarce as 94-S dimes! I like the 70-CC $10 as a choice—I wish I purchased the XF-45 example one you had on your website when I first started coming around 11+ years ago. I am less enthusiastic about the 1854-D $3, in part because my enthusiasm for $3's has waned over the years. I might include such coins that are more available like the 1795 $5 (which seems to have backed off from recent highs), the 1838-D $5 (which continues to lose ground to the 1838-C $5), the 1838 $10, and the 1861-O $20.

2. Oh, great, you would have to ask me a question about moderns…a subject I know absolutely nothing about. So, how about those Blazers…

I’m sure there are future scarcities among the post-1986 coins, it’s just that I have no idea which these are.

And please make sure to take a breath mint on your way out the door….

After taking the Modern Coin Walk of Shame, the ever generous RYK asked me a question about a subject I actually know something about.

SECRET HIDDEN QUESTION ALERT!!!

2a RYK: If you could have the entire series of Dahlonega $5's except, the 1861 (1838-1860), in circulated condition OR own only the 1861-D $5 in MS-62 from the series, which would you prefer? Assume the sum of the value of the 25 coins is roughly the same as the value of the 1861-D.

2a DWN: Hmmm…that’s a great question. My answer would depend on the quality of the coins themselves. If the 1861-D was just a so-so coin, I’d probably go for the quantity option. If the majority of the other coins were nice, I’d select that option. As an “investment” option, I’m pretty sure I’d want the 1861-D but from the standpoint of being a collector, I’s want the virtually-complete set of D mint fives.

RYK: In my question, I am assuming that all coins are quality for the grade and the sum of the value of the first 25 was about equal in value to the higher grade 1861-D...and I would select the One Coin (to rule them all...).

3. I don’t think that the direction we are taking to becoming cashless will impact collecting. I am not that old, but I can’t remember finding cool coins in change, and I still fell in love with coins at an early age.

Here in Portland, I am seeing a renaissance of old things. Young adults in their 20’s here love vinyl, they dig typewriters, and they go gaga for books and ‘zines. I can see this happening with coins as well. No more change makes these little round discs a lot more interesting.

RYK: I am going to agree with my friend from Oregon. Things that are obsolete become collectibles, and despite the fact that gold coins have not truly circulated for generations this has not limited their popularity. Just in case, I am going to buy my own smelter...

4. I could see something happening in the next decade to shatter the PCGS/NGC duopoly. What if exceptionally good counterfeits pass through the graders undetected? How would PCGS or NGC explain their inability to detect these coins? What if an insider trading/insider grading scandal rocked one of the services? It isn’t likely but it could possibly happen.

Or what if a better mousetrap is invented? Say someone patents really effective computer grading with the ability to interpret eye appeal?

Heritage and Stacks Bowers certainly control a good share of the market but they aren’t infallible. Say a hedge fund saw opportunity in the coin market and threw a lot of money at creating a firm to directly compete with the Big Two. It would be expensive but there is enough talent out there to topple them. And don’t forget about good old fashioned hubris. As you pointed out in your example above, Ford and GM seemed infallible but they never considered that the Japanese would make a better, cheaper product.

RYK: I am usually the last person to see the end of the line for a company, a fad, species, etc. That said, counterfeit holders (containing counterfeit or misrepresented coins) seem to be more likely to be a threat than counterfeit coins, at least in the near future. While on the surface, business seems to be booming at the Big Two, business conditions could change on a dime (no pun intended!), possibly leaving one of the other - or both - flatfooted. Perhaps if a consortium of very well respected numismatists came up with a better mousetrap, they could give some competitions, especially in the wake of a scandal or public controversy.

As for the auction environment, the Legend-Morphy entry, at the high end, and Great Collections, as a soup-to-nuts entry, both seem to have legs and are clearly taking away business from the Big Two. Neither of the new entrants currently seems to be a major threat to the dominance, but they are certainly chipping away.

Bottom line: ten years from now, Heritage and the latest iteration of Stacks-Bowers will still remain the Big Two, as will PCGS and NGC.

5. The most expensive ultra-liquid gold coin, in my opinion, is probably a Stella. They are worth $200,000+ for a nice one, but I could sell a bunch of them right now for a fair price and get paid within 72 hours. The least liquid would have to be in a very thinly traded area like patterns. If you had a High R-7 pattern (around 3-4 known) is might be a surprisingly hard sell if the one or two major collectors already had one.

RYK: I do not know much about Stellas (other than the fact that I once held five in one hand at lot viewing), but I probably should throw a penalty flag for illegal use of the pattern in a numismatic conversation, not once, but twice, in the same paragraph. My first thought was that the High Relief Saint was the most expensive and liquid gold coin, but coins like 70-CC $5 and $10, and 1861-D $1 and $5 sell very quickly when offered for a fixed price—almost no matter the price! I also continue to be surprised by the shipwreck coins, especially from the SS Central America, that sell for higher and higher prices as time goes by.

As far inexpensive but illiquid, in the context of gold coins, I would say that there seems to be a cadre of ugly, puttied, and/or otherwise abused gold coins from the southern branch mints that is perpetually available for sale.

So, there you have it. Another installment of the RYK/DWN Mashup!

Do you buy rare gold coins? Do you have gold coins you care to sell? Would you like to have the world’s leading expert work with you in assembling a set of coins? Contact Doug Winter via phone at (214) 675-9897 or email him at dwn@ont.com.

12 Undervalued, Affordable 19th Century Liberty Head Gold Coins: Part I

It’s been a while since I’ve written a blog discussing specific undervalued, affordable gold coins. This is a topic which has proven popular in the past and, unless I’m mistaken, some of my suggested sleeper issues have grown dramatically in popularity—and price—in the last few years. Due to space limitations, I’m keeping this list down to a manageable number but it could easily be doubled—or even tripled—in size.

1. 1865 Gold Dollar

In the past, I have focused on various Civil War gold dollars, usually the 1863 which is the rarest of these issues. The 1863 has become well-known but the almost-as-rare 1865 remains an excellent value for the astute collector.

A total of 3,700 business strike examples were produced. This issue appears to have seen little circulation as it is almost never found in grades below MS60. As an example, PCGS has graded a total of 48 with 38 of these (over 79%) in Uncirculated grades. Interestingly, Uncirculated 1865 gold dollars are seen more often in Gem (MS65 and above) than in the lower grades (MS60 to MS62) and this suggests that a small hoard existed at one time.

The current Coin World Trends valuation for this date in AU55 is $900 and $1,100 in AU58. I’d contend that if you are able to find a PCGS or NGC AU55 or AU58 for anywhere near those kind of numbers, you have just stolen a coin and you can pat yourself on the back.

2. 1867 Gold Dollar

In 1867, the mintage of gold dollars “soared” to 5,200 business strikes. The 1867 is more available than the 1865 but not by much and it is less widely known or regarded.

The current population for this date at PCGS is just 64 coins in all grades with 46 of these (or 71.87%) grading MS60 and above. You can find the 1867 with more ease than the scarcer Civil War dates but what I like about this date is its current affordability. I have sold some nice higher end AU examples in the last year for around $1,000 and I have sold nice Uncirculated coins in the MS63 to MS64 range for $2,000-3,000.

This list is about “affordable” and, in my opinion, coins like the 1867 gold dollar check all the boxes: scarce in all grades, not terribly expensive even in higher grades, occasionally available and historically interesting.

3. 1844 Quarter Eagle

I’ve discussed this issue before so it’s not really a “secret date.” But the 1844 quarter eagle remains curiously undervalued. Of the 6,784 struck, there are under 100 known. PCGS has graded just 39 examples in all grades and this includes only three in Mint State.

So why is this date seemingly a permanently undervalued issue and why has it shown virtually no price appreciation in the past decade? I’d say the answer has a few components. Firstly, the 1844 quarter eagle doesn’t fit into any neat compartments. It doesn’t have a mintmark so it isn’t a branch mint coin. It doesn’t have any historical significance or anything else to give it a level of demand; let alone multiple levels of demand. What it does have going for it is its unquestionable value.

You can buy a very presentable AU 1844 quarter eagle for $2,000-3,000. The same coin with a C or D mintmark would easily be double the price. This fact, in and of itself, may be all the impetus this date needs to become better appreciated in the future.

4. 1846-D/D Quarter Eagle

I’m going to go out a limb here and add a variety to this list of undervalued 19th century gold coins. I know the reaction that some readers will have: “what, there aren’t enough overlooked regular issues? You have to get esoteric on us and add a variety? Seriously?”

The 1846-D/D quarter eagle is a well-established variety that has an important place within a very popular series. Although it is still not recognized by NGC or listed in the Redbook, it is well-known within the specialist community and recognized by PCGS. This has made it better-known than any of the other Dahlonega quarter eagles.

There are an estimated 40-50 pieces known with most in the EF40 to AU50 range. The 1846-D/D is not an inexpensive coin. You are looking at $4,000-6,000 for a nice AU, unless you are able to cherrypick an example. Put another way, the 1846-D/D is about as rare as the 1855-D quarter eagle from the standpoint of overall rarity but at a fraction of the price.

5. 1855-S Three Dollar Gold Piece

The 1855-S is an issue which should receive a lot more attention from non-specialists than it does. It is more of a Condition Rarity than nearly any issue in this group of undervalued issues and as many as 300-350 are known from the original mintage of 6,600 coins.

Here’s why I think the 1855-S is a good value and why it is underappreciated: like the 1854-D and 1854-O it is a first-year-of-issue within the three dollar series. But unlike these two issues, the 1855-S is not a “one and done” coin. In other words, the Dahlonega and New Orleans mints both made three dollar gold pieces for just a single year while the San Francisco mint made them again in 1856, 1857, 1860 and in (sort of…) 1870. Plus the two southern mint threes have the branch mint cachet which its Western counterpart lacks.

As I mentioned above, this is a very rare coin in higher grades. An accurately graded AU55 with good eye appeal is about as nice an example as you are going to find. Such a coin, if available would cost around $9,000-10,000. Back in the heyday of three dollar gold pieces (around 2005-2006) the same coin would have cost $13,000-15,000.

6. 1842 Large Letters Half Eagle

There are two varieties of half eagle dated 1842-P: the Small Letters and the Large Letters. Both are rare, both are undervalued and both probably deserve to be included in this list. But I’m going to go with the Large Letters which is rarer.

This is the fourth rarest Liberty Head double eagle from Philadelphia after the 1875, 1863 and 1865. There are around three dozen known including three in Uncirculated; the finest is a PCGS MS64.

Despite the unquestionable rarity of this issue, it is still very affordable. A nice quality EF 1842 Large Letters still can be found in the $2,000-2,500 range while an AU example would cost $4,000-5,000+. In my opinion, this is extremely good value in comparison to the branch mint issues of this era.

7. 1864 Half Eagle

It’s widely known that the Civil War half eagle from both Philadelphia and San Francisco are rare due to their low original mintages and their low survival rates. The 1864 is more available than the 1863 and 1865 but it is a scarce issue in its own right. There are an estimated 50-60 known from the original mintage of 4,170 business strikes. When seen, the typical 1864 half eagle is apt to grade in the EF40 to AU50 range.

I could have placed any one of at least ten other half eagles in this list of undervalued coins but I selected the 1864 due to its multiple levels of demand. Civil War gold coins have become very popular with collectors in the last few years and the 1864 half eagle is a relatively affordable issue in EF and even AU grades.

I sense the “affordable” aspect of this issue beginning to wane, though. As recently as a few years ago, it was possible to find a nice EF example for around $2,000-2,500 and an AU for a bit more than double this. Today, the collector will probably have to spend closer to $4,000-5,000 for a presentable 1864 but I still think this is reasonable for a coin with this degree of rarity and this much historic association.

Some Thoughts on Proof Gold Survival Rates

As someone who handles a decent amount of rare and interesting Proof gold coinage, I've been thinking about survival rates. I'd like to share some thoughts about typical survival rates and why certain issues don't comply with the "basic laws." First, a little background. The United States mint struck proof gold coins as far back as the 1820's, but production became more established by the 1858-1860 era; which neatly coincides with the beginning of coin collecting as a hobby in this country. Production of most proofs remained small until the early to mid-1880's, when collectors and dealers became more interested and a decent-sized mania for Proofs began to take hold.

For most United States Proof gold coins, I believe that the following survival rates are pretty consistent:

*Pre-1870 gold issues, with exceptions, appear to have a survival rate of around one-third of the original mintage.

*Issues from around 1870 to around 1890, with exceptions, appear to have survival rates of around half of the original mintage.

*Issues from 1890 until the end of the Liberty Head design (1907) typically have survival rates that range from one half to two-thirds of the original mintage.

Let's now take a look at some of the factors that influence survival rates of Proof gold coins. Please note that these are not listed in order of importance.

1. Original Mintage Figures. This seems pretty obvious but it is an important factor that needs to be discussed. A gold issue with a low mintage (say 25-50 coins) tends to be rarer than an issues with a relatively high mintage (100 or more).

However, there are some notable exceptions to this rule.

There are some years that mintage figures are incorrect. An example of this is the 1861 gold dollar with a reported mintage of 349. This figure has never made sense to me and given the small number of survivors (two to three dozen) and the unlikely scenario that nearly all of the supposed "349" struck were melted.

The opposite situation exists with Proof Three Dollar gold pieces dated 1875 and 1876. These are Proof-only issues; i.e, they were made only in a Proof format with none made for business strike purposes. The reported mintage figures for these two dates are 20 and 45, respectively.

But there are probably more than 20 and 45 known of these dates. As an example, looking at the PCGS and NGC population data for the 1876 three dollar, we see that eighty examples have been graded. Even if we discount, say, 30 of these as resubmissions, this still means that 50 examples may have been graded.

It is my belief that both the 1875 and 1876 three dollar gold pieces were restruck, in order to fill a demand among collectors, either later in the year(s) or, perhaps, a year or two later.

2. The Size of the Coin. Small sized Proof gold (i.e., gold dollars and quarter eagles) tends to have a higher survival rare than larger sized coins.

The reasons for this are fairly obvious. The face value of a small gold coin means that it was more likely to survive the Depression era where a number of larger Proofs were spent or melted by collectors because of their high face value and low numismatic value.

3. The Era in Which it Was Struck. I mentioned above that proof gold from the 1890's was saved with greater regularity than those issues from the 1860's.

In the 1890's, coin collecting was a well-developed hobby. But in the 1860's, there were far fewer collectors. It is a known fact that many Proofs struck in the 1860's and 1870's went unsold to collectors and were later melted by the mint. Even if the number melted was not great (say five or ten coins) with issues that mintages of just 25-50 coins, this small number becomes significant.

As far as we know, proofs were still melted up to the early 1900's but not as often as with earlier issues.

4. Economic Issues I mentioned meltings during the Depression in the second bullet point above. This is an important factor, worth repeating.

As remarkable as it seems today, a Proof double eagle in the early 1930's had very little numismatic premium. For some collectors, it made more sense to spend a Proof double eagle from the 1880's then it did to try and sell them to a coin dealer or place them in an auction. Many higher denomination proofs (specifically eagles and double eagles) were lost in this fashion. Some were melted while others circulated so much that they are barely recognizable as Proofs today.

There are other issues that were produced during years in which the economy suffered. The Panic of 1893, while not as well known as the Depression, was a short-lived but highly significant downturn in the economy. It is likely that proof gold coins from 1892-1894 were unsold and melted due to collectors suddenly not being able to afford luxuries such as coins.

5. Contemporary Hoarding Not unlike with today's modern coins, dealers and collectors speculated with smaller denomination proof gold in the 1880's and early 1890's. If you look at mintages for gold dollars, they increased dramatically in the 1880's: from a low of 36 in 1880 to a high of 1,779 in 1889. This was due to significant demand from hoarders and speculators; a situation not all that much different than what we see in 2011 with the hoarding of the 25th anniversary ASE sets!

These issues that were hoarded tend to have higher survival rates than earlier issues, due to the fact that they went into numismatic channels.

How exactly does a collector determine the survival rate of a proof gold issue he is contemplating buying? I think the best way is to study auction appearances over the years. A close study will often reveal interesting anomalies. An example: I recently bought an 1870 gold dollar in PR65. I did a little research and realized that I had only handled one example in twenty+ years and not an especially nice one at that. A study of auction records showed that only a few Gems have ever been sold and nothing better than PR65. My sort-of-cool coin suddenly seemed very cool, not to mention exceedingly rare.

Bass Collection Dirty Little Secret

If you ask ten United States gold coin experts what the most important pedigrees are, you are certain to have the Bass collection mentioned nearly every time. Clearly, the Bass collection was among the greatest collections of United States gold ever assembled. But I’ve learned a dirty little secret about some of the Bass coins that I’d like to share with you. Harry Bass was a pretty compulsive buyer and many of his coins came from the major auctions of the 1960’s and 1970’s. When these coins were shipped to Harry, they were enclosed in the clear plastic "flips" that were popular during this era. What we now know is that these flips were made with polyvinylchloride (or PVC) which is an oil-based chemical that imparts a residue on coins.

I don’t know this for a fact but I believe that many of the Bass coins were stored in PVC flips for many years; in some cases as long as two or even three decades. During this period, a lot of PVC "grime" got onto the surfaces of the Bass coins.

So how can you tell if a Bass coin has PVC grime on it? Generally, gold coins with this residue develop a sort of cloudy whitish film that seems to become thicker with the passing of time.

The coins that appear to have the most noticeable residue are in PCGS holders and have "original" Bass pedigrees. If a Bass coin was removed from its original holder but resubmitted later to PCGS (in an attempt to upgrade it) it was still given a Bass pedigree but to distinguish it, it was designated as "Bass" on the insert by PCGS. Coins that are in their original "first generation" Bass holder have a pedigree on the insert that states "Harry W. Bass Collection." There are also NGC coins that have Bass pedigrees. These were in the Bass collection but were cracked out of their original holders. Ironically, I have never seen an NGC Bass gold coin with any PVC grime on its surfaces.

How serious of a problem is this PVC? I am not a chemist and would defer the chemistry-related issues inherent to this question to someone else. From what I do know about gold, it is a very inert metal and one that is far more forgiving than, say, silver or copper. If the Bass collection had been copper coins and they had been stored in PVC flips for years, I think the coins would have been at considerable risk. Being gold coins, I think they were at far less risk. I’m not certain if the residue from these plastic flips did any long term damage but in the instances that I have seen coins on which the residue was removed, the underlying surfaces seemed just fine.

For me, the biggest problem with these coins is aesthetics. Some of the Bass coins in their original holders that I have seen with this PVC grime simply aren’t very attractive. If you purchased coins from the Bass sales in 1999-2000 and you haven’t inspected them recently, I’d suggest you take a quick peek and see how they look.

Grey Area Gold Coins

What do you call a gold coin that is too scarce to be regarded as a generic but is not rare enough to be called a rare date? I have always called these grey area gold coins “unusual dates” and was recently asked by a collector if they are a) good deals and b) good investments. Yes and no.

Let’s use the $10 Liberty Head series as our guide and let’s use the 1901-S eagle as our baseline. The 1901-S is the most common date in this series with a total population of nearly 13,000 graded at PCGS. This coin has a June 2006 Trends value of $500 in AU50, $575 in MS60 and $650 in MS62.

Now let’s randomly choose two “unusual date” $10 Libs. and compare populations and prices.

First, we’ll look at the 1856. This is a No Motto coin that is considered to be relatively common but its total population of 160 graded at PCGS is about 1/80th the number of 1901-S eagles graded. Trends on this coin is $600 in AU50 and $1,100 in AU55 (we won’t compare its price in MS60 to the 1901-S due to a huge difference in rarity between the two dates).

At a $100 premium in AU50, the 1856 seems to be a fantastic deal. And it is. It has a population of just 35 coins in this grade with 74 better at PCGS. But here’s the rub. There are not many collectors of $10 Libs. by date and the collectors who do want an 1856 probably are looking for a coin that’s at least an AU58 to MS61. So the 1856 is essentially an outcast that is unloved by the generic market and unwanted by the rarities market. Hence, its extreme lack of demand and its low price.

Let’s now look at another date, the 1895-S. I’ve always regarded the San Francisco eagles from the 1890’s to be the poster children for the Lost Cause of Unusual Date Gold. PCGS has only recorded 221 in all grades with just seventeen of these better than AU58. Trends for this date is $1,500 in AU58 and $2,500 in MS60. In MS60, this is a date with a PCGS population of just four with a scant nine graded higher. At $2,500 it has to be a total rip, especially with a common date 1901-S valued at $575. Right?

Absolutely. It’s a total rip. In fact, it’s such a fantastic rip that I’ll buy exactly none for my inventory in the next year. Not because I can’t find such a coin; I’m probably going to be offered one or two in the coming few months. No, I’m passing on this coin because I won’t be able to sell it. There’s just nobody that wants a coin like this with the possible exception of a telemarketer who may resell it to an unsuspecting investor. Except the problem is that this telemarketer will want to pay $1,500 for the coin, he’ll take three months to pay and when I get his check it will probably bounce.

Gold coins are expensive and the Liberty Head series go on and on for decade after decade. This is why Philadelphia and San Francisco Liberty Head gold aren’t popular. Who wants to collect an expensive series that is seemingly never ending? And, conversely, this is exactly why Carson City, Charlotte and Dahlonega gold are popular. They are short-lived and, with a few exceptions, don’t contain any daunting, ultra-expensive stoppers which make assembling a set out of the range of most collectors.

So, you still don’t believe me and are still convinced that coins like 1856 eagles in AU50 and 1895-S eagles in MS60 are a great value? Go look at auction prices from five or even ten years ago and see how these coins have done versus “common rare date” coins like EF45 Charlotte and Dahlonega half eagles or AU55 Carson City double eagles. Coins like the 1856 eagle and the 1895-S eagle have been among the very worst performers in the single all-time greatest price run-up in numismatic history. Not exactly a very compelling endorsement, eh?

Gold Coin Market's Strength

Part of me wants to think that the gold coin market’s currently high values represent a peak and that a correction is due. But the more I look at the market, the more I think that it truly has legs and that prices are not going to go down any time soon. Here are a few reasons why I think the gold coin market is not going to drop any time soon:

There are a lot more people looking to buy coins than there are people selling. As long as demand outstrips supply, prices are not going to go down. In some areas, like early gold, prices have doubled or even tripled in the past three to five years, yet the current supply of early gold is the smallest I can ever remember. When you see auction sales with a large number of interesting early gold coins for sale, this might be a sign that this area is correcting. But as long as people are more interested in buying than selling, look for prices to continue to rise.

With gold (and silver) at twenty-five year highs, coin prices aren’t going down any time soon. If both of these markets show a major short-term correction, it is likely that certain areas of the market will weaken. But I don’t think that gold dropping from $600 to $500 is going to affect the value of a rare date St. Gaudens double eagle or a rare Liberty Head eagle.

There is a lot of money in the world right now. I recently went shopping for a new house in Portland, Oregon and was pretty shocked to see how little $1 million bought you in this once-sleepy market. Not that long ago, one million dollars was a staggering amount of money to pay for a house. Today, it’s what many people pay for their second—or even third—residence. Gone on vacation lately? Taken the wife or significant other out for a fancy meal? Filled up the car? It’s an expensive world we live in these days, and the gold coin market merely reflects this fact.

The most interesting thing about this market is that it is still mostly self-generated. People really want gold coins; unlike in 1979-80 and 1989-90 when they were told they really wanted them. If you remember those two markets, you can remember insane price manipulations and wacky hype that, viewed today, seems like…well, insane hype.

One has to wonder, what will happen to gold coin prices if the Chinese decide they want to play. Or if someone really clever decides to corner the market in MS65 Indian Head gold (it’s SO easy to do!) and then expertly market the coins. Then today’s seemingly “insane” gold coin prices could actually look cheap.

Gold Coin Coloration

Why don’t gold coins with great coloration sell for a significant premium as copper, silver and nickel coins with a similar appearance do? On certain types of gold coins, superb natural coloration can sometimes be seen. As an example, some of the high grade gold dollars from the 1870’s and the 1880’s can be found with magnificent rose, orange and green-gold hues. Proof silver type coins from this era with wonderful color traditionally sell for big premiums over pieces with average quality coloration.

I believe that there are a few possible answers to this question.

First of all, many insanely toned silver coins are often very common pieces which are given big premiums solely because of their color. Dramatic multi-colored toning might be the only reason that someone wants to buy an otherwise-mundane coin like a common Peace Dollar or a silver commemorative half dollar. Clever marketers were quick to see that this was the best way to turn a $50 coin into a $10,000 coin. If a big marketing company starting selling MS67 and MS68 gold dollars for a big premium because of their color, their thinking just might catch on with the mainstream.

The second reason has to do with the fact that toning on gold coins tends not to be as visually dramatic as on silver or copper coins. You don’t see gold coins with stunning rings of peripheral blues and reds. But the natural coloration of gold is warm and attractive and most uncleaned pieces are fairly pretty to begin with. In my opinion (and if you disagree please don’t send me an irate email…) the natural appearance of most silver and copper coins just isn’t as pretty as their gold brethren.

It seems to me that superbly toned gold coins are a great market play right now, especially if they can be obtained for just a small premium over “normal” examples. If and when PCGS and NGC start designating eye appeal on their holders (NGC has semi-embraced this concept with the star designation) it will be interesting to see if very pretty gold coins sell for very big premiums.