Coin market hungry for rare coins

By Steve Roach

First published in the July 5, 2010, issue of Coin World

Collectors are hungry for genuinely rare coins, whether they be key large cents, deep mirror prooflike Morgan dollars or rare branch Mint Proof coins, and they are willing to spend what it takes to get what they want.

Middle Date Coronet cents, struck 1816 to 1839, historically have been viewed as less "sexy" than the Early Date cents of 1793 to 1814. The second auction of the Dan Holmes Collection, offered for sale on May 30 by Ira and Larry Goldberg, produced strong prices for rarities and nonrarities alike.

While part two lacked the million-dollar rarities of the first auction in September 2009, its strong prices showed a built-up hunger in the market for hard-to-find coins.

The Heritage June Long Beach auction realized nearly $10 million, with the top coin being an 1866 Seated Liberty, With Motto dollar, graded Proof 67 Star cameo by Numismatic Guaranty Corp. It brought $69,000.

What is remarkable is that the auction achieved a nearly eight-digit total without any "great rarities" or even any coins cracking the six-figure mark.

Market commentary is often focused at the top end of the market, but an auction like the Heritage sale shows that there is palpable demand at the mid- and upper-mid levels as well, even when there are no individual headliners.

The Heritage Long Beach auction included a strong run of rare deep mirror prooflike Morgan dollars, including 1891-O and 1892-O Morgan dollars, graded Mint State 65 DMPL. Both brought $57,500.

The coins were the highlight of a group that was exhibited at several shows as part of a tour sponsored by Professional Coin Grading Service.

The prices on the DMPL coins were very strong. One can't be sure if the provenance aided in the strong prices, but the auction certainly exposed the coins to a broad collector base.

Another special coin that has changed hands recently is an 1876-CC Seated Liberty dime graded Proof 66 by PCGS. In its market report, New Jersey dealer Legend Numismatics wrote that it paid in excess of $200,000 for the branch Mint Proof, and that the firm "instantly" sold it, with four serious buyers interested in the dime.

Proof American Eagles weather the market

By Steve Roach
First published in the June 28, 2010, issue of Coin World

This column has focused on Proof American Eagle coins several times over the past year, most recently on March 15, because the markets for them move up and down quickly and dramatically, with clear price points to follow.

While dealers' buy prices for the Proof American Eagle gold coins have not quite caught up with the market's recent wholesale height of $2,200 per ounce for Proof American Eagle gold coins in their original boxes with certificates of authenticity, they have rebounded to a stable level where market makers are buying them at up to $1,930 per ounce, well above the January low of $1,425.

The June 21 issue of Coin World featured several advertisements from national dealers offering to buy these coins from the public – a sure sign that the market for these is "hot."

Proof American Eagle silver coins have weathered the recent bullion fluctuations even better, with several dealers advertising on wholesale trading networks having buy prices as high as $55.50 for coins assuming original packaging. In early 2009 these were trading wholesale at the $35 level and after reaching a high at the end of 2009 of $55, they dropped to a low of $42 at one point this year.

The U.S.Mint has indicated that it may not be producing Proof 2010-W American Eagle silver coins, meaning that the supply is fixed for now.

As prices for the common examples rise, several of the tougher issues in the series have seen their premiums evaporate.

For example in early 2009, Proof 1993, 1996 and 1997 American Eagle silver coins were trading at two to three times the price of a common Proof issue. Today, that premium has shrunk to between $10 and $20 per coin.

Even the venerable Proof 1995-W American Eagle silver dollar has fallen, with a recent example graded Proof 67 selling for $1,897.50 at a June 4 Heritage auction. Two similar examples sold in 2009 for $2,530 and $2,645.

Admittedly, with Proof 69 examples readily found, the market for a Proof 67 coin is a bit smaller, but the transaction still represents one of the least expensive examples of this key issue to be sold in recent memory.

Many possible outcomes for PCGS lawsuit

By Steve Roach
First published in the June 21, 2010, issue of Coin World

The Professional Coin Grading Service suit against individuals it has named as coin "doctors" or their helpers has several potential outcomes.

For one outcome, it may encourage coin dealers to not "doctor" coins prior to submitting them for grading. For another, it may cause coin doctors to refine their techniques when "doctoring" coins.

A more unpleasant scenario is that the lawsuit may shift attention away from coins being a safe and solid store of value, and turn the attention to the subjective nature of grading and the existence of a sometimes shifting standard for grading.

The definition of coin "doctoring" as mentioned in the filing is specific, yet broad enough to leave much open to interpretation as to what constitutes "doctoring" and what is more akin to preservation and conservation.

Re-engraving bands on the reverse of Winged Liberty Head dimes and creating full head Standing Liberty quarter dollars (see image above, right) are obvious forms of "doctoring," as evidenced by both general opinion and the examples cited in the lawsuit.

But where is the fine line between standard dipping of silver coins and the prohibited "treating coins with chemicals"?

The PCGS Coin Sniffer represents an effort by PCGS to analyze the surfaces of a coin to detect foreign substances. It will be interesting to read about the buybacks that may accompany this new technology, as under the PCGS Guarantee, PCGS often buys back coins that it mistakenly certified.

The names of "coin doctors" are an open secret among most dealers, and like it or not, most dealers – including many who personally disapprove of coin "doctoring" – will continue to buy and sell from the "doctors" as long as there is money to be made.

Ultimately, PCGS’s decision go after several specific dealers for a problem that is more widespread than just a handful of individuals working together to "doctor" coins may have long-term negative effects on the rare coin market by diminishing the confidence of the consumer.

But, universally positive, reduction of "doctored" coins in the marketplace will undoubtedly help the market in the long run.

Record setting 1794 dollar

By Steve Roach
First published in the June 14, 2010 issue of Coin World

On May 13, as verified by an invoice provided to Coin World, a 1794 Flowing Hair silver dollar, graded Specimen 66 by Professional Coin Grading Service sold to the Cardinal Collection Educational Foundation with a listed price of $7.85 million. A 1933 Saint-Gaudens double eagle that sold in 2002 for $7,590,020 is still the most expensive coin sold at auction.

The prior week, on May 4, Pablo Picasso's painting Nude, Green Leaves and Bust sold at auction for $106.5 million, marking a record for a work of art sold at auction, although private treaty sales are rumored to have moved some paintings for up to $150 million.

Record prices bring media attention to a collecting area, and the Picasso record has inspired many journalists to say that the recession in the art market is over and that the market is hungry as ever for top-quality items of lasting quality and rarity.

Whether the 1794 dollar transaction will have any positive impact in the general coin market is yet to be seen, although it certainly vouches for a degree of confidence in the market for major rarities, evidences of which have been few in auctions since January.

The buyer of the 1794 Flowing Hair dollar, the nonprofit Cardinal Collection Educational Foundation, focuses "on the study and publication of information on the Early Coinage of the United States of America."

This is a huge purchase for the foundation, which in 2008 had assets of $6.6 million and spent nearly $2.3 million on "accessions to the foundation's body of numismatic material used for research, publications, and displays."

In 2008 the foundation also spent more than $2.3 million on "numismatic educational programs" according to the foundation's 990-PF tax filing, nearly the same amount as the larger American Numismatic Association spent on publications and education that year.

Is a more expensive coin waiting to be the first $10 million coin and is there a buyer willing to pay the necessary funds? My money is on the unique Saint-Gaudens 1907 Indian Head double eagle pattern, which has not been offered for sale publicly for decades.