Premiums for generic gold coins - like MS-62 Saints and Libs - drop

By Steve Roach - http://www.steveroachonline.com
First published in the Feb.14, 2011, issue of Coin World

January was a hard month for gold. It opened on Jan. 4 at $1,405.50 (London AM fix spot price) and has gradually fallen since, hitting $1,325.60 during trading Jan. 25. It rebounded slightly before falling to a low of $1,315.80 on Jan. 27 as economic concerns both in the United States and globally continue.

Oil hit a seven-week low and the U.S. dollar index hit a two-month low on Jan. 24. Seeing rising U.S. interest rates, Goldman Sachs changed its prediction on gold — suggesting that the gold market could top out in 2011 instead of its earlier forecast for 2012.

This recent decline in gold prices means that gold coins are less expensive in an absolute sense.

Generic Mint State pre-1933 U.S. gold coins are being promoted as good values with gold $20 double eagles advertised as having a strong upside since their premiums have fallen significantly in the past several years.

Looking at the melt price of double eagles compared with the price of MS-62 Coronet double eagles and Saint-Gaudens double eagles shows that the rumors ring true — premiums have fallen dramatically in the past two years.

In January 2009, with a gold spot price of $1,200 an ounce, MS-62 Coronet double eagles were at a wholesale bid of $1,800 while MS-62 Saint-Gaudens double eagles were at $1,650.

A $20 double eagle has .9675 ounce of gold in it. So, at $1,200 spot, its melt value is $1,161. Thus, in January 2009, an MS-62 Coronet double eagle was trading at a premium of $640 while an MS-62 Saint-Gaudens $20 coin was trading at a premium of $435.

In January 2010, MS-62 Coronet double eagles had a wholesale bid of $1,410 and MS-62 Saint-Gaudens $20 coins bid at $1,325. Spot was $1,095.20 an ounce, so they were trading at $350 and $265 premiums, respectively, to their gold content.

In June 2010, MS-62 Coronet double eagles were at were at $1,450 and the MS-62 Saint-Gaudens coins were $1,400 while spot was $1,239.90 an ounce. Premiums over melt value had fallen to $250 and $200.

On Jan. 25, with gold at $1,334, Coronet double eagles were at $1,505 and the Saint-Gaudens coins were at $1,470, so the premiums for MS-62 coins over melt were $215 and $150 — a far cry from two years ago.

How much lower can they drop? Also, how many more are out there, waiting to be certified?

Auctions show continued resilience at top of market for rare coins

By Steve Roach
First published in the Feb. 7, 2011, Special Edition of Coin World


Things continue to be rosy at the top end of the rare coin market.

Looking at the results of the recent Florida United Numismatists convention auctions reveals that collectors are paying strong premiums for coins that are part of great collections or are new to the market, while being selective on less fresh coins.

One of the highlights of the Heritage FUN auctions was a set of 24 circulation-strike Indian Head gold $5 half eagles consigned by Dallas collector Jim O'Neal, who sold his set of Indian Head $10 eagles at the 2009 FUN show.

While many of the coins were purchased in the last five years, many from auction, collectors seemed to be confident that the coins offered were "best in class," and as such, unlikely to reappear soon.

While bidding in the room during the Jan. 6 Platinum Night floor session was often calm – it seemed that many of the bids were placed online prior to the start of the auction resulting in realistic starting bids – the prices achieved were strong.

O'Neal's Indian Head half eagle collection featured many of the finest-known examples and had an average grade of Mint State 65.32, and according to the catalogers, 14 of the 24 coins in the collection are from issues with 30 or fewer pieces known in MS-65 and finer grade.

His top coin in the set, a 1909-O Indian Head half eagle graded MS-66 – likely the finest known – realized $690,000. It last sold at auction in 1998 for $374,000 and in 1989 sold for $71,500.

A 1911-D Indian Head half eagle graded MS-65+ by Professional Coin Grading Service with a Certified Acceptance Corp. sticker realized $299,000 – a substantial increase from its last auction outing in 2004 where it realized $166,750.

Several coins – including O'Neal's 1908-S half eagle in MS-68 and his 1909-S coin in MS-66, which realized $126,500 and $103,500 &ndsh; did not meet their reserve the last time they were put up to auction and were likely scooped up by O'Neal post-auction. Finding bidders was not a problem this time.

Everyone covets coins that are fresh to market, and few are any fresher than the Frank A. Leach example of the 1907 Saint-Gaudens, High Relief, Flat Rim $20 double eagle. Housed in an Numismatic Guaranty Corp. MS-67+ holder, the legendary beauty sold for a hearty $172,500.

For comparison, two NGC MS-67 wire rim examples sold at auction in 2010 for $97,750 and $138,000 respectively.

A Leach 1907 Indian Head $10 eagle graded MS-65+ by NGC realized $86,250 while another with the same provenance sold for $74,750. At last year's FUN auction, two MS-65 examples sold for $48,875 and $63,250, the latter being graded by PCGS and having a CAC sticker.

Some expensive coins without the attachment of a great collection or a fresh to market provenance didn't fare as well. An 1854-O Coronet double eagle graded AU-55 by PCGS sold for $460,000, representing a substantial loss from its last trip across the auction block in 2008 where it realized $603,750.

Is a bubble forming for "Top of Pop" coins?

By Steve Roach
First published in the Jan. 31, 2011, issue of Coin World

At the Numismatic Guaranty Corp. luncheon at the Florida United Numismatists show in Tampa on Jan. 8, NGC chairman Mark Salzberg presented some refreshing comments relating to his perceptions of the rare coin market.

While indicating strong demand at the top of the market for rare, high-quality coins, he noted that the astronomic prices achieved for low-population common coins as an indicator of a possible bubble in the market.

A bubble is sometimes referred to as a speculative or price bubble, and represents a deviation in the price that an object is trading at and its intrinsic value – or, that objects are selling for more than their true value. The problem is that bubbles pop.

Salzberg cited the example of a Mint State 68 Walking Liberty half dollar that sold for more than $100,000.

In an Aug. 10, 2010, Heritage auction, a 1944 Walking Liberty half dollar graded MS-68 by Professional Coin Grading Service realized $109,250.

By contrast, an MS-68 example graded by NGC at a Heritage auction earlier in 2010 sold for $6,900. MS-67 examples certified by both NGC and PCGS routinely traded in 2010 at the $1,000 to $1,500 level.

In the Jan. 4 Bowers and Merena Tampa Bay auction (from a practical perspective, the pre-FUN auction), a top-of-the-pop (meaning none are graded higher) 1946-S Washington quarter dollar graded MS-68 by PCGS with a Certified Acceptance Corp. sticker found a new buyer at $14,950. (Image left courtesy of Bowers and Merena Auctions)

In contrast, a gorgeously toned MS-67 PCGS 1946-S quarter dollar – also with a CAC sticker – sold for $1,092.50, at a May 2009 Heritage auction. A "regular" PCGS MS-67 1946-S quarter dollar sold for $373.75 at Heritage on Jan. 9. PCGS has graded 93 examples of the issue in MS-67 and only four in MS-68.

Salzberg urged attendees to look at "top of the pop" coins from a value perspective, saying that for $100,000, a collector could buy two Matte Proof Saint-Gaudens $20 double eagles. A Proof 65 1915 double eagle sold for $43,125 at the 2010 FUN sale.

Salzberg's message was that while some coins are truly rare, many of the very high prices in the current market for 20th century coins that are common in low and even higher Mint State grades may not be entirely justified from a value perspective.

Big money for 2010 silver ATB 5-ounce coins on eBay

By Steve Roach
First published in the January 24, 2011, issue of Coin World

The first 2010 America the Beautiful 5-ounce .999 fine silver bullion coins have entered the marketplace and collectors have responded by paying huge prices for the five-coin set on eBay.

While the Dec. 20 Market Analysis column anticipated that the surprisingly low mintage would cause speculation, the results of the first week of completed transactions on eBay are just short of shocking.

The 3-inch-diameter bullion quarter dollars are in hot demand as their mintage was strictly limited to not more than 33,000 of each design.

The authorized purchasers who elected to take part in distributing the coins are being held to tight restrictions on the amount that they charge for the coins and can only sell to the public.

The original selling price for the five-coin sets coins so far has averaged $900 to $1,000.

For the lucky few collectors who have been able to get their hands on these coins, a quick windfall seems guaranteed for those who choose to sell them.

Certified or "slabbed" coins are bringing the highest prices.

On Dec. 31, a five-coin set certified Mint State 69 by Numismatic Guaranty Corp. realized $6,470. On Jan. 2, another NGC certified five-coin set sold for $5,100.

Uncertified coins provide a greater number of transactions to look at, led by a five-coin set advertised on eBay as "in hand for immediate shipment, kinda hard to find." It sold for $3,101 with 35 competing bids on Dec. 28.

Prices have been declining a bit each day since and appear to be stabilizing as of Jan. 4.

On Dec. 31, 19 bidders competed for a five-coin set that sold for $2,728, and on Jan. 3, 14 bids brought another five-coin set to $2,705.

On Jan. 4, the lowest eBay "Buy it Now" price for a set of five coins was $2,395, with free shipping.

One major wholesale market maker advertised two five-coin sets for sale to fellow dealers on Jan. 1 for $2,650, lowering the price two days later to $2,550 and then again lowering the price to $2,300 the same day.

Single coins, as opposed to five-coin sets, are also becoming available on eBay, with single uncertified coins selling for around $450 to $500 each.

Will this robust market continue, or will collectors lose interest? We can only wait and see!

New year, new rare coin auction firm

By Steve Roach
First published in the Jan. 17, 2011, issue of Coin World

The year 2010 ended with a bang for the rare coin market, as a merger of Bowers and Merena Auctions and Stack's was announced, to form a new company, Stack's-Bowers Numismatics.

The merger will create a firm with a substantial presence on both coasts, with Los Angeles-based Bowers and Merena Auctions and New York-centered Stack's.

(Pictured is a fantastic gold 10 ducat from Transylvania, 1663, to be offered in Stack's International Sale held during the New York International Numismatic Convention on Jan. 10, 2011. Image courtesy of Stack's.)

Will this new company be able to better equipped to gain market share away from Dallas-based Heritage Auction Gallery, which currently has the majority of the coin auction share in both volume of lots and total dollar value?

One would think that the combined firm should have a greater shot of gaining market share than either Stack's or Bowers and Merena Auctions had individually.

As the auction business moves more online, and as collectors become increasingly comfortable with using auctions as a retail coin buying venue, an auction company's resources to develop bidding platforms and collector-centered tools like searchable archives on the Internet are more essential to a firm's success than ever.

But, as anyone who has built a Web site knows, it is neither easy nor cheap to develop user-friendly resources on the Internet.

The combined resources of Stack's and Bowers and Merena Auctions should allow for greater innovations that can only benefit collectors in the long run.

Where does this merger leave independent auction firms like Ira & Larry Goldberg Coins & Collectibles in Beverly Hills, Calif., or Scotsman Auction Co. in St. Louis, among several others?

In the fine art field, the two dominant players are Christie's and Sotheby's. Each firm sells several billion dollars worth of fine art across multiple categories each year.

Yet, despite the two firm's dominance, many major cities have their own regional auction houses.

Many collectors prefer the personal touch that they get from these smaller houses, where a mid-level object or a more specialized grouping can be the "star" of a sale.

Simply put, a merger of two major firms in a given market shakes things up. But the likely result is that collectors will win because competition should prompt innovation.

Enterprising smaller auction firms will seek to fill in the gaps in service and offerings of the market share leaders.