Gold Bugs Rejoice as Gold Hits Record Price

By Steve Roach - http://www.steveroachonline.com
First published in the August 1, 2011, issue of Coin World

Gold bugs rejoiced as gold hit a new all-time high on July 13, reaching nearly $1,590 an ounce in New York before closing at $1,583.50.

Gold is up more than 10 percent in 2011, climbing for each of the last 10 years.

The source of the rise — the sixth day in a row where the price of gold increased — was a broad increase in the global demand for gold as a safe haven asset.

The July 13 rise was fueled by comments by Federal Reserve Chairman Ben Bernanke to Congress that suggested there might be another round of monetary stimulus, combined with Congress’ inability to reach a deal on the debt ceiling, which may mean that the Treasury could run out of money to pay existing loans.

Globally, concern in Europe with Italy, Spain, Greece, Ireland and Portugal all experiencing credit problems made precious metals attractive, and silver rose more than 7 percent on July 13 to a high of $38.43 an ounce, an impressive gain but still more than 20 percent below its recent high of nearly $50 an ounce in April.

Comparatively, gold’s July 13 gain of more than $23 an ounce was just a 1.5 percent gain.

The renewed confidence in gold may be what it takes to break the pre-1933 generic U.S. gold coin market out of its recent sleepy period as most generics still trade at multi-year low premiums relative to their melt values.

Further, the widespread media coverage of the Langbord 1933 Saint-Gaudens gold $20 double eagle trial may bring some new blood into the hobby, interested in the coin’s dramatic story and introduced to the beauty and availability of Saint-Gaudens double eagles.

In other market news, initial buyers of the Mint’s recent offering of Proof 2011-W American Eagle silver dollars were able to make some fast profits. Several big dealers are paying $66 for these coins, which can still be purchased from the Mint for $59.95 as of July 13, but 100-coin ordering limits imposed by the Mint prevent dealers from getting large quantities.

The Proof gold American Eagle market has also seen a boost recently, with dealers paying slight premiums for 1988 to 1991 four-coin sets, and quarter-ounce $10 and half-ounce $25 coins. However, the release of the 2011 issues has added enough supply to make a repeat of last year’s big American Eagle gold coin prices unlikely.

Steve Roach is a Dallas, Texas, based rare coin appraiser and fine art advisor who writes the world's most widely read rare coin market analysis each week in the pages of Coin World.  He is also a lawyer who writes on legal topics involving fine art and collectibles, and helps create estate plans for collections. Visit him online at http://www.steveroachonline.com, join him on LinkedIn at http://www.linkedin.com/in/stevenroach or follow him on twitter @roachdotsteve

Pricing the priceless: What's a 1933 $20 gold double eagle worth?

By Steve Roach - http://www.steveroachonline.com
First published in the July 25, 2011, issue of Coin World

As the trial to determine who owns the “Langbord 10” 1933 Saint-Gaudens gold $20 double eagles is scheduled to begin July 7 in a Philadelphia federal courtroom, many are wondering what these coins are worth.

We know what the coins grade since Numismatic Guaranty Corp. reported Nov. 3, 2009, that it had graded one coin Mint State 66, two MS-65, six MS-64 and one with an NGC Uncirculated Details, Improperly Cleaned grade.

When pricing any object, one first looks at comparables — other objects of similar type and quality and the prices they sold for. In 2002, the 1933 double eagle allegedly owned by Egypt’s King Farouk sold for $7,590,000 at auction. It graded MS-65 and was — and currently is — the only 1933 double eagle that can be legally owned by an individual.

So if the coins are ruled private property, are the “Langbord 10” worth around $7 million each?

That’s unlikely. When multiple examples of an object enter a market, the demand/supply ratio changes. While the added publicity helps — meaning that more people know what a 1933 double eagle is and may want one — it’s not enough to compensate for the fact that the coins are not unique.

A parallel in the art market is when an artist’s estate is valued for estate tax purposes, a blockage discount is sometimes used. This assumes that the works are sold at once, depressing the market. To maximize value, prudent estates use long-range marketing, which places objects into the market slowly, responding to the ebbs and flows of demand and artist reputation.

What pricing comparables do the 1933 double eagles have?

Perhaps most obvious is the 1927-D Saint-Gaudens double eagle, considered by some the rarest regular issue coin of the 20th century. Around 10 are collectible today from a mintage of 180,000. They are sold infrequently. The last example at public auction was an MS-66 that realized $1.495 million at a January 2010 auction.

Seeing that the prices for the top objects in many collecting categories are going sky high, with proper marketing to buyers beyond the existing coin-market, the 10 Langbord 1933 double eagle coins could be worth around $2 million each, perhaps more.

But how many more examples remain to be discovered is a troubling, lingering question.

Steve Roach is a Dallas, Texas, based rare coin appraiser and fine art advisor who writes the world's most widely read rare coin market analysis each week in the pages of Coin World.  He is also a lawyer who writes on legal topics involving collectibles and fine art, and helps create estate plans for collections. Visit him online at http://www.steveroachonline.com, join him on LinkedIn at http://www.linkedin.com/in/stevenroach or follow him on twitter @roachdotsteve

Steve Roach will be in Philadelphia to cover the trial of the 10 Langbord 1933 gold $20 double eagles

The fate of a handful of rare coins, valued at more than $20 million, will be determined in Philadelphia this week.  The federal trial that should decide whether a Philadelphia family or the government owns 10 1933 Saint-Gaudens gold $20 double eagles will begin July 7 in Philadelphia’s U.S. District Court.

Steve Roach – an attorney, America’s expert on the rare coin market and Associate Editor of Coin World, the world’s largest hobby publication, will be attending the trial starting July 11, providing daily updates online at www.coinworld.com and through social media including his Twitter account @roachdotsteve

A rich history

The legal dispute over the 10 1933 Saint-Gaudens gold $20 double eagles began in 2003 when Joan Langbord, the daughter of Philadelphia coin dealer Israel Switt, allegedly learned that a family safe deposit box contained the coins. She and her two sons, Roy and David, transferred the coins to the U.S. Mint for authentication in September 2004.

In May 2005, the Mint authenticated the coins but refused to return them or initiate forfeiture proceedings. The Langbords sued the government in December 2006. On July 28, 2009, Judge Davis ordered the government to file a forfeiture action, ruling that the coins were unlawfully seized. The government filed its amended complaint for forfeiture and declaratory judgment against the Langbords and the 10 coins on Nov. 10, 2010.

The government’s case attempts to create a framework for the 10 1933 double eagles as being embezzled or stolen from the Mint and wrongfully retained. The Langbords have argued that there was a window of time where people could legitimately obtain 1933 double eagles from the Mint cashier, and that some pieces may have left the Mint that way.

At the heart of the case is the problem of proving actions alleged to have taken place in the 1930s and 1940s. To this end, both sides have retained three experts each, including numismatic experts David Enders Tripp, who is testifying on behalf of the government, and Roger Burdette, the numismatic expert retained by the Langbords.

A landmark case

The case is important for several reasons. Most obvious is that the coins are extremely valuable. On July 30, 2002, at Sotheby’s in New York, more than 700 people watched as six different bidders fought for eight minutes until the 1933 Saint-Gaudens double eagle allegedly once owned by Egypt’s King Farouk sold for $7.59 million, plus $20 to officially monetize the coin. The buyer of that coin has remained anonymous.

If the Langbord coins are legal to own, the Professional Coin Grading Service Million Dollar Coin Club estimates that they would bring $2.5 to $3.5 million each at auction. Numismatic Guaranty Corp. posted a press release to its website on Nov. 3, 2009, announcing that it had graded the Langbord coins. One was graded Mint State 66, two were MS-65, six were graded MS-64 and a single one received an NGC UNC Details, Improperly Cleaned grade. The press release was removed from the NGC website several days later, adding further mystery.

In a larger sense, any court ruling that would question a collector’s right to own coins not issued as legal tender could jeopardize other legendary U.S. rarities like the 1913 Liberty Head 5-cent coin.

***

Steve Roach is a Dallas, Texas, based rare coin appraiser and fine art advisor who writes the world's most widely read rare coin market analysis each week in the pages of Coin World.  He is also a lawyer and helps create estate plans for collections. Visit him online at http://www.steveroachonline.com, join him on LinkedIn at http://www.linkedin.com/in/stevenroach or follow him on twitter @roachdotsteve

How does a coin's packaging add value to it?

By Steve Roach - http://www.steveroachonline.com
First published in the July 11, 2011, issue of Coin World

In a clever marketing move, Professional Coin Grading Service and Numismatic Guaranty Corp. are grading and encapsulating 2011 American Eagle silver bullion coins struck at the San Francisco Mint with inserts stating that the coins were produced at San Francisco.

However, it raises the question — what premium, if any, should collectors pay for a coin that looks indistinguishable from its West Point Mint counterpart? None of the 2011 American Eagle silver bullion coins struck at either facility bears the S or W Mint mark, and the U.S. Mint has stated that the strikes from the San Francisco Mint will be the same as those produced at the West Point Mint.

That grading services will designate only coins delivered to them in sealed 500-coin boxes as originally received by the U.S. Mint’s authorized purchasers harshly limits the public’s ability to certify these coins themselves.

Any additional value that the market ascribes to these San Francisco Mint coins comes from the original packaging, which is lost upon certification.

Another coin with a value that is strongly dependent on its original packaging is the “Cheerios” 2000 Lincoln cent. In 2000, Cheerios included 10 million 2000 Lincoln cents in special blister packaging with its cereal. These coins are normal — identical to the “regular” issues but for the packaging.

PCGS and NGC will both identify coins coming from the Cheerios promotion on the label, with PCGS calling it a “minor variety.” The cents rose to fame when it was discovered that the majority of the 2000 Sacagawea golden dollars included in just 5,500 of the Cheerios boxes featured a special reverse, commonly called the “Reverse of 1999.”

Cheerios cents sell for around $5 in original packaging, while a non-Cheerios 2000 cent is worth little more than face value. In a slab noting the Cheerios origin, they sell for slight premiums over non-Cheerios cents, although most collectors do not view Cheerios cents as anything special.

My colleague, Bill Gibbs, brought up an apt analogy to another collectible field where packaging matters: originally packaged Hot Wheels miniature model cars. While the No. 225 Hot Wheels from the 2002 series, a mostly red ’57 Chevy, is worth around $3 when it is loose, it is valued at $225 when packaged singularly in its original card, since the majority of the cars were released as part of an extremely limited number of sets. Same car, yet packaging makes one substantially more valuable. Yet, once removed from its package, its value returns to normal.

In August we will look at a similar phenomenon: value created by the PCGS First Strike and NGC Early Release designation program.

Steve Roach is a Dallas, Texas, based rare coin appraiser and fine art advisor who writes the world's most widely read rare coin market analysis each week in the pages of Coin World.  He is also a lawyer and helps create estate plans for collections. Visit him online at http://www.steveroachonline.com, join him on LinkedIn at http://www.linkedin.com/in/stevenroach or follow him on twitter @roachdotsteve

Do low premiums for generic U.S. gold coins present buying opportunities?

By Steve Roach - http://www.steveroachonline.com
First published in the July 18, 2011, issue of Coin World

The gold market in June stayed relatively stable at the $1,530 to $1,550 an ounce level before dropping to $1,498 on June 22 and recovering to the $1,510 level at the end of the month.

With gold showing moderate stability, many collectors are wondering if now is a good time to buy generic pre-1933 gold coins, as many pieces are trading at very low premiums over their melt value not seen in the last decade.

These low premiums result from several factors, including an oversupply of coins coming to the United States from European central banks, and fears that gold is currently overpriced and ready for a price correction that will bring down the generic market.

Also, several certified ugly and copper spotted coins have traded sight-unseen at relatively low prices, which can bring down the prices of normal-quality coins, especially for thinly traded issues.

At gold prices of $1,500 to $1,550 an ounce, nearly all Coronet $5 half eagles, $10 eagles and $20 double eagles, Indian Head half eagles and eagles, and Saint-Gaudens double eagles are trading at 5 to 10 percent premiums over their melt value. In early 2009 when spot was at $850, these coins were trading at around 40 percent over melt.

It’s in the certified Mint State generic market that the drops in premiums are most apparent, and double eagles are the most widely traded generic coins. At current levels for MS-62 double eagles, the premium is 10 percent under melt, whereas in early 2009 these were trading at 50 percent premiums. In MS-63, the current premiums raise to 20 percent over melt for Coronet types and just 15 percent for Saint-Gaudens coins.

MS-64 Saint-Gaudens double eagles trade at just a 5 percent premium over MS-63 examples, where in the past five years this premium has ranged between 20 and 50 percent.

In the higher grade generics (especially MS-64 and MS-65), Certified Acceptance Corp. approved coins and Plus graded coins have had substantial traction and market acceptance. There is a large jump in both price and quality between MS-64 and MS-65 double eagles, and the quality of certified MS-64 coins can vary greatly.

So is now a time to buy? It all depends on what you think the gold market will do, and if you think you can select examples that are accurately graded and attractive for the grade.

Steve Roach is a Dallas, Texas, based rare coin appraiser and fine art advisor who writes the world's most widely read rare coin market analysis each week in the pages of Coin World.  He is also a lawyer and helps create estate plans for collections. Visit him online at http://www.steveroachonline.com, join him on LinkedIn at http://www.linkedin.com/in/stevenroach or follow him on twitter @roachdotsteve