Importance of Expert Assistance During Auctions

A recent auction experience reminded me why it is so important to view coins in the proper condition(s) and why it is so important for collectors to have an expert look at auctions lots for them. At the 2006 FUN show I was walking by the table of a West Coast auction firm who happened to have a group of coins on display for future sales. Included in this group was an early gold coin that was a major rarity and which had an excellent pedigree. I excitedly called a client of mine who I knew would be interested and told him about the coin. I hurriedly viewed it without magnification and using harsh convention center lighting. It looked magnificent to me and I relayed this to my client.

At another show a few months later, I looked at the coin again. It still appeared to be nice.

Prior to the June Long Beach sale, I touched base with my client and reminded him about the impending sale of this coin. Was he still interested? Very. Was he willing to pay what I felt he would have to in order to own this great coin? He said he was.

I viewed the coin again but this time with a 5X glass and using my special coin light that I bring with me to auction viewing rooms. As I tilted the coin into the light and rotated it on its axis, something looked wrong. I checked the coin again and realized that it had, in fact, been subtly wiped many years ago. To the naked eye, the coin looked like a virtual Gem and I had wondered why it was only in an MS62 holder. And given its impeccable pedigree, it had to be a great coin. Right?

Well it was a great coin. But it wasn’t going to upgrade and it did have a subtle but definite problem that might well have made it difficult to sell down the road. And I shuddered thinking about what would have happened if my client bought it and had me crack it out in an attempt to upgrade it. The coin might have wound up in an MS63 or even an MS64 holder. Or, it might have no-graded and we would have had a five-figure problem.

What’s the moral of this story? There is no possible way that the problem that this coin had could have been determined without seeing it in person. And even seeing it in person, it was very hard to detect the wipe lines with a good glass, a good light and an expert’s eyes looking at it. Considering that this coin was worth well north of $100,000 it presented a unique set of circumstances that I feel could only have been properly handled by a very knowledgeable dealer.

May 2006 Long Beach Show Report

The Summer Long Beach show went pretty much as I expected. It started slowly, got exciting in the middle and finished with a whimper. My week began with the Goldberg and Superior sales. I was not hugely impressed with either of these auctions from the standpoint of quality but was able to purchase a few choice pieces including one of the finest known 1840 quarter eagles, a superb Gem 1851-O gold dollar, a glorious Gem 1915-S Panama-Pacific Octagonal $50 and a small group of reasonably crusty southern gold.

This was followed by the usual hum of activity in the pre-show hotel room circuit down in Long Beach. I looked at a ton of coins and was significantly underwhelmed by what I saw. I was, however, able to sell a number of coins including some tired pieces that I was not unhappy to get rid of.

Dealer set-up on Wednesday was a chore to slog through as most people’s attitudes were not great and few coins were available. I was able to find a few interesting pieces here and there, many of which are now listed for sale in the inventory section of my website.

Things picked up considerably when the show officially opened on Thursday. I was able to buy more coins and my wholesale sales were extremely strong. Some observations: scrubby, overgraded C&D gold was everywhere and it was generally hard to sell unless it was priced at big discounts relative to Trends. New Orleans gold was very hard to find. I was not able to find many pieces that qualified as Finest Known or Condition Census examples but I did locate some nice mid-level pieces in the $1,000-$5,000 range. I saw more Three Dollar gold pieces than in quite some time. With the recent price increases in this series there is some profit taking occurring. Early gold was also a bit more available than usual although most of the pieces I saw were common dates in the EF40 to AU55 range.

I was very surprised by the strength of the gold coins in the Heritage sale. Coins that I felt were relatively nice for the grade often sold for more money than I would sell them for retail and most of the old holder upgrades I saw went for exceptional prices. I was able to buy a few goodies but most of the lots that I liked the most went for a lot more than I was willing to pay. My favorite coin was an 1893-CC eagle in NGC MS62 that was extremely fresh and had great coloration and surfaces. I figured it would sell for around $15,000; it brought over $30,000 with the buyer’s premium.

The show slowed down considerably on Friday as many of the major dealers left and gold prices took a major hit. By Friday afternoon, it was officially done, although I did stay until Saturday in a last-ditch attempt to buy some more coins.

I found grading at the show to be pretty realistic. Both NGC and PCGS appeared to be trying to “make” some coins and most of the submitters I spoke with were a bit happier than usual. In my own experience, I was quite pleased and I made some impressive coins, most of which were quickly placed with clients who had want lists on file.

What did the Summer Long Beach show prove? The market is still strong but some areas are showing definite signs of profit taking. The recent ups and downs in the gold market are being reflected in the prices people are paying for generics. At the show, MS65 Saints dropped over $100 per coin. I would urge caution playing this market unless you are very knowledgeable and have a strong constitution.

My next show isn’t until mid-July when I attend the Summer Baltimore convention. I expect activity between now and then to slow down from the frenetic pace of the first five months of 2006. But I expect things to pick back up in August and think that the ANA show in Denver will be superb. I remain convinced that this market still has a long way to go.

May 2006 Long Beach Show Forecast

This should be a very active week for the numismatic industry. The week kicks off with auctions being conducted by both Goldberg and Superior. The Goldberg sale contains an interesting group of high grade Charlotte and Dahlonega gold coinage. The Superior sale is also interesting as it contains some nice fresh early gold (including a splendid 1821 half eagle graded MS62 and pedigreed to the Eliasberg collection) and a run of Proof gold ranging in grade from PR60 to PR65.

Heritage has their usual 5000+ lot sale beginning on Wednesday. There is a considerable amount of gold being offered including some fresh Carson City material, a run of nice Indian Head eagles, a superb set of Commemorative gold plus plenty of other coins in all shapes and sizes.

I do find it interesting that despite the very hot coin market, most of the auctions that are being held these days contains lots and lots and lots of boring, generic United States gold. One really has to wonder, what will it take to get some interesting fresh material out on the market?

The Long Beach show opens on Wednesday. I expect it will be a decent show with some relatively active trading. As usual, most dealers will leave disappointed as they will not be able to buy nearly enough interesting fresh material to satisfy the demands of their customers. A key to the show will be if PCGS and NGC decide to “make” any coins. If the Gods of Grading open the gates, then the show could actually be quite strong. If they are tight, expect much grumbling from dealers.

I have had a very busy past week. I sold two major classic rarities which I will describe in greater detail in the near future. I have also secured a great run of better date Three Dollar gold pieces in circulated grades. If you have a want list for Threes, make sure I know what you need as I expect many (if not most) of these coins to sell at Long Beach.

Someone asked me the other day why the Long Beach shows seem to have lost some of the sparkle they had in the 1990’s. I would have to say the answer is twofold. When California enacted their brutal new tax laws a few years ago, the show seemed to have been dealt a blow from which it has not fully recovered. I also think the whole Long Beach week is too heavily front-loaded. There are just two many auctions that take place before and during the show and this seems to act as a diluting agent. Between Bowers & Merena, Goldberg, Superior and Heritage there are well over 10,000 auction lots being sold in California and this has to take away some of the sizzle.

I am still available for auction representation at the Heritage auction but if you wish to have me bid for you, call me by Wednesday. As I mentioned above, I am looking at the gold lots on Wednesday (and possibly Thursday) and the sale takes place on Friday. The best way to reach me is by email at dwn@ont.com.

"Cornering the Market" on Specific Gold Issues

Does it ever make sense to attempt to “corner the market” on a specific gold coin issue? I have seen a number of collectors and dealers do this over the years. Some of these attempts were spectacular successes while others failed miserably. Anyone who collects coins is probably a little eccentric in the first place. Deciding to focus on one or two specific dates and to hoard these isn’t necessarily more eccentric…just a bit, how should I say this, more “compulsive.”

Collectors decide to hoard a specific date for a number of reasons. A student of varieties like Harry Bass owned multiple examples of certain dates because each represented a specific variety or die state that he was researching. A speculator might find a date that he feels is undervalued, buy up all the pieces he is able and have price levels rise due to continually paying more at auction. An example of this was recently accomplished with 1843 quarter eagles in which a clever dealer accumulated a few dozen of these, made prices rise significantly and then sold into a stronger market. Other collectors just fall in love with a specific date, for whatever reason. I remember helping a collector assemble a hoard of 1888-O eagles in Uncirculated that grew to over 100 pieces before he passed away.

If I were going to hoard a specific issue, I would choose one that does not have an unlimited supply. The gentleman who decided to hoard 1888-O eagles eventually came to realize that he was going to have to buy hundreds of pieces to have an impact on the supply. His decision was made more difficult by the fact the fact that this wasn’t a hugely interesting issue.

I would also look to hoard an issue that was relatively cheap. The decision to hoard 1843 quarter eagles made sense because most of these were available in the $500-$2,500 range.

Most importantly, I would choose an issue that had numismatic significance. Back in my collecting days, I was attracted to 1822 Dimes. I thought this date was much undervalued given its rarity and price structure. It was a key date in a reasonably popular series; another important factor to consider. I eventually owned fifteen or so examples but my relatively small budget meant that most of these were in the Good to Fine grade range.

If I were going to focus on a specific issue today, I might look at something like the 1845-O quarter eagle, a coin with a very low mintage figure, a relatively high level of collector demand and its marketability as the key issue in the short, highly collectible New Orleans quarter eagle series. Or, I might focus on the 1841-O eagle, a date with a very small mintage figure and the numismatic significance of being the first Liberty Head eagle produced at the New Orleans mint.

You can also own a couple of examples of one of your favorite issues without being a hoarder in the classic sense of the word. If I owned a nice 1861-D gold dollar and I had the chance to buy another that was equally nice, I might consider salting it away. This coin could be used as an interesting piece of trade bait at some point in the future.

One final suggestion. If you are hoarding a specific issue (or issues) have an intelligent exit strategy. An investor who put together a very large position of circulated 1893-S dollars recently decided to sell them. The good news was that he ran prices up considerably and that, at least on paper, he made a lot of money. The bad news is that he basically decided to dump them all at once and there are now dozens and dozens of examples on the market. This will probably erode a good portion of his profits.

The Market for New Orleans Gold

How has the market for New Orleans gold changed in the decade and a half since the first edition of my book on the subject was written? I can think of a number of changes including the following six: 1. Very few No Motto half eagles and eagles have changed in terms of comparable rarity, especially in higher grades. The one exception is the eagles and, to a lesser degree the double eagles, that were found in the S.S. Republic treasure.

I would have expected a good number of half eagles and eagles from the 1840’s to have been graded MS60 to MS62 in the past few years. Even with the obvious Gradeflation that has occurred between the early 1990’s and the present, the certified populations of Mint State No Motto New Orleans half eagles and eagles is incredibly low. Clearly, these coins are genuinely rare.

2. All of the post-1883 New Orleans eagles are far less rare in Uncirculated than once believed. However, all of these dates remain very rare in MS64 and above and a number are still unknown in this grade.

Hundreds and hundreds of baggy Uncirculated New Orleans eagles from the 1890’s and early 1900’s have turned up in Europe in the past decade. But because they were shipped overseas and roughly handled, very few of these are likely to grade higher than MS63. Virtually no previously unknown Gem New Orleans eagles from the 1888-1906 era have turned up in the past fifteen years. I find this a bit of surprise and would have expected at least a few to have been discovered.

3. I greatly underestimated the overall rarity of certain very popular issues like the 1839-O quarter eagle, 1854-O Three Dollar and 1909-O half eagle, especially in lower grades.

Man, are these dates common in lower grades. When estimating populations, it is easy to predict rarity in high grade but lower grade pieces are hard to account for. In virtually every major auction there are multiple examples of these dates in the VF-EF range. Clearly, they are much more common then I originally estimated.

4. New Orleans gold from the 1840’s and 1850’s is generally rarer than comparable Charlotte and Dahlonega in terms of high grade rarity and is far rarer in terms of the total number known.

The typical New Orleans half eagle from the 1840’s has around 100-125 pieces known while the typical Charlotte and Dahlonega half eagle from this era has around 175-225 known. The real difference in rarity is in the Uncirculated category. Many New Orleans issues of this era (both quarter eagles and half eagles) have fewer than a dozen known in MS60 and better grades while the numbers for Charlotte and Dahlonega issues tend to be considerably higher.

5. Surprisingly few great collections of New Orleans gold have been assembled and even fewer have been sold in the last fifteen years. Clearly, the Bass, Pittman and Milas collections were superb and contained a number of great coins. But during the past decade and a half there have been at least eight to ten major collection of Charlotte and Dahlonega sold and at least that many (if not more) that focused on early gold. Does this mean that relatively few people have assembled O mint gold sets or do the people assembling them have greater staying power than those people doing C&D mint sets?

6. Who would have ever thought that 1854-O and 1856-O double eagles would have been selling in excess of $250,000 for average quality examples? Fifteen years ago, you could buy these dates for $20,000-30,000 a piece. Today they are ten times as much and, interestingly, almost none have come up for sale in the past two years.

Grading Services

For the most part, the grading services do a decent job. Sure, they blow a few grades every now and then (after all, they’re only human…) and their lack of consistency can be infuriating. If I were the Commissioner of All Things Numismatic, what would be some of the things that I would make the services really improve on? 1. The line on AU55 and AU58 gold coins needs to be tighter. A coin in the higher AU grades needs to have a decent amount of natural mint luster present and not be riddled with marks. If a coin is very lustrous but very bagmarked, it shouldn’t be in an AU58 holder. If a coin has less than a third of its luster remaining, it certainly doesn’t deserve to be in a 58 holder.

The line on MS61 and MS62 coins should be tighter as well. Nearly every southern branch mint gold coin that I see in MS61 and MS62 holders has obvious wear. MS61 and MS62 used to be grades that meant a coin is free of wear. This needs to be the case once again.

2. Both services are maddingly inconsistent on their net grade policy. I have no problem with PCGS taking an AU58 coin that has been cleaned at one time and net grading it as an AU50. But this needs to be indicated on the holder. NGC has been a bit better with this but they tend to be inconsistent with this policy as well.

3. Both services need to reward submitters for keeping their coins original. The only way that people will be discouraged from cleaning or dipping nice original coins is if the services give such pieces high grades on their initial submission. I don’t know how many times I’ve had both services send me a subtle hint that the deeply toned, crusty coins I’ve just submitted could grade higher if they were lighter and more “commercial” in appearance. I’ve had to ruin some really nice coins because they wouldn’t work with this sort of original look.

4. The population reports are a disaster. Clean them up!! I don’t expect them to be perfect but I’d like them to be 75-85% accurate. Encourage submitters to redeem their grading inserts. Hire someone smart to go through submission reports and figure out which populations figures are greatly inflated by resubmissions. I contend that the grading services have been very lazy in this respect and that it would not take much effort for them to make their population figures far more accurate.

5. Stop encouraging submitters to destroy original Proof gold coins in order to get Ultra Cameo or Deep Cameo designations. We’ve gotten to the point where there are almost no original brilliant proof gold coins left. They’ve all been destroyed because the grading services have tacitly told submitters that their coins will be regarded as more valuable if they are bright and shiny and fully show contrast between the fields and the devices. By the time tastes revert back to originality, there will be no pieces left that haven’t been sent to NCS or dipped by submitters themselves.

If I had to address a complaint to each service on an individual basis, I would state the following:

To PCGS: Be more numismatic. With the exception of displaying Registry Sets at Long Beach shows, PCGS has done almost nothing to encourage numismatics. How about some original research? Or increasing the numbers of varieties recognized on holders?

To NGC: Change your holder. Let us be able to see the edges of the coins we own. Give the coins more room in their holders and make the background any color other than bright white which is hard to photo and not always easy on the eyes.

Online Coin Images

More and more I find myself buying and selling gold coins based on the images on my website and on other websites. Is this a good thing? I am a very strong advocate of the adage that there is absolutely no way that you can accurately grade a coin based on an image. But in today’s Internet-driven numismatic market many collectors and dealers have to make important and potentially expensive decisions based on images.

The reason that I hesitate to make certain decisions based on images is that, frankly, most of them are not very good. The large coin companies, who often handle hundreds if not thousands of coins at a time, are not able to take the time on each coin image that is required for them to be accurate.

There are a few things that I like about coin images. For one, they make nice, original coins look better than the typical coins offered for sale. In the past few years, I have become very “image conscious” when I buy coins. If a coin is overly bright or has funky color, it will not image well and will be a hard coin to sell. If a coin is crusty with dark, natural color and nice surfaces it will image well and, hopefully, be easier to sell.

Coin imaging is still unable to accurately capture a coin’s luster—which is best sensed in three dimensions, with the coin being spun back and forth. That’s one major reason why I am always very hesitant to buy a high grade Uncirculated or Proof coin without seeing it in person. Lower grade coins are different. I feel fairly comfortable buying circulated coins (up to AU50 or so) based on images because on these pieces luster is not an essential characteristic in determining grade.

There are other things to keep in mind when looking at coin images. Many people forget that the typical plastic slab has lots of wear and tear and this often makes the surfaces of coins look scuffy and scratched when they aren’t. In my experience, gold coins in PCGS holders photograph better than those in NGC holders. While I can’t offer scientific explanations as to why this is, my guess is that since coins are jammed tightly into white holders, this makes them a much more difficult subject to image than PCGS coins which float more loosely in clear holders.

As you become more familiar with certain rare coin firms, you learn more about their imaging. All of DWN’s images are taken using natural light and no coins are enhanced with Photoshop or other imaging software. But I can think of at least one major retail firm that blatantly uses Photoshop to make their Proof gold coins seem virtually flawless and an auction company who so totally enhances their color images that the coins in person look absolutely nothing like they do in the catalog.

There is still no substitute for buying coins based on seeing them in person but coin images are clearly getting better all the time and are becoming a huge factor in retail and auction sales. It will be interesting to see how this develops over the next few years, as digital cameras get better and better and new technology emerges that will enable websites to contain three dimension reproductions of coins and other flat objects.

Are Three Dollar Gold Pieces Overpriced?

Few areas in the rare gold coin market have seen as much price appreciation in the past two years as Three Dollar gold pieces. I am asked on an almost daily basis “are Three Dollar gold pieces overpriced?” My answer is for the most part, no they are not. Let’s look at the series in a bit of detail and I’ll make a case for them being fairly priced and also point out the issues that I think are now fully priced.

First, let’s look at the bread and butter issues in the series: the common dates in the AU55 to AU58 range. For $1,750-2,500 you can still purchase a coin that is relatively scarce. While I am not especially excited about the common dates of this type in this grade range, I think that slightly better dates such as the 1857, 1859, 1860 and 1868 are good values. These were selling for $1,500 or so a few years ago and given the rise in gold prices in the past few years and the increased popularity of this series, I have absolutely no problem telling people to purchase these slightly better dates at what is just a tiny premium over common date price.

Are there still dates that are undervalued in this series? You bet there are. I think the San Francisco issues, with the exception of the 1856-S, are all very undervalued and attractive, properly graded pieces in EF40 and better are very sensibly priced. Want to know some other underpriced dates? The 1858 is a fantastic value at current levels and all of the Civil War dates in AU are exceedingly cheap relative to common date prices. And I continue to love the very low mintage dates from the 1880’s, most notably the 1881, 1883, 1884 and 1886.

Want to know another area in this series that is extremely underpriced? Proofs. Ironically, Coin World Trends for most dates in MS64 is now higher than for comparable Proofs. I hardly ever see PR63 and PR64 Three Dollar gold pieces and Proofs struck prior to 1885 are nearly impossible to find. If you can locate decent looking pieces in PR63 and PR64 grades at anything near published Trends and CDN Bid prices, I’d say you can laugh all the way to the bank.

What Three Dollar gold pieces are overvalued? There are a number of dates that I am struggling with buying for my inventory at current levels. I have sold some common dates in MS63 recently for close to $10,000 and this seems like a lot of money to me for these. If you have some extra 1854, 1874 or 1878 Three Dollar gold pieces in MS63 and you bought them a few years ago, take your profits.

The 1854-D and 1854-O issues, while both very popular and both numismatically significant as one-year types, have risen substantially in the past two years. Three years ago, I had a group of four 1854-D Three Dollar gold pieces in NGC AU58 and had troubling selling them at $35,000 per coin. Today, each one of these coins would sell for $60,000-70,000. The 1854-O in AU55 and AU58 also seems overvalued, especially considering how many of them are around and how overgraded most of these are.

Would I encourage a new collector to begin a set of Three Dollar gold pieces today? I would, but not with as much enthusiasm as I might have a year or two ago. I still believe that there are good values in this series but the new collector will have to be far more selective than in the recent past when nearly any Three Dollar gold piece he purchased would have been considered undervalued and desirable by me.

Carson City Gold

Why hasn’t Carson City gold performed well during this past five years? I have been asked this question a number of times in the past few months and I think it is worthy of some consideration. In my opinion, the real reason why you haven’t been hearing much about Carson City gold lately is that there simply hasn’t been much for sale. In the past few years, I can recall just a handful of specialized collections being offered for sale. When I go to coin shows, I don’t see much Carson City gold and what I see tends to either be lower grade examples of scarcer dates or middle grade examples of common CC double eagles.

My conclusion is that the reason why Carson City gold coinage currently appears to be in slumber mode is that there just haven’t been many important examples offered since the Bass collection in 1999-2001 and the Lang collection in 2002 were auctioned by ANR.

Now, I don’t personally think that Carson City gold is out-of-favor or difficult to sell. It just seems that, for whatever reason, most of the major pieces that have traded since the Lang sale in July 2002 have been private, non-auction transactions. In the instances that important Carson City gold coins have appeared at auction, they have generally been one or two at a time and have sort of slipped under the radar. This has been a segment that isn’t easily monitored, unlike other areas of the rare date gold market.

I think this is going to change soon. ANR is offering a very important collection of Carson City half eagles and eagles in their pre-ANA auction in Denver this summer. (In the interest of full disclosure, I should note that these coins are owned by a client of mine and that I helped assemble the collection).

This virtually complete date run of Carson City half eagles and eagles is known as the Old West collection and it contains some very major coins. Some highlights are as follows:

Half Eagles:

1870-CC PCGS AU58 (ex Bass) 1872-CC NGC AU58 1874-CC PCGS AU58 1880-CC PCGS MS62 1881-CC NGC MS62 1891-CC PCGS MS65

Eagles:

1870-CC PCGS AU55 1872-CC PCGS AU55 1874-CC PCGS AU58 1876-CC PCGS AU58 1881-CC NGC MS64 (ex Eliasberg) 1882-CC NGC MS62 1884-CC PCGS MS62

This auction should show gold coin market observers exactly how strong rare date Carson City half eagles and eagles are—or aren’t. Many of the coins are among the finest known and a number are pedigreed to major collections and/or were plated in my second book on Carson City gold coinage. It will be very interesting to see the prices that these coins bring.

For more information on the Old West collection of Carson City half eagles and eagles, look at my website in the coming months as I am certain to write a number of features about these coins.