Finally...An Appeciation for San Francisco Gold Coinage (?)

After decades and decades in the dumps, it looks like there are small signs of life in the San Francisco gold coin market. But the activity in this market area is sporadic, to say the least, and is being led by exactly the sort of coins that you wouldn't think would be the pacesetters. There are plenty of overgraded, unappealing high priced San Francisco gold coins on the market right now. You haven't been able to give these away for years. You still can't. San Francisco gold coins that are faux-rarities, uninteresting dates or processed with no eye appeal are impossible to sell.

The coins that are suddenly selling have three things in common:

1. They are genuinely rare dates and most are either from the Civil War era or the years right before the war (i.e., 1858 through 1860).

2. They are well-worn but problem-free coins in the VG to VF grade range. These are true collector coins and this little renaissance of interest is obviously collector-based.

3. They are in PCGS holders. There are a few exceptions to this rule but the people buying these coins seem to want PCGS graded coins. This may be because they are forming Registry Sets.

The denominations that seem to have generated the most interest are half eagles and eagles but from time to time a quarter eagle is included as well.

The recent Heritage Central States auction included a few early, rare San Francisco gold coins that nicely illustrate this new trend. Let's take a quick look at each.

The first was Lot 3476, an 1862-S quarter eagle that was graded F15 by PCGS. This is a rare date in all grades with just 8,000 struck. It sold for $1,092.50 against a Trends value of $550 in F12. Why did it sell for double Trends? The reason is obvious: Trends is way too low for a coin as rare as this. I would have figured it was worth around $700-800 but even at a shade under $1,100 I think its great value.

The second example was an 1859-S half eagle, graded VF25 by PCGS and sold as Lot 3633. It brought $2,323 against a Trends of $1,200 in VF20. I figured it was worth around $1,500-1,750 and actually sold it to the consignor recently for a figure in this range. This coin had a number of things going for it. It was in an old green label holder and it was really nice for the grade. It is a rare, seldom seen issue that is very expensive in higher grades (I sold the second finest known late last year, an NGC MS62, for over $25,000). When you do see EF and AU examples they tend to be pretty yucky quality-wise and at around $2,500 this coin was a fantastic bargain.

The third example was a little bit of a surprise to me: an 1866-S No Motto half eagle in PCGS VF35. Offered as Lot 3636, it brought $3,220 against a Trends of $1,600 in VF20 and $4,250 in EF40. Although this is a numismatically significant date as the final No Motto half eagle from this mint, it is much less rare than the 1859-S and I wasn't really wild about the coin from a quality standpoint. Also interesting was the fact that this date is sometime seen in lower grades, unlike the 1862-S quarter eagle and the 1859-S half eale which are extremely arre in grades below EF40.

Now I know that three auction records do not exactly constitute a full-blown trend but this is not a totally isolated series of incidents. I know that when I have an interesting lower grade San Francisco half eagle or eagle that is affordable and seemingly good value, it typically sells quickly and often well in excess of current published values.

I have noticed that Trends (and Greysheet) values for lower grades (Fine and Very Fine) are way out of whack with reality. Often times, these numbers are years old and have not been changed since gold was priced at below $500 per ounce. Think about it: a coin like an 1862-S quarter eagle in Fine at $550? That just seems like absurdly good value. And coins like this are likely to stay undervalued, at least according to price sheets, due to lower collector activity than silver coins from this era. Enough F12 1862-S Dimes trade that it is possible to have an idea what such a coin is worth. But an 1862-S quarter eagle in this grade? You are talking about a coin with a population of just a few pieces and if two people care about such a coin at any given time, prices at auction can run up quickly.

I'd like to thank Jason Carter of Carter Numismatics in Tulsa OK for suggesting this topic and pointing out this market trend to me.

Overdated United States Gold Coins

One of the most interesting varieties of United States gold coinage is the many overdated issues that exist. Some are very rare and others are common; some are well-known and some are very obscure. But all share a common trait: a high “coolness factor” that makes them desirable with collectors. What are overdates and how can the collector of United States gold coins focus on these issues? An “overdated” coin is one on which two dates are present. A famous example is the 1942/1 dime. An overdate occurs when one of more digits from the current year is punched into an older working die. Overdates are often intentional creations and they may exist for a number of reasons.

In the early years of the US Mint, steel to make dies was scarce and funds were scarcer. The Mint operated on a shoestring budget and if any dies were leftover at the end of the year, there was good reason to reuse them. There are many overdates from the 1790’s and early 1800’s and many were probably caused by economic reasons.

Quality control at the Mint during the early years was often lax and some overdates appear to have been produced by accident. These accidents occurred when an engraver inadvertently employed a date punch that was not consistent with the die he was working on. This appears to be the case with some of the overdated coins produced during the 1830’s and 1840’s.

Let’s look at some of the more interesting overdates that occur on Liberty Head gold coins. We’ll save overdated early U.S. gold coins for another time as the list and scope of these is very comprehensive.

Gold Dollars: There are no gold dollars that were overdated. It is interesting to note that there are very few varieties of note in this entire denomination. The branch mints, where one would have expected an overdate or two to have occurred, never produced one in this denomination.

Quarter Eagles: The Philadelphia, Charlotte and Dahlonega issues from 1839 have been called 1839/8 overdates in the past but this is incorrect. The only genuine overdate for the Liberty Head type is the 1862/1. This is a clearly visible overdate that was probably caused by the stress involved with producing gold coinage during the most intense year of the Civil War. It was once believed to be extremely rare but now is only regarded as very scarce. In higher grades, the 1862/1 is very rare. I have personally seen two or three in Uncirculated including a PCGS MS62 that was the best of these.

Three Dollars: You would think that this odd denomination contained an overdate or two but it does not. In fact, there are virtually no significant varieties.

Half Eagles: The pre-1834 issues of this denomination are fertile ground for overdate collectors. The Liberty Head issues are not as interesting when it comes to varieties. There are only two legitimate overdates: the 1881/0 and the 1901/0-S.

The 1881/0 is an overlooked issue that I think is undervalued and quite interesting. There are hundreds known in circulated grades and it is available even in the lower Mint States grades without much effort. It is rare in MS63, very rare in MS64 and may not exist in Gem. A very presentable Uncirculated 1881/0 half eagle can be obtained for less than $2,000.

The 1901/0-S half eagle is probably the most common overdated Liberty Head gold coin of any denomination. A total of 3,648,000 half eagles were coined in San Francisco in 1901 and my guess is that a decent percentage of these were overdated. This variety is common in circulated grades and easily located in grades up to and including MS63. It is scarce in MS64 and rare in MS65 or better. In lower grades it sells for virtually no premium over a common 1901-S and it is a good introduction to the world of overdates coins for the neophyte.

Eagles: The first few “overdate” issues in this series are either controversial or simply wrong. This parade of suspects is led by the 1839/8 Large Letters (Type of 1838). As with the similarly dated quarter eagles, what has been described as an overdate is, in fact, a defect in the die which can be mistaken for an “1839/8.”

For many years, the 1846/5-O was believed to be an overdate but this has been disproven by me and other specialists. Some collectors believe that an 1849/1848 overdate exists but the pieces that I have are not convincing and I don’t think this variety exists. Same goes for the 1857/5; a variety that has been claimed to exist but which I am certain is not a true overdate.

The only legitimate overdate in the entire Liberty Head eagle series is the 1853/2. The variety has received some fanfare over the years but it is still underappreciated; especially given its status as the only true overdate in the series. I estimate that there are around 125-150 known with most in the EF45 to AU50 range. This variety is very rare in properly graded AU55 and above and extremely rare in Uncirculated. I have seen only one Uncirculated example, an MS61 graded by PCGS.

The 1865-S/Inverted 186 has been called an overdate but it is not; it is actually a blundered date caused by mis-entering the first date punch.

Double Eagles: There is only one overdated Liberty Head double eagle: the 1853/2. This is a somewhat controversial issue and it is one that I have seen a few prominent numismatists (including Dave Bowers) state that it is not an overdate but a recut date. I am of the belief that it is an overdate but that some of the pieces that have been designated as “overdates” but PCGS and NGC are later die states that are questionable. The real 1853/2 double eagle has a bold oblong obverse die dot below the foot of the R in LIBERTY. It also shows fairly clearly within the bottom loop of the 3 the straight-lined base of a 2. There are an estimated 200-250 known in all grades and the 1853/2 is quite scarce in the AU range. It is very rare in Uncirculated with probably no more than a half dozen known. I have seen three or four that grade MS61 or slightly better.

Putting together a set of overdated Liberty Head gold coinage would be a fairly easy task. It would consist of only five coins and only one—the 1853/2 double eagle—is expensive in higher grades. The really fun and challenging overdates tend to occur on the pre-1834 issues but as I mentioned above these are often expensive and some are extremely rare.

The 1878-CC Half Eagle

Having just acquired one of the two or three finest known examples of this date (a PCGS AU58 that is illustrated below) I thought it would be interesting to share some information about one of my favorite half eagles from this mint.

The 1878-CC is among the rarest Carson City half eagles, both in terms of overall and high grade rarity. It is not nearly as well known as the 1870-CC and it doesn't have the cult following that the rare and undervalued 1873-CC has. That said, it is still a coin that is very well respected by specialists.

A total of 9,054 were struck. When I wrote the second edition of my book "Gold Coins of the Carson City Mint" back in 2001, I estimated that there were just 60-70 known in all grades. A decade later this estimate seems a bit on the low side and I'd probably revise the total number known up to the area of 75-100.

As of May 2010, PCGS has graded a total of 64 examples in all grades with none in Uncirculated and a total of twenty in About Uncirculated including five each in AU55 and AU58. NGC has a total of 48 in all grades with one in Uncirculated (more on this in a second) and nineteen in AU including five each in AU55 and AU58. My previous estimate of just three to five known in About Uncirculated now seems very low but I believe that the PCGS and NGC populations for AU are significantly inflated by resubmissions. My best guess is that there are around ten or so properly graded AU's known today.

A few years ago, an example graded MS63PL appeared on the NGC population report. I have never seen this coin and am assuming it is a data entry error. If it does actually exist, it is one of the most significant Carson City half eagles in existence and it is a coin that I would really like to view in person.

The finest 1878-CC Carson City half eagles that I have seen are a small number (around three or four) that grade AU58 by today's standards. The all-time auction record for this date is Stack's 5/08: 4235, graded AU58 by PCGS, that brought $63,250.

The 1878-CC half eagle has a very recognizable "look" and it is an issue that can be distinguished from the Philadelphia and San Francisco half eagles dated 1878 with relative ease.

The 1878-CC has a somewhat fuzzy strike unlike the Philadelphia and San Francisco half eagles of this year which are very sharply impressed. This fuzziness is most evident around the borders and the denticles on a number of pieces are not fully formed. A number have significant weakness at 4:00 and 7:00 on the obverse border.

This is a hard issue to find with good luster. One of the things about the PCGS AU58 that is special for this issue is the fact that the luster is frosty and visible. This is clearly not the case on most 1878-CC half eagles which are not lustrous and have been stripped by processing. The coin shown above has some scattered marks in the fields bt these are fewer than usual for the issue.

The PCGS AU58 1878-CC half eagle shown in the photo above will be available for sale in a few weeks along with some other remarkable Condition Census CC half eagles from the same collection. For information on any of these coins please contact me via email at dwn@ont.com.

The Numismatic Double Play

Say the words "double play" and most people think of Jeter to Cano to Texeira. But in the world of gold coins, the concept of the double play has another meaning altogether. Back in the 1980's and the 1990's it was common to see large-sized U.S. gold coins marketed with the "double play" strategy. What this meant was that these coins had two inherent factors that contributed to their price structure: their intrinsic gold value and their numismatic value.

The double play concept became stale over the course of time and marketers moved on to find other way to peddle their product. But I believe that this is an idea with merit and one that should be revisited in today's value-conscious market.

People who buy U.S. gold coins typically fall into two camps: those who are investors and those who are collectors. What if a third category became a factor in the market; an investor-collector hybrid who focused on semi-scarce to scarce issues that sold for relatively small premiums above their basal value(s)?

There are basically two denominations that are perfect for the investor-collector hybrid: the ten dollar gold piece (or "eagle") and the twenty dollar gold piece (or "double eagle"). If you're with me so far, I'm going to suggest that we narrow our focus to two specific issues: the With Motto Liberty Head eagle (produced from 1866 through 1907) and the Type Two Liberty Head double eagle (produced from 1866 through 1876).

Here are some basic facts about these issues. The With Motto Liberty Head eagle weighs 16.718 grams and it contains 90% gold. As I write this article (in mid-April 2010) gold is trading for a touch above $1156 per ounce. The trading levels for eagles are as follows:

MS60: $700 MS62: $740 MS63: $1,210

It doesn't take a numismatic genius to immediately note that MS62 appears to be the best value grade for this type. At just a $40 premium above MS60 coins, you are talking around a 5% increase for what is generally going to be a much nicer coin. So for the sake of convenience, let's stick with the MS62 grade for this denomination.

The "base line" date for Liberty Head with motto eagles is the 1894 as it has the highest PCGS population in Uncirculated and in MS62. There have been 18,116 examples graded by PCGS or which 6,013 are in MS62. These numbers are, of course, swollen by resubmissions but the ratio of around one-third of all 1894's graded being in MS62 seems correct based on my experience.

There are a host of dates that we can compare with the 1894 but, again for the sake of brevity, let's focus on three of them. The first is the 1883. This issue has an original mintage figure of 208,700 (compared to 2,470,735 for the 1894). It isn't a remarkably interesting date but it is extremely rare in higher grades (PCGS has never graded an MS65 and only four have been graded MS64 by this service; in MS62 they have graded 261) and there is a big price jump between MS62 (current Trends is $865) and MS63 (current Trends is $2,500). Given the fact that the 1883 is, in theory, around twenty to thirty times rarer than the base line 1894 in MS62, it seems that its current $100-150 premium in this grade is pretty reasonable.

Let's look at another date, the 1900-S. I have always liked this date and think its a real "sleeper" in higher grades. PCGS has a current population of 31 in MS62 with just 16 better than this including a single coin above MS64. Given this coin's relative scarcity in Uncirculated, you'd figure it would have a pretty decent premium above the 1894, right? In MS62, current Trends is $1,100 (it jumps to a comparatively high $5,650 in MS63) and I have purchased examples in the last year for around $1,000. Now I understand that an MS62 1900-S eagle isn't going to be the Poster Child for U.S. gold coins anytime soon but it seems like awfully good value to me, given that a common, boring old 1894 in MS62 is worth around $750.

How about a date that actually has a degree of collector demand? Let's take a quick look at the 1901-O. It is one of the more available New Orleans eagles in higher grades but it has the appeal of being from a popular southern branch mint. The current PCGS population is 103 in MS62 with 61 better including just a single coin above MS64. I doubt if more than 125-150 properly graded MS62 examples exist yet current Trends is just $865 in MS62 (it jumps to $2,750 in MS63). Given the fact that a 1901-O eagle in MS62 is popular, reasonably scarce in this grade and is probably not a bad looking coin at this grade level, its very small premium above the common 1894 is fairly baffling to me.

What if someone were to promote the 1901-O in MS62? Given the fact that a year's worth of quiet, under-the-radar buying would probably only produce 40-50 coins, it hardly seems worth the effort. That said, it seems like an easy coin to promote up to the $1,250-1,500 level in MS62.

What are some of the MS62 Liberty Head eagles that I would recommend as good double-play issues? Some of the dates I like include the 1879, 1882-S, 1884, 1884-S, 1886, 1890, 1893-O, 1894-O, 1895-O, 1897-O, 1899-O, 1900-S, 1906-O, 1906-S and 1907-S.

The second type of U.S. gold coin that offers double play potential is the Type Two double eagle. But this series is different than the With Motto eagles that we discussed above. Type Two double eagles are more popular with collectors and they tend to be be rare to very rare in Uncirculated grades.

The base line issue for this type is the 1873 Open 3. It has an original mintage figure of over 1,000,000 and a high survival rate with probably more than 10,000 coins known in all grades. PCGS shows a current overall population of 4,027 of which 1,356 have been graded from AU50 to AU58.

The trading levels for AU55 to MS60 1873 Open 3 double eagles are as follows:

AU55: 1400-1500 AU58: 1500-1600 MS60: 1650-1750+

Let's look at two slightly better dates and see if the double play concept makes sense. The first is the 1867. This is a relatively popular issue with collectors that has an original mintage of just over 250,000. PCGS has graded 304 in all grades of which 131 are in the various AU grades and another 24 are in MS60. In grades above MS61 to MS62, the 1867 is extremely scarce, so nice AU's tend to be popular with specialists in the series.

The current Trends levels for the 1867 are $2,000 in AU55, $2,500 in AU58 and $4,000 in MS60. The premium in MS60 is high enough that it is not a good double-play issue. But in AU55, the premium is fairly low over the base line 1873 Open 3. My conclusion is that a nice AU55 to AU58 1867 double eagle in the $2,000-2,250 range is a great value for the double play investor-collector.

The second date is the 1872-S. This is a date that is regarded as semi-common; not quite at the level of the base line of the 1873 Open 3 but certainly nowhere as scarce as such earlier San Francisco issues as the 1866-S, 1867-S, 1869-S or 1870-S.

The mintage figure for the 1872-S is 720,000. The survival rate is quite low as most were melted over the years and I doubt if more than 2,500 pieces exist. PCGS has graded 551 in all grades including 343 in About Uncirculated. To give you an idea of this coin's rarity in higher grades, of the 52 that PCGS has graded in Uncirculated, only four are better than MS61 and none are higher than MS62.

You can buy a nice 1872-S in AU58 for around $2,000-2,250. As I mentioned above the base line for an AU58 Type Two double eagle is in the $1,500-1,600 range.

The Type Two double eagles in AU grades that I feel are good double play issues include the 1867, 1868-S, 1869, 1869-S, 1870-S, 1871, 1871-S, 1872, 1872-S and 1873-S Open 3.

The double play strategy may or may not prove to be fruitful for the hyrbrid investor-collector. But with the premiums for genuinely scarce issues like the ones mentioned above at very low levels (some of the lowest premiums that I can remeber, in fact) I think it is a strategy with minimal downside.

Some Thoughts on PCGS’ New Secure Plus Program

PCGS recently released the details on their new Secure Plus program. Instead of summarizing it here, I’d suggest that your go to their website and play the video link that will explain their interpretation of the new program. I’d like to share with you some of my thoughts and feelings about it. You can essentially split this new program down the middle and look at it as two distinct facets. To me, the “Secure” aspect is a no-brainer. In a nutshell, PCGS has basically harnessed the technology that will enable them to make a record of all the coins that are submitted to them under this new program. They claim it will end coin doctoring and stop gradeflation in its tracks.

As someone who has been pretty public in his disgust with coin doctoring for many years, I’m glad that PCGS is instituting this program. By the same token, it seems sad to me that a) this had to happen and b) that it took as long as it did. In some areas of the market, there are barely any “original” coins left. PCGS’ step is sort of like making a decision to preserve Bison in 1937: great idea but a little late in coming.

I have always partially attributed coin doctoring, to some degree at least, on PCGS and NGC. If these services had rewarded originality from the beginning and had been really, truly consistent this would have eliminated a lot of the doctoring that has occurred for the last twenty+ years. In the area that I specialize in, United States gold produced from 1795 to 1900, “bright and shiny” has always trumped “dark and crusty.” The irony here is that, finally, dark and crusty is becoming in style. After decades of coins being dipped, dunked, doctored and debilitated (catchy, no?) the coins with character that many people want are exceptionally hard to find.

While PCGS is not really publicizing this, I think the security aspect will be very important in their future efforts to fight counterfeit coins and holders coming in from China. I can’t possibly imagine that some clever guy in Shanghai isn’t already coming up with remarkably good quality early type coins or better date dollars. All it takes is a good distribution system for these to flood the market and by PCGS making it harder for these coins to make it through, that has to be a big positive.

One thing I am a little baffled about is what are we to make of the millions and millions of coins already graded by PCGS? Obviously, the nicest coins are going to be placed into the new Secure Plus holders. But what about the 1% or 2% of the coins that are outright mistakes? What about the coins that people, for whatever reason, decide not to resubmit/regrade? This is going to create a number of secondary markets and it will be certain to cause confusion.

The “Plus” aspect of this new PCGS service is more controversial, in my opinion. What the plus grades will do is to take an area that is already subjective and make them even more so. Now this isn’t necessarily a bad thing. PCGS is essentially decimalizing grading (a subject that I wrote about a number of years ago) and this is something that I believe that very good graders can do. But it puts a lot of pressure on PCGS (and NGC’s) graders to be very consistent and very accurate. Will a PCGS grader who is rushing through a cart full of coins to grade be able to figure whether an early type coin is a 63.8 and follow this coin up with a Saint that he has to determine if it’s a 65.8? It can be done but not easily.

The pricing of Plus coins is going to be very interesting. I’ve written extensively on how broken the price reporting mechanism in the coin market is and how badly it needs to be fixed. So, if we can’t accurately get the value for an MS63 Charlotte half eagle, how are we going to get the value for a 63+? And how consistently graded will the Plus coins be? Will one MS63+ Charlotte half eagle be a 63.7 while another is a 63.9? PCGS expects there to be sight-unseen trading for these coins so I’m hoping they will be graded with enough consistency for this to occur.

Getting back to the pricing issue for a second, it will be very interesting to see how the market values Plus coins in split grades where there is a huge difference in values. As an example, a common date Indian Head half eagle in MS64 is worth around $3,500. An MS65 is worth around $15,000. What does that make a 64+ worth? $4,000? $6,000? 9,000? Until there have been a few hundred Indian Head half eagles graded 64+ by PCGS and they’ve traded I’m not sure that will be a good answer.

It’s been sort of lost in the hype that NGC is working on a plan of their own. I am pleased that NGC is adopting the same plus system that PCGS is. Can you imagine how confusing it would be to have two different grading services using two different grading standards?

I’ve seen a lot of changes in the rare coin market in the last few decades and, for the most part, I’ve been an early adapter to those changes that I liked and believed in. I’m taking a bit of a wait and see approach with PCGS’ new system; mainly because I’d like to see a significant number of newly-graded coins. If I like the system, I will become an enthusiastic convert. But from what I can tell so far, these changes are being done with good intentions and they are destined to have a major impact in 2010 and beyond.

Are Auction Prices Wholesale or Retail?

Until a few years ago, the vast majority of coins that sold at auction were purchased by dealers. It was a safe bet to say that the prices realized at auctions were wholesale and collectors could assume that they would typically pay 10-20% more than what coins were selling for at auction. But this has all changed. One of the key elements to Heritage's rousing success in the coin auction business has been to make sales more collector-friendly. Today, a sizable amount of the coins that sell at auction are going directly to collectors. So, are auction prices now representative of the wholesale or retail markets? The answer is not as easy as you might think...

The answer is actually, as you might have, guessed, "answers." Nothing in the coin market is cut and dry anymore and the new auction market and the prices that coins fetch in an auction conducted in 2010 can have a broad range.

The first thing that has to be analyzed is what coin is being sold. If it's something that's extremely collector-friendly (like a rare date Type One Liberty Head double eagle) the price realized is likely to represent a retail level as it is likely to have been sold to a collector. If it's a widget or a low-end coin that sells cheaply we can assume that a bottom-feeder dealer bought it and the price it brought is clearly at the wholesale level.

The next thing that has to be gauged is the quality of the sale itself. One of the most amazing things about the Bass sales, in my opinion, was the fact that virtually all the coins were bought by dealers. If the Bass sales were to be held today (and conducted by a technologically savvy firm like Heritage) I would venture to guess that over 50% of the coins would be sold for retail as opposed to wholesale prices.

Is the coin in an auction a grading play? (In other words, is it an AU58 in an older holder that would upgrade to MS61 to MS62?) In this case it is a virtual certainty that the coin sold to a dealer. But there is an immediate asterisk that must be applied to the sales price. If the coin is worth $5,000 in AU58 and $13,000 in MS62, it is highly possible that at least two ramblin' gamblin' dealers would pay $10,000-11,000 for the coin. In such an instance, the collector needs to be careful not to assume that just because one AU58 coin sold at auction for $10,000-11,000, the next one(s) will as well.

Auction records are most useful when they occur with some degree of frequency (two or three examples per year) and when any anomalies can be discarded.

Let's say, for example, that a certain Charlotte quarter eagle in AU55 has sold at auction five times since 2007. The prices realized have been $3,500, $3,750, $2,650, $8,000 and $4,000. We can pretty much immediately boot the $8,000 auction record as we can assume that this was a severely under-graded coin with a large spread to the next highest grade(s). We can also boot the $2,650 record as this may have been for an extremely low end coin or it may have been in a "bloodbath" auction that, for a host of reasons, saw very low overall prices in specific areas of the market. This leaves us with three prices: $3,500, $3,750 and $4,000. A quick assumption can now be made that this AU55 Charlotte quarter eagle has a value in the range of $3,500 to $4,000. Another way of looking at this is that the wholesale value might be $3,500 while the retail value might be $4,000.

I have a theory that auction firms give collectors just enough information to do damage to themselves. They provide an archive of auction prices which show what coins have sold for and with a little bit of digging, the collector can determine if the coin sold on the floor, over the phone or to an Internet bidder. But unless someone really follows the market carefully, all of this "information" can do little more than serve as an easy way for the neophyte to make major mistakes. I have long said that hiring an auction representative for 5% is far and away the best value in all of numismatics. This fee (which amount to a whopping $250 on a $5,000 coin) is a small price to pay to have a specialist explain to you why a certain auction record is valid or not valid.

So 700+ words later, I'm back to my basic question: are auction prices wholesale or retail? As you can plainly see, there is no quick answer to this and I urge collectors, new or experienced, not to be lulled into a false sense of security based on what seems like unquestionable information.

America's Forgotten Rarities: The 1842 Quarter Eagle

In the second part of this series on coins that I believe are truly rare but not fully appreciated I am turning my focus on an issue that is very interesting to me: the 1842 quarter eagle. 1842 is, in general, an interesting year for quarter eagles. Four mints produced these coins: Philadelphia, New Orleans, Charlotte and Dahlonega. The mintage figures ranged from a low of 2,823 at Philadelphia to a high of 19,800 at New Orleans. With the exception of the 1842-O, all four are quite scarce in any grade and each is very rare in high grades.

Although it is not the most highly valued quarter eagle dated 1842 (that honor goes to the 1842-D), the 1842 is the rarest, both in terms of overall and high grade rarity. There are an estimated 35-45 known in all grades with most in the Very Fine to Extremely Fine range. I believe that there are six to eight in properly graded About Uncirculated and I think this date is unique in Uncirculated.

The most recent PCGS/NGC population figures show a combined total of fifty graded. This includes two in Uncirculated (more on these in a moment...) and eighteen in About Uncirculated. The population figures are, as usual, inflated, especially the AU coins listed by NGC.

This is generally a well made issue which shows good overall detail at the centers and borders. The luster tends to be semi-reflective but most 1842 quarter eagles are either worn to the point that they show no luster or they have been stripped and display little if any original surface. Most of the pieces I have seen have been abraded and at least a few are either damaged from having been scratched or show evidence of rim filing. The natural coloration is a bright yellow gold.

The finest known 1842 quarter eagle is a piece in a Midwestern collection that has been graded MS62 by PCGS. It first came to the market as Superior 9/99: 1863. I bought it for $31,050 and immediately sold it to a collector in Nevada. A few years later, when I handled the sale of his collection, I placed it privately with the Midwestern collection referenced above.

A few quick words about this PCGS MS62 1842 quarter eagle. I think this is one of the truly great Liberty Head quarter eagles of any date. No, its not a Gem. But it is so head and shoulders better than the next finest piece that it is an unbelievably important coin and certainly one of the less well-known but really significant pieces known from this era. Not to mention the fact that it is choice, original and very attractive as well.

There are two nice AU 1842 quarter eagles that come to mind. The first is ex Bass II: 340 where it was graded AU55 by PCGS and it sold for $13,800. I known that this coin subsequently upgraded to AU58 when it was sent to NGC; I am not aware what its current grade is. The other is ex Pittman II: 1736 where it was conservatively graded "XF" by David Akers. It sold for $12,100 and was later graded AU58 by NGC.

I believe that this date is extremely undervalued. The most recent Trends prices are $3,250 in EF40, $5,000 in EF45, $6,250 in AU50 and $10,000 in AU55. As befits a coin of this rarity in high grades, there is no published valuation over AU55.

A quick check of my records shows that I have handled a whopping three 1842 quarter eagles in the last five years with the most recent being a PCGS EF45 that I sold a few months ago to an advanced collector.

I doubt if this date will ever get the attention it deserves. Its a quarter eagle, its a Philadelphia issue and its too rare to ever promote. That said, the 1842 quarter eagle is a coin that I have great respect for.

America's Forgotten Rarities: The 1863 Eagle

Beginning with this article, I'm going to focus, from time to time, on issues that I regard as "forgotten rarities." These are coins that are truly rare but which, for a variety of reasons, do not get the fanfare that they deserve. I plan on featuring a selected gold rarity once every month or so. The first issue that I want to discuss is the 1863 eagle. I'm going to try to avoid "condition rarity" issues in this series. In other words, I'm featuring coins that are rare in the most absolute sense of the word. And I think the 1863 eagle has this concept of rarity absolutely nailed.

There were only 1,218 eagles produced at the Philadelphia mint in 1863. For all denominations other than the double eagle, mintages were extremely low this year, which makes sense given the economic conditions of the Civil War (at the beginning of the year it was still not readily known if the Union forces would prevail). The low mintage of this issue, combined with a generally low survival rate for gold coins of this era, meant that the 1863 eagle was a rarity from the time it was struck.

I regard the 1863 as the third rarest business strike issue in this entire series, trailing only the 1875 and the 1864-S. I believe that there are around 30-35 known in all grades. As of March 2010, the combined total of coins graded at PCGS and NGC was 37 but this figure is clearly inflated by resubmissions; NGC, as an example, shows eight coins alone in AU58.

The surviving examples tend to be in the VF-EF grade range. Eagles of this era were clearly used in commerce and those that were not later melted tend to show numerous abrasions and signs of rough handling. I can't recall having seen more than three to five 1863 eagles that had original color and reasonably clean surfaces. Many have been cleaned or processed and properly graded AU examples are very rare.

Since 2000, there have been only six auction records for 1863 eagles that have not been damaged, harshly cleaned or ungradable by PCGS and NGC. The most recent record of note was Heritage 1/05: 30496, graded AU58 by NGC, that realized $28,750. This coin was not choice for the grade, in my opinion, yet it was still a bargain given its rarity and comparatively high degree of preservation.

The finest known 1863 eagle is a coin that has been graded MS63 by both PCGS and NGC and it appears in both firms population reports as such. The coin was last sold as Bass IV: 683 for $52,900 in 2000. Harry Bass purchased it out of the 8/91 Mid American sale where he paid a then-strong $104,500. It is one of the very few coins in the Bass collection that was sold at a significant loss and, in retrospect, it was one of the single best values in any of the four Bass sales conducted between 1999 and 2000.

There is a second Uncirculated 1863 eagle. It has been graded MS62 by NGC and it was uncovered in the treasure of the S.S Republic.

The valuation of the 1863 eagle is way off the mark, in my opinion. The most recent Trends shows values of $9,000 in EF40, $12,000 in EF45, $17,500 in AU50, $25,000 in AU55 and $32,500 in AU58. Given the paucity of recent trades, it is hard to state with certainty exactly what this issue is worth. But it seems to me that $12,000 for an EF45 example of a coin as rare as this is very good value, especially when compared to other less rare eagles of this era.

One of the ways that I can determine the true rarity of a coin is by how many that I have handled in the last few years. After checking my records, I see that I have not handled an 1863 eagle since 2005 and I've only had a total of two in the last dozen years. Considering the fact that I've handled probably a dozen 1870-CC eagles in the last decade (if not more), this shows me that the 1863 eagle is an incredible rarity.

I'd love your suggestions about which gold coins are "forgotten rarities." If you have any suggestions for future pieces in this series please email them to me at dwn@ont.com.

Value Compression: A New Trend in the Dated Gold Market

In the past few years, I've noticed an interesting trend in relation to the pricing of rare date gold coins. I refer to this as "value compression." Let me explain what I mean. When I mention this term I am referring to a small price premium between grades. The classic value-compressed issues have long been the Iowa and Roanoke commemorative half dollars. According to the most recent CDN Greysheet , the difference in value between an MS60 and MS65 Iowa half dollar is a whopping $12 (!) while a Roanoke shows a value increase of just $70 between MS60 and MS65.

This phenomenon has begun creeping into the United States gold market as well. Areas which appear susceptible to value compression include common date St. Gaudens double eagles, gold dollars, lower grade Carson City double eagles and early gold in the EF45 to AU55 grade range.

Why do values compress in certain series? The most basic explanation has to do with current grading standards and appearance; a secondary reason is based on the actual design and size of a coin.

As an example, an 1851-C gold dollar is a $1,250-1,350 in EF45 in today's market. In AU53 it is worth in the area of $1,500-1,600. Why is there such a small difference for what should be a pretty hefty increase in grade? This is mainly due to the way that these coins are now graded. There is no longer much aesthetic difference between an EF45 and an AU53 gold dollar and the market recognizes this by compressing the price spread between these two grades. In the case of the 1851-C dollar, the value is even more compressed between an AU50 and an AU53 or an AU53 and AU55. Simply put, if a collector can see no discernible difference between two grades, then why pay a premium.

In no series is this compression more evident than with common date St. Gaudens double eagles. If you take a random sample of freshly graded MS62 coins and freshly graded MS64's, there is probably going to be little difference. In fact, the 62's might even be nicer than the 64's. This inconsistency of grade is why an MS62 is currently worth $1,450 and an MS64 is worth just $1,600. Back in the days when there was an appreciable difference between the two grades, there was an appreciable price difference.

I mentioned above that there were other reasons besides current grading conditions that influenced value compression. Two of these are a coin's size and a coin's design. Small coins are hard to see and harder to appreciate differences in quality. It makes sense that gold dollars, as an example, are a series in which values are likely to become more and more compressed as collectors become older and less likely to be able to see a small mark in the obverse field or a tiny reverse dig. Certain coins have designs which makes subtle grading differences very hard to detect. The Iowa and Roanoke half dollars have extremely busy designs which make it hard to detect marks. An example of a gold type with a "complicated" design is an Indian quarter eagle. There are still fairly good-sized price spreads between grades in this series (especially in MS63 to MS64, MS64 to MS65 and MS65 to MS66) but the spreads between lower Mint State coins are small and getting smaller.

I mentioned two other areas that are showing value compression: lower grade Carson City double eagles and early gold. These are interesting case studies for two different reasons.

For an 1875-CC double eagle, the current Trends values for lower grade coins are as follows: VF20 is $1,750, EF40 is $1,850, EF45 is $2,000 and AU50 is $2,250. Think about this: only a $500 spread between a VF20 and an AU50! No matter how sloppy grading gets, there will always be an appreciable difference between the VF20 and the AU50; certainly enough to justify paying an extra $500 for the higher quality coin. I think the value compression is related to two factors. The first is that Trends is behind the market on CC double eagles. The second is that the collector base for an 1875-CC tends to favor an EF or AU coin and shies away from the VF, making for a small demand factor for the low end coin.

Early gold is a bit more interesting to look at. I recently purchased an 1805 half eagle in an old green label PCGS AU50 holder. It was a lovely coin with original color and surfaces and a "lock" AU55 in today's environment. I had to pay $9,250; a strong price but one that I was comfortable. If I broke the coin out of its old holder and it regraded AU55 it would have been worth around $9,500-10,000. Which basically meant that I had around $250-500 upside. My ultimate decision? I left it in the old holder and sold it "as is" for $9,750.

Why are the values of early gold becoming so compressed? I'd have to say its a function of inconsistent grading, especially in the AU grade range. I often see recently graded AU50 or AU53 Capped Bust Right and Capped Bust Left half eagles that appear essentially no different to me than coins in AU55 and AU58 holders. Clearly, other players in this market agree with me and they have adjusted their buy levels up for nice AU coins and down for schlocky ones. Others areas in the early gold market that appear to have the same thing happening are small size Capped Head Left quarter eagles (1829-1833 issues) and Capped Bust right eagles (1799-1803 issues). In the case of the former its a size and design issue; in the case of the latter its clearly a function of grading standards.

My guess is that for the time being you'll see more and more value compression and in some areas that formerly seemed "uncompressable." I already note areas like Charlotte and Dahlonega half eagles where I'll pay more for a really nice crusty EF45 common date than I will for the same issue in scrubbed-up, ugly AU50.