It has been quite awhile, but we are proud to finally release the first Insider’s Edge edition of 2009. We hope that you enjoyed your editions from 2008. We have received significant feedback from our first year’s editions and hope to exceed your expectations with the newsletter this year. We are running into more and more individuals at coin conventions who have read The Insider’s Edge, and we are hearing good reports. We thank you for your kind words and look forward to releasing some interesting reads this year..
This month, in Exposing the Myths, we will discuss the prospects of weathering the current economic recession as it relates to coins. Blue Chip Picks will focus on an underappreciated coin from a popular series that doesn’t hold many undervalue issues. Our Find Me One column still has not turned up any coins through five editions, so our picks must be as tough as we anticipated. The unexpected difficulty to locate this months selection should surprise you. Finally, our feature Interview will be with proment rare coin and precious metal’s investor John Kutasi. A venture capitalist by trade, John has years of experience investing in rare coin and precious business. His take on the rare coin market is both interesting and informative. We think that you’re going to enjoy the read!
The rare coin market is in the midst of its normally strong first quarter. However, 2009 is not your average year economically speaking. Unemployment continues to climb as even the companies considered the most stable, like Microsoft, have faced job cuts. The stock market continues to falter, as the major indices have reached their lowest levels in over five years. At just over 7,200, the Dow Jones Index is trading at just over 50% of its yearly high. The mortgage market continues to spiral downward, as foreclosures increase and home values fall. The large stimulus package passed by the new Obama administration was met with significant resistance, leaving even more uncertainty for investors.
Through all of this, the rare coin market continues to trudge along. The year began with much uncertainty, as dealers, collectors and investors anxiously awaited the Florida United Numismatists (F.U.N.) Convention to gain a better read on the present coin market.
The rare coin market is in the midst of its annual summer breather before the ANA’s World Fair of Money in Baltimore, Maryland beginning in the end of July. Collectors and dealers alike are taking time for vacations, anxiously awaiting the ANA Convention. Although activity in the coin market is generally a bit slower during June and early July, the rare coin market itself remains strong and healthy. In the face of record high energy prices that are impacting the prices of consumable goods, collectors and investors continue to pursue rare coins. The goals of these buyers can vary. There is a contingent of collectors building sets that they have dreamed of since childhood. Others are competing to build certified Registry Sets of their preferred series. Investment-minded buyers view coins as an alternative storehouse of wealth, especially while the U.S. Dollar continues to weaken and other traditional mediums are providing lackluster results. Some investors are amassing diverse portfolios of coins, based upon rarity rather than type or denomination. Most coin buyers would fit a combination of these profiles.
Our weak dollar has prompted another group to take a position in U.S. coins: the foreign investor. The dollar’s favorable exchange rate has both Europeans and Asians buying U.S. goods that they view as inexpensive. Coins are no exception. Numismatic items such as rare Morgan Dollars, low-pop dated gold and even high-end U.S. currency are leaving the country to foreign investors. Many of these buyers, both domestic and foreign, have deep pockets and long-term holding power. Consequently, many numismatic treasures are going off of the market, most of which will not be seen again for decades.
Even in the face of uncertain economic times, the coin market has retained most of its strength. Many U.S. series continue to see significant activity. Copper coinage of all forms remains red hot! Recent auction results for Large and Half Cents show that buyers will ignore all relative pricing information when the right coin surfaces. Lincoln Cents continue to be strong, as collectors anxiously anticipate the centennial of the design next year. Early U.S. type remains especially active. Collectors are learning just how difficult accurately graded, unmolested early coinage can be to find. Morgan Dollars also show strength, with key and semi-key dates disappearing into collections. Pre-1933 gold is catching the allure of buyers, as the run in bullion has generated renewed interest in numismatic issues. Many rare date gold pieces continue to see monthly price increases.
As for precious metals, prices continue to fluctuate up and down depending on the nature of the day’s economic news. As of this edition, Gold spot price is $880.80 per ounce, silver spot at $16.59 per ounce and platinum spot at $2004.50 per ounce. These levels are up slightly from the prices in our last Insider’s Edge. Precious metals are being supported by the continuance of record energy prices, the lack of consumer confidence in the U.S. Dollar and a tentative worldwide economy. Some recent gains in the Dollar against foreign currencies have kept price advances in check. The news that the Federal Reserve has likely made its last interest rate cut, and may even increase rates by year’s end, has also placed downward pressure on precious metals. Summer tends to be a slow time for markets in general, with more active trading occurring during the fall. One personal observation about the precious metal’s market is that there seems to be more buyers of physical metals at present than sellers. We are still selling gold and silver to those who believe the pullbacks in spot prices are temporary. The upcoming month should be interesting.
The next major event for the coin market is the ANA Convention in Baltimore, held from July 29th to August 2nd. Dealers are anticipating a strong show with hopes that there will be fresh numismatic material to purchase. Collectors and investors are preparing their want lists with the same hopes. Fresh, PQ coins will be the order of the day, but they won’t come cheap. One only needs to view the results of the recent Teletrade PCGS Old Green Holder Auction to see the staggering prices realized for this type of material. The ANA Convention often provides an excellent venue for the reappearance of coins that have been off the market for some time. The success of the ANA will likely provide a strong indication for the direction of the rare coin market.
The R word….that dreaded word that has been haunting us on a daily basis. You can’t get away from it. It’s in the papers, on the news, the topic of office discussion and the nemesis of every hard-working American. The posture of our society as a whole has gone from free spending, heavily indebted and over-leveraged to one of fiscal conservatism, debt elimination and restraint. In less than a year, we Americans have done a full 180 degree turnaround. So, how does this new ideology affect the coin market? And more importantly, what does the future hold for the coin market?
Before I go into all of the particulars of what, how and why, let me share some general observations that I have made in the last month. The Florida United Numismatists show, or FUN show as it is more commonly known, takes place at the beginning of January each year. This large coin show generally dictates market direction for the first quarter of the year. The mood going into 2009 FUN was very tentative, to say the least. I believe that dealers were really uncertain of the mindset of the collectors and their willingness to spend money on coins. I am glad to say that at least this aspect of the market proved favorable. The show was exceptionally well attended with tens of thousands of collectors packing the floor for all 4 days. If nothing else, dealers left Florida with one question definitely answered. People still wanted coins. Two subsequent smaller shows in Wilmington, Delaware and Vienna, Virginia also bared this out. They were both well attended, with the latter show being so crowded that walking from one end of the hall to the other felt like New Years Eve at Times Square. Suffice to say, interest has not waned for coins, which is fortunate considering how many non-discretionary items have been omitted from most people’s budgets. But more importantly, are they actually still buying them? My answer to this is a resounding YES with an even bigger BUT….Let me explain.
One of the things I overheard some dealers complaining about at FUN was the number of the people in attendance, but their general reluctance to buy anything. It didn’t take me long to figure out that these were the same dealers who come to show after show with the same coins in inventory. They are the ones that always want just a little too much for just about everything. Unfortunately for them, they are not going to be able to do much business in this current environment. Now for the rest of us, business was transacted and coins DID sell, albeit at lower levels than the FUN show a year ago. The bottom line was basically this: If you came to buy and sell coins at the new levels, than you left FUN with positive results. Let me illustrate this point in the simplest way that I know. Let’s say that I had a coin that had been in inventory for 6 months with an original cost of $500.00. I know of a wholesaler at the show that had a similar piece available for $400.00. A collector comes to my table and offers me $450.00. What should I do? Well, the old school dealer (yes, the same guy who was complaining) would say, “I paid $500.00 for that coin and I can’t sell it for $450.00. That would amount to selling the coin at a $50.00 loss. I certainly can’t afford to do that”. I believe that the more forward-thinking dealer would take a different approach. This dealer would be inclined to take the collector’s $450.00 offer, realizing that he can replace the coin for $400.00. Consequently, where he owned merely a coin before the collector’s transaction, he now potentially could go re-purchase that same coin and have a $50.00 bill left over for his efforts. Where the former dealer looked at the transaction as a $50.00 loss, the second dealer looked at the same deal as a $50.00 profit. I know that this type of thinking rebukes all conventional business wisdom as well as cost accounting principles. After all, inventory should always be sold over cost, shouldn’t it? Or, should it? In the current challenging business environment, I believe that the forward thinking dealer will still be in business a year from now where his old school counterpart may not be. In a bear market, the coin dealer’s challenges are: 1) Stay a half step ahead of the rest of the market. 2) Turn his inventory quickly. The dealer who obsesses with his cost and feels the necessity to get out of each and every coin at a profit will probably die with his inventory. It’s that simple! As the FUN show proved, there is business to be done in this market, but at levels that are significantly softer than those of last year.
Now, how about the future of the coin market? Where is it headed and what’s in store for the hobby in the months ahead? First off, I try never to prognosticate. I do not have a crystal ball and can not, nor will not, attempt to provide a definitive answer to either of those questions. However, with a little bit of market insight and employing some good old common sense, I believe that some reasonable conclusions can be reached.
Let’s first look at the coin market itself. A market is defined as a group of consumers or organizations that are interested in a product and is permitted to acquire the product.i As the early coin shows of 2009 have proven, we certainly have the group of consumers interested in our product, namely collectors desiring coins. There is no reason to believe that this aspect will change anytime soon. Even with factors pointing to prolonged economic challenges, I still like both the enthusiasm of the collectors as well as the fundamentals that coins offer. I also believe that with the uncertainties in the financial markets, many investors remain apprehensive of traditional mediums such as stocks, bonds, mutual funds and commodities, to name a few. Unlike the aforementioned, coins possess what I call the x-factors: They trade in a small sphere, and therefore are less susceptible to large scale manipulations, similar to what we have seen in the petroleum market. Because coins are tangibles, you take physical possession of your investment, allowing you the flexibility to sell whenever opportunity presents itself. Many coins contain precious metals and have additional intrinsic value. They are historical artifacts and offer collector appeal. Mintages and /or survival rates may be small which adds to the rarity appeal. Certainly, one can not ignore a coin’s beauty. I believe that there are many good reasons of why coins could hold up as an investment, not in spite of the current economic conditions, but rather because of them.
To discuss the future of numismatics, we need to first discuss the future. Again without the help of our crystal ball, the best that I can do is to make an educated guess. In his bestseller, The Great Depression Ahead, Harry Dent discusses why we are headed for another depression. He lays out fundamental, historical and cyclical reasons of why a depression is not only likely, but unavoidable. He also stresses the opportunities that will exist in this environment.ii I believe that rare coins may be just such an opportunity. But,
there are caveats. More so than ever, what you buy will be even more important than how much you pay for it. I believe that the right coins will weather the storm, just as they always have in the past. I also believe that the would-be-investor, who buys coins based solely on price, will get his ass handed to him on a silver platter. I know that our regular readers have heard me say on numerous occasions, “You sometimes pay too much for the right coin, but you always pay too much for the wrong coin.” I believe that this concept of buying right is more important than ever. Where certain coins still offer great potential for price appreciation, many generic coins, coins with negative eye appeal, over-graded coins and/or high-grade modern coins will probably go down in value. For example, one of my customers was bidding on a blast-white, gem 1898-S Morgan $ in a recent major auction. When the coin realized almost double his bid, he chose to buy a similarly graded piece at a discounted price. His reasoning was that the first coin with a CDN bid of $2100.00 was not a good buy at $3700.00, but the similar piece with neutral eye appeal for only $1750.00 was a rip. He stopped by my table at FUN asking if I had any interest in his prudent purchase at only $1600.00, as several dealers had passed at his initial asking price of $1700.00. I reluctantly counter-offered him at $1450.00, thinking that if I acted quickly, I might be able to wholesale this piece for a $50.00-$100.00 profit. Fortunately, he passed on my proposition, as I believe that this coin could be worth even less today. Ultimately, he ended up selling the coin two weeks later for $1400.00, or $50.00 less than my offer. His good buy was apparently not so good after all. Ironically, the first piece traded hands two more times at significant profits to each owner. My crystal ball is telling me this; Next year at this time our customer’s 1898-S Morgan $ will probably be worth less yet, while the auction coin should, at a minimum, maintain its value, and could possibly be worth even more.
In conclusion, I believe that the coin market should fare well through the recession. I also believe that price corrections are in store for many coins and particularly the ones that prove less desirable. Selectivity will be the name of the game. As a collector or investor, you will need to educate yourself, not just about coins, but the coin market as a whole. Understanding the market and learning to recognize indicators before the rest of the crowd will prove paramount to your success. As with any venture, the road is traveled much harder alone. It would be wise to pair up with a trusted numismatic professional to provide you with insight and guidance. Good luck with the journey ahead
For those familiar with the PCGS Registry, the name John Kutasi will be instantly recognizable. Starting in 2002 as a virtual unknown in numismatic circles, John took the market by storm and then went on to build some of the finest sets of 20th century gold coins ever assembled. When his coins were auctioned by Heritage at the 2007 F.U.N. Convention, his Saint Gaudens and Type III $20 Liberty sets were both ranked number one in the PCGS Registry. Most amazing, was his collection of $10 Indians, which to this day in memorialized in the PCGS Hall of Fame as one of the all-time greatest sets. Among the highlights of his $10 Indians were a 1910-S PCGS MS-66, a 1911-D PCGS MS-65, a 1913-S PCGS MS-66, a 1920-S PCGS MS-66, and a 1933 $10 PCGS MS-65. His $20 Liberties included an 1881 PCGS MS-61, the prohibitively rare 1882 PCGS MS-60 and an 1886 PCGS AU-55. His $20 Saint highlights included a 1921 PCGS MS-64, a 1927-S PCGS MS-66 and a 1930-S PCGS MS-66.
An accounting graduate from the University of Southern California, John spent a few years as a CPA and then worked in the financial markets before becoming an entrepreneur in the credit and collections field. After 20 years in collections, John sold his company last year. He is currently working in consulting, commodity futures trading and private investing. A precious metals enthusiast with years of experience in both commodities and rare coins, John has provided The Insider’s Edge with some amazing insight through the eyes of an investor. We think that you will enjoy this read!
INSIDER’S EDGE (IE): How did you first get interested in rare coins?
JOHN KUTASI (JK): I initially had a stamp collecting background and had been in coins to a minimal degree in the early 1980s. With gold at just around $300 in 2001 and 2002, I noticed that MS-63 $20 Saints could be purchased at just a fraction of their price in the early 1980s. Therefore, I began purchasing generic $20 Saints as a gold play. As I gained familiarity with coins, I learned about the market makers for gold and how to purchase generic gold at reasonable prices.
After acquiring a book on 20th Century Gold Coins by David Akers, I became interested in rarer dated coins and came to the realization that they were out of vogue at the time. There was just no keen interest in the dated material at that time. Coins were initially just an investment, but eventually became a hobby as I began to purchase numismatic rarities and trade my generic coins for dated coins.
IE: What attracted to you to rare coins as an investment?
JK: I realized that rare coins seemed to be priced without regard to rarity after reading the Akers book and learning just how rare some dates really were. I noticed that coins like San Francisco Minted $5 and $10 Indians were often much rarer than their generic counterparts, but relatively underpriced due to a lack of interest. Because the public seemed uninterested in dated material, I could trade generic gold with dealers for rare dates that were under the radar. I always had a historical appreciation for coins, but most importantly, felt that it provided investment opportunities. I tended to stick with mid-range grades like MS-63 and MS-64 at first because they were much less costly than the higher grade material. I felt that as gold continued to move, coins would also draw considerable attention.
My first significant steps into rare coins were in the 2004 Superior F.U.N. sale and the 2004 Michaels Sale by Stacks. At the Superior auction, I purchased a 1909-O and a 1911-D $5 Indian, each grade graded PCGS MS-64. The auction also had an MS-65 example of the 1909-O, but I felt that the MS-64 coin was nicer. Subsequently, my coin eventually was upgraded to MS-65.
In the Michaels Sale, I purchased five rare $10 Indians, including a 1908 No Motto PCGS MS-67, a 1910-S PCGS MS-66 and a 1920-S PCGS MS-66. I continued buying rare coins and trading out of generics. At this point, my goal became set building. I completed a super $5 Indian and then an incredible $10 Indian set. Then, I began working on the $20 Saint Gaudens and $20 Liberty sets.
In 2006, I began having doubts about the state of the economy, and decided to sell my entire numismatic collection. In the 2007 F.U.N. Sale, I sold every dated coin and moved the proceeds back to generics as my opinion on gold was growing even stronger.
IE: Where do you see the future of the rare coin market?
JK: I believe that truly rare coins will always be in demand. When they surface on the market, there will always be buyers ready to step up and purchase them. I think the mid-tier pieces that are not especially rare and that are promotable may face difficulty over the next few years. They may not be able to sustain current price levels.
At present, I favor generic gold and other bullion based coins. By purchasing these, you purchase liquidity. In this economy, liquidity is important. Because the market on the really expensive numismatic coins thins out at the higher values, one must be cautious especially in this economic environment.
IE: What coins do you presently like and why?
JK: At present, I do like generic gold and bullion based coins. However, in today’s marketplace, the investor must be cautious with the premiums on certain generic gold. Even, if the price of gold climbs, the premiums can contract and the value of the coins may not increase. I believe that the $20 gold premiums have gotten a little extended. At the present time, I tend to prefer smaller denomination generic gold at present. $2.50 and $5 gold graded MS-63 and MS-64 is down over the past year or two and has been left behind by the recent gold rally. MS-64 and MS-65 $10 Indians have also fallen over the past year, while $20 Gold has increased significantly. MS-65 $10 Indians have fallen to about $4,600 from $6,000 and are substantially rarer than $20 Saint Gaudens, with only about 3,000 total MS-65s in existence. People are buying the gold they can find. In this market, you must look for where the values are. I think $20’s are too expensive at present compared to other generic gold and bullion yet everyone should have some.
IE: I know that you have taken positions in everything from rare, highest-graded gold coins to generic $20’s? Specifically concentrating on these two areas, what is it that attracted you to each?
JK: As I bought rare coins, I began to appreciate them for their rarity and beauty. The highest graded coins are attractive from an aesthetic standpoint. At this point, they are more like art. You want to own them for their beauty. I owned the only 1911-S $20 Saint Gaudens graded MS-67 and it was simply beautiful.
My attraction to generic gold is its liquidity. MS-63 generics, for example, have an established market and can be bought and sold with great ease. Generics are a great way to play the gold market in an alternative way. With generic gold, your coins have bold precious metal value and numismatic value. I think that certified $20 gold should be part of any investment portfolio even at the current levels.
IE: Relative to the last question, is there any value in staying the course or does the coin investor need to be more of a chameleon?
JK: This depends on the individual and their objectives. If you are more of a collector who will hold your coins for the long term, then you should stay the course with your area(s) of focus. For the collector you want to have a long term investment strategy.
If you are more of an investor who is going to sell in the short term, then you want to be more of a chameleon. You will have to have an understanding of what is in vogue at the time in order to profit from it in a short period.
IE: Can you give us any insight as to the big premiums currently associated with common-date $20’s? Seems like only a few years ago that you were hard-pressed to sell these for much over spot.
At present, individuals seem to be buying whatever gold is available. The dated gold has been more available than pure bullion gold for some time. Now, the premiums on the $20s are way up. However, you always want to sell premiums when they are rich. At present, I would rather have more ounces of gold. Premiums can vanish very quickly, or they could even increase in the short term. Gold could go up $100 an ounce and the $20s may only move up $40-50 depending on the premium levels. You should sell the premiums at present on the $20 generics.
IE: What words of advice could you offer a new investor about timing and holding power in the current economic environment?
Right now, you need to be in precious metals, whether it is pure bullion, $20 Saints, $20 Libs, etc. In this market, you must be in physical control of your precious metals. I would not advise any sort of pooling or storage program where you do not take physical delivery of the metals or have custodianship. I would recommend a mix of bullion and generics or semi-generic. Buy a few generics in each grade as a hedge.
IE: Presently, how would you diversify YOUR rare coin portfolio?
I would be leaning more toward bullion gold at present because the premiums on $20s have gotten too rich. I am not doing any dated material at present.
IE: I know that you’re a gold bug and follow that commodity closely? Tell us a little about your personal prognosis and timeline for the yellow metal.
This is now gold’s second attempt at $1,000 per ounce. It is now possible to have a pullback to $900. If this happens, I would equate it to some positive euphoria related to the economic bailout and stimulus package. If the public response to the bailout becomes more and more negative and the economy gets worse and the banking sector continues to implode, then gold may move to a $1,200-1,400 range in the VERY short term.
The economic problem is not just here in the US, but worldwide. With this global economic crisis, many in Europe, Asia and the Middle East are turning to precious metals as a safe haven. I actively support the work of Bill Murphy and the Gold Anti-Trust Action Committee (GATA). I am a real believer in their work which can be reviewed at their website at www.gata.org. Public data shows that gold market has been suppressed by central banks acting as a gold cartel. A rising gold price has historically been an alarm. If the central banks can keep the alarm under wraps, things don’t seem so bad. I would advise that people interested in investing in gold market take a look at GATA’s work and draw their own conclusions.
IE: In your opinion, are there presently any areas for the numismatic investor with a low tolerance for risk?
The rare coin and precious metals markets always have a degree of risk. There is always a risk of values falling or premiums evaporating. If you have low tolerance to risk, go with bullion based gold, like American Gold Eagles, Maple Leafs or some other minted gold bullion coin. With these, you have less risk associated with premium contractions and are tied to the gold price.
As much as I like gold, I like silver even more. Silver is a better investment than gold at present. Silver is actually rarer than gold! There is less above ground silver available to investors than gold. That is a fact that can be supported with data if you research it. There is presently about 5 billion ounces of above ground gold versus 500-750 million ounces of above ground silver available to the investor. This is factual and you can confirm this through the Silver Institute or CPM group. Truthfully, the US may not have enough silver to produce Silver Eagles in the near future. A low risk tolerance individual should probably purchase 10 and 100 oz silver bars due to the lower premiums at present. But everyone should own some American silver eagles as well.
Another investment that may be the biggest sleeper of all is Morgan and Peace dollars in MS63 or MS64 grade. If you think about it, you are getting almost an ounce of silver, certified and over 100 years old. How much downside could there be at $40-$50 for the Morgans and $30-$40 for the Peace dollars? The grading alone is $10 per coin.
IE: Any closing comments or advice that you would like to share?
Anyone with an interest in investing should do their homework. Understand your own tolerance for risk. Bullion and bullion related coins should be in everyone’s portfolio. Precious metal investing is just now becoming main-stream. Everyone tends to talk about cash being king in these tough times. Do you feel more like a king with Federal Reserve Notes or with gold?
IE: Thank you for your time and insight.
2009 Winners and Losers
By Robbie Jenkins
There are a lot of forces impacting the rare coin market that will continue throughout 2009 and beyond. The heavy job losses and declines in other asset areas are causes for concern. However, the strong collector base for coins continues to drive the market forward. Precious metals and physical assets in general may prove to be an excellent alternative to struggling paper assets.
Even in the present economic climate, we believe that there are some coins positioned to perform very well in 2009. Other coins, in our opinion, are ripe for losses and should probably be avoided.
So, here they are (in no particular order); our 10 numismatic winners and 10 losers for the upcoming year.
10 Winners
1893-97 O Morgan Dollars Graded MS60-MS62 - This middle 90’s run of New Orleans Morgans were all released into circulation leaving very few mint state examples for the next generations of collectors. Unlike their more popular CC counterparts, no hoards of any of these dates have ever surfaced. Undervalued is not a term that one normally associates with Morgan Dollars, but these 5 dates in uncirculated grades really do fit that description to a tee.
Key-Date 3 Cent Nickel-business strikes – There probably aren’t enough of these underappreciated coins to really matter. But, if you get lucky enough to acquire a middle 1880’s-dated, NON-proof, 3 Cent Nickel that is priced anywhere close to CDN, buy it! These issues are all, at the very least, scarce, and most are legitimately RARE.
1909-S Indian Cents – All one has to do is compare the populations of this key-date with the more heralded, but far less rare, 1909-S VDB Lincoln Cent. Are Indian Cents any less popular than their Lincoln counterparts? Give me a break! Don’t even give this one a thought; it’s a no-brainer!
1911-D $5 Indians – Did that say $5.00 Indian? Here we are thinking that the $2.50 Indian from this date is the real key. But, the truth lies in the numbers. The 1911-D $5.00 is about 15 times as rare as the $2.50 counterpart, and for whatever whacky reason is priced at far less money in XF to MS-60 grades. Does this make any sense whatsoever?
Semi-Key and Key Date Barber Dimes – Again, you may need to retrieve your population report to affirm this choice. But, the proof is there. Even the most common Barber Dimes in uncirculated grades are not all that common. Get to some of the sleeper O and S mint dates from the late 90’s and early 1900’s, and they are downright RARE. If you have a spare $3000 to $5000 laying around to buy a rare coin, I doubt that your money could be better spent than on one of these low-pop little Barbers. These are just waiting to explode, and could be the poster child of the next bull market.
First Spouse Gold Coins – We don’t need a lot of justification for this choice. At the time of this publication, these First Spouse, (albeit second tier) U.S. Gold Coins were trading at a lower premium than a South African Krugerrand!
Mint State Seated Material – Seated material is nearly impossible to collect by date and mintmark. Consequently, many rare coins in these series fly under the radar. Try the middle 1880’s halves if you want to start a target list. Many dates are very low mintage with even fewer survivors. If you get lucky enough to locate one, quite often it can be bought for a song. At current levels, these coins seem, dare I say it, recession-proof!
1938-S Uncirculated Nickel Rolls – Why does the 1938-S Jefferson roll bid at only 60% the price of it’s Philadelphia mate? The S mint is far more difficult to locate and got saved in much smaller quantities. This is a low-budget play, but a play nonetheless.
Pre-1839 US Type Coinage-Mint State Specimens Priced Under $5,000 – I know this is really vague. What exactly are we referring to? Ignoring the popular Bust Halves for a minute and the overpriced Bust Dollars for another, you could look almost anywhere else. From small silver type coins to early copper, just about anything pre-1839 in uncirculated grades is underpriced. The price of admission is higher in this area, but so is the potential for some handsome returns.
1892-1954 U.S. Commemorative Coins – How low can they go? This is an area which has been absolutely hammered, and we believe, has seen its bottom. Yes, at these current low prices, it seems that it’s time to start buying Commems again!
10 Losers
1909 VDB Cents & 1909 Indian Cents – Over promoted and overly available, these should both be avoided like the plague. By the end of the year, these coins could quite possibly be worth only fifty cents on the dollar.
Bust Dollars Graded XF/AU – These were pushed up like there was no end in sight, and currently there is a glut in the marketplace. Some AU Bust Dollars are trading as high as 50% of their mint state counterparts, although they are 25 times as common.
Registry-Quality Modern Coins – This almost seems like an oxymoron. Coins made RARE exclusively by their PCGS and NGC populations are not the type of coins that I want to own.
2009 Ultra High Relief Saints – The hype on these is almost scary. So too will be the number of coins that quite possibly will be on the aftermarket a year from now!
1921 Peace Dollars – Here is a first year type coin that has escalated in value for one reason and one reason only; it’s a first year type coin. Get the picture? Circulated examples were about $40.00 only a few years ago, and they likely could be again.
1911-D $2.5 Indians – As long as marketers were pushing $2.50 Indian sets, it seemed that there was no end in sight for the 11-D. As the promotions on these sets have waned, so has the interest for this over-valued key. Don’t be putting this one back for the immediate future, as it’s $5.00 mate is really the one to be looking at.
1997 Jackie Robinson $5 Gold Uncirculated – This is the key to the modern commemorative set, but the question is, who cares? The answer, unfortunately, is almost no one. At $4000.00, these could fall further before the dust settles.
Common Franklin Halves in Uncommon Grades – Franklin Halves are incredibly popular. And it’s that popularity that has allowed the low-pop, high grade pieces to escalate in value. Keep in mind that a 1953-S, PCGS graded MS-66 Full Bell Lines sold twice in the same year, and the second time for almost $30,000.00 less than the first time. Beware of similar results for some of the other so-called rarities.
1887/6-O Morgan Dollars Graded MS-64 – Over the years, more and more of these high-grade overdates have come out of the woodwork. By PCGS and NGC initially designating this variety, a rarity was created. But as savvy collectors sent more and more of these in for certification, the rarity factor has since faltered. Unfortunately, that’s not the case with the price. Complicating matters, many collectors do not feel the necessity to include this variety in their Morgan set.
Post 1820 Bust Halves Graded XF/AU – This is a tough one, as it is such a popular series with collectors. But, we have watched XF and AU common date Bust Halves go up and up and up. At some point, we all need to say, Enough! Watch some of these prices relax as checkbooks get tighter and collectors search for real value.
As many of our readers are already aware, this is my favorite column. This is where I get to challenge you to locate an undervalued coin. So far, not a single person has come forward with one of my picks, so I must be doing an adequate job.
This month I’m really going to step up the rarity. No, it’s not an 1804 Dollar or an 1894-S Barber Dime. How about something rarer than either one of those two comparatively common coins? I’m talking about a coin so rare that it lacked from most of the great collections! Surely a rarity of this magnitude has to be world-famous, even legendary in status-Right? Think again! My coin this month is the not-so-famous 1846 Liberty Seated Dime in mint state condition.
Let’s briefly look at the 1846 Liberty Seated Dime in general. With an original mintage of only 31,300 pieces, it is apparent at first glance that this coin is probably scarce. In fact in circulated grades, the piece is not just scarce, but rare. PCGS has graded just 50 pieces in all grades with NGC grading only 32 pieces. The vast majority of these are low grade, circulated specimens ranging from Good-Fine. In XF and above, this coin is prohibitively rare, and in mint state, it’s basically nonexistent! In fact only a single mint state coin has been graded at each service with the highest being a MS-63 at PCGS. The more-heralded 1844 is at least twice as common, although the price guides seem to value it higher. In 5 years of auction history, there have been a total of only eight 1846 Dimes to cross the podium. Of that small number, the highest graded piece was a PCGS AU-58 which sold at Stack’s in November, 2008.
Forget about all of the wholesale pricing indexes. In my opinion, they are absolutely useless in evaluating a coin of this rarity. For argument’s sake, I’ll use the Guide Book of United States Coins (the Redbook) by R.S. Yeoman which is a true retail price guide. According to the Redbook, the 1846 Dime is worth $5500.00 in MS-60 and $16,000.00 in MS-63. My belief is that even if a mint state coin were to become available, it could not be bought for even five times these alleged retail values. For comparison purposes, the aforementioned AU coin at Stack’s realized $28,750.00!
In the past, this column has exposed some rare and unappreciated coins. But, maybe none of those is quite as rare as this month’s pick. With so little published information about Liberty Seated Dimes, this date has failed to get the attention of all but the most ardent collectors. This is one rare coin that has really flown under the radar.
If you think I’m overhyping the rarity of an uncirculated 1846 Liberty Seated Dime, then go ahead and Find Me One! I would gladly pay multiples of any current published value for a problem-free specimen, no matter what the grade. Unfortunately, at forty eight years of age, I don’t believe that I’m young enough to have this challenge answered any time soon!
By: Robbie Jenkins
Morgan Dollars are arguably the most widely collected coin in U.S. numismatics. With the attention that collectors, investors and dealers give to Morgan Dollars, finding a sleeper date can be a difficult task.
From an investment standpoint, I believe that Morgan Dollars are a fairly safe play due to their consistently strong collector base. However, this statement does not apply to the series as a whole. There are some dates that I believe are presently fully priced or even overvalued. On the other hand, other dates appear to still be good values. One such example would be the 1879-S Reverse of 78 in GEM MS-65 condition.
To understand why this coin is an excellent value at is current levels, let us review the history of the date. In general, an 1879-S Morgan Dollar is common, with a mintage of 9,110,000. As the only non-gold coin struck at San Francisco, 1879-S Dollars were carefully made. The date is among the most well-struck and lustrous in the entire series. However, 1879-S Dollars were struck with two reverses: The Type II Reverse (the flat breast or Reverse of 78) and the Type III Reverse (the round breast or Reverse of 79). The majority of the 9 million plus aforementioned coins were struck with the newer Reverse of 79, making the Reverse of 78 the scarcer variety. Because this variety was not even recognized until the 1960s, the few bags containing these were not treated with the care that they deserved. Consequently, the 1879-S, Reverse of 78 is very tough to locate in gem condition. Most survivors are lightly circulated coins or heavily bagmarked mint state coins. Although 3000-4000 pieces of this variety were found in the Redfield Hoard, these survivors were also plagued by the typical heavy bagmarks.
The 1879-S Reverse of 78 was first recognized as especially tough in Gem Uncirculated condition by Wayne Miller in his quintessential work The Morgan and Peace Dollar Textbook. Miller observed that most uncirculated coins have too much chatter to warrant a MS-65 grade. The present population reports from PCGS and NGC support this fact. Between the two services, only 67 examples have been graded MS-65, including PL and DMPL coins. The 1879-S Reverse of 78 currently has a Coin Dealer Newsletter Greysheet bid price of $5,600. To get an idea of its value-population correlation, review the following comparison chart to other better date Morgan Dollars in MS-65 condition.
Date |
MS-65 PCGS/NGC Population |
Current |
1879-S Rev of 78 |
67 |
$5,600 |
1879-CC |
120 |
$25,300 |
1879-O |
382 |
$3,400 |
1890-CC |
298 |
$4,700 |
1891-CC |
560 |
$4,010 |
1891-O |
156 |
$8,500 |
1892 |
287 |
$4,010 |
1892-CC |
421 |
$7,850 |
1892-O |
218 |
$6,000 |
1893 |
246 |
$6,800 |
1894-S |
156 |
$5,950 |
1895-S |
36 |
$23,000 |
1903-S |
155 |
$9,700 |
1904-S |
134 |
$8,950 |
The 1879-S Reverse of 78 compares extremely favorably to other dates of Gem Uncirculated Morgan Dollars when comparing the Greysheet (CDN) values to the present PCGS/NGC populations. Of this group, only the 1895-S Morgan has a lower population. With a bit more than half the population of the 1879-S R78, the 1895-S is over four times as expensive. One can make similar comparisons with each of the dates listed in the previous table. A few coins on the list may be less expensive than the 1879-S R-78. However, these coins also have populations of four to eight times as many pieces graded. The comparison of the population to price indicates that the 1879-S Reverse of 78 appears under-valued, especially compared to other dates of Gem Uncirculated Morgan Dollars.
To better evaluate the 1879-S Reverse of 78 Morgan Dollar, let’s also compare this date in MS-65 condition to other well-known and widely collected Morgan Dollar varieties. The following table provides the population pricing data for this comparison.
Date |
MS-65 PCGS/NGC Population |
Current |
1879-S Rev of 78 |
67 |
$5,600 |
1878 7 TF Rev of 79 |
408 |
$2,130 |
1878 7/8 TF |
272 |
$1,960 |
1880-CC Rev of 78 |
611 |
$2,450 |
1887/6 |
190 |
$2,925 |
1900 O/CC |
782 |
$1,920 |
Please note, I intentionally omitted the 1882-O/S and the 1887/6-O in MS-65 due to their extreme rarity and lack of availability.
When evaluating the data, one will find that the 1879-S Reverse of 78 Morgan once again compares favorably to these other varieties in MS-65 condition. Although it is priced at 1.9 to 2.9 times the other coins, it is between 2.8 to 11 times as rare. The closest two varieties in rarity would be the 1878 7/8 TF and the 1887/6. Our selection is slightly over four times are scarce as the 1878 7/8TF, but under 3 times the price. Similarly, the 1879-S R-78 is nearly three times as scarce as the 1887/6, but less than twice as expensive. Once again, the 1879-S R-78 Morgan emerges from the pack as the best value.
Morgan Dollars are a mainstream numismatic series that are widely traded and highly prized by both collectors and investors. I believe that most of the semi and key-date coins in the series are solid pieces to hold for the long term. This is due to their consistent and widespread demand, even if they are not the rarest of all U.S. coins. However, my goal was to find the underrated date within this popular series.
The pricing and population data clearly shows that the 1879-S Reverse of 78 in MS-65 condition is just such a sleeper. Additionally, I do not believe that the number of GEM coins is likely to increase significantly over time. Even if a quantity of uncirculated 1879-S R-78 Morgan Dollars surface (which is probably unlikely), they will probably be heavily bag-marked and of average quality. These factors all lead me to select the 1879-S Reverse of 78 Morgan Dollar in MS-65 condition as this edition’s Blue Chip Pick.
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