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Rare Coin Markets in August 2009, Part 2

By Greg Reynolds

This is the second part of my August market report (Read Part One Here) regarding scarce or rare U.S. coins, with a focus on bourse activity at ANA Convention in Los Angeles in early August, along with references to pre-ANA and ANA auctions. This part mostly includes analytical comments from experts relating to copper, nickel and silver coins, along with some passages relating to very rare gold coins. Analytical remarks of mine are found herein as well. I suggest reading Part 1 first. Next, please see my companion article on the growing price gap between high end and low end coins.

Numismatic landscapeIn addition to a relative increase in demand for high end coins on the bourse floor at the ANA Convention, there was intense trading in many areas, partly because there was so little fresh material available. Most market participants, who properly recognize the current levels, are cautiously optimistic about the near future. There is a good chance that underlying market levels will hold steady or increase slightly over the next few months. Keep in mind that I am talking about pre-1934 scarce or rare coins, or condition rarities, not generics or bullion items.

The market for generics is driven by speculators, and mass marketing operations, and has little to do with coin collecting. Generics are very common, often hundreds of thousands or millions are known of specific coin issues, and collectors only buy a small percentage of them.

Since numerous market participants in 2009 are gradually adjusting, or refusing to adjust, to the lower levels that have prevailed for months, it would be easy for some to get a false impression that coin trading is very slow and demand is falling. Volume is considerable, and, on average, market prices were holding steady or increasingly slightly. Most of the market declines occurred in the last quarter of 2008 and the spring of 2009. Many of the declines were not then recorded in price guides, which are becoming relatively less useful for scarce or rare coins.

John Feigenbaum has “seen Morgans drop quite a bit lately. Buffaloes are soft as is Proof type.” Steve Contursi agrees that the market for “Proof silver type is soft.”

All type coins are not acquired by collectors assembling type sets. In this context, 19th century type coins are the least scarce dates of their respective types, or are coins that do not sell for a significant premium over the least scarce dates. Many Liberty Seated coins, Barber coins, pre-1914 nickels, trimes, and bust silver coins are type coins, though such ‘type coins’ are often acquired by buyers who are collecting ‘by date.’ Usually, type coins are the least expensive coins of each respective type. The term ‘type’ also refers to series that are usually collected ‘by type’ rather than ‘by date.’ Liberty Seated series are usually collected ‘by type,’ while Morgan dollars, Buffalo Nickels and Mercury Dimes are more apt to be collected ‘by date.’

Matt Kleinsteuber is lead trader and grader for NFC coins. He believes “that all bust and seated coins in uncirculated and circulated grades are down over the last year. [He] can still sell almost all circ seated and bust fast, just at prices from 10% to 30% less,” and these “have a lot of activity at the new levels.” Matt goes on to reveal that “MS-64 and above bust halves are weak and hard to sell. Finest known Liberty Seated coins are way off, in some cases as much as 50% less” than they were priced twelve months ago. Liberty Seated ‘type coins,’ and “slightly better dates,” that grade from “MS-61 to MS-64 are doing okay, as prices are not down much,” Kleinsteuber concludes.

Wayne Herndon finds that business strike Barber coins “have been slow for the past year, both uncirculated and circulated coins.” Rich Uhrich points out that 1901-S quarters, which are the keys to sets of Barber Quarters, “have gone down 15% to 20% over the past year.”

Contursi believes that demand for gem uncirculated Barbers has fallen since January 2009, when “Dale Friend’s Barber halves brought especially strong prices at auction.” I agree.

Barber dimes, quarters and halves that grade MS-64 or higher now constitute one of the coldest categories in coin markets. Is this a good reason to start collecting them?

It is interesting that Rich Uhrich draws attention to severe weakness in particular categories of silver type coins. “For bust silver [1794-1830s] and Liberty Seated series [1837-1891], non-rare Very Fine [grade] coins are probably down 20% to 50% since August 2008.” Uhrich declares that the “price guides do not indicate how much common date coins have dropped in value.” In contrast, Rich says that “many rare dates in these series that are priced under $5000 have not gone down in value over the last year; some are even up a bit.” As examples, he mentions 1867 and 1886 quarters, and 1852-O halves. Uhrich also finds, however, that “the number of buyers of rare date silver coins that cost more than $5000 has declined over the past year, and prices have gone down 10% to 20%.”

Proof Liberty Seated and Barber coins are faring somewhat well. Garrett has a customer who is seriously collecting Proof Liberty Seated coins, and Garrett was “able to find a few of those” at the ANA Convention. Wayne Herndon “sold out of [his] Cameo Proof Seated and Barber material,” which were “all gem grades” (65 and higher). Wayne states that prices for these “were a little lower than six to twelve months ago, but not by much.” He “would estimate a 5%” drop in prices for gem quality Liberty Seated and Barber coins.

Pre-1858 Proof Liberty Seated coins did amazingly well in the Heritage auction, and Stack’s sold a few for strong prices. These, though, are typically much rarer than post-1865 Proofs, and really merit a separate discussion. They are not indicators of a large part of coin markets.

“Before the ANA show,” reports Andy Lustig, it was pretty clear that most market sectors are weak. Rare date gold, [classic] gold commemoratives, silver type, better date Morgan and Peace dollars, and certified colonials all seemed especially weak.” I agree with Andy. These are all areas that have faltered since the winter, and have dropped significantly in value since August 2008. Uhrich and Contursi also point to weakness in silver type coins.

“Over the past six months,” Schweitz concludes, “prices have fallen for gem quality small cents [Indians & Lincolns] and Buffalo nickels, and the market has not found stable levels” for these. In my view, such levels have also not been found for Morgan dollars. Kris Oyster reports, however, that, on the ANA bourse floor, “trading was brisk for mid range to high end, better-date Morgans.”

Matt Kleinsteuber asserts that “Buffalo nickels have taken it on the chin in the grades of 65 and above,” with “exceptions.” Matt exclaims that Buffalo nickels that are clearly the highest certified by the PCGS or the NGC, not just tied for the highest certified, for their respective dates, are “still bringing crazy prices.” Kleinsteuber finds “that $10,000 Buffalo nickels are down 20%, that $30,000 one are down 30%, and six figure nickels are down 40% or more, over the last twelve months.”

Though down 10% to 30% over the last twelve months, very rare gold coins were strongly demanded and seemed to be selling well at their new levels, especially in the pre-ANA and ANA auctions.

A PCGS graded AU-58 1804 Quarter Eagle ($2½ gold coin), with thirteen stars on the back, realized $322,000 in Heritage’s auction. I was expecting it to sell for around $200,000. Market prices have dropped since the Ed Price coin of the same variety brought the same $322,000 price a year earlier, and many of the results in the Ed Price sale were considered outrageously high at the time. In the same Heritage pre-ANA 2009 auction, Steve Contursi bought an 1841 Quarter Eagle. It is NGC certified Proof-58, for $132,250, a healthy price in the current market, but significantly less than it would have brought had it been auctioned in Jan. 2008 or even Jan. 2009. Also, an 1873-CC $10 gold coin, which is NGC graded AU-55, sold for $63,250, which is a very strong price, even considering that it is one of the highest certified.

In the B&M auction, an 1808 Quarter Eagle brought $161,000. It is PCGS graded MS-61, a high grade for this very rare one-year type coin. Markets for early gold coins skyrocketed for years and then dropped considerably over the last twelve months. This coin is early, very rare, and an extremely important type coin. It brought a healthy price, while less than it would have brought during the first half of 2008, the $161,000 price is a lot more than I expected.

After the close of the ANA Convention, Lustig concludes that, “given the obvious weakness in the market, [he] was very pleasantly surprised to see truly great and/or interesting coins selling very easily”! Andy was “also surprised at how easily less interesting coins sold if they were properly discounted.”

Assuming that the 2009 ANA Convention was necessarily to be held in the Western United States, I found that the attendance was consistent with current market conditions. I do not believe that attendance would have been greater in Seattle or Denver. Anaheim, which is also in Los Angeles County, might have been a better choice because Anaheim is geared for tourism. Moreover, this convention suffered a little because people had a false impression, worsened by ridiculous rumors among coin enthusiasts, that the area around the LA Convention center is dangerous. I investigated the area; it is not dangerous. Rich Uhrich feels that “it is much like” the area around the “Baltimore Convention center.”

I found it to be more comfortable at night than the vicinity of the Baltimore Convention center. Almost immediately West and Southwest of the Los Angeles Convention center is a friendly, middle income, residential area.

Rumors are often untrue. Someone who was buying or selling low end coins, perhaps unknowingly, is likely to draw a false negative conclusion about coin markets or about bourse activity at the ANA Convention. Some of the dealers who complained to me about the ANA Convention were selling low end coins, had not adjusted their asking prices to reflect current market realities, and/or were specialists in areas that are very weak in 2009. Others are not accepting the reality that fewer collectors can afford to travel and buy in 2009. The incredibly intense demand, from 2004 to mid 2008, for almost all scarce U.S. coins could not continuously last forever.

Markets for excellent rare U.S. coins, in all grades, have only fallen 5% to 15%, for the most part. Excellent U.S. coins are truly rare, or in some cases very scarce, are in the mid range to high end for their respective certified grades, have mostly (or preferably entirely) original surfaces and/or natural toning, and have some significance in the traditions of coin collecting in the United States. The substantial demand and active trading in excellent U.S. coins, as I have defined them, made the bourse activity at the ANA Convention successful. The price distinctions between high end and low end coins are analyzed in my companion article, The Coin Market Phenomenon of 2009 is the Widening Gap between the Prices of High End and Low End Certified Coins.

©2009 Greg Reynolds

About the Author

Greg Reynolds is a numismatic writer, researcher and analyst. Greg has examined almost all of the greatest U.S. coins and most of the finest type coins and patterns, He has extensively researched the pedigrees of important numismatic properties, and he has written about and analyzed numerous auctions, private sales and collections.

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