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All Posts Tagged With: "Price Compression"

Value Compression in the Rare Date Gold Coin Market

By Doug Winter –

The recent Coin World “Coin Values” (or Trends as we long-time dealers call it) features a number of price reductions in the various Liberty Head gold series. This has caused some interesting pricing anomalies that have major ramifications for collectors of rare date gold coins.

dw_cd_250The grade range that appears to be severely affected by the Trends revisions is AU50 to AU58. This makes sense as this is the grade range that, in my opinion, has been most severely compromised by the grading services over the years. I think this especially true for the AU55 and AU58 grades; a range that includes many coins that are marginal quality at best.

A number of factors caused these values to be reduced by the Trends editor(s). One is, of course, auction prices. As I have stated a number of times in the past, one of the biggest problems with coin pricing is the fact that one bad apple can literally spoil the whole bunch. Let me give you an example. Let’s say that Trends in AU58 for a specific Charlotte quarter eagle was $9,000 in AU58. Then let’s say that a really, really low end example in an AU58 holder sells at auction for $4,000. Does this mean that the price of this issue should suddenly be cut in half?

I would argue that it shouldn’t. But I would also argue that a compression of values for rare date gold is inevitable.

Value compression is not without precedent. Two of the most famous examples that I can think of are the Iowa half dollar (worth $85 in XF and $100 in MS65) and the Roanoke half dollar (worth $160 in XF and $180 in MS64). The reason why values become compressed for a specific coin is that the market believes that a premium is unmerited. In the case of the Roanoke half dollar, the reason is obvious: because of the cluttered design, an AU58 Roanoke looks essentially no different from an MS64. For better or worse, this is what has happened with certain branch mint gold coins due to erratic grading standards.