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Coin Rarities & Related Topics: Southern California Auctions and Market Realities

News and Analysis regarding scarce coins, coin markets, and the coin collecting community #4

A Weekly Column by Greg Reynolds

I. Today’s Theme

While both the Goldbergs and Heritage auctions contained a significant number of appealing coins that attracted collectors, both firms had much more exciting offerings in their respective Southern California auctions in the Springs of 2007, 2008 and 2009. Moreover, as John Albanese has emphasized, much of the demand in current coin markets is for Eagles ($10 coins) and Double Eagles ($20 gold coins).

Albanese is the founder of the CAC, and was the sole founder of the NGC. He finds that, this year, there has been “less demand for silver coins dating after 1837.” From my (this writer’s) perspective, demand for rare silver coins has fallen since the January 2010 FUN Convention, though will probably rise again soon.

There will be more exciting offerings of rare silver coins, in Boston in August, than there have been from February to June. Exciting offerings may spark collectors. Plus, relative prices for Eagles and Double Eagles will not increase, forever. Collectors will tend to gravitate towards other areas.

For decades, Jim McGuigan has been a specialist in U.S. coins dating from 1793 to the late 1830s. Jim finds that “things really slowed down after Sept. 2008.” This year, McGuigan says, there has “not been a lot of good pre-1840 stuff coming up at auction; when a good coin does come up, it usually does pretty well. 1793 half cents and large cents are as strong as ever. 1794 to 1796 [dated] coins are still pretty good” in terms of demand, McGuigan observes. The market for early coins that are not very rare is weak. “Randall Hoard large cents,” for example, “are easy to buy,” Jim points out. These are high grade, often appealing uncirculated, large cents, dating mostly from 1818 to 1820.

Demand is not great for Liberty Seated coins and Barber coins, I conclude. Matt Kleinsteuber, of NFCcoins, asserts that “this [Spring] was not a good time to auction” a collection of “gem Buffalo Nickels.” Matt twice put forth a similar point to me before the Heritage Long Beach auction.

Trading volume in common gold coins continues to be large. High End gold rarities, which are not necessarily expensive, are extremely difficult to find. (Please refer to my article on the Widening Gap for a definition of ‘high end.’)

Below, I discuss an 1854-O Double Eagle that sold at the Long Beach (CA) Expo. I devote considerable space to Dan Holmes’ Middle Dates as numerous collectors have expressed interest in reading about this event. Even collectors who do not collect large cents like to read about a comprehensive and famous collection that was built over many years by a dedicated coin enthusiast.

I talk about coins in the Goldbergs and Heritage Southern California auctions that I find to be newsworthy. Sometimes, coins are mentioned as examples to illustrate larger points. It is never possible for me to discuss all the very interesting or otherwise newsworthy coins in a major auction.

As before, I emphasize that, just because I discuss expensive coins, I am not communicating negative points about coins that are inexpensive. I honestly believe that learning about coins that a collector cannot afford enables him or her to better understand all the coins that are acquired or just viewed. Art enthusiasts typically learn about paintings and sculptures that they cannot afford to purchase. As usual, I recommend coins that have natural toning and are relatively problem-free for their respective grades. I would rather own a Barber Quarter in Very Fine grade with pleasant, gradually formed natural toning, than a markedly dipped, bright white one that has been certified as grading “MS-66”!

II. 1854-O Double Eagle Sells

On Thursday, June 3, Bob Green of Park Avenue Numismatics sold the 1854-O Double Eagle that he recently bought at the CSNS Convention. It is NGC graded AU-55. Reportedly, the price is well above a half million dollars. Please see my first weekly column for mention of Green’s acquisition of this coin and please click here to read my article about an 1854-O that was auctioned in 2007, in which I discuss the extreme rarity of this issue.

This 1854-O, Green says, “was sold to a client as an upgrade to his complete set.” Green has “handled two other 1854-O deals with him over the past decade. Moreover, his set is fast becoming one of the finest complete $20 gold sets known.” If it were registered, “it would compete with the best sets out there,” Bob declares.

III. Holmes’ Middle Date Cents

Large cents continue to be an area of the market that is very active. More than any other recent auction, collectors have been talking about Dan Holmes’ collection of Middle Dates (1816 to 1839). Two weeks ago, I discussed the rarities that were offered in this event, which was conducted by the Goldbergs on Sunday, May 30, at the Beverly Hills Crowne Plaza hotel. (A click here will ‘bring up’ my second weekly column, and here for my preview of Holmes’ Early Dates last year. As always, clickable links appear in blue, throughout the text.)

Even though Holmes’ Middle Dates are not in the same league as Naftzger’s Middle Dates, Holmes assembled one of the best Middle Date sets to be auctioned in a long time. After all, it is not expected that anyone will approach Naftzger’s achievements in this area in the near future, if ever. (I invite readers to consider of my series on Naftzger’s Middle Dates, click to see part 1, part 2, part 3, etc.)

The 1821 issue is not a rare large cent in absolute terms. It is moderately scarce, however, and maybe very rare in grades above AU-50. As far as I know, before the Naftzger Middle Date sale in Feb. 2009, the auction record for a Middle Date business strike was $58,650. This former record was set in Sept. 2008 when Superior auctioned an 1821 that is PCGS certified MS-63 ‘Red & Brown’.

The Holmes 1821 of the first variety is PCGS graded AU-58. I will not address die varieties here. Die varieties of Middle Dates (1816-39) are really of interest to only a small, though dedicated, number of specialists and they communicate often among themselves.

Most collectors of Middle Date large cents obtain one representative of each date, with readily apparent overdates counting as separate dates. This 1821 was formerly in the epic collection of Jules Reiver, who built an incredible collection of die varieties of copper and silver coins dating before 1840. Heritage auctioned the Reiver collection in Jan. 2006, at which time this coin realized $6,325. On May 30, 2010, it brought $5520.

The highest graded 1821 in the Holmes collection is PCGS certified MS-63 with a designation that it is ‘Brown’ and thus does not exhibit a significant amount of original red color. McCawley & Grellman, the cataloguers, grade it as ‘MS-60+,’ which means MS-61 or MS-62, probably the latter in this case.

This 1821 was formerly in the famous Wes Rasmussen collection, which Heritage auctioned in Jan. 2005. It then realized $11,500. On May 30, 2010, it garnered $24,150, which is a very strong price, more so than many of the other prices realized of the Holmes Middle Dates. As I have not actually seen this coin, I will not draw a firm conclusion regarding this auction result. In Jan. 2005, coin markets were strong, and it brought more than twice as much now.

As I have said before, only three issues in the Middle Date series, among those that are logically collected as distinct dates (not just varieties), are each rare or almost so, the 1823 ‘Normal Date,’ the 1823/2 overdate, and the 1839/6 overdate.

The Holmes 1823 Normal Date is M&G graded VF-35 and is minimally abraded for a Very Fine condition large cent. It realized $9775, which is fair.

The Holmes 1823/2 is PCGS graded AU-58 and M&G graded AU-50. It went for $8337.50, which seem reasonable. Even if this coin is not overwhelming, I figured that a PCGS graded AU-58 1823/2 would be worth at least a little more.

The 1839/6 issue is a clear overdate. No magnifying glass is needed to see the underlying numeral. It is certainly rare. I am somewhat impressed that Dan Holmes had three, relatively high grade representatives. Naftzger did, too.

The first Holmes 1839/6 is PCGS graded AU-53 and M&G graded EF-45. Perhaps “microscopic roughness” was a factor in the M&G determination. Also, M&G remark that “it may have been lightly cleaned and expertly retoned long ago.” Its $16,675 price is less than the estimate and not overly impressive by any measure. Without having seen this coin, I will not comment further. It did bring considerably more than the $8050 that the NGC certified AU-58 Rasmussen 1839/6 realized more than five years ago.

During the same week in Jan. 2005 when the Rasmussen collection was auctioned, Heritage also sold a PCGS graded EF-45 1839/6 for $14,950. According to M&G, the Rasmussen coin became the second Holmes 1839/6. Evidently, the PCGS upgraded it from EF-45 to AU-55, which is quite a jump. It is M&G graded EF-40. Even so, Greg Hannigan, a leading dealer in large cents, very much likes “the second Holmes 1839/6 a lot more than the first one.” Hannigan focuses on the die break and other characteristics. This second Holmes 1839/6 brought a respectable $20,125, about 35% more than it realized in 2005.

Surprisingly, the third Holmes 1839/6 realized more than the first two, $22,425. It is graded EF-45 by the PCGS and VF-35 by M&G. I have some idea as to how this happened. The collector who bought it is known in the PCGS Registry as ‘G H Rays’ and has granted permission to be referred to by that name here. His ‘Big Bear Middle Dates’ is third on the list of “All-Time Finest” Middle Date sets, and second among the “current finest.”

GHRays did not attend the auction and he instructed his agent to bid on the third Holmes 1839/6 and not the preceding two. It did not occur to him that the third Holmes 1839/6 would bring more than either of the first two. He was baffled. Nonetheless, he is delighted to be the owner of a relatively high grade 1839/6.

The Holmes Middle Date cent that I really wish I had a chance to examine is the 1834 that is PCGS certified Proof-64 with a designation that it exhibits ‘Red and Brown’ color. The images suggest that it is mostly original Mint red. M&G grade it as Proof-64 and note that “80%” of its surfaces are original, “mellowed Mint red”! This cent is generally believed to be of a Proof-only die variety, with a large 8 in 1834 plus relatively large stars and letters. It was earlier owned by Floyd Starr, who formed one of the all-time best collections of large cents. Starr was one of the most famous collectors of the 20th century. Why did this 1834 bring only $48,300?

There are many other coins in the Holmes Middle Date collection that are of interest to specialists in large cents. My purpose here is to cover items that are newsworthy to the coin collecting community at large. I hope that most coin enthusiasts like to read about famous, true rarities that were significant components of widely recognized collections.

Also, the Goldbergs auctioned an 1804 large cent, which was not in the Dan Holmes collection. It realized $143,750, a stunning amount for a PCGS graded AU-55 1804 cent. The Dan Holmes 1804, PCGS graded MS-63, sold for a record $661,250 in Sept. 2009. In grades above VF-30, 1804 large cents may be rarer than most collectors realize. Walter Husak’s 1804 is (or was) PCGS graded EF-45. (Click here for an article on Husak’s collection or as follows for an article on the famous Husak 1793 Liberty Cap cent.)

IV. Brutus and Others in the Goldbergs Sale

Unfortunately, there is not space here for a thorough treatment of the Goldbergs auction of world coins. Besides, I did not attend this sale. Moreover, many of the rarer, choicer and more interesting world coins in this auction event were earlier in the Millennia collection, which the Goldbergs auctioned on May 26, 2008. (All are welcome to read my six part series on the Millennia collection, part 1, part 2, part 3, etc.)

A Millennia Collection pedigreed Roman gold coin depicting Brutus realized $603,750 in June 2010. “Probably the finest of only eight recorded specimens,” the cataloguer declares. It is NGC graded as ‘Choice AU.’ It dates from 42 BC, though, of course, this date is not on the coin. It does not specify a year. It weighs 8.07 grams, about 0.285 ounce.

This result is almost as much as the price that it realized, two years earlier, in the auction of the Millennia collection. It is important to consider that that the Millennia sale occurred at about the peak in markets in world coins, and, for additional reasons, many of the prices realized in that auction were amazingly high, sometimes more than twice the amounts that knowledgeable experts expected. It is incredible that this coin just sold for 91% of the $661,250 price that it realized in the Millennia collection, as the 2008 result was itself startling. Then again, I admit that I am not an expert in ancient coins. I know more about British coins.

Almost every Spring, for quite a few years, the Goldbergs have been offering exemplary selections of British gold coins, dating anywhere from the 1300s to the 1800s, especially the 1600s. The Lion Spur Ryal (15 Shilling) issue certainly has a cool look. This short-lived type dates from the third coinage of King James I. This coin was minted circa 1620. It is lot #3081 in this auction, and it is different from the corresponding piece in the Millennia collection. It sold for $94,875, an exceptionally high price for this type.

A 1688 Five Guineas gold coin has a good deal of historical significance. King James II ruled for only a few years. He did not share his older brother’s (Charles II’s) belief in religious tolerance. Courageous leaders of the two major political parties forced James II to end his reign. They saved England from years of religious and political strife plus perhaps from another terrible civil war.

I clearly remember this Five Guineas gold coin when it was offered as part of the Millennia collection. It is NGC certified MS-64 Prooflike, and it certainly is Prooflike, incredibly so. It has full, deep mirrors and dynamic surfaces. Furthermore, it is sharply struck on a choice planchet. It is about very attractive overall. I really like the coin. Most U.S. coin collectors would be astonished by it. While it has quite a few hairlines, it is just incredible for a coin struck in 1688!

This 1688 James II gold coin went for $43,700 in the Millennia sale. It brought much more than twice as much in June 2010, $106,375!

One of the U.S. gold coins in the Goldbergs sale that drew my attention is a PCGS graded MS-62 ‘Small Date’ 1842-Charlotte Half Eagle ($5 gold coin). I was hoping that it was the same one that Heritage offered in their Jan. 2009 Platinum Night event, as that one impressed me a great deal. Upon closer inspection of the catalogue images, it became clear that it is not. Moreover, it is likely that the 1842-C ‘Small Date’ that Heritage offered, in Jan. 2009, has since upgraded to a PCGS grade of MS-63. Assuming that it was not doctored or otherwise adversely affected before it was re-submitted, the upgrade is justifiable, in my view. The now PCGS graded MS-63 ‘Small Date’ 1842-C is, or was, an excellent coin. As for this one, I am not sure. It did realize a strong price of $92,000 in this auction.

V. The Heritage Long Beach Auction

As usual, Heritage conducted the official coin auction of the Spring Long Beach Coin, Stamp & Collectible Expo. Of course, I cannot discuss all the newsworthy coins included.

In terms of condition rarities, one of the healthiest and most significant prices in the Heritage auction is $46,000 for a 1908 Indian Head Quarter Eagle ($2½ gold coin). It is PCGS graded MS-67, one of only four so graded for the entire design type!

A 1900 Morgan Dollar brought $32,200. It is NGC certified Proof-68*, with a sticker of approval from the CAC. From Jan. 2005 to the present, with or without a Cameo designation, NGC graded Proof-68 1900 Morgans have realized amounts between $28,175 and $32,200 more than once. I recommend against taking the Cameo designations too serious or for paying a substantial premium solely for a Cameo designation. Cameo characteristics are often ambiguous and Proof coins with little or no cameo contrast may sometimes be much more attractive than parallel coins with Cameo features.

I realize, of course, that it is best to view coins before writing about them. Unfortunately, it is not always feasible for me to do so. As this 1900 Morgan has both a NGC star for ‘eye appeal’ and a CAC sticker, there is a good chance that I would find it to be an appealing Proof-68 Morgan. In the current market environment, this $32,200 price is strong, as is the $92,000 that a NGC graded PF-68 1895 Morgan realized in the Goldbergs auction.

Consider also an 1866 Liberty Seated dollar that is NGC certified Proof-67*, and has a CAC sticker. Heritage sold it for $69,000. This is a very strong price in the current market. Coins of the same date, type and NGC certified PF-67* Cameo realized $27,600 in March 2005 and $34,500 in Sept. 2007. A few NGC certified PF-67 1868 dollars, sometimes with Cameo and/or Star designations, were auctioned for between $23,000 and $34,500 during the period from 2003 to 2007. An NGC certified PF-67* 1869 dollar sold for $43,700 in a Feb. 2008 Goldbergs auction, when coin markets were red hot. I am referring to other dates, not just 1866s, because Proof ‘With Motto’ Liberty Seated Dollars are usually collected as type coins. Even those who collect Proof Liberty Seated Dollars ‘by date’ will not typically pay a premium for any specific date; all the dates in this ‘With Motto’ series of Proofs are worth, more or less, the same.

While it does not make sense to draw a conclusion from a few coins, I note that 19th century Proof silver dollars seemed to fare well in these two auctions. The Buffalo Nickels in this Heritage auction received the most attention.

Several of the prized Buffalo Nickels in the ‘BrendaJohn’ collection did not sell. It is my impression that Heritage promoted this collection in an effective manner. Its failure to be a blockbuster event was partly due to the fact that the market for gem quality Buffalo Nickels has dropped considerably since it peaked in the Spring or Summer of 2008, and has fallen since January 2010, as have markets for many gem quality silver coins. Moreover, in 2009 and in 2010, collectors and their dealer-agents have been looking more closely at coins and are not quite as accepting of all the grades assigned by the PCGS or the NGC.

Of course, the PCGS and the NGC do a good job overall. A major point here is that the percentage of active collectors who wish for prospective purchases to be scrutinized has been rising. Some of the novices who joined coin markets, during the especially electrifying period, of early 2005 to mid-2008, have departed, and perhaps many of them never really attempted to learn much about coins. (Please see my article on The Widening Gap for a discussion of the values of ‘high end’ coins relative to ‘low end’ coins.)

I have heard extremely positive remarks about the 1926-S nickel from the ‘BrendaJohn’ collection. I wrote about this exact same 1926-S nickel in April 2008, after B&M then auctioned it for a record shattering amount of $322,000. Just recently, after the Heritage Long Beach auction was over, this 1926-S was available for $287,500 on the Heritage website. It is NGC certified MS-66 with a star for eye appeal. I admit that I have never seen it.

In 2008, this 1926-S nickel was fresh in the sense that it had not appeared at auction for more than seven years, if ever before. Now, it is widely known that it was auctioned a little over two years ago. As I have pointed out on many occasions, fresh coins tend to realize higher prices at auction than do equivalent coins that have been ‘on the market’ during the prior seven years. It is true that this 1926-S was not totally fresh in April 2008, as it sold as part of a collection that was transacted as a unit, via a somewhat secret sealed-bid sale in January 2008. Even so, it was substantially fresh in April 2008, as only a small number of dealers and almost zero collectors had seen it in a very long time. (Please read my April 2008 article.)

The BrendaJohn 1926-S is the only 1926-S nickel that is NGC certified MS-66 with a star for eye appeal. In April 2008, there was one 1926-S nickel that was NGC graded MS-66 without a star. Dave Schweitz, an expert in Buffalo Nickels, then stated that the Colorado-BrendaJohn 1926-S is of “much higher quality than the other 1926-S that is NGC certified MS-66.” Indeed, Dave then asserted that there is a tremendous difference between the two. Since April 2008, a third 1926-S nickel has been graded MS-66 by the NGC, though it did not receive a star for eye appeal.

Also in 2008, Charles Browne spoke highly of this same NGC certified MS-66* 1926-S nickel. He expressed doubts, though, that the PCGS would ever grade it as MS-66. Browne was not aware that it was PCGS graded MS-65 circa 1990. Browne is now a PCGS grader and thus cannot publicly comment on PCGS grading practices. I am here referring to his remarks in April 2008, at which time he was not affiliated with the PCGS.

I then quoted Browne as boldly stating that “it is a magnificent coin, about as nice as a ’26-S comes.” Browne emphasized that this 1926-S nickel has natural toning, which is important as there are many artificially toned Buffalo Nickels in the marketplace.

My guess is that the consignor of the ‘BrendaJohn’ collection placed an unrealistic reserve on this 1926-S nickel. I would have expected it to realize from $175,000 to $210,000 in June 2010. The $322,000 result was a bit startling in April 2008, when markets were dramatically stronger for Buffalo Nickels.

Before April 2008, the auction record for a 1926-S was set when a PCGS graded MS-65 nickel realized $132,250 in a Nov. 2006 event conducted by B&M. That 1926-S was from the “ADM collection.” In July 2006, the Anne Kate 1926-S, also PCGS graded MS-65, brought $116,500. In July 2005, the MS-65 1926-S from the Leon Kontos PCGS Registry Set garnered $120,750. So, I wonder if the BrendaJohn 1926-S, even though it is NGC certified MS-66*, is really worth more than $200,000?

The ‘BrendaJohn’ collection also contained a 1944-D cent that was struck, in error, on a steel planchet of the type that was employed in 1943. It is NGC graded AU-55 and sold for $60,375. Steel cents of 1944 are always popular, as are copper cents of 1943.

The early gold coins in the Heritage auction brought respectable prices, especially the Eagles ($10 coins). The 1796 Eagle is definitely rare, and may be very rare, which I define as fewer than 250 known in all grades. An NGC graded AU-53 1796 went for $57,500, which is exactly the same price for which Heritage auctioned a PCGS graded AU-53 1796 Eagle in Jan. 2009.

As early U.S. coins vary so much in terms of aesthetics and their respective degree of originality, it is misleading to compare prices without discussing precise characteristics of the respective coins. Jim McGuigan did not voice very positive remarks about this 1796. As I review prices realized for 1796 Eagles over the past few years, I conclude that prices fell by a third from the middle of 2008 to early 2009, and, later in 2009, dropped a little more. More recently, prices have been rising, though are still a distance from the levels that prevailed in 2007 and during much of 2008. As John Albanese pointed out in an earlier column of mine, Eagles and Double Eagles have been strongly demanded since January 2010.

Next week, I will discuss the upcoming B&M auction and maybe return to my ongoing analysis of the PCGS lawsuit. Soon, it will be time to talk about the Summer FUN Convention in Orlando and the Summer ANA Convention in Boston.

©2010 Greg Reynolds

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