I’ve been helping a collector sell his holdings over the past few months and he recently made an observation that really hit home. How, he wondered, could nice quality genuinely scarce United States gold coins stay so flat in price over the past decade when the price of gold itself has tripled?

Many people are quick to blame the grading services for this problem. On more than one occasion I’ve pointed out that certain issues, like slightly better date Saints, have actually lost value in this great metals market because grading standards have been lax. But I don’t think that’s the real problem.

If I had to point my finger at THE single glaring problem in the coin market, it’s price reporting. It’s ironic that even with the advent of the Internet and the access to umpteen thousand prices realized at auction, the basic premise of price reporting is based on sight unseen coin trading; a premise that reeks of pre-Internet days.

Editors Note: See Doug’s new article on “How To Price Very Rare Coins”
Courtesy of Doug Winter and RareGoldCoins.com

I’ve explained how the Coin Dealer Newsletter works (or doesn’t work) before and don’t want to rehash old information. But I think something that is important to remember about why this system is so antiquated and so in need of a fix is that every time one low end coin trades (via CCE or at auction) there is the very real possibility that all examples of a specific series have their price levels dragged down with it. The whole system is just plain silly.

In the area of rare date gold we have the issue of sporadic price updating. As an example, prices of many scarce and popular New Orleans gold coins have stayed exactly the same as they were five (or even ten) years ago despite continual increases at public auction. I can give you dozens and dozens of examples but here is one that sticks out to me. The 1883-O eagle has a Trends value of $9,000 in EF45. If I’m not mistaken, this is exactly what it’s been for the past seven or eight years. Yet if you look at auction prices for this coin, you can see that an undamaged 1883-O in EF45 hasn’t been available in EF45 since the Knicks were a dominant NBA team (that would be back in the 1990’s for the non-basketball fans reading this blog…).

(One of the things about CAC that I find most intriguing is the possibility that an accurate trading network with useful pricing will emerge. But more on this another time…)

The lack of good pricing information is something that seems especially glaring to me right now. I think it’s contributed more to collectors and investors leaving the hobby than coin doctoring or inconsistent grading.

After all, how do you explain to a collector that the $350,000 he spent on interesting New Orleans eagles in the late 1990’s would have been better spent on Krugerrands and American eagles? It kind of pains me to write that sentence but it’s true. The pricing gurus at the CDN and Coin Values feel that New Orleans eagles are worth essentially the same in 2008 as they were in 1998 even though I know as a buyer that I have to pay far more for these coins today than I did a year or two ago and that the number of people I can sell these coins to is larger than ever.

This decade has seen unprecedented changes in the coin industry. I, for one, would like to see the 2000’s end with a new way of reporting prices that, for the first time since who knows when, was actually accurate!!

Doug Winter
www.raregoldcoins.com
For more information on U.S. gold coins please contact me via email at dwn@ont.com