U.S. Gold Still a Bargain

Posted on 8/1/2005

While the U.S. Gold market has been extremely active for some time now, there are several numismatic market makers who feel the best is yet to come.

While the U.S. Gold market has been extremely active for some time now, there are several numismatic market makers who feel the best is yet to come.

Based on the facts we presented last month it is not a long stretch to accept their outlook. We have seen this market grow and expand over the last 20 years into what has become one of the great collectible markets in the world. Further, if dealers and collectors are astute in their acquisitions the documented results can be astronomical. Not that we would predict that all coins will rise in value over the coming years, but if some of the same parameters that are used in studying the history of stocks are applied to numismatics some very satisfying results can be realized. When you consider the original mintages, possible meltings by the government, natural attrition over time, and even the quality of the original minting process compared to today's methods, you soon realize that numismatic coins of yesteryear cannot satisfy all of the demand that we have seen demonstrated in the last couple of years. Surmising that demand will increase due to collectors becoming more advanced and the increasing base of collectors entering the coin market, it is easy to see that there just are not enough nice collectable coins to go around.

Several of the more inspiring numismatists of our time agree that this is a multi-tiered coin market. Not only are collector coins selling to persons of average means, we have major rarities selling to big-time collectors who are trying to amass the world's greatest collection of…you name it, it is being collected. The 1913 Liberty Head Nickel was recently purchased by Legend Numismatics. Everyone thought it was a lot of money when it was last sold. What is a lot of money to one person may not be a lot to another. When we start to see more companies putting their funds together and forming major partnerships we will probably see more rare coins selling in a manner akin to the art market where rare paintings realize 10 to 20 million dollars and up.

This multi-tiered market is deep. We have several areas of the market that naturally attract collectors because of the beauty of the series, the low mintages, the challenge of matching coins to each other among other parameters selected by the specific collector. Remember, eye appeal is of utmost importance to each and every numismatist. Eye appeal is what generates one of the hottest markets today—Toned Dollars.

Now many people think some of these prices are high, but it only takes two collectors who have the same taste in coins to push values to the upper limits. The Battle Creek Silver Dollar Collection, all graded by NGC, in the recent Superior Galleries Auction is a prime example of coins with eye appeal attracting relentless premiums above the typical FMV prices. There were coins that we have listed at $400 which brought over $8,000 just because they are pretty. Of course, there are obvious degrees of pretty. Most of these Dollars weren't just pretty, they were pretty awesome. Taking this one step further, many of the coins that sold to dealers in the auction have already been sold again to the true collectors of this material. These are the people that are willing to take the time to search for just the right coins that appeal to their sense of taste. For those collectors not in tune with original coins with multi-colored surfaces you are definitely missing out on some truly glorious coinage. Keep in mind that not all of the Battle Creek coins had tremendous toning; only about 250 out of over 1,400 coins could be described with degrees of wonder toning.

We mentioned last month how Three Dollar Gold coins have advanced recently. This is a great series for the traditionalist because it is a fairly long series, 1854 to 1889, but the mintages are so low compared to many other series that you have to be a serious collector to even venture here. There are really only three common dates by mintage, the 1854, 1874, and 1878; more than half of the dates have an original mintage of less than 5,000 coins. Fifteen of these dates have a mintage under 1,500, so the number of collectors for complete sets is limited due to so many natural rarities. There is one unique date, the 1870 S, so this would not count toward a complete set.

The small mintages is one of the reasons that this particular series never took off in the past the way it has done recently. With so few coins available in many dates, it was difficult for dealers to market the series as a whole; the Three Dollar Princess was typically marketed as a type coin rather than as a piece of a potential set. What transpired in the intervening years was that dealers and collectors began to realize just how rare this entire series is and individual coins should be collected for their rarity rather than simply for assembling a set. Because of this revelation we have seen some dazzling results in FMV advances in the last year alone. It also helps to have a few major market makers recommend these coins to their customers.

The common dates have jumped in FMV from $940 to $1,080 in XF; $1,180 to $1,410 in AU50; $1,620 to $2,010 in AU58; $2,250 to $2,880 in MS60; $5,840 to $8,880 in MS63; and $7,250 to $10,910 in MS64. What may be more interesting in the years to come are the rare dates that have not advanced based on the same percentages. And why haven't they moved in the same manner? Because they have not been available in quantity to really test the market for these rarities. What will happen if some of the rare dates come onto the market? It is quite likely that the demand will come from many directions and the prices for this intriguing series will continue to set records.

One of the problems with low mintage coins is the lack of trading information principally because, few if any, coins are actually available to trade. Further, if we established an FMV from an old price realized and there was only one serious buyer at the time, the FMV could be biased to the downside. With no further trading information over an extended period of time, a new trade could actually be multiples of our previous FMV. This is especially so if the demand for a particular issue is widespread and the competition is openly aggressive. This has been the case in general for the Three Dollar Gold Series.

This article is a guest article written by:
NumisMedia

The thoughts and opinions in the piece are those of their author and are not necessarily the thoughts of the Certified Collectibles Group.