Posted by Jeff Garrett on 7/5/2013
Most traditional collectors choose a series and begin the process of forming a collection. My personal numismatic journey began with collecting Lincoln Cents and the obligatory Whitman Albums. Like millions of other collectors, I was hooked by those devious holes that needed to be filled. I soon graduated to more challenging areas of the market, but my basic collecting habits remained the same. After becoming a rare coin dealer, my personal collecting desires were usually fulfilled by simply handling rarities. I do, however, still collect coins and currency. My personal favorite at the moment is Small Size Kentucky Nationals. I have compiled a list of the towns in Kentucky that issued these notes and I passionately search for any missing from my collection. I’m not sure if I will ever complete the collection, but it will not be for lack of trying.
Collecting a series by date and mintmark is still extremely popular with most coin collectors. I seriously doubt if this will ever change. There is a form of collecting that has become very popular in the last several years. Instead of choosing a series to collect, many collectors or investors buy a single coin that can be considered great. This is sort of like trophy hunting for coin collectors. Coin collectors don’t hang their coins on the wall, but the pride of ownership and thrill of the chase provides the desired rewards. Owning just a few fantastic coins is now quite fashionable. This form of collecting has also become incredibly profitable in recent years. When I wrote the popular book, 100 Greatest United States Coins, I should have bought as many of the coins as possible. Most of the coins in that book have soared in value over the last 10 years. For example, a decade ago a Chain Cent in Gem condition could have been purchased for under $200,000. Today that same coin would bring over $1,000,000. Nearly every coin on the original list of 100 Greatest United States Coins has performed in a similar manner.
One of the ultimate examples of buying a trophy coin was the purchase, over a decade ago, of the 1933 Double Eagle that sold at auction for over $7,000,000. The buyer of the coin was never revealed, but I have been told by several reliable sources that it’s the only rare coin the collector has! He was probably not too thrilled when another 10 coins showed up in the estate of Izzy Swift. The 1933 Double Eagle has a great story and the final chapters of that book have not been written.
Several years ago one of my clients decided to assemble a collection of trophy coins based on buying the “key” dates of every series. His strategy and logic is that as more collectors become interested in rare coins, there will be buying pressure for the limited number of rare dates in each series. Common coins will always be common, but there are definitely a limited number of rare coins in every series. As more people begin to collect Indian Half Eagles, finding a 1929 Half Eagle becomes nearly impossible. The same can be said for almost any area of the rare coin market. This strategy has paid off handsomely in the last decade. Anyone interested in rare coins should do some research to see how incredibly well “key” date rarities have performed in recent years. Even Modern series such as Silver Eagles have seen an increased demand for the rarest dates.
One of the oldest bits of advice in numismatics has been to buy the best you can afford. The theory is that the demand for top quality coins will always exceed that of inferior examples. The demand for trophy coins has caused an incredible explosion in prices for superb examples of almost every series. Many collectors are now less interested in completing a set than in finding an astounding example to add to their collection. When a truly great coin shows up at auction these days it’s “Katie bar the doors”! Recently a fresh, new to the market 1796 Draped Bust Silver Dollar graded MS 65 by NGC was offered at auction. The coin sold for over $1,000,000! This is a coin that can be purchased for a few thousand dollars in circulated condition. Such a price would have been considered insane even a few years ago. The price illustrates the insatiable demand for quality and fresh coins.
Another factor that plays into the demand for many trophy coins are the great stories attached to them. Great stories create demand for rare coins and this will probably not change anytime soon. The 1910-S Double Eagle is quite rare in Gem condition, but the story of that coin pales in comparison to the 1907 High Relief and the intriguing history of its creation. Rarity will always be a factor in rare coins, but the combination of rarity, quality and a great story is what makes a wonderful trophy coin. Whatever your collecting habits are, it’s important to understand what drives demand for rare coins. The market at the moment for great coins is simply astounding. The drop in precious metals prices has had a minimal effect on the prices of great coins. The recent offering of coins from the Newman Collection was a great illustration of the demand for trophy coins. My guess is that when the next group of coins from his collection is offered later this year, price records will once again fall.
Not everyone can afford million dollar coins, but the basic idea of buying the best coins you can afford is still solid advice. The next time you are trying to buy that last “key” date needed for your set, do not buy an inferior example to save money. I have purchased many collections over the years from frugal collectors. Nearly all of them would have done much better if they had bought fewer coins in better condition. Good luck bagging your next trophy!!
Questions about the rare coin market? Send them to firstname.lastname@example.org.