Mixed Market Produces Bargains

Posted on 4/1/2007

An oversupply of U.S. Gold in the marketplace has created tremendous buying opportunities for collectors seeking coins near dealer prices.

Over the past month, we have observed myriad opportunities that were not available a year ago. The main reason for this transition is that there is an overabundance of U.S. Gold in the marketplace. Supplies are far in excess of current demand and that brings up an important note: premiums on common date U.S. Gold are the tightest we can ever remember. That presents tremendous buying opportunities for the collector who is always in search of coins near dealer prices. This is as close as you are going to get without starting your own business.

A year ago at this time, gold bullion was in the $580 range; today it is at $663. With an increase like that, you would think that common U.S. Gold would be higher by the same percentage. However, such is not the case. Twenty Dollar Liberty in MS62 is up only $40 in MS62 and the MS64 is actually down by nearly $300. The MS64 Saint Gaudens was $1,030 last year and it is at the same FMV right now. In MS65 last year, the FMV was $1,640, while today it is $1,480. The $10 Gold Liberty may be one of the best buys in the market today if you feel prices are destined to rise again in the near future. The premium for nice AU coins is barely above the melt level on a wholesale basis. In MS61 last year, the FMV was $430 and today it is only a dollar higher at $431. In MS62 through MS66, the FMV is markedly lower today. One of the chief reasons there is so much supply today might be a direct result of the modern issue bullion coins that the U.S. Mint is producing. A vast amount of money has been spent on modern issues with little left for truly rare coins. Most dealers feel this is bound to change in the not-too-distant future.

One of the areas we have seen grow over the last several months is Seated Dollars. All grades are in demand and the FMV has risen across the chart. Further, there are not that many available and only occasionally do you see them offered at reasonable levels. In many cases, our FMV is only a starting point for the buyer and seller to get together. After the five or six most common dates, the rest of the issues are not easily acquired. When you start comparing the census reports for NGC and PCGS, you quickly realize how few of these coins are actually certified in the market. When you allow for coins that are submitted repeatedly, the total numbers dwindle even further. In early January of this year common Seated Dollars No Motto were $1,050 in MS60 and today the FMV is $1,780; in MS63, it was $4,190 compared to the current $4,380. The With Motto variety in MS60 was $990 and today it is $1,690; in MS63, the FMV was $2,910, but has jumped to $4,410. It shows how quickly an issue can move when dealers and collectors figure out how difficult a series can be.

A deeper look at the Seated Dollars certified census of most dates reveals that there are no more than 500 specimens certified by NGC and PCGS together in all grades. That is for the most common Seated Dollars; the better dates are usually in the range of 200 pieces total. Major auctions will typically include a variety of better dates in high grade. In the past year, auction results have afforded us the opportunity to update many FMV prices where we did not have listings previously. For a few issues, just the fact that they appeared in an auction allowed the market to see how the FMV has increased from the last time we had viable trading information. The 1851 in MS63 had an FMV of $46,000 last year at this time, while today we list it as $66,880; in MS64, it increased from $63,970 to $85,630. Looking at the census of this specific date you find that a total of nine coins have been certified by NGC and PCGS in MS63, while the MS64 indicates only seven specimens with two grading higher. With advanced collectors still holding millions of dollars and looking for the right opportunities, you can see that it would not take too much effort for this series to take off.

One area that seems to have lost favor in the last couple of months is the Gold Commemorative category. Most issues from MS63 to MS66 appear to be down at least 10% since early January. The 1915 S Pan-Pac Gold $1 had an FMV of $3,170 in MS65, but is now at $2,770. The 1926 Sesquicentennial was $6,550 in MS65, but now features an FMV of only $4,860. This is what can occur when market-making dealers in specific areas just completely drop their support. The second tier of support is considerably lower and causes some sellers to panic and create further discounts of previous FMV. There also appears to be an oversupply of $20 High Reliefs on the market. All of last year, it seemed that whenever they were for sale, there was always a willing buyer. Now, it looks like someone with the wherewithal could buy about 20 coins in MS63 to MS65. This time last year the FMV for the MS64 was $37,940 but has dropped to a current FMV of $31,560. The MS63 has fallen about $5,000 as well.

This mixed market has created some concerns for many numismatists. Those astute enough to have seen these signs in the past realize it is all a part of a cyclical market. We had seen this market run for at least three years with no real testing to the downside. Granted, we saw a few series maneuver back and forth a few times but the downturns quickly reversed and prices came back to near previous levels. There were still more buyers than sellers much of the time in most series. Now we are finding more sellers than buyers and this is occurring in more than just a few series. Some dealers feel it is weakness, while others think it is a time of opportunity. It will be a matter of time before we can decide which hypothesis is correct. One thing is certain: those taking advantage of opportunities when they appear are the ones profiting the most.

In the span of one year, we have seen every mint state grade from MS62 to 66 of the 1920 S $10 Indian trade, usually at a major auction. They have traded from $60,000 to just over $400,000. However, possibly the most desirable coin in this series was recently purchased in the Heritage Auction at the Charlotte ANA. It realized $1,725,000; it is graded MS67 and is the only specimen certified by either of the two major services. This coin symbolizes the uniqueness of not only this coin and series, but numismatics as well. It is why we climb the mountain; it is why we collect.

This article is a guest article written by:


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

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