Potential Exists For Lower Grades
Posted by NumisMedia on 5/1/2007
For years, many numismatists have proclaimed, "Buy the best coin for the grade your money will allow." What this means is the collector should select the highest-graded coin for the particular series that their budget will withstand. Many collectors, like dealers, try to have a fixed amount of cash in reserves just in case that special coin comes along and they are the lucky recipient of the opportunity. For example, the advanced West Coast collector who just spent $5 million for the finest known Proof 66 1913 Liberty Head Nickel. This was the Eliasberg coin and was most recently owned by Legend Numismatics. However, not every collector can afford to spend this much money on just one coin. What about the other 1913 Nickels? Just because they are not the finest, does that mean they are not desirable? Hardly. Granted, this is a unique specimen, but it lays the philosophical groundwork for all other collector coins. If we all collected the same way, every collection would contain the finest known coins and all the rest of the lower grades would be virtually worthless. Fortunately, we don't and they aren't.
Since the inception of NGC and PCGS, the market has strived to push quality as the basis for collecting coins. The ability to keep records and track not only quantities minted of a particular date, but how many are certified in a specific grade makes numismatics more like a contest than the hobby it was originally intended. The evolution of numismatics is forever – changing. It is wonderful that Registry Sets are an attractive method of pursuing numismatics. Allowing numismatists to chart and score their collections compared to their peers has taken the hobby to a much higher level than we could have ever expected. Yet, there is a certain realization that has transpired in the last couple of years that may have much more impact than anything that has occurred since the grading services opened their doors.
With the ability to keep certification records and track values of coins over a period of time, astute numismatists are beginning to focus not on what you see, but what you don't see. Here is a prime example of the awareness that has entered the minds of many outstanding dealers and collectors. The 1804 Bust Quarter has an original mintage of 6,738; yet, only 274 coins have been certified by NGC and PCGS. The 1796 has a like mintage of 6,146 but the two major services have certified 433 coins in all grades. For the last century, the 1796 has commanded much more respect than the 1804 mainly because it is a one-year type coin. This is beginning to change as dealers have been searching for the 1804 and what we don't see is them having much success. Most of the coins available are not certified by NGC or PCGS and the majority of them are either damaged or have been excessively cleaned. When problem free coins are available they usually bring premiums to current FMV levels for the grade. The following is a comparison of the 1804 FMV prices from March, 2006 to today by grade.
|March 2006||May 2007|
It is practically fruitless to look for a coin graded higher than MS62 since there have been only seven coins certified by NGC and PCGS together. Who knows if these are seven distinct coins or if some are resubmissions of the same coin? The fact is that this is an extremely rare issue and one that is finally being recognized. Further, this example epitomizes the point we are trying to bring home here: rare and desirable coins can be less than gem quality. In the last couple of years, we have noticed that the MS62 grade in many series has increased at a significant rate compared to what had transpired in previous years. Depending on rarity of the issue, this advance has been taking place in the circulated grades as well if the coins are properly graded and do not have negative attributes.
The Very Fine 20 has a census of only 16 coins and the Extra Fine 40 census contains just five coins. With millions of collectors out there searching for their most affordable coins, not everyone can own an XF40 1804 Bust Quarter. All it takes is six collectors vying for the five coins in the market and the FMV can jump substantially. This may be an unusual case, but numismatists are studying just this kind of situation in every series. This set of circumstances occurs throughout numismatics in nearly every series. Through diligence and observing what you don’t see in the market can lead you on a quest for coins that have potential.
The grading services have allowed numismatists the opportunity to track information for over 20 years now. They afford us the ability to create ratios between the numbers of coins certified by grade to the original mintages. After all these years, we can make one astute assumption that should be used with some caution: most of the truly rare coins have been certified, but there will surely be some that come out of hiding in the future. Most likely, these rarities will only fuel the excitement that most numismatists feel today when they have the opportunity to see, hold, or purchase the likes of a 1913 Nickel, an 1804 Dollar, or an 1894 S Barber Dime. All classic rarities for sure, but there are many others that hold future inspiration for today’s collectors. What rarities will you discover tomorrow?
A series of focus by many dealers and collectors is the Seated Half Dollar. Again using the census reports, you have a starting point for discovering potential rarities. By using the original mintage numbers and then comparing these numbers to the ones certified by grade, you can determine which coins are not readily available in the marketplace. After you create a list of these potential rarities, you can next study dealer inventories on their Web sites and at coin shows. You can refine this list even further by learning what you have located over a specific period of time. The lack of information for some dates will speak volumes to you. For example, last year in March the 1857 S Seated Half had an FMV of $1,170 in AU53; today it is $1,530. NGC and PCGS have only graded six coins in AU53 and just 59 coins in all grades. The original mintage is a mere 158,000. Where are all these coins? Attrition is the coin’s enemy, but the collector’s friend. Through years of attrition, the potential for a rising FMV increases as time reveals no additional availability within a specific series by date and grade. It is most noteworthy that in the summer of 2003, the census reports listed the total coins certified for the 1857 S Half were 42 compared to today’s 59. Just 17 newly certified coins since and values have increased substantially across the FMV chart.
Within the Seated Half Dollar series, there are many dates containing substantial mintages like the 1859 O at 2,834,000. Although, a study of the census reports indicates only 229 certified in all grades. This is a relatively inexpensive coin in Mint State through MS63. There are less than 50 coins certified above MS63. As more collectors delve into this series in the coming years, they are sure to discover many other potential rarities that pique their interest.