Market Tiers Expand Demand
Posted on 11/1/2005
Us old-timers remember when the coin market was governed by market cycles; values went up, values went down. It all depended on the whims of the dealers and the collectors. The dealer and collector base was so tight knit that it did not take too much to move certain series in one direction or another. However, the ability to maintain values was limited by the amount of money in the entire coin market. Therefore, when interest began in another series, one of the previous hot markets would falter and the values fell. These cycles created momentous "ups and downs" in the coin market from the early 1970s through about 1997.
Today there seems to be no limits on the totality of money in the coin market. Personal wealth has been created in so many other areas of business that new, well-funded collectors begin their adventures into numismatics, many times with a major acquisition. We are seeing million dollar rarities selling at a record pace. Hundred thousand dollar coins are quickly sold as ready collectors buy them at the first opportunity; and there are other buyers in the background that just missed because they did not react fast enough or did not know of the availability of a coin they had been searching for over the past year. It is no wonder that numismatists speak of this market as multi-tiered.
All coins will sell; some just take a little incentive to move them from one inventory to another. For example, Morgan Dollars are very easy sellers in nearly all grades. The number of coins certified by the major grading services is known through the census reports and high-end collectors are looking for the best they can afford. Nowadays, if there is a single highest graded coin within any series, there are probably a couple of collectors for this specimen and the price realized will seem astronomical compared to the next available grade. But this is the market we are in today as quality is the theme of most sophisticated collectors and it takes real money to compete.
Our Morgan Dollar example may enlighten readers a little more by stating that there are different kinds of buyers within the same grade. We have seen superbly toned Dollars that grade MS63 to MS66 that trade 10-20 times their FMV because there are numerous collectors who want these original coins. Then there are collectors wanting only white coins with blast luster and full strikes. Very few coins within a specific grade will qualify for either of these types of collectors. Next, there are buyers who don't care as much about the premium quality aspect of the coin as they do about the price being reasonable for the grade. Finally, there are the buyers in need of a discount to buy coins. All of these tiers represent different prices for many of the same coins. Certainly, this is one of the reasons that the coin market over the last five years has become so successful for so many numismatists.
There are so many pockets of activity within the coin market that many collectors may not be aware of due to limited knowledge outside of their own expertise. One such area is Carson City Dollars. We all know that the CC Dollar market runs very deep as dealers and collectors are very enthusiastic partly because of the lore of the old west. Fuel was added to this enthusiasm back in the 60s when the government released the GSA hoard of silver dollars, many of which were Carson City dates. In early 2004, NGC began to certify these Dollars in the original GSA black holders further stimulating the Carson City market. Not only are these coins rare in high grades, the numbers available are limited by the amount the government first released and the many broken out of the GSA holders. Adding to the overall rarity of CC Dollars is the fact that you reduce the number of coins available from the original mintage by the number that have been destroyed through attrition, damaged by circulation, downgraded from typical wear and tear; there is some question whether all the CC dates are even available in the GSA holder. The market for NGC-graded CC Dollars is in its infancy and there is no telling where it will go over the next few years.
A more advanced sub-collection of Morgan Dollars is the DMPL or Deep Mirror Prooflike. These have been popular for many years and represent a very small percentage of coins for each date. There really is no telling how many coins would qualify for this designation; when you add the grading element to this equation you soon realize why some of these coins bring such phenomenal prices when they go up for auction. The main characteristic of the DMPL is the strong contrast between the main device and the overall surface of the coin. For that reason, a DMPL coin will tend to show typical bag marks and exaggerate these marks more dramatically than on a regular business strike. As the grades increase, these marks will diminish to the point where the reflection appears nearly perfect. It is no wonder that clean surface and cheek DMPL Dollars will bring out the competitor in many avid dealers and collectors.
The U.S. Gold market is on quite a ride. The demand for most gold coins is strong but there are certain areas that are so hot the demand has soaked up nearly all the supply. The most active series is $3 Gold where the FMV has been sky-rocketing for several months now. It is to the point that we are not seeing anybody advertise any coins for sale because when they do happen to walk in the door of the coin shop, the dealer knows right where to go to realize the highest price. Dealers are falling all over themselves trying to be the highest buyer when coins are made available. This is one of those phenomenal events that comes along once in a blue moon. The seller can just about name their own price because of the extremely short supply. As all good things, this has to come to an end. Or, does it?
Not only are the $3s strong, but the Early $5s and $10s remain very active and competitive. Dealers and collectors are looking for nice original coins that have not been cleaned and have clean surfaces. There are numerous standing orders for many of these issues in Very Fine to High Mint State grades. Furthermore, the higher FMV prices are not producing substantial new supplies onto the marketplace.
NumisMedia is the NGC Official Price Guide.
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