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NumisMedia Monthly
June 2007
Early Type Extremely Active
Early Type Coins have been easy sellers for a few years now. If the coins are pleasant for the grade with no distractions, buyers are eager to acquire them. We have been monitoring and continually adjusting the FMV for the Flowing Hair Halves and still feel like they may be under priced based on continued dealer demand. With every new transaction reported, buyers have again paid a premium over previous FMV levels. An especially popular date is the 1794 Flowing Hair Half. This coin has jumped in value many times in the last year or so. There have been just over 600 coins certified in all grades by NGC and PCGS with the majority being circulated. When Mint State coins are located sales figures sharply increase. We compared the FMV for the 1794 since January of 2006. Below is a list of grades and prices.
| 1794 Half | January 2006 | June 2007 |
| Very Good 8 | $3,330 | $7,980 |
| Fine 12 | $4,440 | $18,130 |
| Very Fine 20 | $9,560 | $26,880 |
| Extra Fine 40 | $21,880 | $40,630 |
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It is no wonder there are so many buyers with these results (above), advancing from two to three times the FMV of early 2006. Do you know why collectors will pay premiums for problem free coins? If they do not buy the coin when presented to them by their dealer, the next buyer certainly will. Once you pass an opportunity, it may be some time before another comes along. These coins are rare and the demand is considerable. Even at the recent Long Beach Show we saw a lovely Fine specimen wholesale well above current dealer trading levels. These coins are not a dime a dozen and astute collectors are well aware of their rarity.
All coins are not created equal; nor is the demand for them. The market for common date coins with high census numbers is quite soft at this time. There is a large availability of Morgan and Peace Dollars in MS65 floating among the dealer community at coin shows. The FMV has retreated to levels we have not seen in a few years. It sure makes you wonder how much farther they can fall and when will be the time to jump in and take advantage of lower FMV levels. Early last year these MS65 Dollars were well over $225 and now they are below $150. At today's levels, Dollars are easier to sell to other dealers than they are to collectors. In this kind of market most collectors tend to wait until there is an upturn before they start buying. Of course, at that moment, collectors will start chasing a rising market and are usually about 5-10% behind in what they are willing to pay. This is why most astute dealers and collectors feel it is better to buy coins in a down market than in a rising one.
Trading activity for the Modern Bullion coins continues to plague the market for earlier gold coins. The amount of money being spent on modern issues is phenomenal and has reduced activity for truly collectable early gold. The premiums for common $10 and $20 Liberties and Saints are at an all time low. When you realize that you can purchase U.S. Gold coins from the 1900s at premiums so close to their bullion value, it makes one wonder what collectors are thinking when they buy the modern issues at well over bullion because they grade MS69. The mint makes sure these modern issues are not rare in high grade because they are all high grade. If you compare the census reports of today's gold coins against those of yesteryear you will see the vast difference in quantities certified. Those collectors buying the older U.S. Gold coins will be thankful they did in years to come when the premiums climb back to appropriate levels. What makes this even more interesting is the fact that dealers will typically pay the same amount of money for a certified $50 Gold Buffalo in MS68 or lower that they would for an original raw coin. This is not the case for earlier gold coins because the spread from MS65 to MS68 can be astronomical. This is true even for the most common of early gold coins.
Many analysts feel the metals will move higher now that many European Banks have announced a moratorium on selling gold reserves. If this is the case then the market for all gold could certainly rise and the collectors who purchase early U.S. Gold at today's minimal premiums will undoubtedly be rewarded for their astute purchases. Whenever there is an anomaly in a market you need to understand why it is taking place. The simplest reason for the low premiums in early U.S. Gold is the fact that the mint is spending millions of dollars promoting the modern issues, thus making millions of dollars while coin dealers try to take advantage of this active market. At the same time, the mint is not spending millions of dollars on promoting early U.S. Gold because they do not have any to sell. Of course, dealers could spend the same millions of dollars that the mint will spend on promoting earlier U.S. Gold but this money would come directly out of their pockets and is a fixed cost. The money spent by the mint is allocated by their budget and does not come out of their pockets. It is an offset against sales of newly minted coins that have built-in profits. Coin dealers do not have the luxury of built-in profits like those of the mint. This is akin to going to Las Vegas and trying to win all their money; they will just bet more until you run out. Coin dealers are trying to compete with the mint on these modern issues and very few will actually do so in the end.
Dealers had become spoiled by the strength of the market for the last several years. Now that we have a mixed market with some weakness exposed, some attitudes are more negative than optimistic. Yet, we view the market with a much more positive outlook. We see hundreds and thousands of coins sell on a regular basis. Through dealer to dealer transactions or retail sales there is always something going on. For the most part, the coins that are being discounted are the ones dealers have had in inventory for a long time and the quantities available are substantial. The first few dealers selling this material are the most successful because they have more money and less stagnant coins to sell. The discounted prices force additional lower prices for this unwanted material. However, we have noticed a change in the buying habits of several dealers of late. Many key date coins have risen over the last few years to the point where it appeared there could be some profit taking. This has occurred somewhat during the first part of 2007. One coin that seemed to slow down was the 1909 S VDB Lincoln Cent. Nonetheless, over the last couple of weeks, this issue has risen again. All grades are in demand and the circulated grades are wanted in quantities. We feel this is a positive barometer for the market in general. If other key date coins begin to move, it could be an indication that another group of new collectors has advanced from the novice ranks.
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