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NumisMedia Monthly
August 2009
In Gold We Trust; Collectors Confident in Metals
The Heritage Signature Auction takes place just prior to the ANA in Los Angeles, July 31-August 2. This sale features the all time #1 ranked Barber Quarter set currently owned and assembled by Dr. Steven Duckor and it is sure to set the tone for the ANA. The sheer depth of quality denotes precision and character with a superior perceptiveness toward eye appeal. A devotee of varieties, Dr. Duckor usually includes some difficult acquisitions in his collections. The 1892 O/O, 1896 O, 1898 O, 1901 O, and 1913 S are among the highlights. All of these referenced coins are near the top quality for the date and the majority of the coins in this sale cannot be duplicated; this may be a once in a lifetime opportunity for serious collectors to acquire one of these rarities.
Confidence in gold continues to be the backbone of summer sales. Gold has remained in a fairly tight range of $925 to $950 with most buyers anticipating even higher prices in the future. Silver and Platinum have been active enough to attract buyers and maintain more than adequate sales. The strength of metals has directed many coin dealers to focus on bullion and a majority of trading on the dealer networks is for Modern Bullion coins. Add to this, sales of silver bags, circulated silver dollars, and silver bars, dealers have found a way to retain their competitiveness in today's market.
Without the current bullion sales, rare coin dealers could be left with large stagnate inventories, waiting for a drastic change, not only in the coin market, but in the economy as well. While trading in bullion has kept many coin dealers in business through these tough times, many are taking advantage of lower prices and using some of their cash to buy coins of opportunity. That is, coins that have lost some of their value over the last year, but are still in demand and have new potential for profits.
What types of coins maintain liquidity when a market turns downward? Like stock traders, experienced coin dealers will stick to areas that have proven track records, seeking coins that appeal to the most collectors. Many dealers are looking for collector coins at new lower FMV levels. These discounted coins could be difficult to sell today, but when the market turns around, they could command hefty premiums. So, a better question to ask might be, which undervalued coins will collectors want when the market turns around or, better yet, which collector coins are way undervalued and will provide the biggest returns in the future?
The Walking Liberty Half Dollar series has taken some serious losses in the last eight months, especially for MS65 to MS67 coins dated after 1940. The 1946 in MS66 was $425 FMV in January of this year and is currently at $325. The 1943 D had an FMV of $363 in January and now it is $288 in MS66. The 1941 S, always popular and one of the key dates in the short set from 1941 to 1947, had an FMV of $1,210 in MS65 at the beginning of the year and is now down to $1,060. We could list many others from this series selling at discounts of current FMV. Dealers and collectors are being very selective in the coins they purchase. This is a very good strategy for the buyer, but it limits the number of coins that will trade at present levels, which in turn, raises the appearance of market weakness.
Opportunistic buys are not limited to the areas we have mentioned; there are many throughout most series. These coins can be found by studying current FMV prices versus previous higher levels and comparing the population numbers for specific grades with the number of certified coins above the grade you are considering. The population reports of NGC and PCGS have been an integral part of most strategies of advanced collectors and dealers for the past twenty years.
Let's say there is a particular collector of $1 Gold coins and he is looking for the highest grade for every date in the series. He is continually in the process of upgrading his set and is having a very difficult time in locating some dates in the highest grades. Even though he knows there are some dates in these higher grades, the current owners are not willing to part with their wonderful coins in today's market. However, when an upgrade becomes available, he is quick to add it to his collection as long as it meets his discerning preferences. Once he replaces a lower quality coin, bearing in mind that this is still a high quality rarity, he sells this coin to another collector who is afforded the opportunity to add a coin to his or her collection. This ongoing process has satisfied collectors for hundreds of years.
Today's market is much different from the one we had become used to over the last five or six years. Coins are not selling themselves and it takes work and a real story to complete a sale; whether it is a low mintage issue, or a low population coin, or, it simply has stunning eye appeal. There are hundreds of other factors that may influence a sale, perhaps a collector simply wants to put together a set within a specific series. In this market, the story is quite simple; prices are down and there are opportunities for collectors and dealers to buy coins at lower prices. The ANA should provide the market with some interesting results. Most of the nation's top dealers will attend and there should be much to report in our next issue. We have found several series that appear to be firming at current FMV levels so this should be a good test of the market.
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