Rarity and Quality: The Key to Profits
Without demand, the coin market would move sideways. That is, it would be nothing more than a simple hobby subject to the whims of the most active market makers. During the four decades from the 1960s through the 90s, dealers had acclimated to this type of market. However, dealers no longer have this wide-ranging control of the market; collectors are in charge. Dealers and numismatists from all over the country have advanced our industry to a position of great respect among those who maintain the nation’s wealth. Dealers and collectors have observed the FMV increase in many areas over the last several years with little resistance to higher prices. Since we have such fervent collector demand in today’s market, we can focus on the attributes of rarity and quality.
Since the inception of the NumisMedia Fair Market Value Price Guide (January 1999), the price of a 1909 S VDB Lincoln Cent in MS65 Red has advanced from $2,128 to $3,750 in January 2003 to today’s FMV of $7,440. When you consider that NGC and PCGS have certified just under 900 coins total for one of the most popularly collected coins in numismatics, it surely makes sense that the FMV has advanced this far. Consider the fact that less than 900 collectors can own this coin in MS65 Red. Now combine this information with the fact that many of these coins are resubmitted many times in an effort to achieve the highest grade. Then, think about the number of these coins that, when compared against another like coin, does not quite measure up to today’s MS65 Red grade and you might be amazed that prices are not even higher. Yet, that is what we see all the time; coins that are called Premium Quality, or PQ, for the grade. These coins will command premiums because they are nicer than the majority of the whole group. So how many coins are actually in this group? You can rest assured the number is much less than 900.
The 1914 D Lincoln Cent has realized even better results. However, with more than twice as many originally minted as the 1909 S VDB, the number of coins certified by NGC and PCGS is a mere 72 coins in MS65 Red. What started with an FMV of $7,535 in 1999 is now at $23,080. This dramatically points out that within the thousands of Lincoln Cent collectors, there are less than 72 who can own this coin in this grade. What we need to emphasize here is that there are many elements to collecting coins and they may vary from one coin to the next. Numismatists have to consider, not only rarity and quality, but also current demand for the issue, original mintage, numbers of coins certified by grade, and the total number of coins certified in all grades relative to the original mintage. There are virtually millions of coins that are not collectable at current FMV levels because of the attrition they have suffered over the years. How else could you explain the low numbers of certified coins by NGC and PCGS for so many different issues in the 1800s? And no, we did not forget about the loss of coins due to planned melting of many issues. Coins were minted for commerce; the ones that survived to be collected are much rarer than mintage numbers can reveal.
There are many series and individual issues in the vast array of U.S. Coins that have displayed like or even better results over the last eight years. Astute dealers and collectors are doing more in-depth studies of specific series of coins to see which ones do not follow the norm. Which coins are not readily available, but seem like they should be? We have mentioned Early Gold several times in the past year. The Capped Bust $5 Gold is another example of major advances over the last several years. The 1813 is the most common date with over 95,428 coins minted. However, there are only 628 coins certified in all grades by NGC and PCGS. This is not many coins to spread amongst all the avid collectors of Type coins for this era. Taking into account that there are less than 200 coins available in grades above MS62, selection and acquisition reveals very few opportunities. The term “available” is a key word here. If a major market maker tried to buy up all these coins, you can rest assured it would be a formidable task. The number of coins that would actually come into the market for sale would be very minute compared to the reported census numbers.
NumisMedia listed the FMV for the 1813 $5 Gold at $15,730 and $21,563 in MS63 and MS64, respectively. Today, the FMV is $24,060 and $45,630 in the same grades. Further, there are strong buyers for these coins and the better dates within this short type series. The 1818 has always been a collector favorite with only 48,588 minted. The FMV in 1999 was $56,650 in MS64, which was about two and a half times the common 1813. Yet, with only 80 coins or less certified by both major services, it appears to be much rarer than today’s FMV of $67,280 might indicate. Currently, it is only 50% higher than the most common date. This is the type of information that today’s advanced numismatists desires and they have a vast array of characteristics to consider. Twenty years ago, we did not have near as much data to compare. The only real comparisons came from original government mintage figures and auction prices realized. Now, we can do much more in-depth analyses from census reports, past FMV prices to see how specific coins have cycled over the last eight years, much more timely auction prices realized and with the Internet, information is right at every numismatist’s fingertips.
The increasing number of dealers and collectors today produces some very specialized methods of collecting coins. One of these areas is Morgan Dollars and more specifically, Deep Mirror Proof Like specimens. Avid collectors within this area can produce some spectacular results when low census coins come up in major auctions. There are enough of these collectors trying to acquire the finest known specimens that competition becomes very fierce for the limited number of coins in the market. As with any series back in the 1800s, the number of coins that qualifies for higher grades dwindles as quality improves. The fact that the Morgan Dollar has a large surface tends to reveal marks more so than smaller coins that don’t have as much field exposure. Further, the main characteristic of the mirror surface will tend to highlight any of these typical marks. That mirror surface is by nature, the main attraction for these collectors. An improvement in grade will show fewer marks and, when specific dates reach the ultimate grade, many of these specialized collectors become very competitive in their pursuit. This competition leads to increased fair market value prices, which is typical for the highest grade of any series.