To open 2017, Steve Roach tackles the appeal of rare coins and why
they command the hobby's attention. Below is the second segment of
his extensive look at the rare coin market as
it exists today and what may garner attention in the coming year:
As the stock market reaches for record heights and precious metal
prices stay at relatively stable levels, one wonders where the rare
coin market is headed in 2017. With all of the potential for change
under a new presidential administration, many are optimistic but
cautious; hesitant to make any major changes in their investment
strategies and perhaps waiting for the right time to buy rare coins.
Will established collectors come out and buy rare coins in 2017?
Will new collectors and investors enter the rare coin market,
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If you’re interested in stepping up your rare coin game, or if
you’re entering the rare coin marketplace for the first time, you
should look at the rare coin market as it exists today and seek to
understand the pitfalls and possibilities inherent in rare coin
investing. Smart coin buying today requires at least an awareness of
the changes that might impact the future when it comes time to sell.
Advantages of coins
Investing in rare coins, rather than other collectible investments,
offers some strategic advantages that can benefit the owner.
Coins are generally standardized products with known mintages, and
with U.S. coins especially, many series have been heavily studied and
the provenance of most important examples is well-documented. This
collective understanding of a coin’s past ownership history helps
thwart counterfeiters since it’s hard to create a new example of a
rarity when all examples are known and accounted for.
Rare coins also benefit from having solid information on the
relative rarity of quality within an issue, thanks to grading service
population reports. Both Numismatic Guaranty Corp. and Professional
Coin Grading Service have kept track of the coins that they have
graded in the past three decades and the collective knowledge has
helped the hobby create condition censuses to help identify the finest
known examples as well as condition rarities within an issue.
Read more of Steve's look ahead at the 2017 rare coin market:
The appeal of investing in coins:
Even though it may not feel like it all the time, there are still
hundreds of thousands of people who collect coins and millions who
have fond memories of coins.
lessons to learn from three great collectors:
In addition to Pogue, a number of other top collections have come
to market recently — perhaps most notably Eugene Gardner and Eric
A condition rarity is one for which, if mintages were high,
lower-grade examples might be common, but in higher grades, examples
are rare. This is often seen in 20th century U.S. coins. A 1942-S
Washington quarter dollar has a mintage of nearly 20 million pieces
and is considered a bullion coin in circulated grades. Even in Mint
State 65 it is easily available for under $100. The population thins
in MS-66, and in MS-67 examples move up to the $1,000 level. PCGS has
graded just two in MS-68 and one of these sold for $7,637.50 at
Stack’s Bowers’ March 30, 2016, Rarities Night Auction.
This understanding of quality allows the hobby to have many data
points to help provide accurate pricing information. Online resources
like PCGS Coin Facts and NGC Coin Explorer list individual auction
transactions by grade, allowing buyers to see the underlying data that
is interpreted by a price guide like Coin World’s Coin Values
when assigning a single retail value to a certain coin in a certain grade.
Data points are understandably limited because coins don’t trade
every day. It has been estimated that just 1 percent of fine art
changes hands every year. Art tends to stay in families longer, while
coins are not as multi-generational in their ownership, so coins have
a bit more turnover than fine art. Still, with many collectors keeping
coins for their lifetimes, the overall turnover of the rare coin
market each year is low.
Repeat auction transactions of the same coin provide interesting
fodder for market analysis pieces, but individual sales can be of
limited value when evaluating the rare coin market as a whole.
Take an 1870-S Seated Liberty dollar graded Extremely Fine 40 by NGC
that sold for $423,000 at Heritage’s October 2016 New York auction. It
is unquestionably rare with just nine examples known; however, it was
a bit too familiar to high end coin buyers as it had appeared at
auction multiple times over the past decade.
It realized $805,000 at Heritage’s April 2008 sale of the Queller
Family Collection then sold for $470,000 at Heritage’s 2015 Florida
United Numismatists sale. A different example, graded EF-40 by PCGS
sold for $505,250 at Heritage’s May 2015 sale of the Eugene Gardner
Collection. Sometimes the perception of rarity is as important as
actual rarity and when examples of a rare issue are offered
frequently, buyers become fatigued and prices can drop.
Check back later for more of Steve Roach's look ahead at 2017!