Secrets of the. Collectable Coin Market. By Van Simmons

Transcription

1 Secrets of the Collectable Coin Market By Van Simmons

2 Secrets of the Collectable Coin Market By Van Simmons The Type Coin Market FOR the past 30 years, type coins market have been one of the most active areas of the rare-coin market. And it has also been one of the best performing. In this issue, we ll take a look at the most active and important part of the type-coin market: 19th Century copper, nickel and silver type coins. What exactly is a type coin? Technically, all coins are type coins. However, coin collectors and dealers have something much more specific in mind when they use the term. Prior to approximately 1915, most collectors built sets by the date, even ignoring mint marks. But around that time, collectors started building sets of individual series, which consisted of an example of each date and mint mark within that series. That was the major way that people collected coins for most of the 20th century and it s still the most popular way to collect. In the late 1960s and early 1970s, a new way of collecting coins became extremely popular. This was collecting by types as opposed to date and mint mark. Instead of collecting one of each date and mint mark within a series, the type collector assembles a set which features one example from every series. The goal of a type collector is to have a collection which features the highest possible quality example of each type of U.S. coin. As stated earlier, every coin is, in reality, a type coin. Every type collector needs a Morgan dollar, a Buffalo nickel and even a Kennedy half dollar. However, these coins are avidly collected by date and mint mark and the more readily available issues within these three series sell for modest prices, even in the highest grades. The coin market has a more practical definition of the term type coin. To dealers and collectors, type coins are examples from the earlier coin series that are usually not collected by date and mint mark. Specifically, the type coin market refers to non-rare date examples of copper, nickel and silver coin series minted from 1792 to 1916, i.e., Bust halves, Barber dimes, quarters and halves, Liberty Seated coinage, Indian cents, Liberty nickels, etc. Note that gold coins are also collected by type. However, they are considered more as part of the rare gold market than the type coin market. In addition, because of the greater expense of gold type coins, especially the early issues, the majority of type collectors have sets which do not include the gold issues. Mint State Type There are three basic ways to collect by type. Some type collectors have sets which consist of proof coins exclusively. Some collectors focus on mint state examples exclusively. Still others have a type set that consists of both mint state and proof examples. When the type coin market first became active some 30 years ago, most type collectors combined both mint state and proof coins. Today, the majority of type collectors tend to focus on one or the other. Mint state and proof type coins are two somewhat distinct markets. Most of the time, they have a tendency to move in concert with one another. However, there are times when proof type coins can be hot and mint state type can be cold, and vice versa. In this issue we will be focusing on Gem quality mint state type coins. 1

3 Market Opportunities Type coins have been a major market leader in the past three bull markets. In fact, Gem quality type coins have been among the best performers in the entire rare coin market during the past 35 years. Type coin prices soared from 1971 to 1974, 1977 to 1980 and 1983 to In the current bull market, type coins have been taking a back seat to all of the action in the 20th century market. There is strong evidence that this situation is now changing. Dealer supplies of Gem quality mint state type coins are now very thin. Auction offerings have become unusually sparse. Prices have started to move upward. And buyer demand is great. The market for Gem quality mint state type coins is now ripe and ready and prices are still extremely reasonable. Market Areas The type coin market has eight distinct areas. These areas are: Half cents and large cents, small cents, odd denominations, nickel type, Capped Bust coinage, Barber coinage, Liberty Seated coinage, and early type. Today we ll take a look at the first six areas. Half Cents and Large Cents From 1793 to 1857, the U.S. mint struck copper half cents and large cents. The half cents were about the size of a silver quarter, only thicker. The large cents were almost as big in diameter as a half dollar and they were much thicker. Both types of coins have been popular with collectors for the past 150 years. In fact, large cents were the first U.S. coins to be avidly collected. Early copper coins are all very rare in MS65 full Red condition. They are good values in all grades MS64 or better, and both full Red (RD) and Red & Brown (RB). These are classic early U.S. coins. Classic Half Cent ( ) Grade: MS65RB MS64RD MS65RD Pop: Price: $2,100 $2,350 $8,500 All half cents are scarce in any grade. And all half cents are rare in Gem condition. Consider the Classic Head half cent minted from 1809 to1835. In 18 years of grading, PCGS has only graded ten examples of MS65RD. Gem quality examples are exceptionally beautiful. This is a great coin and I recommend their purchase in MS65RB, or better, and MS64RD, or better condition. Braided Half Cent ( ) Grade: MS65RB MS64RD MS65RD Pop: Price: $1,625 $1,300 $5,750 The Braided Hair half cents are almost as rare as the Classic Head half cents. Only a couple dozen have been graded MS65RB and MS65RD in the past 18 years. Top quality half cents of any type have spectacular long term potential. Note that Braided Hair half cents are much rarer than the Braided Hair large cents, but the price premium is quite modest. These coins are great values. 2

4 Coronet Cent ( ) Grade: MS65RB MS64RD MS65RD Pop: Price: $1,250 $3,500 $10,500 This type is often called the Matron Head, and Miss Liberty is certainly at her pudgiest here. Most of the known mint state examples are from the Randall Hoard. This hoard was a full Keg or two of 1816 to 1820 large cents that was found beneath a railroad station just after the Civil War. Most Randall Hoard cents are MS63RB and MS64RB. Today, Coronet Heads are rare in MS65RB and extremely rare in MS65RD. Considering that PCGS has only graded 7 examples of MS65RD in 18 years, the $10,000 price seems too light! Braided Hair Cent ( ) Grade: MS65RB MS64RD MS65RD Pop: Price: $1,200 $3,600 $7,500 While this is the most common of the early copper type coins, common is certainly not the right word. These coins are rare in Gem condition and not difficult to locate. They have outstanding long term potential. In the old days (for me, that s the 1970s), you could go to a coin show and see five or 10 Gem examples. Today, it s not unusual to go to two or three coin shows and not see a single Gem! Small Cents The large cents minted between 1793 and 1857 were bulky and actually quite awkward for commerce. The Mint solved this problem in 1856 by introducing a much smaller version of the one cent piece. The new smaller cents were very popular with the public and were also very popular with coin collectors. In fact, it was the introduction of the then new small cent that caused the first coin collecting boom in this country as people became interested in building date sets of both the disappearing large cents and the new small cents. While Indian and Lincoln cents are mostly collected by date, they are also very important type coins. And the Flying Eagle cent is one of the all-time classic type coins. Flying Eagle Cent ( ) Grade: MS65 MS66 Pop: Price: $5,000 $13,500 The first U.S. small cent was quite a novelty. The 1856 is a super rare coin in all grades, as only 1500 were originally minted. That makes the Flying Eagle cent effectively a two-year-only (1857 and 1858) type coin. They are scarce in all grades and quite rare in Gem condition. They have been popular with both date and type collectors for decades and they have outstanding long term potential. This is an American numismatic classic and Gems are both beautiful and highly desirable. 3

5 1859 Indian Cent Grade: MS65 MS66 Pop: Price: $3,375 $7,100 Indian cents were struck in a copper-nickel alloy from 1859 to Later years were struck in bronze. The 1859 is a slightly different type than the 1860 to1864, as it does not have the shield on the reverse. It is a very rare one-year-only type coin. PCGS has only graded 100 examples in MS65 and a mere 12 examples in MS66. This is a very important and currently very underpriced type coin. The relative value of the one-year-only type coin is outstanding. Copper Nickel Indian ( ) Pop: Price: $1,125 $3,000 $6,900 The 1860 to1864 Copper-Nickel Indians are rare and important type coins. Remember that they were minted during the Civil War and people had a lot more important things on their minds than saving new Indian pennies. The population-to-price ratio for this coin is very favorable. I believe a price for MS65s of $2000 to $3000 is easily justified in today s market. Bronze Indian Cent ( ) Grade: MS65RD MS66RD MS67RD Pop: Price: $650 $1,500 $6,000 The Indian cents are one of the all-time U.S. coin classics. This is one of the most famous of all U.S. coins. This series is very avidly collected by date and it is a really important type coin for both the 19th and 20th century. Though prices have doubled in the past couple of years, this is still an extremely under-valued coin. I could easily see prices doubling again in the next few years. I just don t see any reason why an MS65 full Red Gem Indian cent is under $1000. Odd Denominations In the mid-19th century, there was a greater need for small and odd denomination coinage, as three cents, for example, went a lot farther than it does today. The odd denomination series were all quite short lived, and original mintages were generally relatively small. Today, these odd denomination coins are high demand collector s items. People collect the odd denomination series by the date, and they are also extremely important type coins. Price-to-population ratios are very favorable at current price levels. This is one of my favorite areas of the coin market. 4

6 Two Cents ( ) Grade: MS65RD MS66RD MS67RD Pop: Price: $1,325 $3,750 $12,500 The bronze Two Cent piece was only minted for nine years. They were first issued toward the end of the Civil War in Interestingly, they are the first U.S. coin to have the motto In God We Trust. Two Cent pieces are very rare in Gem Full Red condition. The price-to-population ratio is very attractive at today s levels. But it s even better than it looks because the coins simply aren t available. Full Red Gems are now nearly impossible to find. Three Cent Nickels ( ) Pop: Price: $800 $1,600 $3,700 The mint made a Three Cent Nickel piece for 24 years, starting at the end of the Civil War. Today, they are popular with both date and type collectors. This is one type coin for which it is much easier to find a proof than a Gem quality circulation strike. Gem circulation strikes are very under-valued at current prices. MS65 s could easily be $1500, and MS66 s could be $2500 to $3000. Three Cent Silver, Type 1 ( ) Pop: Price: $1,000 $2,000 $8,000 The Three Cent Silver is the smallest non-gold coin ever issued by the U.S. Mint. They re dinky in diameter and razor thin. There were three distinct types of Three Cent Silvers. The Type 1 was only struck for three years, This coin is rare in Gem condition and current prices are very reasonable. This is a type coin that could easily double in price in a very short period of time. Three Cent Silver, Type 2 ( ) Pop: Price: $3,750 $6,400 $18,500 The Type 2 Three Cent Silver is by far the rarest of the three types. Less than 100 have been graded MS65 by PCGS during the past 18 years. This type was only minted for five years. It has long been recognized as one of the rarer of the silver type issues. But today s price is just not in line with this issue s rarity and importance. $5000 to $7500 for MS65s would be more logical. This is a classic type coin with great long term potential. 5

7 Three Cent Silver, Type 3 ( ) Pop: Price: $975 $1,900 $4,600 The last type of Three Cent Silver is somewhat more available in Gem condition than the first two. They are great looking coins and you can actually go out and find a Superb Gem in MS67. Prices are still very reasonable for these coins. The current available supply is quite thin. It adds up to another great value in the type coin market. Twenty Cents ( ) Pop: Price: $6,250 $13,000 $34,500 Twenty Cent pieces are one of the most important U.S. silver type coins. They are an all-time classic and they ve been a personal favorite of mine since I first saw one 40 years ago. They re beautiful and rare. Circulation strikes were only issued in two years; 1875 and This great coin is very reasonably priced at today s levels. If you like the best of the best, then this classic type coin rarity should be in your type coin portfolio. Nickel Type The first nickel five cent pieces were struck in Nickel is the hardest metal used to mint coins and the Mint had quality control problems in the beginning. Early nickel type coins are often found with weak strikes and/or die breaks. Fully struck, problem free Gems are rare. Nickel type has only recently begun to see price increases and this area has a lot of upside. The prices for MS65 and MS66 examples just do not make sense in today s hot coin market. This is another area of the type coin market in which I can see prices doubling easily. Shield, with Rays ( ) Grade: MS65 MS66 Pop: Price: $2,850 $7,500 Shield nickels were minted for 18 years. For the first year and a half the design included rays on the reverse. The With Rays Shield nickel is by far the rarest nickel type coin. Gems are really difficult to locate. As a two-yearonly, truly rare and important type coin, this issue is a tremendous value at today s prices. 6

8 Shield, no Rays ( ) Pop: Price: $950 $1,650 $7,000 Shield nickels are collected both by the date and as an important type coin. At under $1,000 for a Gem, they are really reasonably priced. Shield nickels were minted for a relatively short period of time and quality control was a problem at the Mint. Gems have a lot of upside potential. Liberty, no CENTS (1883) Pop: Price: $280 $950 $4,650 During the first year of issue, Liberty nickels did not have the word CENTS. There was just the Roman numeral V on the reverse. In fact, Liberty nickels are sometimes called V (pronounced VEE) nickels. This caused some confusion at the time, and some unscrupulous individuals would gold plate the nickels and try to pass them off as $5 gold pieces. The Mint promptly added the word CENTS to the reverse, making the 1883 no CENTS nickel a one-year-only type coin. No CENTS nickels were saved in quantity as a novelty item at the time. However, they are rarer in Gem condition than their current price would suggest Liberty, with CENTS ( ) Pop: Price: $750 $1,950 $5,250 The Liberty nickel has been very popular with collectors for decades. This, like the Indian cent, is one of the most famous of all U.S. coin types and the series also includes the most famous of all coins, the 1913 Liberty nickel. The series is avidly collected by date and the Liberty nickel is an important 19th and 20th Century type coin. This classic coin has a lot going for it and it s underpriced at today s levels. Capped Bust Coinage Prior to 1850, there wasn t an active coin market in the United States and there were very few collectors who saved coins. Since they were issued in the first half of the 19th Century, Capped Bust silver type coins are much rarer in Gem condition than later types. These are true type coin classics. Though more expensive than the later issues, they are so much rarer that they are actually somewhat underpriced at today s levels, especially in light of what s been going on in the 20th Century coin market for the past two years. I highly recommend these great type coins. 7

9 Half Dime ( ) Pop: Price: $3,200 $4,250 $12,500 Capped Bust half dimes are the most affordable of the Capped Bust coinage. This shows the efficiency of the marketplace as they are the most available Capped Bust coins in Gem condition. These are beautiful coins and the price is right. They could easily sell for $5000 to $6000 in MS65 within the next few years. Dime, Large Size ( ) Grade: MS65 MS66 Pop: Price: $11,500 $20,000 There were two distinct types of Capped Bust dimes. The large size, minted from 1809 to 1828, featured relatively large, thick denticles and a somewhat more matronly Ms. Liberty. The small size, minted from 1828 to 1839, had smaller denticles and a younger looking Ms. Liberty. With only 62 examples graded MS65 and MS66 by PCGS in 18 years, and none graded higher, the large size is obviously a very rare coin in Gem condition. The Capped Bust coinage is like the beachfront property of the rare coin market. Dime, Small Size ( ) Pop: Price: $6,750 $11,000 $21,000 Small size Bust dimes are a mainstay of the silver type coin market. This has been one of the coin market s most important type issues for the past three decades. This rare, beautiful and important coin is quite reasonably priced at today s levels. They could easily be $10,000 in MS65 and $20,000 in MS66. Quarter, Large Size ( ) Grade: MS65 MS66 Pop: Price: $24,000 $36,000 The quarters are the rarest of the Capped Bust denominations in all grades. They are rare in low grades and they are extremely rare in Gem condition. Like the dimes, there are two types of Capped Bust quarters; large size and small size. The large size is a major silver type coin rarity. Though currently selling for over $20,000 in MS65, I can easily see the price doubling in the next year or two. 8

10 Quarter, Small Size ( ) Grade: MS65 MS66 Pop: Price: $21,000 $37,500 The small size Capped Bust quarter is also a major silver type coin rarity. You ll only see two or three Gems a year. This is one of the classics of U.S. numismatics. They are also very beautiful. It just doesn t get much better than this. The price of these rarities could easily double in the next few years. Half, Lettered Edge ( ) Pop: Price: $8,450 $15,000 $32,500 Capped Bust half dollars are fairly available in lower grades. Original mintages were relatively large as there were no silver dollars minted during this time period, so this was the silver denomination of choice for commerce needs. But in Gem condition, Capped Bust half dollars are very rare. This is a gorgeous coin, which I highly recommend. Half, Reeded Edge, HALF DOL ( ) Grade: MS65 MS66 Pop: 11 6 Price: $18,000 $35,000 The 1836 and 1837 Reeded Edge halves had 50 CENTS at the bottom of the reverse. The 1838 and 1839 Reeded Edge halves had HALF DOL on the reverse. The HALF DOL type is one of the rarest of all silver type coins. A mere 17 Gems have been graded by PCGS in the last 18 years. MS65 examples should be $50,000 today. Barber Coinage Barber coinage features three of the most important coins in the numismatic marketplace. Barber dimes, quarters, and half dollars were minted between 1892 and The obverse design of Ms. Liberty is the same for all three issues and the type is named after the designer, Charles Barber. They are avidly collected by date and mint mark. They are also extremely important 19th and 20th Century type coins. All three issues currently have very favorable population-to-price ratios, especially considering their extreme popularity. These are three great coins with lots of demand and lots of upside. 9

11 Barber Dime ( ) Pop: Price: $675 $1,400 $5,250 Barber dimes are not overly difficult to locate in Gem condition, but they are rarer than their price would indicate. They are very important 19th and 20th century type coins and they also are avidly collected by date and mint mark. In fact, several big hitters are currently working on complete sets and auction action on the better dates and low population coins is very heated. I think MS66s are ridiculously underpriced and there s huge demand for MS67s. Barber Quarter ( ) Pop: Price: $1,275 $2,200 $5,350 Barber quarters are beautiful, important and rarer than their price indicates. This is a great coin and it s quite underrated at current prices. Interestingly, while several serious collectors are working on complete sets of Barber dimes and halves, I don t know of anyone working on quarters. Perhaps that s why there s no price pressure on the type dates. All the better for you! Barber Half ( ) Pop: Price: $3,300 $5,000 $11,000 Barber Halves are the rarest 20th century silver type coin. There is lots of demand for Gem examples by both 19th and 20th century type collectors. And they are also in demand from date collectors of Barber halves. This is a truly beautiful and extremely important coin. I feel the price is currently a little light due to the importance of this coin. A price of $5000 for a Gem MS65 would make more sense to me. Type-Coin Strategy Gem quality type coins are one of the great values in the rare coin market. They are the heart and soul of the rare coin market. They are beautiful, and Gem examples of the 19th Century issues are rare. There are two ways to take advantage of this market. 1. Build a type set. A Collection of United States type coins is beautiful, historically important and has lots of upside at current price levels. There is no better way to participate in this market than to buy one of each type in as high a grade as possible. Here are the sets to choose from (least expensive first): 20th Century design set* 10

12 20th Century type set Complete U.S. design set Complete U.S. type set And there are variations of the four sets above. You can stop in 1964 (the last year of silver coins), as many people do, or you can include the modern, post 1964 issues. You can also exclude the much more expensive pre issues and/or the 18th Century issues, or you can include them if your budget allows. 2. Take a position. If you don t have the money and/or the inclination to build a complete type set, you can take a position in the coin market based on your budget and/or your desire to make a play in the type coin market. Simply pick out the type coins you like best and buy the best quality you can. *Note: In a design set you only have one of each major design. So you d have one Shield nickel, as opposed to a complete type set in which you d have both the With Rays and No Rays types of Shield nickels. The 10 Best Bets of the Type-Coin Market There are some great deals in the type coin market. Literally every coin discussed in this issue is a relative bargain at today s price. But if I had to choose the 10 best bets of the type coin market, I like the following. As always, the recommendations apply only to PCGS graded coins. PCGS coins are the standard for the marketplace and there is no reason to buy anything less than the best. Braided Hair Cent ( ) MS65RD (Pop: 195, Price: $3,600) The population is a little misleading. You ll be lucky to find one or two full Red Gems. There simply are very few coins available at shows and auctions. This should easily be a $5,000 or $6,000 coin today Indian Cent MS65 (Pop: 100, Price: $3,375) This might be the most underpriced of all type coins. It sells at 65% of the price of a Flying Eagle cent, yet it s twice as rare. This is a classic one-year-only type coin rarity. Buy one if you can find one. Bronze Indian Cent ( ) MS66RD (Pop: 916, Price: $1,500) There s a lot of pressure on this issue from 19th century type collectors, 20th century Type collectors and Indian cent collectors. At $1,500 for a Superb Gem example of this American classic, this is a great value. Two Cents ( ) MS65RD (Pop: 491, Price: $1,325) This is a super important, short lived type coin that s really hard to find in full Red Gem condition. I believe this is one of the most underpriced coins in the entire rare coin market. This should be $2,000 to $3,000, not $1,325. Three Cent Nickels ( ) MS65 (Pop: 670, Price: $800) This is a super sleeper. The price is held down a little by the easy availability of the proofs, but the circulation strikes are much rarer than the price indicates. This coin has a great population-to-price ratio. 11

13 Shield, no Rays ( ) MS66 (Pop: 233, Price: $1,650) This is a classic type issue that s also collected by the date. It s much rarer than later nickel types. Superb Gems should be $2,500 to $3,000, not $1,650. Half Dime ( ) MS65 (Pop: 238, Price $3,200) This is the most affordable of the Capped Bust coins. Gems are beautiful little jewels. This has a price target of $5,000 to $6,000. Bust Half Reeded Edge, HALF DOL ( ) MS65 (Pop: 11, Price $18,000) This is an incredible rarity in Gem condition. The MS65 population is a mere 11 coins. This is one of the rarities of the silver type coin market and could easily be a $50,000 coin. Barber Dime ( ) MS66 (Pop: 687, Price $1,400) This is a mainstay of the type coin market. It s not ultra-rare, but it s way tougher than its current ridiculously low price. There is a lot of demand for this issue and prices could easily move. Barber Quarter ( ) MS67 (Pop: 91, Price $5,350) A Superb Gem Barber quarter is definitely a beautiful coin. With a population of fewer than 100 coins for the whole 1892 to 1916 issue, this is a great value at the current price. There s more focus on dimes and half dollars at the moment, but quarters are also a great deal. 12

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