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“EXTRAORDINARY MERIT” AWARD WINNER FROM THE NUMISMATIC LITERARY GUILD

“If you’re buying just one price guide to see what your coins are worth, this is the obvious choice.” -COINage magazine

The Insider’s Guide to U.S. Coin Values 2010
by Scott A. Travers

The chance of turning up “a fortune in pocket change” — the equivalent of digging up buried treasure — has always been one of the great allures of coin collecting. A generation ago, that chance diminished when copper-nickel “clad” coins drove silver U.S. coins from circulation.

Now the brand new edition of a book written by New York City coin dealer, author, and consumer advocate Scott A. Travers demonstrates conclusively that the age of discovery is far from over — that worthwhile, often highly valuable coins can still be found in pockets, purses and cash drawers. All it takes to find them is knowledge and perseverance, and The Insider’s Guide to U.S. Coin Values 2007 provides all the knowledge a treasure-hunter will need to hit the jackpot.

Never before has there been a clearer, more helpful guidebook on how to identify, acquire and profit from valuable coins. This is a book for everyone who finds rare coins enticing.

Circulation finds are just one aspect of the book. It also provides detailed listings of fair market values for all regular-issue and commemorative coins struck by the U.S. Mint in its first 200 years of operation. And the author displays a welcome willingness to offer market values for coins of extreme rarity. Other price guides steer clear of these coins, seemingly out of a reluctance to be too specific in measuring hard-to-gauge, limited market activity. Being a major buyer and seller of classic high-grade rarities, Scott Travers has the advantage of knowing this market intimately.

The Insider’s Guide to U.S. Coin Values 2007 is a mass-market paperback published by Dell and priced at $7.50. It is available at bookstores everywhere.

For those who buy or sell wisely, there’s an ultimate payoff, for collecting rare coins, like finding buried treasure, has the potential to be a richly rewarding pursuit.

You can be the expert with information on:

• UNDERSTANDING COIN GRADES AND WHAT THEY MEAN IN DOLLARS AND CENTS FOR COLLECTORS
• THE ADVANTAGES OF A “CERTIFIED COIN” FROM A GRADING SERVICE
• ESSENTIAL SPECIFICATIONS – DIAMETER, WEIGHT, COMPOSITION, EDGE, AND DESIGNERS – FOR POPULAR U.S. COINS
• COMPREHENSIVE LISTINGS OF COIN PERIODICALS

GUEST CHAPTERS

THE 1933 DOUBLE EAGLE GOLD COIN by ROBERT W. JULIAN

AMERICA’S STATE QUARTER PROGRAM by DAVID L. GANZ

The Insider’s Guide to U.S. Coin Values 2007

Comprehensive facts on all U.S. CoinsCurrent fair market values

Insiders’ information for the best deals in buying and selling Tips on collecting wisely for fun and profit

The Insider’s Guide to U.S. Coin Values 2007 published by Dell Publishing, Copyright 1993, 1994, 1995, 1996, 1997, 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006 by Scott A. Travers

The Coin Collector’s Survival Manual®

Sixth Edition

The Coin Collector’s Survival Manual® – Sixth Edition

The Ultimate Consumer Protection Resource

by Scott A. Travers

WINNER OF 10 AWARDS FROM THE NUMISMATIC LITERARY GUILD

• FULL-COLOR PHOTOS
• ALL-NEW ADVICE ABOUT THE INTERNET
• BOMBSHELL INTERVIEW ON COIN “DOCTORING”
• INCLUDES HOW TO MAKE MONEY IN COINS RIGHT NOW

“One of the most important coin books ever written.” The New York Times

THE ULTIMATE CONSUMER PROTECTION RESOURCE

The New York Times

Barry J. Cutler, former Director, Federal Trade Commission Bureau of Consumer Protection

“This is the book about the coin business you can’t afford to be without.”

Hank Gilman, Business Editor, NEWSWEEK

“Should be read before a single coin is bought – and read again and again!”

COIN WORLD

WINNER OF 10 NUMISMATIC LITERARY GUILD AWARDS

Billions will be made in this bull market.

Not everyone will be a winner.

This daring book will make you a winner.

Introducing the boldest, most courageous coin book ever:

THE COIN COLLECTOR’S SURVIVAL MANUAL® FIFTH EDITION

“The most important coin book ever written… a spectacular tour de force that surely will be proclaimed an instant classic – and undoubtedly will stand for years to come as the gold standard for coin books on consumer protection and investment.” –Ed Reiter, Senior Editor, COINage

The Coin Collector’s Survival Manual® Fifth Edition reveals trade secrets on how you can make money and avoid even the smallest mistakes in the rare coin marketplace in his new Random House book. This straight-forward guide candidly examines grading controversies and the popularity of registry sets, playing the “crack out” game with third-party encapsulated coins, and the dangers of online auctions and coin doctoring.

1,200 consumer protection caveats give you the most candid advice on how to buy and sell coins profitably, whether it’s a sleeper found on the bourse or a multi-million dollar rarity seen at auction.  Detailed photographs of coins with genuine and difficult-to-detect artificial toning give you unprecedented side-by-side comparisons.

Illustrated with more than 260 state-of-the-art digital color and black and white images of coins, this 400-page guide packs a powerful, one-two punch.  It combines a thorough update of earlier editions of The Coin Collector’s Survival Manual with another acclaimed book, How to Make Money in Coins Right Now. Both were bestsellers in their own right, and now both are available in a single, updated and timely volume.  Among the topics covered in the new mega-book:

Coins overgraded by grading services (text page 79, color photos insert page 13).

How you can capitalize on the gyrations of gold prices when buying rare and generic gold coins.  What specific coins you should buy when gold is moving up, and how to minimize losses when gold prices are falling (page 157).

Extraordinary insights and secrets of crack-outs and getting lucrative upgrades from third-party grading services.  Well-known dealer Jim Halperin tells how he made millions in profits by resubmitting coins and expands his secret list (page 140).

Exposing the pitfalls and avoiding the perils when buying coins through online auctions (page 212).

Detecting altered, counterfeit and “doctored” coins (page 126).

How the popular registry set programs have changed the numismatic market, and how to use registry sets to your advantage (page 187).

Knowing when to buy, when to sell, and when not to do anything (page 251).

Comprehensive discussions by leading experts about taxes and tax consequences on buying and selling numismatic items, including record keeping, estate planning secrets, retirement plans and in-kind exchanges (page 284).

Security issues now facing the most advanced collectors and investors after 9/11 and natural disasters, such as Hurricane Katrina (page 318).
Now you can survive and make money in coins right now!

THE COIN COLLECTOR’S SURVIVAL MANUAL, FIFTH EDITION Random House, 2006; profusely illustrated in color and black and white; 400 pages; $22.95 postpaid

TITLES OF CHAPTERS AND APPENDICES: Collecting Coins Profitably q Reading a Coin Like a Book q Bigger and Brighter q The Grading of U.S. Coins q Grading Services and the Plastic Revolution q Beauty and the Best—Authenticating Proofs q Telling Fact from Fiction q Making Money in Coins Right Now q Making Sure the Price is Right q Registry Sets Get High Grades q Secrets of Cherrypicking q ‘Insider Trading’ of Rare Coins q Dangers of Buying Coins on the Internet and by Mail q Cashing In at Shows q Selling High, Higher, Highest q Don’t Let Uncle Sam Pick Your Pocket q Myths That Can Cost Millions q Endangered Coins—and How to Rescue Them q Security After September 11th and Hurricane Katrina q Value Charts for United States and Canadian Silver Coins q Value Chart for Commonly Traded United States and World Gold Coins q Specifications for American Eagle Silver and Gold Bullion Coins q Internet Resources q Calamity Insurance: Gold Coins as a Safe Haven

FREE COLLECTOR’S EDITION WHILE THEY LAST! We recently located a carton hidden in our warehouse of the very first edition of The Coin Collector’s Survival Manual published in 1984. While they last, we will include a copy of this special collectible book in mint condition with each order placed for the new Fifth Edition.

The book is available in bookstores everywhere or may be ordered from us for $22.95 postpaid: Scott Travers Information Services, P.O. Box 1711, FDR Station, New York, NY 10150-1711. New York State residents must add appropriate sales tax.

Scott Travers takes you all the way from identifying valuable coins in your pocket change to trading coins on an electronic exchange network.

“In numismatic terminology, it’s a gem.” – Don Alpert, Los Angeles Times
“The easy and fast way to become a true coin expert.” – Robert Leuver, American Numismatic Association

One-Minute Coin Expert

® Sixth Edition, by Scott A. Travers, published by House of Collectibles, an imprint of Random House, Inc.

Excerpt from One-Minute Coin Expert®, Sixth Edition

Chapter 5
“Answers to the Most Frequently Asked Coin Questions”

By Scott A Travers, Copyright 1991, 1996, 1998, 2001, 2004, 2007
ALL RIGHTS RESERVED. HOUSE OF COLLECTIBLES, AN IMPRINT OF RANDOM HOUSE, INC.

The following is an excerpt from One-Minute Coin Expert®, Fifth Edition available at bookstores everywhere.

What’s the most valuable U.S. coin?

On July 30, 2002, two leading auction firms jointly conducted a public auction for sale of the fabled 1933 Saint-Gaudens double eagle.  Pre-sale estimates were in the $4-million to $6-million range.  The coin sold for an astounding $7,590,020. This now stands as the highest price ever paid at auction – and the highest price confirmed to have been paid publicly – for a single U.S. coin.

In August 1999, an 1804 silver dollar changed hands at a New York City auction for $4,140,000.  That figure included a hammer price of $3,600,000 plus a 15-percent buyer’s fee of $540,000.  As this book goes to press, that stands as the highest price ever paid at auction – and the highest price confirmed to have been paid publicly – for a single U.S. coin.  In fact, it is more than double the previous record of $1,815,000, which was achieved by a different specimen of the same coin in April 1997.  Both coins were sold by Bowers and Merena Galleries of Wolfeboro, New Hampshire.

The 1804 dollar is not the rarest coin ever made by Uncle Sam; in fact, a number of others have lower mintages. However, it may be the most highly publicized – and romanticized – of all U.S. coins. Just 15 specimens are known, and all of them were minted many years after 1804. Eight are so-called “original” examples struck in the mid-1830s for inclusion in presentation sets prepared by the U.S. Mint as gifts from President Andrew Jackson to rulers in the Far and Middle East – monarchs with whom the U.S. government was seeking to establish trade relations at the time. The other seven coins are restrikes minted in the late 1850s.

The piece that brought the record price on Aug. 30, 1999, was an original (or Class I) example considered to be the finest of all the known 1804 silver dollars. It came from a collection formed over several generations by the Childs family of Vermont and had been purchased in 1945 by Charles Frederick Childs for a mere $5,000. Originally, the coin had been part of a presentation set given by U.S. envoy Edmund Roberts to the Sultan of Muscat, a Middle East nation now known as Oman.

I was an eyewitness to the historic sale at the Park Lane Hotel in midtown Manhattan. In fact, I was a serious bidder for the coin: My firm represented a client who was willing to pay significantly more than the previous auction record. The bidding exceeded his limit, but I did have the satisfaction of calling out the bid that shattered the old record: My offer of $1,750,000, when augmented by the 15-percent buyer’s fee, officially put the Childs coin over the top.

A 1913 Liberty head nickel, one of five known, sold for $1,485,000 in May 1996. This specimen was from the collection of Louis E. Eliasberg, Sr., and sold at public auction by Bowers and Merena. It was purchased by well-known dealer Jay Parrino of Missouri.

I have a collection of medallions struck by The Franklin Mint They’re attractive silver pieces portraying various United States presidents. I understand that very few were struck, and I have certificates from The Franklin Mint which guarantee they’re made of sterling silver. Are these medallions valuable?

Chances are, the items you have are worth no more than “melt value”-the value of the silver they contain. Thousands of Franklin Mint issues were struck and sold for substantial premiums, but a significant resale market never materialized. Your “medallions” may be beautiful, but they’re not negotiable; you can’t spend them. And since there isn’t a strong secondary market for these pieces as collectibles, the only real value they have is their precious metal.

Remember, three factors determine the value of a coin or medallion: (1) the level of preservation, which these medallions probably have in their favor because they are undoubtedly well preserved; (2) the number struck, and many Franklin Mint items have relatively low mintages; and (3) the collector base.

Even though your medallions may do well in two of these three areas, they’re seriously hurt in the third area – the collector base. And this is extremely important. Most collectors simply aren’t interested in Franklin Mint medallions. It’s a classic case of supply dramatically outstripping demand. Thousands are available and almost no one wants them.

If each of your medallions contains an ounce of silver, then each one is worth more or less the same as an ounce of silver. Sorry, but that’s the way it is.

I visited several countries in Europe a few years ago and picked up coins everywhere I went during my travels. Are they worth anything?

Probably not. These coins are probably worth no more than their face value in the countries where you obtained them. Even if by chance you got some unusual variety, it still isn’t likely that these coins would command much of a premium. There’s simply not much of a market for modern foreign coins.

The rare coin market in the United States is an easy-entry, easy-exit field; there is little regulation governing sellers of coins. Consequently, many of the people dealing in coins in this country are freewheeling entrepreneurs who don’t have extensive backgrounds in areas of numismatics that are, quite literally, foreign. Most of these people don’t speak foreign languages and don’t really know much about foreign coins. They stick with the subject they’re comfortable with-United States coins. Similarly, the overwhelming majority of coin collectors and coin investors in this country limit their purchases to U.S. issues.

Modern foreign coins do turn up in coin shops and at coin shows-but often they’re in boxes containing common material that dealers sell by the pound for nominal sums. The foreign coins you acquired in your travels might very well be found in such a box.

My grandmother left me an old Buffalo nickel but I can ‘t see the date. Is it worth anything, and is there any way to restore the date?

That Buffalo nickel could be worth a million dollars-in sentimental value. But if you try to cash that in, you won’t get more than a nickel.

Dateless Buffalo nickels are so worn that they’re barely identifiable as to type. These coins don’t have any collector value. Chemical date restorers are available-but while these might enable you to determine the date of the coin, they won’t do a thing to enhance its collector value.

I just received a telephone call from someone I’ve never heard of, trying to sell me rare coins. “What should I do?”

Hang up the phone! Selling coins over the telephone is never a cost-effective proposition. Consequently, just about anyone who sells coins over the phone-via telemarketing-marks up their prices tremendously, in some cases several hundred percent. I’m sure there must be reputable telemarketers somewhere, but they’re few and far between.

I’ve heard chilling horror stories about the abuses perpetrated by telemarketers. However, these go far beyond the scope of this response. Suffice it to say that if you’re ever called on the phone by someone selling coins, someone you don’t know, you should hang up the phone. Don’t be polite. And never, under any circumstances, give your credit-card number over the telephone to someone that you have not called.

I talked to a coin-collector friend about selling some mint errors I found in change, but my friend said the coins I found weren’t really “errors. ” Is he right?

There are many coins that deviate from the norm. Some are off center and others exhibit doubled letters, to cite a couple. These coins were once lumped together as “mint errors.” Now certain specialists argue that these coins should be classified under “minting varieties.”

Author Alan Herbert is one of these experts. In Herbert’s view, not every unusual coin is an “error.” The coin may have been manufactured that way, perhaps because the mint was using worn dies to save money. Herbert differentiates between these intentionally different- looking coins and those that come out different by mistake. Only the latter, he argues, are really errors, but both come under the heading “minting varieties.”

An excellent listing of minting varieties can be found in The Official Price Guide to Mint Errors, 7th Edition, by Alan Herbert (House of Collectibles/Random House, Inc., 2007).

Last year, after reading a financial publication, I decided to invest $5, 000 with a very good company that sells bullion and coins. I got several $20 gold pieces. They looked pretty and I put them away for a while. Last week, I decided to show them to a local coin dealer. He looked at them and said they’re not worth anything. What should I do?

One thing you shouldn’t do is accept the opinion of your local coin dealer without checking further. Any dealer to whom you bring coins for an appraisal has a vested interest in the outcome of the discussion. If you ask a dealer to render an opinion on coins that you purchased from a competitor, you really can’t expect him to be objective. Human nature being what it is, that dealer isn’t going to say: “You got a wonderful deal. You shouldn’t buy coins from me; you should buy all your coins from my competitor.” He’s much more likely to say: “You got a terrible deal. These are horrible coins. You should return them and buy all your coins from me.”

In buying coins and in getting coins appraised, you should always seek the protection of independent third- party grading. Buy only coins that have been certified by leading independent grading services. And before having coins appraised, submit them for certification by one of these firms. These organizations will encapsulate your coins in tamper-resistant sonically sealed holders with inserts stating their grade. That way, you’ll know what your coins are worth-or what they aren’t worth.

I understand that coins are graded on a 1-through-70 scale. How can I tell the difference between a coin which grades 65 and is worth $5,000 and a similar coin which grades 64 and is worth only $1, 000?

Don’t expect to be able to tell the difference. Only trained experts can do this. But do apply a little common sense. If you have a portrait coin with a likeness of Miss Liberty, for example, look at the portrait. Her cheek is what is known as a grade-sensitive area. If you see nicks, marks, scratches, gouges, or other imperfections on that cheek, common sense should tell you that this particular coin probably won’t qualify for a grade of Mint State-65.

There’s a greater ethical burden on the coin dealer’s shoulders than on someone who is selling a uniform commodity. Suppose you go out and buy yourself a television set-a brand-name 19-inch television set. As long as it comes in a factory-sealed box and has a U.S.A. warranty, you can be reasonably certain that you’re getting what you’re paying for. But if you buy coins which haven’t been independently certified, you have no reasonable certainty as to what you’re getting. If you don’t know your coins, know your dealer. If you don’t know either, get your coins independently certified. In fact, play it safe: Always get your coins certified by NGC, PCGS, ANACS, or ICG.

I’ve heard about independent certification, and I have some coins I might want to have certified. Lots certification services are reliable, and how do I get my coins certified by them?

As this is written, four organizations which have reputations for strict, consistent grading-and whose coins enjoy great acceptance in sight-unseen trading-are the Professional Coin Grading Service (PCGS), the Numismatic Guaranty Corporation of America (NGC), ANACS, and the Independent Coin Grading Company (ICG). You can write for a list of authorized dealers, or submit coins, as follows:

Where can I sell some of these pocket-change rarities?

Perhaps the leading market-maker in off-metal U.S. coins is Fred Weinberg & Co., Inc., 16311 Ventura Blvd., Encino, CA 91436.  Be sure to call and confirm the arrangements before sending any coins (the number is 1-818-986-3733).

With certification of coins being so important is there any book I can buy that would explain in clear and understandable terms exactly what standards are used by these various certification organizations?

At press time, August 2004, the only independent  grading service that has issued an authoritative book defining its grading standards is PCGS. Its award-winning , 432-page profusely illustrated book, The Official Guide to Coin Grading and Counterfeit Detection, Second Edition (House of Collectibles/Random House, Inc., $19.95), will help you understand what’s involved in the grading of coins and what factors are taken into consideration when assigning numerical grades. The grading standards are authored by the book’s exceptionally-skilled text author, John W. Dannreuther. I am proud and honored to be the book’s editor and applaud PCGS and random House for this colossal effort.

I have some silver dimes, quarters, and half dollars. All of them are common-date coins, and all are well worn from having circulated. I assume they’re worth just their bullion or metal value. How can I determine what they’re worth?

The rule of thumb is that for every $1 of circulated silver U.S. coins, the value is approximately 70 to 75 percent of the price of a troy ounce of silver on that day. If you have five silver dimes and one silver half dollar-or any other combination adding up to $1-and the price of silver that day is $4 an ounce, you’d probably be able to cash in those coins for $2.80.

Of course, different equations are used for different coins. The formula given here applies only to traditional U.S. silver coins with a silver content of 90 percent. These include the dimes, quarters, and half dollars made before 1965. Kennedy half dollars minted between 1965 and 1970 also contain silver-but only 40 percent. You’ll get less money for these. Jefferson nickels made during World War 11 also contain silver, but in an altogether different composition.

I have about $500 to spend and I want to get involved in buying coins. Were should I start?

High-grade coins – those with grades of at least Mint State-65 or Proof-65 – performed very well in the market’s last big boom – and although their prices have fallen since then, they still hold great appeal. People want coins in the very highest grades they can obtain, or at least in the highest grades they can afford.

Demand in the coin market moves horizontally, not vertically. If someone is collecting a certain kind of coin – Morgan silver dollars, for example – in high Mint State grades and the prices for these coins go up dramatically, that buyer may find it difficult to purchase more Morgan dollars in those grades. But rather than lowering his sights and buying Morgan dollars in lower grades, he’ll probably turn instead to a different kind of coin that’s substantially less expensive – and then collect that series in the same high grades to which he was accustomed with Morgan dollars.

As this is written, one good starting place would be Mint State-66 or Mint State-67 Mercury dimes. Another would be Mint State-66 Walking Liberty half dollars. A third would be Franklin half dollars graded Mint State-66 or even Mint State-67. All of these coins are affordable, all of them have good potential, and all of them are quite scarce in extremely high grades.

With Mercury dimes, for example, there are certain dates for which only five or six specimens have been certified in Mint State-67. Yet some of these coins can be purchased for less than $1,000-sometimes substantially less -in Mint State-67. That’s a tremendous value; you really can’t get hurt when you buy a coin like this.

Is there any one coin that you recommend as the best to buy?

My favorite United States coin of all time is the Liberty Seated quarter. Buy the highest grade you can afford. I like both proof and business-strike examples (the coins the Mint intended people to spend) in grades 65 and above on the 1-through-70 grading scale. Different styles or “varieties” of Liberty Seated quarters were struck from 1838 through 1891.

A “type” coin is a representative example of a particular coin series, but not one of the rarest and most valuable specimens from that series. Experienced collectors and investors have found certain type coins to be the biggest winners. I extend my highest recommendation-in high grades only-to the following: Liberty Seated dimes, quarters, halves, and dollars; Barber dimes, quarters, and halves; Bust dimes, quarters, halves, and dollars; Trade dollars; and nonmodern proof gold coinage. These coins are the blue chips, not the “sleepers,” and have formed the backbone of the market for U.S. coins. But most importantly, these coins are beautiful.

What’s the lowest-risk/highest-reward way to get involved investing in gold coins?

Common-date Type 3 Liberty Head double eagles in grades of MS-60 to MS-62 are low-risk/high-reward gold coin investments as this is written in March 2007.

Type 3 “Lib” $20s are the most popular and most commonly collected coins in this long-running series. They cover its final three decades, from 1877 through 1907. For years, examples in lower mint-state grades have provided just under an ounce of gold for not much more than the price of one-ounce gold bullion coins – but with the added kicker of bonus price potential as collectibles. Not so long ago, these coins were selling for close to $1,000.

All that changed when the one-ounce American Buffalo coins hit the market. While the new coins were selling like hotcakes, the Type 3 Libs were languishing in dealers’ showcases – and their prices started to plunge. Before long, they could be had for little more than melt value. With gold at $600 an ounce, a Lib $20 in MS-60 or 61 might cost you $700.

The premiums have collapsed because people have been spending the money instead on American Buffalo coins, which they find more interesting at the moment. But the value may soon return to these Lib $20s once the novelty and strong initial demand for the Buffalo coins subside. So now might be the time to buy the Libs, while you can get them for just $700 or $750 – including pieces certified by the Professional Coin Grading Service (PCGS) and the Numismatic Guaranty Corporation of America (NGC). For that modest sum, you can even get a coin with nice eye appeal that nearly makes the grade of MS-63.

If analysts are right and gold goes up to $800 or $900 an ounce, you’ll end up with a double-barreled winner: a coin whose value rises both as bullion and as a collectible.

How much can a dealer mark up coins sold for investment without getting in trouble with the government?

If you’re selling something that’s not an investment, you can charge whatever the market will bear. For example, if you buy a painting for $500 and sell it for $50,000, that’s not illegal in itself. But if you represent that painting as a good investment, you’ll surely have the watchdogs from the Federal Trade Commission sniffing down your neck, because the market value of that painting would have to go up spectacularly in a relatively short time to come even close to the $50,000 that your buyer was foolish enough to pay for it.

Barry J. Cutler, former director of the FTC’s Bureau of Consumer Protection, says that when he was working for the commission, dealers selling items for investment tended to invite government scrutiny when they exceeded a markup of 100 percent, but that a 50-percent or even 75-percent markup (though this can be pushing it, he says)  usually would escape the FTC’s scrutiny. This doesn’t mean that in private litigation in a civil court, a judge is going to give a dealer his or her blessings for a 75-percent markup – but based on the FTC’s apparent yardstick, a dealer charging 50 percent or even 75 percent is probably free and clear.

Dealer representations can be very important in this area. Often, a dealer will claim to be charging a commission of only 2 or 3 percent when in fact he or she is charging 50 percent–in which case that person is committing fraud. By the way, Barry Cutler is now an attorney at McCutcheon, Doyle, Brown, and Enersen in Washington, D.C.

Why do I have to pay more than the price guides for certain coins?

Coin market analyst Maurice H. Rosen of Plainview, New York, editor and publisher o the prize-winning Rosen Numismatic Advisory, several years ago came up with the term “market premium factor,” or MPF to cover such situations. When you’re purchasing coins, MPF refers to the percentage you’re sometimes required to pay above published price-guide values.

Price guides are reflective of the marketplace, but the marketplace is not necessarily reflective of price guides. If a price guide says a coin is worth $1,000, but that coin is booming in the marketplace, suddenly you might have to pay $1,400, $1,500 or $1,600 to acquire it, even though the previous week’s price guide indicated a market value of $1,000. So if you’re at a coin convention and there’s a particular coin you want, and the market for that coin is hot, just because your week-old pocket price guide says it’s worth $1,000 doesn’t mean you can write out a check for $1,000 to any dealer who has that coin and walk away with it.

If the market is hot, you need to use your intuition – your “market smarts” – in deciding what would be a fair market price for that coin. If the market is really booming, you might even have to pay upwards of $2,000 for that sought-after numismatic treasure.

*     *     *     *

MORE FREQUENTLY ASKED QUESTIONS, WITH THE EMPHASIS ON GOLD (updated Dec. 2007)

Q.   Precious metals, in particular GOLD, are showing strength.  Gold is hovering around $800 an ounce.  In the 1990’s, gold was barely over $250 an ounce. There’s talk about a return of inflation.  Investors fear a terrorist attack on U.S. soil. How does this affect the rare gold coin market?

Domestic monetary inflating and higher gold prices have long served as “economic justification” for a sustained increase in rare gold coin prices.  The current bull market in rare gold coins would be expanded and sustained in the event inflation returns or gold (now around $800 an ounce)—sees a continued impressive rise, especially above the $1,000 level.  Broad demand comes from rare gold coins being perceived as an inflationary hedge and from coin dealers plowing their profits from gold investments back into the rare coin market.  Terrorism fears are bringing investors back to “safe haven” gold coin investments—coins whose values are primarily determined by their gold content.

Q. What does the fear of a crippling terrorist attack have to do with consumers wanting to buy gold coins?

Rare coins have long been viewed as an insurance policy against calamity.  With the continued threat of terrorism looming over Americans, rare coins are being snapped up by jittery investors. Certain rare gold coins contain high precious metals content—a lot of gold. And if a spectacular event were to paralyze the economy, these coins would serve as a store of value and a facilitator of trade and barter. In a severe economic crisis, it might be easier to buy food with gold coins than with paper dollars.

Q. What makes a coin valuable?

There are 3 factors that determine a rare coin’s value:  1) Grade or condition:  The number of nicks flaws and scratches a coin has on it—or doesn’t have on it—plays a key role in a coin’s demand.  Coins are graded on a scale of one to seventy.  One represents a coin so well worn it can barely be identified; seventy represents a perfect coin.  2) Supply or rarity:  The number of coins extant or available has a major impact on a coin’s value.  A coin that is unique is rarer than a coin that has a million examples known.  3) Demand or collector base: The number of collectors that want a coin have an important impact on a coin’s value.  Even if a coin is available in a quantity of a million, it will have a high value if two million persons want that particular coin.

Q.      What’s the difference between a “bullion” coin that has an ounce of gold and a “rare” coin that has an ounce of gold?

A gold “bullion” coin that has an ounce of gold is worth what an ounce of gold is worth—about $800.  A “rare” coin that has an ounce of coin derives its value from collectors and can be worth millions of dollars.  A 1933 Saint-Gaudens twenty-dollar gold piece—that contains about an ounce of gold—sold at public auction about 5 years ago for $7.59 million. The government says that it is the only twenty dollar gold piece dated 1933 that is legal to own.

Q. So you have a new book out from Random House titled SCOTT TRAVERS’ TOP 88 COINS TO BUY & SELL. What’s your Number One winner? And what’s your Number One loser?

The Number One winner is the Type 3 Liberty head twenty dollar gold piece (or “double eagle”) in Mint State or Uncirculated condition. These coins were manufactured by the U.S. Mint from 1877-1907. They each contain about an ounce of gold, are true collector coins, but declined in value after the U.S. Mint introduced its Buffalo gold bullion coin. For a very small amount of money above the intrinsic or melt value of the gold, you can buy a large Uncirculated coin manufactured in the late 1800’s or early 1900’s. When the novelty of the Buffalo gold coins wear off, I expect these Liberty head double eagle gold coins to easily double or triple in value. The risk is minimal, as each coin is worth at least what an ounce of gold is worth. And if gold goes to $1,000 an ounce, watch out—I would anticipate even more impressive price performance.

The Number One loser is gold PLATED coins offered for sale on home-shopping television programs. These shows don’t lend themselves to selling collector coins that are truly rare. Thus, right off the bat, the coins they offer for sale are less-than-prime collectibles. This format is expensive for the sellers, who are pressured to cut corners. Last year, I worked with a nationally syndicated television program that hired two independent laboratories to test some of the platinum “layered” coins offered on those shows. According to the lab results, some of the sets of those coins contained *no* platinum at all.

Q. How does a consumer get started collecting or investing in gold coins?

A consumer has to raise his or her level of knowledge from that of swindler’s mark to that of informed amateur.  This is done by gaining familiarity with grading standards and pricing mechanisms, while slowly making purchases over time.  Book knowledge combined with practical experience will all pay off in the end in a marketplace where “caveat emptor”—let the buyer beware—is an understatement.

Q. What are “certified” coins?

Organizations have been established that independently grade or rate a coin on that one to seventy scale, where one is the lowest and seventy is the highest.  The two leading services are the Professional Coin Grading Service (PCGS) and the Numismatic Guaranty Corporation (NGC).  These organizations assign a grade and encapsulate the coin in a sonically sealed, tamper-resistant holder.  Consumers should only buy rare coins that have been certified by a leading grading service; this is the cornerstone of consumer protection in the coin field.

Q.  How can someone who buys a gold coin be certain of getting good value?

Buy pre-packaged U.S. Mint products or coins that are certified by credible, third-party grading services, such as PCGS or NGC, and receive pricing guidance for those coins from a reliable price guide.  If you purchase coins that are accurately graded and fairly priced, you have, for all practical purposes, eliminated the risks associated with acquisition.

Q. With all this talk about buying things online—is a consumer safe buying expensive gold coins through online auction facilitators, such as eBay?  What are the risks?

Consumers should treat online coin purchases the same way they treat mail-order purchases: very carefully.  Purchase only from reputable dealers and buy only coins certified by leading third-party grading services or pre-packaged U.S. Mint products.  Online digital images of coins can be misleading and should not be relied upon.  And beware of shills that bid up the values of coins on behalf of the selling dealer.

Q.  What’s the right way to handle a coin? –and to store a coin?

A coin should be held tightly by its edge between your thumb and forefinger.  Always examine a coin over a soft surface in case you drop the coin.  Never abrasively clean your coins.  And be certain to store your coins in a dry, stable environment and away from airborne particulate matter.

In this thorough, accessible introduction to coin collecting and investing, numismatic expert and consumer advocate Scott Travers shows you how today’s unregulated rare coin market really works and why trading on “insider information” in the coin industry is not only legal, but essential for sustaining profits.

WINNER OF THE NLG’S “BEST INVESTMENT BOOK” AWARD

The Investor’s Guide to Coin Trading – Published by John Wiley and Sons, Inc., Copyright 1990, by Scott A. Travers

This outdated book, published in 1990 and no longer in print, may be ordered directly from the author for $10 plus $2 per book for postage and handling: Scott Travers Information Services, P.O. Box 1711, F.D.R. Station, New York, NY 10150-1711. NYS residents should add appropriate sales tax.

Excerpt from The Investor’s Guide to Coin Trading

Sections:
Rare Coin Insider Trading
Selling Off Right Before a Massive Downturn
Price Manipulation
The Inner Circle
The Bad Old Days
Today’s Improved Market
Promotions of Coins in Newsletters
Insider Economics
Insights from a Leading Investment Banker

This is an excerpt from The investor’s Guide to Coin Trading. For more information, contact Scott Travers Information Services at info@PocketChangeLottery.com

The Investor’s Guide To Coin Trading, by Scott A. Travers
Copyright 1990. ALL RIGHTS RESERVED

INSIDER TRADING OF RARE COINS

“Honest, if you buy this coin I promise I’ll bid that coin to three times the level that it’s listed on the sheet for now. It’s the only one known. I can bid it up to any level you want. What level would you like me to bid it up to?”

- Well-known market-maker with a coin listed in a certified coin population report as the only one graded for that grade.

  During my years as a coin trader, I've witnessed many examples of insider 
trading and observed very closely the way that information is disseminated -
its ethical use, unethical use, and uneven distribution in this field.

RARE COIN INSIDER TRADING

  Just what is rare coin insider trading?  Outsiders perceive it as the 
manipulation of the coin market for material gain by people who take advantage 
of their knowledge of inside information, knowledge not available to the 
general coin-buying public.  In point of fact, however, "insider trading" is 
a nebulous term not only in the coin market, but also in the securities 
industry.  There is no universally accepted or court-sanctioned definition 
for Wall Street insider trading, so no one should expect a specific 
definition for rare coin insider trading either. A number of prominent coin 
dealers capitalize on their knowledge of insider information to make 
advantageous deals.  In fact this goes on so routinely that even Ivan Boesky 
would be impressed.  The methods of market manipulation in this field are 
almost endless.  Yet up to now few investors have tapped the profit potential 
inherent in this freewheeling situation. The government doesn't regulate the 
coin market; people in this field don't have government agencies monitoring 
their day-to-day activity.  For this reason, and because the coin industry 
is relatively small in size, savvy investors can put themselves in the same 
advantageous position-the same insider position-as major dealers.
   For example, an investor can purchase a coin that he or she knows 
is the only one of its kind to which a certain grade has been assigned a 
given grading service, and then make arrangements to have a dealer bid up 
the value of that coin.
   An investor can get friendly with a dealer and learn from that 
contact, on a confidential basis, that five rare coins of a certain type and 
date were submitted by the dealer for grading and will be coming into the 
market soon.
   Insider information is used routinely, of course, in many different 
aspects of daily life.  And it's used in ways that are legal and ways that 
are not.
   Suppose your local congresswoman knows that certain property will 
soon be the site of a major development, and suppose she tips off her cousin, 
who then makes an investment in the area.  That's leakage insider information. 
Suppose the chairman of the Federal Reserve Board is drafting a statement on 
interest rates that's likely to have a dramatic effect on the securities 
industry.  Any number of his colleagues or associates might conceivably be 
aware of what he's preparing to say, and this information might enable them 
to make-or advise their friends to make-some highly lucrative deals.
Although this kind of insider information permeates the coin field, I don't 
believe it to be a major problem.  There are mechanisms place that will limit 
to a great degree, or even prevent, insider trades.
   As I have noted, this industry is relatively small; insider information
doesn't remain secret very long.
   With that said, I must point out that there are certain types of inside 
information that have put some people at a tremendous advantage in the coin 
field and have left others at a great disadvantage.

Selling Off Right Before a Massive Downturn

  We saw a good example of this phenomenon in July 1988, when coin dealers
at the annual convention of the American Numismatic Association were stunned by 
the announcement that coins supposedly certified by the Professional Coin 
Grading Service had turned up in counterfeit plastic slabs.  Apparently some 
dealers learned of the situation before the announcement was made-and based 
on this information, gained through insider contacts, they immediately sold 
many of their PCGS-graded coins.  Some of the coins they sold were in 
counterfeit slabs and, like virtually all the coins of this type, these were 
overgraded and therefore overpriced.  But even the coins in genuine slabs 
were worth substantially less following the announcement, because the 
scandal shook market confidence (at least for a short time) in PCGS coins as 
a whole.  This was a clear instance where knowledge of insider information 
helped certain dealers significantly.

Price Manipulation

  Another common use of insider information in the coin market is price 
manipulation.  Often this involves coins with very low populations, coins 
that have been graded in very small quantities in a given grade by a 
particular grading service.
   From the insider's standpoint, the ideal population is one.  The 
chances for price manipulation are maximized when a dealer owns the only coin 
of a certain kind to which a given grade has been assigned.  This information 
can be obtained by studying the population reports issued by the major 
grading services.  So long as the dealer is certain that no other coins of 
that type and that grade are available, he or she can bid up the price of 
that coin on the teletype system. (if another example happened to exist, the 
dealer would be obliged to purchase it at his or her bid price if the coin's 
owner belonged to the same trading network and chose to accept the bid.)
Suppose this coin is listed initially at $2,500 in the Certified Coin Dealer 
Newsletter or Blue Sheet, the standard weekly price guide for coins that have 
been independently certified.  And suppose the dealer offers progressively 
higher bids, upping the ante to $5,000, to $6,000,and finally to $7,000.  
After $7,000 has been offered for several weeks, the publishers of the Blue 
Sheet may raise the coin's listed price from $2,500 to $7,000.  At that point 
the dealer will sell it to someone who is unaware of what has been going on, 
perhaps another dealer unschooled in the ways of such games or perhaps to an 
unsuspecting collector or investor.  The dealer may even offer a "discount": 
With the Blue Sheet price at $7,000, maybe the coin will be offered for 
"just" $6,000.  And then, when the dealer stops bidding $7,000 for the coin 
and has sold it for $6,000, its price will go back down to where it was 
before and where it belongs: $2,500.

The Inner Circle

   Collectors and investors can avoid this type of manipulation by doing 
business with dealers who are not only honorable, but also members of the 
coin market's inner circle-that is, dealers who know the ins and outs of 
population reports and will not themselves fall victim to this kind of scam.
Keep in mind that dealers themselves can be victimized if they don't stay 
fully informed on all the factors involved in determining the value of a 
coin.  If they don't pay close attention to population reports, they too can 
be deceived by price lists where the value reflects manipulation rather than 
real demand.  They may think they're getting a bargain when someone comes up 
to their table at a show and offers them such a coin at a price well below 
the Blue Sheet level.  And they'll pass this "bargain" on to a customer, not 
because they too are trying to take advantage of someone, but because they 
themselves aren't very knowledgeable.
   In many cases it is wise to do business only with someone who is an 
authorized dealer of NGC or PCGS or both.  On request, both organizations 
will provide a current list of their authorized dealers.
   Collectors, investors, and dealers, too, should watch closely for signs of 
volatility in any specific area of the market.  This is especially true of 
areas where few coins have been certified and where, for that reason, one 
dealer can control a complete population.  Great volatility in any particular 
area doesn't always mean that coins are being traded rapidly; it may mean 
that a dealer has manipulated that portion of the marketplace-manipulated it 
upward and then sold the specific coin or coins, causing bid levels to drop 
precipitously.
   PCGS has the following anti-self-interest policy posted in its grading room:

GRADERS !!!!
PCGS ANTI-SELF-INTEREST POLICY

PCGS graders cannot do any of the following:
1.      Grade their own coins.
2.      Grade coins they submit for clients or other dealers.
3.      Grade coins they have a financial interest in (split profit deals,
        etc.)
4.      Verify any of the above coins.
5.      Participate in any discussion whatsoever-inside or outside of the 
        grading room-either before, during or after the coins are in the 
        grading process.

FIDUCIARY RESPONSIBILITY
PCGS graders cannot use any information obtained inside the grading room 
before the information is available in the general market place.  More 
specifically graders cannot do any of the following:

1 .     Buy coins from a dealer based on information obtained in the grading 
        room. if a grader finds out who a coin or group of coins belongs to 
        while the coins are in the grading process, that grader cannot 
        contact the submitting dealer for the purpose of purchasing the coins 
        (or obtaining first shot, etc.) until 10 days after the dealer has 
        received his coins back from PCGS.
2.      Sell or buy coins and/or coin positions based on information obtained 
        in the grading room.

Any grader who has one substantiated violation of item #1 or who shows a 
consistent pattern of violating item #2 will be immediately terminated.

THE BAD OLD DAYS

  In the early 1980s we witnessed market practices that were far less
ethical than those we have today.  Dealers at that time often drove up bid levels
in the Coin Dealer Newsletter or Grey Sheet, the standard weekly price guide for 
all U.S. coins.  They did this on a constant basis.  And they didn't have to 
concern themselves with rules and regulations requiring them to buy such 
coins if those coins were offered.
  Circa-1980 dealers could take a coin listed for $400 in the Coin Dealer 
Newsletter, bid $600, $700, $1,000-and keep bidding higher and higher amounts 
on the teletype system. in those days they had no real obligation to purchase 
any coins that people sent; coins were not certified then, and we didn't have 
a sight-unseen system.  The dealers would simply send the coins back, saying 
they didn't meet their high grading standards. Dealer promotions and price 
manipulation played a big part in the marketplace confusion over grading 
standards.  In driving up prices, dealers were looking to make bigger 
profits on coins they already had; they had no interest in buying such coins 
from anyone else.  Thus, as people sent them coins, these dealers just 
shipped them right back.  A number of people would then submit coins of the 
next higher grade, since the artificially inflated price levels were high 
enough to justify selling even these at the quoted bids.  Again the dealers 
would send the coins back.  In some cases dealers were offering to buy coins 
graded MS-65 at a certain price, and people were sending them coins graded as 
high as MS-67; even then the coins were returned.

Today’s Improved Market

  Although manipulation does occur today, it's much more difficult to
drive up price-guide levels-especially those of certified coins, since dealers must be 
willing to buy any coins that are offered.  This discourages the unscrupulous 
from trying to manipulate prices of the more common certified coins, where 
hundreds or even thousands of examples may exist.
  As growing numbers of coins are certified, population reports will list far 
fewer one-of-a-kind coins.  Already the number is dwindling, even among 
supergrade coins bearing the very high MS and proof numbers that grading 
services assign quite sparingly.  In most cases enough coins are available 
to protect against price manipulation.  Today super-grade commemorative coins 
appear to offer the best opportunities for manipulators-and the greatest 
risk for potential victims-because these coins exist in very limited numbers 
in certified grades of MS-66 and above.
  Clearly the coin market doesn't have a perfect trading system.
But in a world where no system is completely perfect, today's system is 
certainly far better than yesterday's.

PROMOTIONS OF COINS IN NEWSLETTERS

  Newsletters serve as yet another way to promote coins and influence
their prices.  Some mass-market coin dealers publish their own newsletters and
use them on a regular basis to promote the coins they have for sale.
Often it's possible to anticipate such promotions-even without being a true 
market insider-simply by analyzing which coins these dealers have promoted in 
the past.
  When dealers send newsletters to thousands upon thousands of collectors and 
investors, obviously they can't use them to promote coins of which just 
three examples, or even 300, are known.  They have to select coins that exist 
in more promotable numbers.  Among the series that combine sufficient numbers 
with broad-based popularity are Morgan silver dollars, Saint-Gaudens double 
eagles, and commemoratives.
  Dealers stage promotions for these and other popular coins on a regular, 
systematic basis.  They may promote Saint-Gaudens double eagles one month, 
Morgan dollars the next month, and commemoratives the month after that.  If 
you haven't seen the Morgan dollar promoted in one of these newsletters in a 
while, you can be quite certain that its time will be coming very soon.  And 
that might be a good time to buy Morgan dollars-before the promotion hits, 
with all its attendant hype, and prices go up in response.
  I recommend that you get on the mailing lists of all the large dealerships 
that publish and distribute such newsletters.  Often they're quite 
informative and even entertaining, and they can help guide you in charting 
the direction of the market.

INSIDER ECONOMICS

  Paul Taglione, a former principal of the now defunct New England Rare
Coin Galleries, has written a number of valuable books and articles analyzing the
coin market's inner workings.  Taglione and his company became targets of a 
Federal Trade Commission lawsuit charging them with unfair or deceptive acts 
or practices in or affecting commerce.  Despite this, and to some extent 
because of this, his in-sights on the market are fascinating and illuminating.
The following is an excerpt from Taglione's book, "An Investment Philosophy  
for the Prudent Consumer" (Numismatic Research and Service Corporation, 
Boston, 1986).

Across the expanse of market actors currently active in the Numismatic Markets, technical numismatic knowledge and comprehension of the economics of the various Numismatic Markets is, in my view, extremely variable in depth and quality. An amazing number of market actors do not possess adequate technical knowledge of areas in which they trade. incredibly enough, very few market actors seriously study the economics of the Numismatic Markets in which they participate. Any private numismatic investor can obtain an edge in a specialized area and, I am perfectly convinced, any private investor can obtain a general edge in even wider areas of the Numismatic Markets. The “investment edge”, as I see it, involves a wide- ranging knowledge of the economics of the area in which one wishes to invest. A first step in obtaining this knowledge is researching and examining the supply side of an area. How many examples of this coin exist? How many come to market? is the supply of this particular coin or class of coins inelastic to increased demand? The next step is obtaining a knowledge of the size, intensity and quality of demand. This step must begin at the level of the individual buyer. What sort of market actor demands and desires this coin? Does the acquisition of this coin satisfy a preference or does it stimulate a preference to acquire more coins? In my opinion, the quality of demand is much more important than its size or intensity. The size or intensity of demand can be the result of dictated preference and if quality of demand is taken to include endurance and continuity (which I take it to include), then it becomes obvious that demand which derives from dictated preference is markedly lacking in these qualities. Another step in obtaining the investment edge is investigating the parameters of price at which buyers can and do acquire material. Obviously the demand for a common coin is much more sensitive to price than is the demand for a rare coin. An investor must exercise a great deal more caution in acquiring a common coin in terms of price than is required for obtaining a rarity whose market appearance in and of itself generates a value for the acquisition opportunity. Perhaps the best investment edge of all is the recognition that the edge is complicated and varies from area to area and from time to time. Part of this recognition is an awareness that choosing the elusive and storied “right dealer” might not be an edge at all; it might be a disadvantage!

INSIGHTS FROM A LEADING INVESTMENT BANKER

  One of the most brilliant coin collectors I know is a vice president at
a world-famous conservative investment banking house.  This numismatist holds 
an M.B.A. from the University of Chicago and a B.S. from the University of 
Pennsylvania's Wharton School of Finance.  Although he spends a lot of time 
coordinating multibillion-dollar deals in traditional capital appreciation 
areas, he has carefully scrutinized and studied the investment rare coin 
market for over 20 years.  I can personally attest to his grading ability 
and market timing: It's far superior to most savvy professional coin traders'.  
The genius of his analytical investment mind applied to the coin market's 
structure and direction is presented here for the first time.  He has 
requested anonymity.

Here are my questions and his responses:

Q. What do you think about the efficiency of the rare coin marketplace?

A. Let me discuss efficiency from a couple of perspectives. Certainly, with certification, the rare coin marketplace is more efficient than it used to be, particularly for low-end coins within a given grade. However, unlike many other investments that are fungible, such as stocks or bonds, rare coins are all pretty much unique. Certain individuals in the market possess superior knowledge and skills, particularly grading skills, and can use these to make money that the average market participant cannot. In addition, subjectivity and perception can affect a coin’s value because two individuals may find a given coin more or less desirable, which will affect their respective valuations. What this says is, even with the standardization of grading there will always be an opportunity to improve upon your investment returns by becoming more knowledgeable about grading. Moreover, since not all coins are certified yet, this adds yet another layer of inefficiency relating to raw coins and those not graded by PCGS or NGC. There is also a source of inefficiency built into the market-place because of the quality of the information flow, particularly as it relates to prices. Putting aside differences in values due to grade, eye appeal, etc., the current reporting system leaves a lot of room for uncertainty. The actual marketplace includes the electronic information/trading system called the American Numismatic Exchange, teletype networks, major coin conventions, auctions, and private transactions. The reporting is done by price guides such as the Coin Dealer Newsletter and Coin World’s “Trends,” auction prices realized lists, and word-of-mouth. Gathering useful information from these diverse sources and presenting it in a timely and accurate fashion is a most difficult task. To the extent that some market participants don’t have the best information as to value levels (because the price guides come out only weekly or they don’t have accurate values in the first place), they can be taken advantage of. Furthermore, the inefficiency is exacerbated should any manipulation take place within the reporting system.

Q. Based on your knowledge of conventional financial investments, what aspect of the rare coin field needs the greatest refinement in order for this industry to attract the greatest number of investors?

A. If you had asked me this question a few years ago, I would have said grading. But with the use of the 70-point grading system and PCGS and NGC, grading has become very much refined. I believe the area that must be improved next is the information reporting system. With values at high absolute levels and a good deal of price volatility, there must be more accurate, up-to-date information on values for the great majority of investors to be comfortable in participating in the marketplace. This means better price guides and some source of more timely information. For instance, I know that oftentimes the major coin conventions represent the truest marketplaces and best indicators of values at a given point in time. Yet it can take a couple of weeks for any price movements emanating from one of these shows to be reflected in the price guides. Some sort of electronic service that captures and distributes this information on a real-time basis would be of immense value. The practicalities of how the coin market works may prevent the realization of this, but we certainly can use some improvement.

Q. Do you feel that “insider trading” in rare coins – which presently are not regulated as securities – is fair? Why?

A. Obviously, any use of information that is not widely available for personal gain has the potential to be deemed unfair. As it relates to rare coins, there ought to be far fewer types of information that could lead to this, and these should mainly be associated with things affecting the supply of or demand for coins, technical as opposed to fundamental information. (There aren’t takeovers or earnings announcements in the coin market.) For example, suppose a dealer buys a hoard of five coins, all graded the same, which doubles the known population. If he distributes them in a way that allows him to sell to others at the current high value because each purchaser doesn’t know about the remainder of the hoard, most would agree that this dealer has used his trading expertise in a proper way. On the other hand, if this dealer finds out about the hoard from one of the grading services (maybe he submitted the coins on behalf of a customer) and sells a similar coin from his inventory on the wholesale market before the news of the new five coins is generally available, this is much closer to insider trading and clearly unfair.

Q. There clearly are a number of inner-circle dealers who have access to information that might help these dealers and their clients profit tremendously. Should industry leaders restrict this flow of information or attempt to release it on an equitable basis?

A. In general the more information the market has, the better. industry leaders should develop a set of rules as to what information is appropriate to release and what is genuinely proprietary. After all, in many instances a dealer is acting on behalf of a client and is justified in withholding certain information. As long as reporting is accurate and there is no manipulation going on, it is hard to argue that dealers should be compelled to release much technical information (such as a large buyer coming into the market).

Q. Given your understanding of the working of the mechanisms in the coin market, how would this field’s structure change if there was a loss of confidence?

A. It is tremendously important for the leaders in the industry to ensure that collectors and investors have confidence that the game is fair. Only then can the base of investors be broadened. Any scandal that causes a major loss of confidence, whether it comes from counterfeit holders, widespread manipulation or collusion, or other significant abuses, can irreparably damage the marketplace.

Q. When rare coins are considered as an investment, what should the coin buyer consider?

A. I believe an investor in coins should consider several things. First, appreciation potential, since this is the ultimate goal. Many different factors go into the rate at which a coin appreciates in value, but the key ones are the existence of a meaningful (and hopefully growing) base of collectors and investors who want to purchase coins of this type and the scarcity of a given coin. Many coins are scarce but are relatively inexpensive because they lack a meaningful demand base. Conversely, even coins that are readily available in the marketplace can experience dramatic appreciation if there is a high level of demand. Next, related to appreciation potential, is timing. An investor should be aware of relative values and should time his or her purchases of coins in a given category to reflect both valuation in relation to coins in other categories and valuation in relation to where in the value cycle a coin stands. The goal is to try to purchase coins that are relatively undervalued. For example, if an MS66 specimen of a given coin type tends to sell at twice the value of an MS65 and the spread narrows to 50% rather than 100%, an investor should focus on purchasing the MS66 and can reasonably expect it to outperform the MS65. Many coin series, such as Morgan and Peace Silver Dollars, Commemoratives and gold type coins, clearly move in definable cycles. An investor should try to concentrate purchases in series that are well off their peaks and relatively out-of-favor. It is virtually assured that at some point a new up cycle will begin. Third, grading is a critical element, meaning both the actual grade levels on which an investor concentrates as well as the confidence in the grades of coins purchased. over the years, due to relative scarcity and a proportionately growing level of demand, higher grade coins have tended to appreciate faster than their lower grade counterparts. Unless human nature shifts, I believe this will continue. In the past, an investor had to rely on his or her own grading ability and/or that of the dealers who sold the coins. The variability in grading standards experienced in the early 1980’s exposed the risks associated with grading as it related to coin values. With the advent of the major grading services, PCGS and NGC, not only can an investor be confident of a coin’s grade but also he can have confidence in the standards used to grade the coin remaining stable. Fourth, liquidity is important for the investor. The more desirable the coin and the larger the demand base, the easier it is to sell a coin at its true value. The existence of certified coins has helped to broaden the demand base for these coins by bringing in new investors to the marketplace. It has also allowed the formation of an active market in sight-unseen coins, further enhancing liquidity. Next, I feel an investor should have diversification in his or her portfolio of coin investments. This will minimize the risk of missing strong performance in coin categories you don’t hold. Finally, even for investors, the esthetics of the coins purchased can help to make the whole exercise more rewarding. An investor will often be well served in buying coins that he or she finds particularly beautiful and pleasing.

Q. What do industry leaders need to do to get rare coins on Wall Street and traded like stocks?

A. For coins to trade like stocks, there must be widely distributed real- time trading information. Presumably this would focus on generic material that trades actively, like Morgan dollars. just as in the over-the-counter stock market, the coin trading market would be enhanced if it reported actual trades (last price) in addition to bid and ask levels. The first important step would have to be to get at least one or two major Wall Street firms to begin making markets in coins. The physical settlement of trades would have to be streamlined. It might even be possible to develop an options and futures market in coins. Because an effective coin trading department at a Wall Street firm would need an outlet to retail customers, a sales force would have to be developed. It is likely the staffing for such a department would come from experienced professionals within the coin industry.

Q. Please use your emotions: What do you really think of low-end certified coins? Would you buy a low-end MS-66 coin from even the best grading service?

A. I have generally found low-end coins to be undesirable. They usually make the technical grade but have some detracting feature. oftentimes a high-end coin in the next lower grade is more desirable than the low-end coin in the higher grade. An MS-66 is generally something special, quite rare and pretty expensive. Why spend a lot of money on a low-end MS-66 when for a lot less you may get a nicer MS-65? High-end coins have better appreciation potential.

Q. Let’s imagine it’s the year 2000. Where will the investment coin market be? (It would be unfair to ask you for anything except a wild but educated guess.)

A. Ten or so years from now I would expect most coins on the market to be certified, whether it’s by PCGS and NGC or some firm or firms that have taken their place. I hope that more individual investors, directly and through entities such as limited partnerships, will have begun to look at investing in certified rare coins as a main- stream rather than an exotic investment. Institutions such as pension funds, insurance companies, and trust departments should be investing a small portion of their funds in coins. This will represent a sizable amount of money (billions of dollars). Coins in many series grading MS-65 and up will have seen spectacular appreciation over the past decade. Their true rarity will have become apparent. An inexpensive coin will be one that sells for under $100,000. Coins grading MS-66 and up in many series will trade well into six figures. Certain low-population high-grade coins will have broken the seven- figure barrier. Looking back on prices in 1989, when many high- grade rarities sold for $5,000 to $50,000, many will wish they had taken advantage of the incredibly cheap prices available then.

Q. Are our price guides professional enough to satisfy the “prudent man” standard?

A. Today’s price guides can do a lot more to improve their accuracy as to values and their timeliness. In addition, they are too easily manipulated by the deliberate placement of inaccurate information. It is probably time to inject some healthy competition into the arena, which would serve to lift the level of professionalism. At the very least the price guides should beef up their staffing to have more people monitoring the marketplace. Frequent surveys of a large number of dealers and market-makers as to both bid and ask levels and actual transactions would pick up more of the market’s activity and true value levels than is currently done.

Q. You recently purchased an NGC Proof-63 coin, which one of the nation’s leading coin auction firms cracked out of its holder, described glowingly as a Proof-65, and featured in a beautiful color photograph for prospective buyers to see. Was this fair?

A. Activity such as this is quite common. To the extent that a buyer of such a coin in the auction pays more than it is worth because of the higher commercial grade, there is an element of unfairness. However, the auction company clearly has a different standard of grading than NGC, and its coins are available for viewing prior to the auction. Over time this activity should wind down as more and more coins become certified by NGC and PCGS. These two services should gamer the bulk of the certified market and will come to be viewed as the only type of coins to be safely purchased. As those who have purchased coins in these auctions get them certified by NGC and PCGS, it will become clear what the true grades and values are, as well as the risks of purchasing non-NGC and non- PCGS coins at auction.

Q. How has this market’s inefficiency allowed savvy investors to profit?

A. By purchasing high-end certified coins at prices close to the sight- unseen levels (through a knowledge of grading), an investor can often sell these coins at a significant profit, both at auction or in a private sale and both in or out of the holder.

Q. Will a more efficient market improve or impair the informed investor’s ability to profit?

A. Opportunity for abnormal profits declines as a market becomes more efficient. I doubt, however, that many of the new players in the certified market will have the ability to determine or care about high-end versus low-end. Unless these players end up with all the low-end coins and the players with grading knowledge end up with all the high-end coins, there will continue to be profit opportunities of this sort.

Q. Who is the ultimate consumer of coins? Why?

A. I believe that the conventional wisdom has been that collectors are always the ultimate consumers of coins. High prices presumably cannot be sustained unless collectors are willing to pay them. I think you can add to this demand base the collector/investor and even an outright investor. To the extent that these latter players reinvest any disposition proceeds back into coins, or other players step in to take their place, this new demand base is solid and can sustain extant price levels. Investors in coins must be willing to take the long view. If large numbers bail out when there is weak- ness, and if new investors don’t step in when prices decline, then the conventional wisdom will hold true and prices will be effectively capped. I do not believe that this is the case.

Q. We’re seeing limited partnerships becoming part of rare coin in- vesting. How do you see this form of coin trading impacting the marketplace? What might happen after one or two funds come into the U.S. market and spend $75-100 million? What will be the end result?

A. There has been a lot of discussion about the impact of large new investment funds coming into the rare coin market. I would bet that it happens in a way and on a time schedule that is somewhat different from what everyone expects. It will probably take longer than people think. When this money does come in, the trick will be to determine what parts of the market will be affected the most. If someone tried to invest $100 million quickly in super-grade or even high-grade material, all of the available coins would be swept off the market long before a quarter of the money was invested. Clearly, material that can be bought in quantity will have to rep- resent a large part of these funds’ portfolios-things like common to better-date Morgan dollars, gold type coins, commemoratives, all grading MS-63 to MS-65. As market participants sell to the funds, they will have to reinvest the proceeds in other areas. This will drive the entire coin market higher. As prices rise on generic material, the funds will be willing to pay substantially higher prices for the occasional MS-66 that they are offered.

Q. What needs to be done to make coin investing attractive to the average person?

A. Better marketing, information, and public relations concerning the certified rare coin market has to occur before the average person is comfortable investing in rare coins. The awareness level of this market must increase markedly. Something like the entrance of one or two major Wall Street firms into coin trading or the tracking of certified coin values on some electronic information network such as Reuters or Telerate will have to happen. And of course all the things I mentioned earlier are important prerequisites: accurate up-to-the-minute information reporting, confidence in the integrity and fairness of the marketplace, value-added packaging of the investment, and enhanced liquidity.

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How to Make Money in Coins Right Now SECOND EDITION (2001), by Scott A. Travers (NOW OUTDATED)
The ultimate insider’s guide to the coin market! (The Coin Collector’s Survival Manual®, Fifth & Sixth  Editions incorporates the third edition of this book.)

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2007 FORECAST: THE TOP 12 COINS FOR THE NEXT 12 MONTHS

BY SCOTT A. TRAVERS

COPYRIGHT © 2007 BY SCOTT A. TRAVERS
ALL RIGHTS RESERVED.

Twelve months ago, I predicted that we might be “on the verge of one of the greatest years in history for rare coins.” Those words proved prophetic, for 2006 turned out to be an incredibly positive year – truly one of the best ever – for the coin market and the hobby on which it is based.

Will 2007 see more of the same?

The answer is, it’s altogether possible. The coin market built up very strong momentum during 2006, and some of the positive trends that made it such an exceptional year were still creating excitement as the old year drew to a close.

One of these was the strength we saw throughout 2006 in market demand for precious metals – and base metals, too – and the higher prices they brought in the marketplace. There were backward steps along the way, to be sure, but at year’s end all of the metals were significantly higher-priced than they had been 12 months earlier.

I expect gold and silver to continue going up in 2007, and the pace of that increase could well become much faster. I think there’s a realistic chance that gold may surge above $1,000 an ounce in the coming year, and silver could reach levels well above $12 an ounce. That would send coin prices sharply higher, too, for the metals and coin markets are closely intertwined.

Industrial metals such as platinum, palladium, copper, nickel and zinc also enjoyed big price gains during the past year, largely because of dramatically rising demand from China and India, where they are essential to those countries’ newly booming economies. The huge exports of base metals and accompanying price increases drove the cost of producing cents and nickels above those coins’ face values, raising the very real possibility that the U.S. Mint might have to stop making them.

If this trend continues, the Lincoln cent – and perhaps the Jefferson nickel, as well – may soon disappear from Americans’ pocket change, stimulating new interest in collecting those two series and boosting the demand for them as collectibles. As it is, the hobby’s base already has been expanded tremendously by the 50-state Washington quarters, which have captured the attention of millions of non-collectors and converted many into hobbyists.

All things considered, 2007 shapes up as another terrific year. To make it even more special, check out my list of the top 12 coins for the next 12 months – and after you’ve picked your favorites, give them a try!

(1) The 24-karat American Buffalo one-ounce gold bullion coin.

There has been a stampede for this coin since it made its debut last June. And though it is strictly a bullion coin and though I have disdain for it as a collector coin, I cannot singlehandedly stop the stampede to purchase it, nor can I hold back the tremendous demand for it in all forms – including certified examples graded Mint State- or Proof-68 or 69 and “first strikes,” a term of which I strongly disapprove as it is applied in this case. On the contrary, I see it – in the short term, at least – as a coin that should enjoy continued popularity and rise in value still more in 2007. And for that reason, it clearly merits a spot among the top 12 coins for the next 12 months – though not necessarily longer.

The American Buffalo coins are extremely popular. Coin and bullion dealer Mark Yaffe of the National Gold Exchange told me that during the summer of 2006, following their introduction, they siphoned $325 million out of the market for bullion-related gold coins, such as common-date double eagles ($20 gold pieces) in lesser grades, which generally have at least modest added value as collectibles. This money was poured instead into the pure gold Buffalo pieces, which, as I have noted, are entirely bullion coins, worth just the value of the metal they contain with no added numismatic premium. (They bear a face value of $50 – well below their intrinsic value.)

This diversion of funds was a real blow to the market for numismatic coins – including semi-scarce and semi-rare double eagles, each of which contains nearly an ounce of gold. These suffered significant losses in value as buyers bought Buffalo pieces instead. Nevertheless, I see no slackening of demand for American Buffalo coins. They’re growing in popularity and that’s continuing to push their prices higher – and I expect to see them achieve record or near-record sales during the coming months.

Try to buy these coins at bullion-related prices and, before you buy them, be sure to ascertain the price of gold. Remember, above all, that just because one of these coins is in a holder from a leading grading service saying it’s in a very high grade such as MS-70 or Proof-70, you shouldn’t be paying $2,000 or $3,000 for it. With gold at $600 an ounce, you shouldn’t be paying more than $650 or $675. Just use your judgment and pay a reasonable premium – and don’t pay thousands of dollars.

(2) Common-date Type 3 Liberty Head double eagles in grades of MS-60 to MS-62.

Type 3 “Lib” $20s are the most popular and most commonly collected coins in this long-running series. They cover its final three decades, from 1877 through 1907. For years, examples in lower mint-state grades have provided just under an ounce of gold for not much more than the price of one-ounce gold bullion coins – but with the added kicker of bonus price potential as collectibles. Not so long ago, these coins were selling for close to $1,000.

All that changed when the one-ounce American Buffalo coins hit the market. While the new coins were selling like hotcakes, the Type 3 Libs were languishing in dealers’ showcases – and their prices started to plunge. Before long, they could be had for little more than melt value. With gold at $600 an ounce, a Lib $20 in MS-60 or 61 might cost you $700. I recently purchased a magnificent MS-62 example of a slightly scarcer-date 1898-S Lib $20 at a time when gold was $600 an ounce, and I paid well under $700.

The premiums have collapsed because people have been spending the money instead on American Buffalo coins, which they find more interesting at the moment. But the value will soon return to these Lib $20s once the novelty and strong initial demand for the Buffalo coins subside. So now’s the time to buy the Libs, while you can get them for just $700 or $750 – including pieces certified by the Professional Coin Grading Service (PCGS) and the Numismatic Guaranty Corporation of America (NGC). For that modest sum, you can even get a coin with nice eye appeal that nearly makes the grade of MS-63.

If analysts are right and gold goes up to $800 or $900 an ounce, you’ll end up with a double-barreled winner: a coin whose value rises both as bullion and as a collectible. That Type 3 Lib $20 you buy today for $700 might very well double or triple in value. What’s more, this is a lovely coin aesthetically. To me, it’s a tremendous coin to buy.

(3) Common-date Saint-Gaudens double eagles graded MS-63 to MS-65.

The much-admired “Saint” has long been acclaimed as the single most beautiful coin ever minted by Uncle Sam. In grades of MS-63 to 65, its stunning design – featuring a striding Miss Liberty on the obverse and a majestic flying eagle on the reverse – can be seen to good advantage, with a minimum of detracting imperfections.

Like Type 3 Liberty double eagles, these coins have fallen in value in recent months because of buyers’ love affair with the new American Buffalo. But since they were higher-priced to begin with, they haven’t fallen as far. As the end of the year approached, MS-63s were selling for about $800 and MS-65s for about $1,800 – several hundred dollars below what both were bringing earlier in the year, but still highly respectable.

If, as I anticipate, gold bullion soars in value and the buying frenzy for Buffalo bullion coins cools down, these Saints will rebound impressively and quickly reach and pass the levels they enjoyed before they fell. They’re frequently purveyed (and overpriced) by telemarketers and direct-mail marketers seeking older U.S. coins that are desirable but available – and, above all, promotable. They’re popular with more reputable coin dealers, too, because their handsome appearance makes them easy to sell. And, of course, they’ve been big favorites with collectors for a century.

If gold does reach $1,000 an ounce, I can easily see common-date MS-65 Saint-Gaudens double eagles going for $4,000 apiece – and maybe even $5,000 or more. The only thing that might prevent that is if grading standards get a little sloppy and the certification services start to award these grades to coins with a few more scratches. If the standards remain consistent and you buy only properly graded coins, you should do very well with these truly striking coins.

(4) Common-date Indian Head eagles graded MS-64 and MS-65.

The Indian Head eagle ($10 gold piece) is the fourth member of the gold family at the top of my list this year. It’s also a close relation of the “Saint,” for both were designed by renowned sculptor Augustus Saint-Gaudens, who was widely regarded as the finest American artist in that field at the start of the 20th century.

Like Saint-Gaudens $20s, Indian Head eagles bear magnificent portraiture – this time showing Liberty with a Native American war bonnet on the obverse and an eagle in repose on the reverse. And these coins are truly dazzling in grades of 64 and 65. Also like Saints, they’re very promotable because of their beauty and relatively high gold content – nearly half an ounce.

As of this writing, in the waning days of 2006, $10 Indians graded MS-64 are available for about $1,800 – hundreds of dollars below the levels they attained prior to the Buffalo stampede. MS-65s cost about $4,600 to $4,800. A premium-quality MS-65 piece might cost you $5,000, but such coins are scarce and well worth the small added premium.

If you’re fussy about grading and make sure to get coins with as few scratches as possible and with no carbon spots on the headdress, your profits from these coins can be as handsome as their design. They could easily double in value to the $10,000 range – a tidy return indeed!

(5) Registry coins.

Here’s another instance where one of my “top 12” selections is on the list not because I think it has great potential for long-term price appreciation, but because it seems likely to rank among the coin market’s hottest sellers in the short term – namely, the next 12 months. In a number of ways, it parallels my first selection, the American Buffalo gold bullion coin: It may be a big winner for some people, but only if they’re extremely careful (and perhaps very lucky).

Registry sets combine modern technology with the age-old competitive spirit that has burned within man since time immemorial. To form such sets, collectors acquire certified coins “slabbed” by PCGS (or by NGC, which offers a similar program), assemble them into sets, then register these sets with the grading service by entering the coins’ serial numbers on the company’s Internet Web site. At that point, the grading service uses special software to assign a rating to each coin, based upon its rarity not just in absolute terms, but also in the grade in which it was certified. (PCGS, which originated the Registry concept, accepts only coins it certified itself; NGC accepts coins from either service.)

As you might expect, there’s fierce competition among Registry set owners to have their coins listed at or near the top on the Web sites. This has driven up the prices of coins whose grades are exceptionally high – often well beyond the levels at which they would sell without such sets. I see no problem with this if the coins in question are long-established collectibles with proven track records for being scarce – or even rare – in top condition. I see very big problems, however, when people pay ridiculously high amounts for common-date modern coins because they have been certified in extremely lofty grades.

In a recent Teletrade auction, a bidder paid $15,120 for a 2003 Lincoln cent certified by PCGS as MS-70. A few years ago, a 1963 cent graded Proof-70 sold at auction for $39,100. PCGS later purchased the coin to take it off the market after spots appeared on its surface. But that cent became the poster boy for coins that sell at auction for a pretty penny but really aren’t very pretty at all. Prices such as these are outrageous, unjustified and bound to come back some day to haunt the “lucky” buyers.

Though I don’t recommend modern Registry coins as investments, I do encourage you to capitalize on this phenomenon if you can. Check your proof sets and search through bank-wrapped rolls, and look for a perfect coin. If you can get that coin certified as Proof-70 or MS-70, you may be able to sell it for hundreds – or thousands – of dollars. Some people have done just that since the onset of Registry fever. If you can’t find such a coin, simply sit on the sidelines and watch the show for its entertainment value.

(6) Early gold coins.

If high-priced modern Registry coins are the graffiti of the current coin market, early U.S. gold coins – those from the 1790s and early 1800s – are the Rembrandts. I am a great admirer of the Capped Bust eagles and half eagles ($10 and $5 gold pieces) minted during the U.S. Mint’s first decade-and-a-half. These coins are not only rare; they’re also great expressions of Early American artistic genius, with designs that are startlingly beautiful.

Collectors and investors have been focusing on these coins very closely over the last several years, and that focus has translated into dramatic price gains. Just a few years ago, a 1799 eagle in a nearly uncirculated grade cost $10,000; today, it’s a $30,000 coin. Higher-grade examples have risen in value even more spectacularly. These are not generic rarities; they’re truly rare coins and they’re devilishly difficult to find in original grades.

As we see the price of gold continue to go up, these classic rarities will far outpace more pedestrian forms of gold. A word of caution, though: The grading services have been fooled by some of these coins into giving them higher grades than they deserve. That happens, for example, when the surfaces of a coin are less than pristine, even though the grade on its holder suggests that it is original. I have seen a number of these coins in holders labeled MS-62 or MS-63 where the coins turn color after encapsulation or spots break out later because something was done by a coin doctor to enhance their appearance.

With that one caveat in mind, this is one area of the marketplace that should sparkle brightly this year, next year and for years to come.

(7) Scarce-date Morgan silver dollars priced from $300 to $1,000.

I like these coins very much and they have great potential to rise in value. There are lots of options, too, in this price range. The 1881 dollar from the Philadelphia Mint is a $550 coin in MS-65. An 1879 P-mint is $600 or $700 in that grade. And you can buy all but the scarcest coins from the Carson City Mint. You can go down the list and find many great coins for $300, $400, $500 or $600.

These coins have the potential to jump in price 40 to 50 percent in 2007 and beyond. The momentum is certainly there. Morgan dollars have always been popular with collectors and investors alike, and demand for them as collectibles is getting a powerful boost from the strong bullion market. This seems likely to continue, since silver, like gold, has been trending sharply higher and seems to be headed in that direction again as the new year begins.

In buying these coins, take a close look at Miss Liberty’s cheek, which is a grade-sensitive area. Make sure it’s free from nicks, flaws, scratches and other blemishes. Take the coin and tilt it under a pinpoint light source and make sure it reflects light in a circular pattern. A truly original coin has light literally dancing on its surfaces. Morgan dollars are beautiful to look at, wonderful as investments and surprisingly affordable to own.

(8) State quarter errors and varieties.

The 50-state Washington quarter series has been an unprecedented boon to the hobby since making its debut in 1999. The program is entering its next-to-last year, and it’s still enormously popular not only with collectors but with non-collectors too. Since they’re made for circulation by the hundreds of millions, the state quarters bring little or no premium as collectibles – but there’s one very big exception: mint errors, issued by Uncle Sam with some obvious imperfection or significant deviation from the norm.

Off-center coins … coins with clipped planchets … even coins that have a state quarter design on one side and a Sacajawea dollar design on the other. These and other mint errors hold greatly heightened interest when they appear on the popular statehood quarters. That’s because these quarters have special fascination for much of the American populace – even without such errors. So when minting mistakes turn up, that interest is magnified tremendously. These coins routinely command premiums in the hundreds –and even the thousands – of dollars. The few known examples of the state quarter/Sacajawea dollar “mule” have sold for tens of thousands.

In April 2007, Random House is scheduled to release the 7th edition of The Official Price Guide to Mint Errors by error-coin expert Alan Herbert, and I look for that book to spark great new interest in state-quarter minting errors. The information in Herbert’s book will create a wave of excitement in the general press and on TV – and that, in turn, will serve as a major catalyst for increased activity and higher prices.

The U.S. Mint claims that 150 million Americans are seeking out state quarters and setting them aside. That’s a lot of interest – and during the next 12 months, I think we’ll see that legion of coin enthusiasts energized even more as word spreads from coast to coast about the big profits available from unusual state quarters.

(9) Larger proof gold coins, from half eagles through double eagles.

Proof gold has an almost magical quality. The combination of shimmering precious metal and exquisite minting detail makes these coins spectacular to behold. And their high intrinsic value makes it clear that they belong on a very high pedestal. All proof gold coins – including “matte” proofs, which have a sandblast appearance – should do extremely well in the coming year as gold increases in value and demand for gold in general continues to grow. But brilliant proof gold coins will clearly be the biggest winners of all. And since they provide the most appealing showcases, larger pieces will be in the greatest demand.

Many coin dealers have a tendency to push gold bullion coins when customers first express interest in buying gold. They encourage these customers to buy American Buffalo coins, American Eagles and other bullion coins – and after a while, these purchases add up to holdings with considerable value. Sometimes they also include semi-scarce numismatic gold coins, such as MS-65 Saint-Gaudens double eagles worth perhaps $1,700 or $1,800 each. A steady gold buyer may end up with multiple safety deposit boxes filled with gold coins worth tens or even hundreds of thousands of dollars.

At that point, the buyer may feel the urge to trade all this gold for coins that are truly rare. He or she may go to a coin show and see a magnificent proof example of a Type 3 Liberty double eagle – a coin with a proof mintage of only 80 or 90 – and jump at the chance to buy it for $50,000.

Many people now possess large quantities of bullion coins and common-date Saints, and they’re in a prime position to trade these coins for rarities, including proof gold from 1915 and before. Quite a few will – and they’ll be glad they did, since these are the gold coins with the greatest upside potential. They’re totally irresistible, and I see them soaring in value, especially in grades of Proof-64 to 67.

(10) The 1909-S VDB Lincoln cent.

I recommend this coin almost every year – and just like clockwork, it almost always goes up in value. I’m not about to change my approach this year, for this “king of Lincoln cents” – a perennial favorite with collectors – seems likely to enjoy an especially strong run in 2007 and beyond.

Lincoln cents are spending lots of time in the limelight these days. In one respect, all this attention is good: The U.S. Mint is making plans for four special cents in 2009 to mark the bicentennial of Abraham Lincoln’s birth and the 100th anniversary of the cent that bears his image. In another way, however, the publicity has been negative, focusing on the fact that rising metal prices have made the cost of producing cents more than a “penny” apiece. That has many Americans calling for a halt to further production.

No news may be good news, but this time just the opposite is true for the popular “S-VDB.” All of the news – including the bad news regarding metal prices – is pumping up interest in putting together sets of Lincoln cents. And as the longtime centerpiece of the series, the 1909-S VDB is drawing the greatest attention.

I recommend the S-VDB in all grades from fine to MS-66 Red and beyond. It’s a wonderful coin to own – and with all the ongoing news about the Lincoln anniversary and possible discontinuation of the cent, it will remain in the limelight for years to come.

(11) Proof type coins.

Proof gold isn’t the only proof coinage I’m recommending. Proofs in other older series – Barber and Liberty Seated dimes, quarters and halves, for example – also have captivating beauty and also are attracting a great deal of interest in the current super-active marketplace. These coins will hold their own – and possibly do even better – during the next 12 months. They are very strong collector coins, and as we see more and more newly minted collectors progressing from modern coins into more established series, the spillover effect will be significant – and highly beneficial.

In the last half of 2006, we saw much more interest in proof type coins in the Barber and Liberty Seated series – more than we’ve seen at any other time in the last three years. People realize that these are great values and very underrated. Coins with minuscule proof mintages are available in the $1,200 to $1,500 range. Some can even be had for $500 to $600 if you go down to grades such as Proof-63. I recommend these coins in grades from 63 to 66, and I expect that within a few years, we’ll see a 50- to 75-percent increase in value.

(12) Mint-state type coins.

My final recommendation is a mate to proof type coins. Mint-state coins aren’t as flashy as proofs and as a result, mint-state type coins will lag the proofs a little. A lot of new collectors are looking for flashier coins and coins that are easier to grade, and on both those counts, proofs are the better bet. Business-strike coins can be treacherous to grade.

But mint-state examples of business-strike coins are tremendously popular just the same, and demand for them has risen sharply since the advent of Registry sets. These have given a shot in the arm to all mint-state type coins – and some of the rarer issues, such as Draped Bust silver dollars, have gone up in value by 100 percent or more.

There you have them – my top 12 coins for the next 12 months. These predictions and projections are based on marketplace momentum and on the assumption that the market will continue to be vibrant and the current exuberance will continue. They also assume that metals – both precious and base – will keep trending upward in value.

With that, I wish everyone a prosperous 2007 – confident that when it’s done, we’ll all have many reasons for celebration.

I can think of at least 12!

2007-2008 COIN MARKET FORECAST
SCOTT TRAVERS’ COIN MARKET OUTLOOK INTERVIEW

COPYRIGHT © 2006, 2007 BY SCOTT A. TRAVERS
ALL RIGHTS RESERVED.

We had a great market until May 2006 and then a slump. What’s your outlook for 2007/2008? Please explain in detail.

I expect that precious metals will be higher, that the uncontrolled deficit and the problems in Iraq will be exacerbated by continuing terrorist fears and that both investors and collectors will continue to enter the coin marketplace in larger numbers than previously expected. However, it’s going to be a mixed bag in terms of inflationary expectations, because I think the Fed is well focused on inflation. Metals will go up, inflation will stay in check or increase a little bit, and higher metals prices will strengthen the coin market. If gold goes to $800 or $900 an ounce, then certain areas of the coin market will get stronger.

What areas of the market look to be the best performers for 2007/2008? Please explain why.

For the last couple of years, I’ve been placing great emphasis on classic gold coins such as Early American gold from the late 1700s and early 1800s – and with higher precious metals prices and especially higher gold prices, I would expect these coins to continue to outperform the market as a whole. I also expect generic gold coins, the entry-level coins for new gold investors, to continue to pique the interest of the initiated.

What areas of the market look to be the worst performers for 2007/2008? Please explain why.

I think you’ll see some unexpected surprises in coins that are rare but have been over-promoted. Some of these coins, such as Continental dollar patterns, have gotten out of hand in terms of price. Some of the high-grade Continental dollars and even some of the great rarities will see a bit of correcting in 2007/2008, even with higher precious metals prices. Take the gem half disme, for example. That has become a seven-figure coin, and I think it’s a bit overpriced. It’s not going to be a worse performer, but it’s also not going to go from seven figures to eight. The absolute worst performers for 2007/2008 are probably going to be some of the First Strike coins and a lot of the high-grade modern coins. Both are selling today for much more than their actual available supply would seem to justify.

Since the lows of 2001, gold almost tripled, but rare coin performance severely lagged gold. Some indices show gains of 20%-40% from 2001 to the highs of 2006! (A) What accounts for the disparity? (B) What does this portend for the future?

(A) In the last great gold boom, back in 1980, all the excitement and irrational exuberance were generated by coin dealers themselves. They were buying and selling rare coins on their own accounts and for inventory. As gold soared ever higher, they were buying ever more rare coins and paying ever higher prices. Dealers themselves are the greatest marketplace engine for demand. Conditions were similar in the smaller bull market of 1989. Today, the situation is just the opposite. Dealers are being more cautious and not buying as many rare coins with their profits from precious metals, knowing from sad experience that if the gold market drops, the rare-coin market could follow suit. The current demand is strictly from consumers – and it’s healthier this way. But the reality is, a lot of gold coins are not performing as well as we would like because of this.

(B) This portends that gains will be more solid and that if gold goes down in value, coin prices probably will not decline precipitously, as they did in the early 1980s. We will have a marketplace that’s far less volatile than we had in 1980 and 1989 and, to a lesser degree, in 1992. On the other hand, if gold goes up in value, we probably won’t see as dramatic an upturn in coin prices as we might have seen in the past, with the possible exception of some of the generic coins, such as Mint State-65 Saint Gaudens double eagles, which are the signature coins of numismatic gold promotions.

Do you think that “Ohiogate” had a detrimental impact on the market? If yes, how so and why? If not, why not? What lasting effects can we expect from “Ohiogate”?

Ohiogate really became an external event, with the coins being sold in a bull market very expertly over time in sales well coordinated by John Albanese. He advised Ohio on how to sell the coins systematically. There were no fire sales and the whole thing had zero impact on the market. I see no lasting effects whatsoever.

What will it take for a large financial institution to make a commitment to the coin market? What specific sectors of the market would be most likely emphasized in the portfolio of a large coin fund?

It will take impressive price performance statistics combined with an excellent outlook for the future, combined with the appearance of a high upside and a low downside, combined with honorable fund managers. I think all this is a possibility, but we don’t seem to have the statistics that we need to show robust past price performance – and some of the projections that I’ve seen don’t suggest performance as strong as I’d like to see for the future. Still, I think deficient areas can be strengthened and that this will happen relatively soon. I think large coin funds would seek great rarities and generic rarities such as proof gold coins. I don’t think we’d see these people running out to buy rolls of 1950-D Jefferson nickels.

As we close 2006, how do you assess the state of coin grading?

I see things improving. I think the grading services are making a greater effort to be consistent. I don’t see the standards loosening from where they were a year ago, so it’s a case of status quo. But I think we’re in a better position now than we were a year ago. I applaud the grading services for learning as much as they can about coin doctoring and for taking a lot of doctored coins off the market. At this point, I would be very surprised to see grading loosen further. I think we’re at the point where people understand what the standards are.

How important are modern coins becoming to the market? What are your overall views and recommendations for investors?

I don’t believe modern coins are becoming important at all, except to the promoters who foist grossly overpriced super-high-grade examples on the unwary. Sadly, they also will become important to those who buy them – but in a negative sense, when they learn how much they’ve lost on their “investments.” And yet, while many deride them, such coins continue to bring ridiculously high prices in super grades.

I recommend not buying modern coins in grading-service holders, since these coins’ super grades – the basis for their outlandish prices – have already been established. If people want to dip their toes in the shark-infested waters of modern coins, they should do so by purchasing – or cherry-picking rolls for – coins that appear to be very high grades and send those coins to the grading services to see if they can get them certified as MS- or Proof-70. It may cost $15 or $30 apiece to get them certified, but it’s an educative process. If you submit 10 coins and even one comes back as 70, you’ve gotten a $1,000 coin for an investment of a couple of hundred dollars. If all of them come back with lesser grades – say, 68 or 69, then you’ve spent a few hundred dollars to learn about grading standards. That’s how I recommend investors get involved in modern coins.

Two sophisticated investors come to you to invest for the long term. One has $25,000, the other $250,000. Each investor wants only a few coins. What do you recommend to each and why? Please state the upside potential for your picks.

For the investor with $25,000, I would pick virtually all gold coins from $5 Libs to $20 Saints in the grades of MS-64 to MS-66. For the one with $250,000, I would recommend a portfolio of all gold coins with the exception of an MS-65 1909-S VDB Lincoln cent and a couple of other coins – perhaps an 1856 Flying Eagle cent and a few key-date coins of that nature. The rest would all be gold coins – an MS-66 Saint and early gold coins in MS-63 and above. These might include a prooflike 1799 $10 in an old holder in 63 or 64, a 64 $5 gold piece from 1799 or even an XF 1795. That’s how I would put together that portfolio. The upside on all those coins is tremendous, and I would expect that in a few years, all could double in value.

Increasing government regulations, further losses of privacy, more taxes, these are all likely to impact our lives in the years ahead. How might they impact the coin market? What specific advice do you have for today’s investors?

That’s an open-ended question, and it’s difficult to say. I really don’t see much more impact on the coin market than what we already have. I think we’re at a point now where we’re not going to see a greater overall across-the-board government impact on the marketplace. I think we’re at the high point of government regulation. If we have another terrorist attack and there is another spectacular event like 9/11, all bets are off; there will be more restrictions on funds, and banks will look more carefully at movements of large sums of money because they will be forced to do so by the government. But barring another terrorist attack, I think we’re at the height of regulation and we should actually see an easing of these regulations in the months and years ahead.

My advice to today’s investors is to keep very good records of all transactions, especially trades. Just make sure the transactions are all well documented.

What follows are a series of questions where I request you to state your Best Buys in a number of market sectors. Please list the ones you favor, (B) explain why you picked them, and give us an idea of their investment potential.

Best Buys for Type Coins in MS and Proof

Twenty-cent pieces certified as Proof-63 or 64

You’ll pay about $2,300 in Proof-63 and $4,000 in Proof-64. But when it comes to investment, these coins have lots of life in them. Appreciation of 15% should be the norm.

Common-date Barber silver coins in Mint State-64 or 65, or Proof-64 or 65

The Barber coins served Americans long and well in commerce, and relatively few were preserved in mint condition. As a result, they’re elusive in high mint-state grades. You can expect to pay hundreds of dollars for even a common-date example in Mint State-64 or 65 – and more for a Proof-64 or 65, for proof mintages rarely exceeded 1,000. But these coins are legitimately scarce and the prices are justified. There are important bellwether coins and have lagged the market, so don’t go overboard and load up on them. But any recommendation of Type coins would be complete without these coins included.

State 1809-1837 Capped Bust dimes

Capped Bust dimes had extremely low mintages, judged by current standards. In only four years did their output exceed 1 million – and then not by much. On the other hand, there were nine years when the total came to less than 500,000. Furthermore, few were saved, since coin collectors were similarly sparse in those early years. You can expect to spend close to $600 for the “small size” (1828-1837) and $1,000 for the “large size” (1809-1828), even for specimens graded just Mint State-60, and several times as much for one that grades MS-63. But these coins are legitimately scarce and well worth the premiums they bring. These coins are undervalued by 25-40%.

Copper-nickel Indian Head cents graded Mint State-64

Although its annual mintages weren’t small by the standards of the day, ranging between 10 million and 50 million, this “white” Indian cent enjoys wide popularity as a type coin. In Mint State-64, it costs about $300 (not counting the higher-priced 1859), but I consider that a good value and a coin that could easily double in price.

Trade dollars graded Proof-64, 65, 66 or 67

Considering how elusive they are, they represent good values at current market levels – about $4,200 in Proof-64, $10,000 in Proof-65, $12,000 in Proof-66, and $20,000 in Proof-67. They are rare, beautiful, old, historic and desirable. 25% appreciation during the next couple of years is realistic.

Franklin half dollars graded Mint State-66 or higher

The design is deceptively simple, with Benjamin Franklin’s portrait and the likeness of the Liberty Bell both having clean, open looks. But subtle details are missing from most of these coins, even in mint condition; few, for example, display full lines on the bell. Franklin half dollars are common in grades of Mint State-63 and below; in higher grades, however, they command substantial premiums, generally much more than $100 – and based on their scarcity, they’re well worth it. Prices sometimes reach into the thousands of dollars depending on specific coin. Some dates in the 1950’s with full bell lines that are priced at $500 or so could easily reach into the thousands of dollars within a couple of years. This is one of my personal favorites, and I have salted away a number of beautifully toned examples for myself at relatively cheap prices.
1793 Chain and Wreath cents

The Chain cent and Wreath cent are obviously coins of tremendous historical significance. More than that, however, both are major rarities. The Mint produced only about 36,000 Chain cents and 63,000 Wreath cents, and in both cases those mintages are subdivided into several highly collectible varieties. You can expect to pay hundreds of dollars for low-grade specimens of either coin and thousands for high-grade examples, but they’re worth it. Seldom in U.S. coinage have history, rarity and romance intersected so dramatically – and so appealingly. A doubling in value within 3-4 years is realistic.

Two-cent piece in Mint State-65 Red

Because of the high usage of early two-cent pieces and the low mintage of later ones, relatively few exist today in pristine mint condition. Even among the ones that were saved initially, many were mishandled over the years. In Mint State-65, common-date examples cost $1,300 or more today – but the price is right, for these are truly scarce, historic coins. A realistic trading range should be above $3,000 per coin, but many coins such as these never achieve their potential because they are a part of an obsolete series.

Draped Bust silver dollars and half dollars graded AU-50 to AU-55

The earlier coins in the series, from 1795 to 1803, while attainable, also are far from inexpensive, for all have mintages under half a million and, in most cases, under 100,000. Draped Bust half dollars lingered until 1807, but topped 500,000 in just one year, 1806. Both denominations are prohibitively expensive in mint condition. They’ll set you back several thousand dollars even in about uncirculated (AU) condition – but as rare, historic and highly coveted coins, they’re well worth the outlay. These are perennial favorites that should appreciate 10% or more per year.

Best Buys in the Gold Coin sector

Early $2½, $5 and $10 gold pieces in mint condition

Early U.S. gold coins are beyond compare – in a class by themselves – in mint condition. In fact, early gold pieces graded MS-63, 64 and 65 are the most important coins in the marketplace as this is written. And they will remain so as long as gold continues to increase in value. As this is written, these coins are absolutely on fire. Everyone who can afford them wants to buy them, and collectors, investors – and even dealers – are throwing away their price guides when they bid on them at auctions. It’s not unusual to see such a coin with a price-guide value of $40,000 bring $90,000 or more at an auction. This is a textbook case of supply and demand: Very few of these coins are available, and the universe wants to buy them. With early gold coins, the momentum has been fueled by gold’s continuing surge and the powerful demand from determined buyers. And both of those propellants seem likely to persist. Under such circumstances, that $90,000 early gold coin – far from being overpriced – may look like a bargain before long. These are the coins you should be pursuing if you want to maximize your gold-related gains in the current marketplace.

Type II and III Liberty Head double eagles graded Mint State 60 through 63

This coin is listed as a winner, as I am optimistic about the outlook for gold. However, if you see gold bullion decreasing in value dramatically, you can reasonably expect Type II and III Liberty Head double eagles graded Mint State 60 through 63 to be big losers if you purchased them when gold was higher. Further, Section 352 of the U.S. Patriot Act could significantly impact the investment attractiveness of these “Libs,” as many dealers of these kinds of gold coins are now required to keep detailed records of transactions to comply with anti-money laundering requirements that are now being enforced. In December 2006, with gold at $617.30 per ounce, a common date Type III Liberty Head double eagle retails for $685 in MS-60; $725 in MS-61; $740 in MS-62; and $825 in MS-63. Type II is rarer and, thus, more expensive. These are bullion investments at these low prices, and could easily double or triple after the Buffalo bullion coin novelty wears off and if gold increases in value. I see virtually no downside at these levels and am aggressively recommending them not only to my best clients, but to my closest relatives.

Type 3 Liberty double eagles graded Proof-65

Type 3, is the gold proof I especially recommend. A Proof-65 example will cost you about $100,000 – but with mintages ranging from a low of 20 to a high of just 158, these coins are not only dazzling but downright rare. A doubling in value is realistic with higher gold bullion values creating economic justification.

Best Buys in Silver Dollars
1885-CC Morgan dollar graded Mint State-65 (and similar dollars that have only slightly higher values in Mint State than in circulated conditions)

The 1885-CC Morgan dollar is rare in every condition because the Nevada mint produced just 228,000 cartwheels that year—the fourth-lowest mintage in the Morgan series. A circulated piece will cost you much more than the corresponding 1886-O; even in the grade of Extremely Fine, for instance, the ‘85-CC dollar sells for nearly $600. But there are no huge increments as you go up the grading scale. On the contrary, the jumps are quite small until you reach the high mint-state range. This rare-date coin can be obtained for less than $1,300 in MS-65 and less than $2,600 in MS-66. True, this reflects the fact that much of the mintage survives in uncirculated condition, having been stored for decades in U.S. Treasury vaults. But given the low mintage, the current market values have a bedrock base of rarity. And you can go to bed not having to worry that your rare, beautiful coin—struck at a colorful mint spawned by the historic Comstock Lode—will have lost much of its value overnight. Carson City dollars in U.S. government General Services Administration (G.S.A.) sealed cases are often worthy of a premium, especially if NGC has offered its opinion as to the coin’s grade and affixed its hologram to the holder. Coins in these holders, sold by the G.S.A. to the public from 1972 to 1980, can be considered original and not tampered with. This is an excellent safeguard for collectors concerned with coins having been doctored or altered after they left the Mint. Be careful not to get too enthusiastic over the concept of a sealed government holder and an NGC grade: Sometimes these coins will sell for hundreds of dollars more just because they are in G.S.A. holders. Crack the holder, and you will never be able to recover the premium.

Better-date silver dollars

Many Morgan dollars and other traditional cartwheels have bright, dazzling luster and razor-sharp detail. You need to be careful, however, not to fall in love with just a pretty face. Certain common-date dollars – the 1880-S and 1881-S, for example – exist in large quantities in pristine mint condition and really are overvalued even when purchased for a fair market price. You should concentrate instead on coins with lower mintages, even though their condition might be a bit less spectacular. They needn’t be rare – only scarce. The 1886-S Morgan dollar and 1928 Peace dollar are two good examples. These coins will always be in demand, yet they’re difficult to promote (offer in ads with wide circulation and on television shopping programs with high viewerships because these marketers need coins of which many exist). They’re safer and sounder values. These coins have momentum and a rock-solid base and should continue appreciating smartly.

Best Buys in the U.S. Commemorative series

I specifically and emphatically do not like run-of-the-mill $500 commems. Many are overgraded, artificially toned, dark in color and generally undesirable. I also realize that the gold commems have experienced substantial price appreciation. Nonetheless, I believe that with higher gold, these gold commems will reach even higher levels—while the $500 problem coins will continue to languish in dealer inventory boxes.

The 1915 Panama-Pacific $50 gold piece, either octagonal or round

The $50 coins were identical in design, both depicting the Greek goddess Minerva on the obverse and her symbol, the owl, on the reverse; one was round, however, while the other was octagonal. These coins have been acclaimed for their beauty. Even more attractive to investment-minded buyers are their mintages: After unsold specimens were melted, the net remaining figures were 685 octagonal pieces and 483 round. These coins are expensive, typically bringing strong five-figure prices. But they’re rare, beautiful, desirable – and likely to continue rising in value as time goes by.

Best Buys among 20th Century Series coinage

All legitimate rarities that are truly considered necessary to complete a collection should see considerable price support. Examples are the 1955 Doubled die Lincoln cent (MS63 Red is the best value) and 1990 No-S Lincoln cent Proof (Proof-67 red is a good value). These types of coins will retain their value when the MS- and Proof-70 modern coin bubble bursts.

What changes or innovations are needed to make the pricing of coins a better deal for investors? Just as reduced commissions (even the elimination of commissions!), plus much narrower spreads between bids and asks, have dramatically lowered trading costs for stock traders, what can be done to make our market more efficient and a better deal for investors?

Spreads are about as low as they are going to get. The product is relatively decent. We need a big player to step up to the plate and recommend coins as an investment. Much of this is bandwagon effect and psychological. Gradual, reasonable steps to help make this come about are being taken. I have a new book scheduled for July, and I will try and help everybody by being positive. This book is very a departure from my role as a consumer advocate—which I have toned down for now in order to help the industry try and attract some institutional funds so everyone can make money.

Since PCGS and NGC began, we’ve seen a general loosening of grading standards. (A) Could standards in the future become stricter, thus reversing the trend of the last 20 years? (B) If yes, what event or events would cause this to take place. If you disagree, please explain why.

The standards will not become stricter permanently. The way the system is designed, standards move within a narrow range.

What 1, 2, or 3 coins are your favorite “sleepers,” coins you know to be much scarcer than generally perceived and, as a result, undervalued. Anything from the 1700’s to date, your picks. Please explain why you picked them and tell us their potential.

Proof silver Type from late 1800’s to early 1900’s—grades Proof-63 through Proof-64 (and possibly some Proof-65’s). Trying buying some—you will have to pay over sheet now. The coins are very scarce, and haven’t moved. A prominent trader told me he could raise the bids by about 20% and expect to receive no more than 5 coins total. With a little demand, these coins could double.