Gold has begun to glitter again, and gold bugs are exhorting us to climb aboard and strap ourselves in for a rocket ride to the Moon.

There’s no way of knowing how high this hopeful boomlet will carry the yellow metal. Before we get too comfortable on the launching pad, however, we ought to reexamine the events of recent years, especially in the market for generic gold coins.

It will soon become apparent that far from embarking on a rocket trip, those who buy gold coins today could actually be in for a roller-coaster ride.

The fact of the matter is that over the last half- decade, gold coins have risen in value dramatically in many cases, only to lose that added value in a relatively short period of time.1990 W Gold $50 American Eagle NGC PF 70 Ultra Cameo

The gold coin marketplace has been shattered by volatility and by sharp ups and downs that often have little or no correlation to the current price performance of the yellow metal itself. This has served to magnify the risks for those who venture into this market. But at the same time, it also has created opportunities for those with the savvy and wherewithal to use the peaks and valleys to their advantage. At the very outset, it’s crucial to understand the difference between “generic” gold coins and those that are genuinely rare.

Generic coins are those which exist in sufficient quantities to be traded as like-kind units–very much like commodities.

These coins may be in high levels of preservation; more often than not, in fact, those traded frequently in the current marketplace are in mint-state condition. But they’re readily available in those grades, so buyers and sellers have quick access to sources of supply. And one is treated much like any other, so that these coins are interchangeable. Common-date Saint-Gaudens double eagles ($20 gold pieces) are viewed, for example, as generic coins.

By contrast, truly rare coins are one-of-a-kind pieces, and each has its own personality. Low mintage, not high quality, is the key determining factor in their value. Some, of course, possess not only rarity but also exceptional quality–and that combination greatly enhances their value. But unlike generic coins, truly rare coins are treated first and foremost as collectibles, not commodities; they’re regarded as distinctive, rather than interchangeable.

No-motto Liberty Head half eagles ($5 gold pieces)– those minted between 1839 and 1866 without the motto IN GOD WE TRUST on the reverse–fall within this category. They’re very scarce as a group, with mintages generally well under 100,000, and flat-out rare in a number of individual instances.

Precious-metal content forms an important part of generic gold coins’ value–much more so than it does in the case of rare gold coins. This is particularly true for coins in high circulated grades such as About Uncirculated-55 or 58, and in low-end uncirculated grades such as Mint State-60 through 62. In these levels of preservation, generic gold coins are virtually “bullion” coins: They command just a modest premium over the market value of the metal they contain, and they rise and fall in value as the precious metal itself goes up or down in price.

The price differential widens considerably as the grade level moves up to Mint State-63 and above. And at times when the market is bullish, the differential balloons even more. Conversely, when conditions are adverse, the differential contracts.

Since May of 1989, when the coin market scaled its last major peak, high-grade generic gold coins have fallen in value sharply–even though gold itself actually went up in value slightly during that time: The average price of gold was $372 an ounce during May of 1989, and this July it averaged just under $400. But during that span of more than four years, there have been a number of well-defined points when these coins rallied. And those who were shrewd and/or fortunate enough to ride the up-and-down waves in the marketplace, buying at low ebb and selling at high tide, could have made–and, in some instances, did make–very substantial profits.

Let’s look at a few examples:

  • The Certified Coin Dealer Newsletter (or Bluesheet) of May 26, 1989, assigned a value of $3,950 to common-date Saint-Gaudens double eagles graded Mint State-65 by the Professional Coin Grading Service (PCGS). In early June 1993, those same coins were valued at $1,440, meaning they were worth only about 36.5 percent of their 1989 peak value. But they didn’t fall to that point in a straight line. On July 3, 1992, for example, the Bluesheet listed them at just $1,010, only about 25 percent of their May ’89 peak–so between then and June of this year, they actually rose in value nearly 50 percent. And similar swings, quite dramatic percentage-wise, have occurred throughout the four-year period.
  • On May 26, 1989, the Bluesheet set the market price at $2,400 for Indian Head eagles ($10 gold pieces) graded MS-63 by PCGS. In June 1993, those coins were worth $1,400, or 58 percent of the peak. But in July 1992, they had been worth only $790, or less than one-third of the peak. Thus, between then and June of this year, they rose in value nearly 80 percent
  • On May 26, 1989, the Bluesheet valuation was $3,050 for Liberty eagles with IN GOD WE TRUST graded MS-63 by PCGS. In June 1993, those coins had a market value of $1,240, or roughly 40 percent of the peak. But that was still more than 40 percent higher than their value in July 1992, when the Bluesheet listed them at only $875.

Not all generic gold coins fell as far as these, or have fluctuated as greatly during the last four-plus years. But many have experienced significant swings in value, creating opportunities to buy and sell advantageously–even though the coin market has remained depressed throughout this period, relative to its status in May 1989.1922 Saint-Gaudens double eagle graded PCGS/CAC MS64

Rare gold coins, by contrast, have had no similar intermediate ups and downs; rather, they have remained unremittingly depressed. The reason for this is simple: Being unavailable in quantity, rare coins cannot be promoted profitably–manipulated, if you will–by numismatic entrepreneurs, the way their generic cousins can be. Thus, they don’t enjoy the temporary boosts in value generated by what might be called artificial market stimulation. Instead, they lie dormant until the market regains more permanent underlying strength.

Truly rare coins benefit more dramatically than generic ones when market conditions are bullish–and I consider them much better buys from the standpoint of long-term investment. Just as their malaise is more persistent and pronounced during market slumps, their performance is also more spectacular and sustained when the good times roll. They have the potential to soar in value far faster and higher when the inevitable turnaround occurs–and justifiably so, since they are more elusive and desirable.

But, as we have seen since 1989, the coin market–like any other segment of the economy–is subject to its share of slumps, and these can be protracted. And during such periods, it’s comforting and challenging for action-oriented “players” to know that there is still some ferment in the marketplace and they still have a chance to realize meaningful profits on a short-term basis without having to wait for the possibly distant light at the end of the long-range tunnel.

Anyone who purchased rare gold coins during the last four years has probably incurred paper losses; those coins are very likely worth less today–perhaps a great deal less– than when they were acquired. And their prices have trended consistently downward, furnishing little or no window of opportunity for selling them at a profit along the way. With generic gold coins, on the other hand, handsome profits could have been made through judicious buying and selling.

Many generic coins lost 50 percent of their value between May 1989 and May 1990, then regained roughly half the lost value before sinking lower again. This ebb-and-flow pattern was subsequently repeated twice more. Let’s say a certain coin was worth $10,000 in May 1989 and you bought it a year later for $5,000. You could have sold this coin for $7,500 when the market rebounded temporarily, then bought it back for $5,000–or even less–at the next bottom and sold it again at a profit when it went up. By doing this several times, you could have doubled or tripled your money during the four-year period–in the very teeth of a raging bear market.

A word of caution: This is a gambler’s game–one that can be extremely risky. In a sense, it’s like playing musical chairs with your money, and it’s not something an ordinary consumer can be expected to do. In fact, even expert dealers have trouble doing it successfully.

Having said this, the fact remains that most of the profit-making opportunities in the coin market during the last four years–short of waiting years for the market as a whole to turn around–have existed in the area of generics. While other coins were dropping in price like rocks and then simply staying low and flat, generics were behaving more like bungee-jumpers–bouncing up after each plunge and giving people a chance to cash in their chips.

In this sense, volatility can be–and has been–the investor’s best friend in time of need. And if ever coin investors needed a friend, the last four years have been the time.

If you decide to try your luck and gamble on generic gold coins, I urge you to limit your investment to totally discretionary funds–money that isn’t essential to your economic well-being.

To play this market properly, you should buy at times when both gold itself and generic gold coins are relatively low-priced, compared to near-past levels, and sell at times when prices are trending upward without economic justification.

Let’s say a certain generic gold coin has increased from $200 to $500–and we’ve seen this happen with a number of gold coins in the last couple of years–and the coin is a relatively common one of which thousands of examples are available in a comparable level of preservation. If the only apparent reason for the price increase is the fact that a certain company is promoting this coin, then you should sell it and take your profit (assuming that you purchased it while the price was lower). Then, when the price comes down again after the promotion, as it almost certainly will, you can buy the coin again and wait for another chance to repeat the sell-buy cycle.

If you believe the price increase resulted not from promotion but rather from genuine economic justification, and you believe the justification will last, then you should consider turning your attention to coins with greater long- term potential–rare gold coins, for example. Those should do far better in the long run.

Factors that would constitute true economic justification include inflation, an expanded money supply and increased federal spending. Generic gold coins WILL go up in value in times of high inflation, just as gold itself will go up. But truly rare coins will go up even more, so that’s where you should turn your attention at such times. Gold may not be heading to the Moon anytime soon, so it’s probably premature to make a reservation on the gold bugs’ rocket ride.

But roller-coaster rides can be exciting, too–and possibly even rewarding. So while reconstruction continues on the coin market’s launch pad to outer space, why not enjoy one of the most stimulating rides now being offered here on Earth:

Go for the generic gold!






1800 Draped Bust dollar MS65 NGC
1800 Draped Bust dollar MS65 NGC

The 1804 silver dollar is always in the news, so it seems. This “King of American Coins” has long been not only one of the most valuable United States coins but also one of the most publicized.
This great numismatic rarity surely deserves the attention and acclaim that it receives; after all, just 15 examples are known, and one of those currently holds the all-time auction record of $4.14 million (a record I helped create as an active underbidder at the time of its sale on Aug. 30, 1999).

But other early dollars from the very first years of U.S. coinage also are extremely scarce and desirable. And lately, these have been getting some much-deserved attention as well from dealers and collectors who recognize their scarcity and potential. Prices are strong and rising, and there’s good reason to look for sharp growth in interest and performance in the months and years to come.

“Early” U.S. dollars generally are considered to be those produced from 1794 through 1804. Actually, all 15 dollars dated 1804 were struck decades later, as researchers have documented in great detail. Dollar production did take place in 1804, but all of the dollars minted that year are thought to have been dated 1803 and possibly 1802.

There are three major varieties of these early dollars.

* The very first ones issued, in 1794 and part of 1795, bore a “Flowing Hair” portrait of Liberty with a small, rather puny-looking eagle on the reverse.
* Partway through production in 1795, the Flowing Hair obverse was replaced by a more polished and matronly “Draped Bust” likeness of Liberty, with the “Small Eagle” reverse being retained.
* Then, in 1798, the reverse was changed to a “Heraldic Eagle” portrait – this time with the obverse remaining as it was, with the Draped Bust interpretation of Liberty. This final version continued through the end of the series.

Like other early U.S. coins, the Flowing Hair and Draped Bust dollars came in numerous die varieties – more than 100 have been identified – and this reinforces and enhances their appeal to the small but growing number of hobbyists who pursue them.

The profusion of die varieties might seem to indicate high production levels, with new dies being needed as old ones wore out from use. On the contrary, the mintages were modest – even minuscule, in some cases, with just 1,758 dollars being made in 1794 and 7,776 in 1797. The dies wore out not because of high volume but because of the stress and strain of making such large coins with the relatively primitive equipment in use at the time.

At 39 to 40 millimeters in diameter, these were the largest regular-issue coins ever issued by Uncle Sam. Noted coin dealer-author Q. David Bowers is fond of referring to them as “the dollars of our daddies” – and given their impressive size, they might also be aptly described as the daddies of all dollars.

Their unusually large surface area makes it easier for collectors to identify and study the many die varieties they exhibit, and even discover new ones on occasion. Collectors who specialize in smaller-size coins, such as early copper cents and half cents, and particularly dimes and half dimes, might well be jealous of that.

The late Walter Breen, a brilliant numismatic researcher, once bemoaned the absence of definitive reference books on early dollars – books that might illuminate the series in the same way Dr. William H. Sheldon did (with Breen’s collaboration and that of Dorothy I. Pascal) in the classic book Penny Whimsy.

“Were some future researcher to produce a book on this series in a class with Sheldon on 1793-1814 cents,” Breen wrote, “these silver dollars would eventually rival the cents’ popularity.”

Bowers made a major contribution to interest in early dollars through the authoritative section on this subject in his magnificent book Silver Dollars & Trade Dollars of the United States, published in 1993.

More recently, the series has attracted new interest – and new buying activity – because of the popularity of the “registry” set programs now being conducted by the Professional Coin Grading Service (PCGS) and the Numismatic Guaranty Corporation of America (NGC). These programs, which stimulate competition among collectors to form high-grade sets of certified coins, have created new awareness of just how scarce the early dollars are in all collectible grades, and especially in mint condition.

Later silver dollars have attracted large constituencies over the last few decades. Morgan dollars have been among the most widely collected of all U.S. coins. Peace dollars have been extremely popular, too. And even Liberty Seated dollars have had a substantial following. But early dollars have lagged far behind – overlooked and very much underappreciated, considering how much they have to offer.

There are understandable reasons for this. One is the sheer rarity of these coins, which has long translated into extremely high prices. Even in higher circulated grades, such as extremely fine, these coins can cost thousands of dollars. In reality, these prices have been bargains, considering how few of these coins survive in the upper grades, particularly mint condition.

Then, too, early dollars haven’t benefited from organized hobby activity as early cents and half cents have done, for example, through the membership of specialists in Early American Coppers, a club where they rub shoulders, compare notes and gain insights from such renowned experts as Denis W. Loring. EAC has done a great deal to advance hobby interest in large cents and half cents, but up to now there has been no comparable stimulus for early silver dollars.

Besides being expensive, early dollars also can be highly elusive, especially for those who seek to collect them by die varieties. It’s almost impossible to find a dealer who stocks these coins by die varieties; for that matter, it isn’t all that easy to find a dealer who carries a decent stock of early dollars at all.

If you pick up a mailer from a large coin company or look at its Web site on your computer, you’re not going to see early dollars listed by specific die varieties. It takes tremendous determination to track down these coins, and considerable financial resources to buy them.

Overall, early dollars are far scarcer, more expensive and more elusive than early cents and early half dollars, two series that traditionally have enjoyed greater popularity.

For these reasons, they are likely to continue to trail behind these other series in terms of the number of people who collect them. Lately, however, we have seen a significant increase of interest in the series and some really extraordinary price appreciation for nice examples.

When I wrote Travers’ Rare Coin Investment Strategy in 1986, I included a section entitled “How to Calculate the Market Premium Factor,” and nothing could be more relevant to the current market status of early silver dollars than the market premium factor.

Those who compile price guides have great difficulty determining accurate values for coins of exceptional rarity. The reason is simple: Because they are so rare, and those who own them are reluctant to part with them, these coins change hands infrequently. Months – even years – may pass before certain coins appear in the marketplace. But that doesn’t mean their value is remaining static during that time; on the contrary, they might bring far higher premiums the next time they appear than they did the time before.

Price-guide compilers have no way of gauging how much these coins might bring if they were offered for sale, so they have to make educated guesses based upon the most recent sales – which could have been years before. As a result, the price guides are often far off base in their valuation listings for really scarce coins – including some of the early silver dollars.

That’s where the market premium factor comes into play.

A coin listed in a price guide at, say, $500 might actually be worth $1,000 in terms of the price an actual informed buyer would pay an actual informed seller, with both under no particular pressure to complete the transaction. This higher percentage can be expressed in terms of a market premium factor, or MPF, a concept devised by Maurice Rosen of Plainview, New York, a longtime coin dealer who publishes the award-winning Rosen Numismatic Advisory. In the example given here, the MPF would be 100 percent – the amount by which the real fair market value of $1,000 exceeds the price-guide valuation of $500.

The MPF can work in reverse, as well. If a coin listed in the price guide at $500 decreased in value in the marketplace to $250, its MPF would be minus 50 percent.

Whether the MPF is positive or negative, it is determined by the same algebraic formula: x over y minus 1 times 100 equals the MPF, with x representing the price required to secure the coin and y being the price guide valuation.

What we’ve seen lately is an unbelievable – and positive – market premium factor for early U.S. dollars.

Recently, I sold a 1795 Draped Bust dollar (Center Bust) graded Mint State-63 by PCGS for a price approaching six figures. The PCGS Population Report lists no MS-68 examples for this coin, no 66s, five 65s, three 64s, seven 63s, five 62s, three 61s, and no 60s. In AU condition, only three have been graded by the service.

This is the kind of coin where you may see just one public sale every few years, and people compiling price guides are forced to scramble to verify unconfirmed trades in order to come up with a meaningful valuation. It can be complicated to establish an accurate value for such coins.

The Coin Dealer Newsletter Quarterly lists this particular coin at $47,500 in MS-63. That’s about half what it traded for – and the buyer was pleased to acquire it at that price.

In another recent transaction, I sold a 1795 Flowing Hair dollar of the three-leaves variety – a coin graded Mint State-61 by PCGS – for a price approaching $60,000. The Coin Dealer Newsletter Quarterly lists it at $45,000 in Mint State-63 – two grade levels higher. Once again, the buyer was satisfied, for this is another coin that is difficult to locate and purchase at any price. Further, several other buyers were willing to purchase this coin at the same—or higher—level.

There are far more varieties in the first two early dollar types – the Flowing Hair with Small Eagle reverse and the Draped Bust with Small Eagle reverse – than in the third and final type, which mates the Draped Bust with the Heraldic Eagle. In addition, the mintages from 1798 onward, consisting of this third design combination, were generally higher than in the first four years.

That’s not to say they’re “common”–far from it. From beginning to end, the early silver dollars present a real challenge, even to those without monetary restrictions. It takes more than money to put together a set of these desirable coins; it takes perseverance, contacts and luck.

More collectors are taking the time and trouble to look for these coins today than in the past, and the registry set programs have accelerated this process by sending people scurrying to find high-grade examples of U.S. coins in general – including early dollars.

Some of the coins being purchased by these registry-set collectors represent dubious value. It’s questionable, for instance, whether very high-grade examples of fairly common Jefferson nickels are worth four-figure prices. Collectors acquiring mint-state examples of early silver dollars can rest assured, however, that they are obtaining coins of legitimate rarity which may, if anything, be underpriced at current market levels.

The 1804 dollar may be hogging the limelight, but the rest of the early dollars constitute a strong supporting cast.



Who says Lincoln cents are penny-ante?

Certainly not the bidders who attended a wild auction at the spring convention of the Central States Numismatic Society in Indianapolis.

Lincoln and Indian cents in unheard-of pristine mint condition brought unheard-of prices at the Central States Signature Sale, conducted April 5 and 6 by Heritage Auctions of Dallas.

Cents long considered common-date, or semi-key at best, changed hands for strong four-figure prices – even five-figure prices, in some cases – as dealers and collectors battled tooth-and-nail to bring home small bronze trophies from this frenzied treasure hunt.

A fully lustrous 1919-S Lincoln cent graded Mint State-66 Red by the Professional Coin Grading Service (PCGS) sold for an astounding $19,550 (a hammer price of $17,000 plus a 15-percent buyer’s fee).

Heritage described this coin as “the single finest representative of this issue known to both NGC (the Numismatic Guaranty Corporation of America) and PCGS.” Still, it is a 1919-S, not a 1909-S. And, with a mintage of nearly 140 million, it has never been mistaken for a rarity. In fact, it has one of the highest mintages of any Lincoln cent produced before 1920.

With this and other so-called “common-date” cents in the Heritage auction, however, the crucial figure wasn’t the number produced by the Mint, but rather the number certified in very high mint condition since the start of the “grading revolution” in 1986.

In the case of the 1919-S, this is the only specimen ever graded MS-66 Red by PCGS or NGC, with none graded higher. Thus, this has a legitimate claim to being the finest-known 1919-S Lincoln cent – a true condition rarity if ever there was one.

Obviously, ‘19-S cents weren’t well struck and fully lustrous even on the day they left the Mint, so not many examples existed to begin with – and over the years, the number has been winnowed to just a precious few by the ravages of time and attrition.

A 1914-S Lincoln cent graded MS-65 Red by PCGS changed hands at the Central States auction for a remarkable $14,375 ($12,500 plus the buyer’s fee).

Yes, the ‘14-S has always been regarded as a semi-key Lincoln, given its mintage of just slightly more than 4 million. And yes, the Heritage catalog described this specimen as “fully struck” and “sparkling with originality.” But most observers would have been looking for the key-date 1914-D, not the ‘14-S, to realize a five-figure price. The S-mint, after all, is a coin that can be purchased in highly collectible very fine condition for less than $50.

Here, too, the relevant number isn’t the mintage figure – even though that’s much lower than the mintage of the 1919-S. The number that prompted the five-figure price was 21 – the number of specimens graded by PCGS as MS-65 Red. The service has certified only two ‘14-S cents in higher grades – both MS-66 Red.

A 1919 Lincoln cent graded MS-68 Red by PCGS, and a 1921 cent graded MS-67 Red by the same company, brought matching prices of $9,775 apiece. And after the auction, at least two underbidders were disappointed that their bids did not secure these coins—and offered $10,500 apiece for them.

These are exceptionally high-grade pieces, and “super-grade” coins do command big premiums. But these are not rare dates by the standards of early Lincolns. The 1919 has a mintage of more than 392 million. The 1921, at slightly more than 39 million, has less than one-tenth the mintage of the 1919, but it, too, is not rare. And MS-67, while only one grade lower, seems a lot less rarefied than MS-68.

All this pales in significance, though, upon examination of the PCGS population figures. As of this writing, the company has graded only 14 examples of the 1919 cent as MS-68 Red, with only one specimen (an MS-69 Red) graded higher. And it has graded a mere two examples of the 1921 as MS-67 Red, with just two graded higher. These low populations have apparently established these Lincoln cents as important condition rarities. From the collector’s perspective, a coin with a population of two or 14—after 15 years of submissions to PCGS—qualifies as a rarity that commands respect and a high price realized.

Other Lincoln and Indian cents sold for similarly impressive prices at the Central States auction – and in each case, the constant ingredient was very low grading-service population figures.

Here are a few more sample prices, in each case representing the hammer price plus the 15-percent buyer’s fee – along with the population figures:

· $9,775 for a 1925-D Lincoln graded MS-65 Red by PCGS. It has given this grade to just 33 examples, with only one higher (MS-66 Red).

· $8,050 for a 1917-S Lincoln graded MS-65 Red by PCGS. It has graded a mere 12 as MS-65 Red and only one as MS-66 Red.

· $4,945 for a 1932 Lincoln graded MS-67 Red by PCGS. It has graded just 14 as MS-67 Red, with 290 as MS-66 Red.

· $5,290 for an 1869 Indian graded MS-65 Red by PCGS. It has graded 22 as MS-65 Red and six higher.

· $4,313 for an 1875 Indian graded MS-65 Red by PCGS. It has graded 25 as MS-65 Red and four as MS-66 Red.

What are we to make of this bidding frenzy? Lincoln and Indian cents, after all, have been widely collected series for generations, so it’s not as if buyers suddenly discovered them in a secret sub-basement of the marketplace. Even when the coin market fell into a funk in the early 1990s, small cents remained popular and active and their prices edged upward while other series languished and suffered a spate of minus signs in price sheets.

The connection may not be apparent at first glance, but the recent price explosion in certified high-grade cents is inextricably linked to the vast popularity of the 50-state Washington quarters. The cent boom is being fueled by people who became involved with coins – or returned to the hobby after years away from it – because their interest was piqued by the statehood quarters.

It was estimated that 140 million Americans were saving the 50-state quarters. Some were simply pulling them out of their pocket change and setting aside one example of every type. But others were collecting them in a more organized – and often more elaborate – fashion, arraying them in folders, holders, albums, maps and other kinds of packaging meant to both display and protect them.

Many of these statehood quarter enthusiasts were Baby Boomers who collected coins as youngsters but put aside the hobby when they had to focus instead on college, career, courtship, marriage and children. Now, decades later, they had leisure time again, as well as disposable income – sometimes quite a bit of it. And once they got their feet wet again with the help of the 50-state quarters, more than a few were taking the plunge in a much bigger way than they did when they were kids.

State quarters were the entry point for most new coin hobbyists in the early 2000s – but in years gone by, the majority got their start with Lincoln cents. It’s only natural, then, that many of the Baby Boomers renewed their earlier links and are moving on from quarters to Lincoln and Indian cents – the coins they were most familiar with, and had the greatest interest in, years before. Only now, they have the wherewithal to acquire the scarcer dates and better grades.

At first, these reborn collectors tended to settle for lower-tier uncirculated cents in grades such as MS-60 and MS-63 – possibly even higher-grade circulated pieces. But now, more and more are pursuing the best available, applying the kind of thinking that helped them amass big profits in the stock market and other investment arenas. And this, in large measure, is the source of the upward pressure we’re seeing now on pristine Lincolns and Indians.

The Central States sale shone a spotlight on the cent boom and came as a revelation to many collectors. But while it may have been the most dramatic manifestation, it was simply a reflection of a trend that is becoming increasingly apparent throughout the country.

Demand for Lincoln cents has been growing by leaps and bounds in all collectible grades – all the way down to very good and, in some cases, even good. We’ve never seen anything like it; the coins are simply flying out of dealers’ cases.

The scarcer dates and higher grades are doing especially well, though – and when coins such as those in the Central States auction are put in a sale, bidders go wild.

The Heritage sale included not only common-date and semi-key Lincoln and Indian cents in pristine mint condition but also key dates in very high grades. And they, too, realized fancy prices. But these prices seemed to represent a straight-line progression from the values the keys enjoy in lower grades.

With the semi-keys and common dates, by contrast, the price increase was often geometric. In other words, top mint-state common-date pieces didn’t just bring two or three times as much as borderline mint-state examples – they brought exponentially more.

There’s a logical explanation. Key-date coins were recognized as such at the time of their issuance, and thus were set aside in much higher numbers – from a proportional standpoint – than their common cousins. Therefore, they exist in greater quantities, relative to their mintage, in uncirculated and higher-level circulated grades.

The 1931-S is the ultimate case in point. At 866,000, it is one of only two Lincoln cents (not counting errors and unusual varieties) with a mintage below a million, second only to the 1909-S VDB, at 484,000. But the ‘31-S was recognized at once as a low-mintage coin and much of its output was saved from the very beginning. As a result, it sells for only marginally more in mint condition than in circulated grades.

One key Lincoln did bring a key price in Indianapolis. In fact, it realized more than any other cent at the sale. The coin was a 1922 No-D Strong Reverse cent graded MS-65 Red by NGC. This so-called 1922 “Plain” cent sold for $49,450.

But the ’22 Plain is a different kind of key; it’s a mint-error coin, created when small numbers of 1922 cents were struck with worn dies at the Denver Mint, giving them the appearance of lacking the “D” mint mark. Typically, these coins have very weak detail, especially on the obverse, and a mushy, well-worn appearance. Finding one sharp enough – and with sufficient luster – to justify a grade of MS-65 Red is indeed an event worthy of note and a lofty price.

The ’22 Plain cent sold at the Central States show is exceedingly rare. In fact, it is the only one ever graded by NGC as MS-65 Red – and PCGS has never awarded that high a grade to a single example, designating only one at MS-65 Red-Brown.

Most, if not all, of the common-date Lincolns now bringing unprecedented premiums in very high grades exist in that condition in double-digit quantities or more. They are not unique, or nearly so. But the law of supply and demand is pushing their prices inexorably higher – for while there may be 50 or 100 supergrade specimens available, three or four times that number of people want them.

I do have one very important caveat: Population figures should be relied upon as reasonably accurate determinants of rarity only for Indian cents and Lincolns from 1909 through 1933. Cents produced thereafter tend to have significantly higher mintages and were set aside in far greater quantities at the time of their issuance because of the growth of interest in coin collecting starting in the early 1930s.

What’s more, these later coins have not yet been submitted to the coin-grading services to the same degree, relative to their mintages, as the earlier cents. So the odds are much higher that rolls – even bags – of uncirculated pieces might emerge from hiding someday soon and drastically skew the population reports and market values.

One of the more unusual coins in the Central States auction was a 1943 Lincoln cent struck in error on a bronze planchet meant for a Curacao coin. This piece, produced for that Latin American country at the Philadelphia Mint, was certified as Fine-12 by ANACS. Bob Korver, then director of auctions for Heritage, declared it to be “the most interesting Lincoln cent in this sale.”

“Due to its close association with the fabled 1943 copper cent, we followed the bidding activity on this coin with great interest,” Korver said.

It changed hands for $7,475.

Shortly after the auction, I was privileged to handle the finest 1943 “copper” cent I’ve ever seen. This specimen possesses original luster and has never been cleaned. PCGS graded it Mint State-61 Brown.

In a series that is currently hot as Hades, this can truly be called a “penny” from Heaven.





In an age when image is all-important, the word “modern” enjoys a high approval rating. Most people associate “modern” with progress and change for the better, as in the expression “modern conveniences.”

Thus, when hobbyists think about or talk about the modern coin market, they tend to focus on latter-day developments that make it more convenient to buy and sell rare coins–computers and computer networks, for example, that make their coin transactions quicker, easier and more efficient.

There isn’t any doubt that computers and other modern innovations have had a dramatic impact on the coin market. Independent third-party certification is yet another development that has changed the way people buy, sell and hold rare coins, to cite just one more example.

At the same time, however, advances in knowledge aren’t always accompanied by corresponding quantum leaps in wisdom. Often, in fact, technological breakthroughs actually give rise to new misconceptions–so that modern-day advantages end up being compromised by myths and old wives’ tales more suited to the Dark Ages than they are to an Age of Enlightenment.

We’ve seen a marvelous marriage of coins and computers, but that union has given birth to maddening misinformation. So, too, has the “slab revolution.” And this worrisome downside is threatening to undo some of the good that these modern advances have wrought.

In order to combat misconceptions, we first have to separate fact from fiction. Knowledge of the truth is the first step in the process of gaining wisdom.

With that in mind, I’ve drawn up a list of the top 10 myths in the modern rare-coin marketplace.

Myth No. 1: Most certified coins trade sight-unseen.

With the advent of the slab and the establishment of the Certified Coin Exchange (CCE), an illusion was created that coins independently certified and encapsulated by either the Numismatic Guaranty Corporation of America (NGC), the Professional Coin Grading Service (PCGS) or ANACS all trade fluidly on the Certified Coin Exchange.

Certain generic, fungible coins (coins that are considered interchangeable) do trade in this fashion; common- date Mint State-65 Morgan silver dollars and Walking Liberty half dollars, for example, tend to be commoditized and often change hands sight-unseen. But, for the most part, beauty is still in the eye of the beholder, and most certified coins trade on a sight-seen basis.

A numerical grading system doesn’t take the place of personal taste, and most collectors buying coins demand to see them first. Dealers are no different–and, as shrewd businessmen, they recognize that it pays to show off their merchandise when it’s attractive. A sight-unseen offer represents an offer for coins of the lowest common denominator in a given grade, not for coins a cut above the rest.

Myth No. 2: Toning is to silver coins what rust is to iron.

This unfortunate–and potentially harmful–myth has been perpetrated, and perpetuated, by self-styled experts on coin chemistry. They equate the beautiful toning on lovely silver coins with the unsightly rusting of iron, and warn collectors not to buy toned silver coins because they are “damaged.”

Such warnings are not only baseless but also potentially hazardous to hobbyists’ financial well-being. They might well induce collectors who already own toned coins to “dip” those coins in a mild acidic solution to remove the layer of toning (and thereby presumably halt any further “damage”). In point of fact, however, beautifully toned coins are widely–and correctly–perceived to be natural and desirable, while dipped coins are the ones that have suffered surface damage, losing not only their luster but sometimes even part of their value. Thus, in warning about a problem that doesn’t even exist, the alarmists could be creating a very real one.

The process that causes silver coins to tone or tarnish is altogether different from the one that causes iron to rust. What’s more, the results are very different, too.

My father is a chemical engineer with a master’s degree from the Massachusetts Institute of Technology, and he has carried out extensive studies on this subject. Here’s what he has to say:

“When moisture reacts with iron, there is an all-out destructive attack of the metal. However, silver is relatively inactive and does not react with oxygen in the air, even at high temperatures. It reacts with certain chemical compounds, notably those containing sulfur, if a catalyst is present–moisture, for example. But even then, the reaction stops short of an all-out destructive attack. In the case of silver coins, the sulfur causes a coating to form on the surface of the metal–but far from being destructive, this coating is actually protective. If it develops quickly and tends to be unsightly, we call it tarnish; if it happens more slowly and attractively, we call it toning.

“Unlike iron, which loses metal when it rusts, silver is not eaten away–that is to say, corroded–by this limited chemical reaction. When iron rusts, it spalls and loses metal; when silver tones or tarnishes, there is no loss of metal.”

Myth No. 3: Certification services grade coins by computer.

A few years ago, with much fanfare and hoopla, the Professional Coin Grading Service introduced The Expert, a computer which, according to claims in PCGS literature, would be able to grade coins accurately on a systematic basis. Initially, it was programmed exclusively to grade Morgan dollars. But after just a year or so of service, The Expert was “temporarily” retired, and the Irvine, California, certification service now grades coins strictly by means of human experts’ eyes, not by computer.

Myth No. 4: Slab coin holders are vacuum-sealed and contain no air.

For the most part, coins that are encapsulated by grading services are sonically sealed, not vacuum-sealed. According to NGC’s founder, John Albanese, sonic sealing is accomplished by using high-pitched sounds which convert their energy into heat to fuse the two halves of a hard plastic slab together as one. In order to vacuum-seal a coin in a plastic holder, Albanese says, it would be necessary to press the plastic right up against the coin, much as the plastic wrapping is pressed against a frozen turkey in a supermarket. And this, he says, would damage the coin. Thus, for the most part, slabs are airtight but not air-free.

Myth No. 5: A rare coin’s value is directly proportional to its population.

With the introduction of population and census reports by the certification services, we’ve seen greatly increased reliance on the data revealed by these reports. Clearly, this information is highly useful. Just as clearly, though, many people are blinded by the numbers in these reports and think they never lie. Well, often the numbers do lie.

Many factors determine the value of a coin, and the number in a population report is just one of them. It’s helpful, of course, to know how many examples of that particular coin have been certified in that particular grade, and this is what we get from a population or census report. But other factors also come into play: the number of pieces available that haven’t been certified, for example, and the number of collectors who are interested in that particular series. Then again, far from indicating great rarity, a low population actually might reflect extreme commonness: A high- mintage modern coin, for instance, might have a low population in one of these reports simply because hardly anyone has bothered to submit any pieces for certification. Having little or no premium value, they aren’t worth the bother and expense of being certified.

Myth No. 6: Population reports can be relied upon 100 percent.

Population reports are imperfect reflections of rarity. People often crack coins out of holders and resubmit them in search of a higher grade–and each time the same coin is resubmitted, the population report counts it as a new submission.

It’s perfectly understandable why many coins are resubmitted, for small deviations in grade often result in great variations in price. Let’s say you have a magnificent Morgan dollar that’s beaming with luster, but a certification service sends it back to you with a grade of just Mint State- 64 because of a tiny scratch on the reverse. And let’s say that coin is worth $200 in MS-64 and $1,000 in MS-65. You’d probably crack it out of that MS-64 holder and resubmit it in hopes of getting a grade of 65. And if that coin was worth $10,000 in MS-65, rather than just $1,000, you might submit it a dozen times or more in your attempt to get it upgraded.

All this makes perfect sense from the standpoint of the person submitting a coin to a grading service. It doesn’t make sense at all, though, to rely upon the resulting population or census report as an accurate and infallible barometer of that coin’s true rarity. All too often, resubmissions skew population reports–sometimes quite dramatically.

Myth No. 7: The American Numismatic Association needs to spend large sums of money distributing educational material.

Recently, the national coin club has explored new ways to promote the hobby by self-publishing educational materials. The objective of such ventures is certainly laudable; the hobby in general and the ANA in particular both need a shot in the arm, and these might help provide it. But self-publication would be a needless expense. A far better approach would be for the ANA to license professional publishers to distribute books, videos and other materials drawn from the association’s proprietary resources. My contacts in the publishing field tell me there would be considerable interest in such materials.

Instead of paying a printer or a CD-ROM company to self- publish its work, the ANA could generate substantial new income. And, just as important, its materials would receive broad, powerful dissemination, which undoubtedly would attract many new recruits to both the association and the hobby.

Myth No. 8: Gold coins are always a better investment than silver or nickel.

Many new collectors, as well as many investors entering the coin market, are convinced that all that glitters is indeed gold. They assume that being more valuable (at least in terms of face and intrinsic value), gold coins are inevitably more desirable as well.

In a way, this is understandable; gold has undeniable glamour and allure. But gold coins can go down in value just as surely as any other kind. Gold coins may outshine their silver and nickel counterparts visually–but from an investment standpoint, they’re just as prone as their poorer relations to turn in a lackluster performance.

Your best bet is to stick with the highest-quality coins you can afford, regardless of their metallic composition or intrinsic value. And you would almost certainly be much better off with a stunning rare-date MS-66 nickel three-cent piece–a coin that cost thousands of dollars in 1989 and is just a small fraction of that today–than with a beat-up gold coin whose nicks and scratches make it appear that Godzilla used it as a teething ring.

Myth No. 9: Rare coins are traded on Wall Street.

Back in 1989 and 1990, Merrill Lynch and Kidder Peabody did in fact establish limited partnerships in rare coins. However, those partnerships have since been liquidated– largely because their performance was disastrous. Participants in the Merrill Lynch funds got all their money back from Merrill Lynch, but others were not so fortunate.

Beware of hucksters touting rare coins as an investment vehicle traded on Wall Street. It was true in 1990, but it’s false five years later.

Myth No. 10: Coins perform well only in inflationary times.

Inflation does enhance interest and activity in rare coins. We saw this in the late 1970s and early 1980s, when inflationary fears–and actual double-digit inflation– triggered a massive exodus from traditional investments into tangible assets, including coins. But another major coin- market boom, in the late 1980s, had little or nothing to do with inflation.

That boom–likewise one of the biggest we’ve ever seen– was touched off by Wall Street’s entry into the coin marketplace. It drew strength from the introduction of coins to many prospective buyers as a new form of investment, and from the ability of the coin industry to promote itself successfully. This demonstrates conclusively that while inflation is a big plus for the coin market, it isn’t an absolute prerequisite for a boom.


Excerpt from The Investor’s Guide to Coin Trading

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

Chapter 6

The Investor’s Guide To Coin Trading, by Scott A. Travers


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.

“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?”

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.

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.

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:


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.


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.


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.


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.


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!


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

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.

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?

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.

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

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.

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?

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).

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?

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.

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

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.

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

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.

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?

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.

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.)

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.

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

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.

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?

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.

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

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.

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

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.

Who is the ultimate consumer of coins? Why?

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.

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?

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.

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

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.





The great investment revolution of the 1980s is just a
memory now in the rare coin market. The 1990s have given rise
to a very different marketplace, and very different realities
–often more sober realities–confront coin buyers and
sellers at this time.

The glory days of rapid price increases have faded, and
the gravy train of quick, easy profit has been sidetracked.
On the positive side, however, many bargains exist in today’s
coin marketplace, and those who answer the door when
opportunity knocks can make their reservations on the gravy
train of tomorrow.

But what about those who purchased investment-type coins
in the marketplace of yesterday–the superheated market of
the Eighties? How can those people sell these coins at
minimal loss, and possibly even turn a profit, in the colder
investment climate of the Nineties? Or, for that matter,
should they sell these coins at all?

The changed investment climate calls for a change in
strategy. In fact, it calls for a number of different
strategies, depending upon the nature of the coins that you
possess. Some coins should be sold–even at a loss. Others
should be held. And others should be traded for different

There’s no time like the present to review your coin
portfolio–take stock of what you have–and formulate a plan
for restructuring your holdings to reflect the market
realities of today.

One of the basic realities is the undeniable fact that
most coins are worth considerably less today, in the spring
of 1993, than they were four years ago, as the market
approached its last big peak in May of 1989.

A check of the Certified Coin Dealer Newsletter, or
Bluesheet, confirms this all too graphically.

o On May 26, 1989, the Bluesheet assigned a value of
$555 to an 1880-S Morgan silver dollar certified as Mint
State-65 by the Numismatic Guaranty Corporation of America
(NGC). Today, that same coin is valued at only about $75.

o On May 26, 1989, the Bluesheet value for a no-motto
Liberty Seated half dollar graded MS-66 by the Professional
Coin Grading Service (PCGS) was a whopping $39,000. Today,
that coin is listed for only about one-third that amount.

o On May 26, 1989, the Bluesheet assigned a value of
$4,060 to a Saint-Gaudens double eagle graded MS-65 by NGC.
Today, its value has dropped precipitously. My book, The
Insider’s Guide to U.S. Coin Values, lists it at only

The common thread among all three of these coins is
their sharp decline in value. But if you own these coins and
are wondering whether to sell them, very different thinking
should guide your decisions.

Whichever path you take, your first move should be to
get your investment coins certified (if they haven’t been
already) by one of the major coin-grading services.

If you acquired your coins in the late 1980s, the
chances are good that they’ve already been certified by
either NGC or PCGS. But if you bought them earlier, they may
still be uncertified–or “raw,” to use the common market
expression. If so, you need to get them certified and
encapsulated–“slabbed,” if you will–in order to be sure
just what you have and maximize your chances to sell them or
trade them advantageously.

Let’s first consider the case of the 1880-S silver
dollar. This is what is known as a “common-date” Morgan
dollar–one that not only had a relatively high mintage (8.9
million), but also has a high surviving population in mint
condition. As of Jan. 1 of this year, NGC had graded 3,442
examples of this coin as MS-65 and 622 as MS-66.

The figures are even higher for the 1881-S Morgan
dollar: As of Jan. 1, NGC had graded 5,459 examples of this
coin as MS-65 and 767 as MS-66. And PCGS has certified even
more coins of both dates and both grade levels.

These are extremely high figures–and even though Morgan
dollars are among the most popular coins in all of U.S.
numismatics, it’s likely that the supply of these coins
exceeds the current demand by a wide margin.

The price declines of common-date Morgan dollars have
been every bit as dramatic for MS-66 and MS-67 specimens as
they have for MS-65 pieces. In MS-66, the price has plunged
from $1,400 to $200, and in MS-67 the drop has been from
$3,950 to $680.

Similar declines also have befallen other “generic”
coins–that is to say, coins which are available in large
quantities even in high levels of preservation and which, as
a consequence, have come to be looked upon as virtual
commodities. Many such coins can be found, for example, in
the Walking Liberty half dollar and “Mercury” dime series.

At first glance, it might seem that these coins
represent real bargains at current market levels. Well, they
don’t. Sure, it sounds great to be able to buy a coin for $75
and know that it would have cost you more than $500 just a
few years ago.

Keep in mind, however, that with these particular coins
–these generic, commoditized coins–there’s a very sound
reason why prices plunged so far. Simply stated, experience
has shown that these coins are far more common in high mint-
state grades than buyers and sellers realized in the middle
to late 1980s.

Their commonness has been dramatized by the PCGS
Population Reports and the NGC Census Reports, which
regularly list the numbers of coins that those two grading
services–the leaders in the industry–have certified for
each U.S. coin series in each date-and-mint combination and
each proof or mint-state grade level.

Prior to the introduction of these two monthly reports
in the late 1980s, there was no accurate way to determine the
relative rarity (or commonness) of any given coin in any
given grade. It was largely a matter of guesswork. These
reports have eliminated the guesswork and provided firm
figures rooted in scientific fact. And what they have shown,
in the case of generic coins, is that many more coins exist
in grade levels of MS-65 and above than most people realized
just a few short years ago.

Granted, generic coins are attractively priced today,
compared with their levels of 1989. In order for them to
increase in value, however, we’d have to see economic
justification–in short, a growth in demand to match the
growth in supply. And that kind of new demand seems highly
unlikely: Morgan dollar collectors need just a single example
of any particular coin to complete their sets, so there’s no
long-term market for all the thousands of extra coins beyond
those required to fill the basic demand.

I strongly recommend that you divest yourself of all the
generic coins you now possess–even if you have to incur a
loss. You can sell them outright or, if you prefer, you can
trade them for other coins. But it’s my considered judgment
that despite their lower price levels, these coins aren’t
going anywhere. If anything, they’re going nowhere fast.

Among the other coins that you should be selling today
are impaired modern singles–carbon-spotted Lincoln cents
that turn up in BU rolls from the 1940s and ’50s, for
example, or coins with obvious blemishes that you may find in
rolls or bags of Jefferson nickels, Roosevelt dimes, Franklin
half dollars and other coins of similarly recent origin.

Let me make it clear that I am not disparaging modern
coins as a whole. On the contrary, I am bullish on high-
quality coins from the modern era; many of these have truly
enormous potential for future appreciation. But “problem”
coins have no potential at all, and never will.

Speaking of modern coins, I see this as an area that
may do very well in the next few years–and therefore
recommend that you place some of these coins in your
portfolio. I’m speaking now of certified 20th-century singles
in very high levels of preservation. Important promoters are
moving into this field, and I think it could become a hot new
area during the next couple of years. Don’t go crazy and put
all your money into modern coins–but if you’re spending
thousands of dollars on coins, do spend at least a few
hundred on modern issues.

If you prefer not to sell your coins outright, you might
consider trading them for other coins that, in your opinion,
have greater potential. Tax laws permit “like-kind” exchanges
involving rare coins, and this can be an excellent way to
defer any tax obligation you may have for gains you have

Let’s say you bought a coin for $1,000 and it went up in
value to $5,000. Instead of simply selling the coin and
having to pay taxes on your $4,000 profit, you could trade it
for other coins costing a total of $5,000–coins that might
be at the bottom of their cycle at the time. Later, if those
coins rose in value to $10,000, you could repeat the process.
And you could keep repeating it over many years.

I know of many people who have followed this procedure.
Eventually, of course, taxes must be paid on any gains that
are realized. But actual sale of the coins–and payment of
the taxes–often can be postponed until the owner reaches
retirement age and a lower tax bracket.

Losses have been more common than gains in recent years,
so the tax-deferral advantage of like-kind exchanges hasn’t
been as useful to people holding coins. In fact, it might
well be preferable from a tax standpoint to sell coins in
some circumstances, and claim a loss on your tax return,
rather than trade them. You should check with your accountant
to see which approach is better for you.

While the general trend has been down, some coins
actually have increased in value during the last few years–
and if you have such coins, I would recommend that you trade
them in a barter exchange and buy coins which are now at the
bottom of their cycle. Certain copper coins, for example,
have risen as much as 50 percent in the last year or two, and
I think this would be an opportune time to trade them for
coins with good potential that are currently at low ebb.

Under that heading, I strongly recommend high-grade type
coins–Liberty Seated coins and similar material from the
more traditional era of U.S. numismatics. Like generic coins,
many of these type coins have suffered major losses since
1989. But unlike generic coins, they remain legitimately
scarce: The population and census reports continue to confirm
that relatively few examples are available in high mint-state
or proof grade levels–grades of 65 and above. And a solid
collector base exists for these true collector coins.

These are the coins you should hold onto, or trade into.

Consider, for instance, the no-motto 1858 Liberty Seated
quarter. On May 26, 1989, the Bluesheet listed this coin at
$14,900 in MS-65 as certified by either PCGS or NGC. The
Insider’s Guide to U.S. Coin Values lists the same coin’s
value in 1993 at less than half that amount–just $7,000.

If you own coins such as this, I urge you to hold onto
them; they’re extremely sensitive to demand, and just a
modest increase in the number of people buying them could
drive their prices much higher in a very short period of
time. In other words, they have tremendous potential,
especially at today’s depressed levels. They’ll be among the
first–and biggest–winners in the next coin-market boom.

It’s just common sense that an MS-65 type coin with a
population of less than 10 will go up faster and farther than
an MS-65 Morgan dollar with a population in the thousands.
Clearly, it will be much more responsive to demand–and it’s
much, much rarer.

If you own generic coins and are looking to make a
trade, this would be a terrific area to move into. You’d be
much better off with a single no-motto 1858 Liberty Seated
quarter in MS-65 than with dozens or even hundreds of 1880-S
or 1881-S Morgan dollars in the same grade.

Many investors–and even collector/investors–purchased
large quantities of generic gold coins during the late 1980s.
Most often, these included common-date Saint-Gaudens double
eagles (or $20 gold pieces) in grades such as MS-63.

From a numismatic standpoint, these coins have roughly
the same potential as generic Morgan dollars in the same
grades. In short, they’re going nowhere fast. They do have
some potential for price appreciation, though, based on their
precious-metal value.

If gold bullion were to rise dramatically, double
eagles–which contain very nearly a full ounce of gold–would
enjoy a similar rise in metal value. For that reason, many
investment advisers recommend keeping a certain amount of
gold–including gold coins–in your portfolio.

My advice would be to keep a few–but only a few–
generic gold coins in your portfolio. If you have 80 or 90
“Saints” sitting in your safe deposit box, keep a few and
trade the rest for coins with better potential.

Clearly, the 1990s haven’t been the best of times in the
rare-coin market. They’ve certainly been a letdown after the
fast and furious 1980s.

Sound judgment and prudent planning can minimize the
downside of this decade gap, however, and help pave the way
for much brighter tomorrows once the marketplace–and you–
bridge that yawning gap and reach the other side of the great





First published: June 1994

Some people acquire rare coins primarily for pleasure,
others primarily for profit. Some regard themselves first and
foremost as collectors, others first and foremost as

However you view yourself and your coins, you’ll never
achieve your objectives unless you take care of those coins
— for protection and preservation are the common allies of
collectors and investors alike, and deterioration and damage
are the common enemies.

In 1985, a collector client came to me with a group of
coins that once had been — and still should have been —
truly incredible. The group contained a Liberty Seated half
dollar with spectacular cameo contrast and beautiful toning
… several highly desirable and scarce-date Indian cents,
including an 1864-L, an 1877 and a 1908-S … and a high-
grade, scarce-date Barber dime.

All of the coins were well preserved — or at least the
client thought they were, since all had been stored in nice,
soft vinyl flips. The trouble was, those flips were made of
PVC — polyvinyl chloride — and the coins had all corroded
while in storage.

The moral of the story is that a coin holder costing
just a couple of cents can easily ruin coins costing many
thousands of dollars.

Coin storage problems are a matter of utmost concern.
Whether you buy coins to hold for long-term gain or to sell
in a nearer term when the time is opportune, you stand to
lose a great deal of money if those coins deteriorate while
in your possession.

The preservation risk is a clear one. If you buy a coin
for $1,000 and drop it on the way home and the coin gets a
scratch on it, that $1,000 coin can plummet in value to $100
— even if you got good value in the first place — because
of the loss of condition.

Many collectors and investors have experienced similar
losses in the value of their coins — not because they
dropped them, but because they stored them in unsafe holders
or unsafe environments. Yet, in many instances, they haven’t
sought or received advice on how to avoid recurrences.
Clearly, there is a lack of appreciation for the seriousness
of the problems and a lack of education on how to combat

Coin preservation is a never-ending struggle. Coins
begin to deteriorate the second they are produced. Every coin
you see — even the highest-grade mint-state coin — is in an
intermediate stage between having been completely brilliant
and turning completely black.

Coins are affected by a multiplicity of variables. Bern
Nagengast, a well-known authority on coin preservation who is
the principal of E&T Cointainer Company in Sidney, Ohio, says
the rate of a coin’s deterioration depends primarily on the
metal of which it is made, the atmosphere, the contaminants
on the coin’s surface and the handling of the coin.

As the owner of a given coin, you can exercise control
over a good number of these factors and thereby slow down —
and perhaps all but stop — the deterioration of your coins
and keep them in the same level of preservation over the
years. You owe it to future generations of collectors to do
so — to maintain your coins in the same level of
preservation when you store them. And if moral and
philosophical considerations aren’t persuasive enough, you
owe it to yourself–because if you don’t, you stand to lose a
whole lot of money.

Let’s consider the most important factors affecting a
coin’s long-term life.

The atmosphere surrounding a coin certainly can have a
significant effect on how well, or how poorly, that coin
holds up.

According to Bern Nagengast, normal pollutants found in
the air can cause serious long-term problems by combining
with oxygen to damage a coin’s surface. Artificial gases
produced while a coin is housed in a plastic holder, coming
from the plastic itself, also can cause major damage.

The atmosphere contains moisture and dust, and both are
dangerous to a coin, for both carry oxygen into intimate
contact with the surface of that coin.

Since we don’t have much control over the air around us,
the best way to protect a coin from the atmosphere is to
place it in a container that’s as airtight and inert as
possible. That way, impurities in the air will be kept away
and, at the same time, the container itself won’t contaminate
the coin.

The problem is, no coin holder yet devised is absolutely
airtight. Even coins that have been encapsulated in sonically
sealed, tamper-resistant holders by the major grading
services are not 100 percent impervious. These holders are
somewhat airtight, and the plastic of which they’re made is
chemically inert — but they’re not completely airtight, and
air does come in contact with the coins inside, though
admittedly at a greatly inhibited rate.

This is not to minimize the importance of safe and
effective holders. On the contrary, they can play an
invaluable role in safeguarding your coins.

Susan Maltby, a well-known preservation expert from
Toronto, recommends holders made of either Mylar,
polyethylene or polypropylene. All three are tough, stable
compounds — and unlike PVC, they won’t break down readily
into their chemical components.

As for PVC, Sue Maltby has a three-word recommendation:
“No, no, no!”

PVC “flips” gained wide popularity during the coin
market’s boom years of the mid- and late 1970s because they
are exceptionally clear and flexible. This seemed to make
them an ideal way to store and display rare coins. In time,
it became apparent that these relatively minor conveniences
came at a very high cost — for when heat and light act upon
PVC, it breaks down chemically and hydrochloric acid is
released. This, in turn, can cause chemical damage to the
surface of the coins that the holders are supposed to be

Often, plasticizers are used to enhance the chemical
properties of PVC holders, and these can ooze out and form an
oily film upon the coins, greasing the skids for still
further damage.

The perils of PVC were publicized extensively in the
early 1980s, and since then there has been a noticeable
decline in the use of such holders. Obviously, though, not
everyone has gotten the message: Recently, the Numismatic
Guaranty Corporation of America (NGC) issued a press release
reporting that it has received a substantial number of coins
with PVC damage.

Those coins were submitted to NGC by dealers, collectors
and investors seeking to have them certified and encapsulated
by the company, which is one of the nation’s leading coin-
grading services. Instead, they got their coins back
uncertified, since NGC and other grading services make it a
policy not to grade damaged coins.

Mark Salzberg, NGC’s president, suggests that many of
the damaged coins now entering the marketplace may have been
set aside years ago, before the risks of PVC were fully

“Collectors and investors should check any coins they
have put away — in safe deposit boxes, for example — to
make sure the holders are chemically inert and the coins have
not been damaged while in storage,” Salzberg said.

Those who suspect that their coins may have been exposed
to PVC should remove them from their holders immediately, he
said, and take or mail them to a dealer familiar with how to
neutralize the chemical and, if possible, remedy any damage.

“We’re alerting NGC-authorized dealers to the problem
and advising them what can be done to deal with it,” he said.

Of course, PVC isn’t the only source of potential damage
to your rare coins. Other caustic chemicals, such as
compounds containing sulfur, can harm them, too. Even you
yourself could be the source of damage: If you chanced to
touch a coin with a perspiration-soaked thumb, for example,
that coin could end up with a thumbprint permanently etched
in its surface.

This, by the way, is another illustration of why
“slabbing” won’t necessarily guarantee the permanent safety
of your coins. If your sweat-soaked thumb came in contact
with a coin and the coin was then certified and encapsulated,
the chemical damage caused by that contact could continue to
develop even within the sonic seal of the “slab.” It might
take longer for the etching of that thumbprint to appear, but
eventually it would rear its ugly whorls.

Frequently, coins carry the seeds of their own
destruction — without any help from the atmosphere or other
external factors.

Bern Nagengast and Susan Maltby share the view that
however pristine they may look, coins are essentially dirty.
During production, the metal used in coins is rolled,
punched, annealed, die-struck and handled by various
mechanical devices. Even proof coins are contaminated with
metallic particles, and even the most meticulously preserved
business-strike coins suffer from a multiplicity of
contaminants: oil and grease … rag dust … bag dust — you
name it, they’ve been exposed to it.

After the coins leave the Mint, they’re further
contaminated by counting machines and handling. Even when you
simply hold a coin, you’re contaminating it — and sometimes,
the contamination can be devastating. If you eat a pastrami
sandwich over your proof Trade dollar, you’re contaminating
it. If you have dandruff, you can contaminate it. If you eat
chicken wings and then touch a coin, you can permanently ruin
its level of preservation. If you talk over a coin, the
saliva from your mouth can land on the coin and turn that
area black — and then actually penetrate the surface of the

How you hold a coin can be important, too. If you don’t
hold it properly by its edges and the mishandling causes
abrasions, you can ruin the coin. Likewise, a coin can be
damaged by coming into contact with other coins or rubbing
against some other foreign substance — even a velvet cloth.

Another crucial aspect of coin preservation is coins’
metallic makeup. Some coins are more prone than others to
chemical and environmental damage; some, by contrast, are
more resistant.

Gold retains its mint luster almost indefinitely —
although, as Sue Maltby notes, that depends on how pure the
gold is. Some gold coins contain copper — and in such cases,
the copper might cause them to break out in spots.

Silver is quite resistant to corrosion, but it’s highly
susceptible to tarnish, especially in the presence of sulfur
compounds and nitrates. And Bern Nagengast points out that
sulfur and nitrate compounds are frequent components of air
pollution today, so these are real concerns.

Copper coins are especially susceptible to damage from
airborne particulate matter, and can break out in spots
virtually without notice. For this reason, you should take
special pains not to store copper coins in a moist

According to Susan Maltby, vulnerable metal coins will
start to corrode when the relative humidity in the
surrounding air rises above 35 percent. Obviously, then, the
risk of corrosion is higher in a damp, humid place such as
Florida than it is in a drier climate — the kind found in
Arizona, for example.

To combat this risk, you need to create what Sue Maltby
calls a proper “micro-climate” — a neutral, acid-free
climate — for your coins.

One way to accomplish this is to treat the air
surrounding the coins — the air in your safe-deposit box,
for example — with a vapor-phase inhibitor. This is a
substance that changes the molecular composition of the air
to retard the process of tarnishing.

Sue Maltby reports that museums have used such products
for many years. She cautions, however, that vapor-phase
inhibitors tend to be specific for certain metals; in other
words, a “VPI” meant for use with silver might be of little
value in retarding damage to gold or copper coins.

Silica gel also can be beneficial, she reports. If
you’ve purchased a new camera or radio lately, you’ve
probably noticed a small packet of silica gel in the box.
Silica gel and silica are “very handy for maintaining a dry
environment,” Maltby says. Basically, they serve as sponges,
drawing all the moisture out of the air.

Sue Maltby also recommends dipping your coins in a
neutral solution, such as alcohol, before storing them. For
his part, Bern Nagengast advises that you treat them with an
evaporative freon solution such as trichlorotrifluoroethane.
This protects the surfaces of your coins from environmental
damage, yet is harmless itself to the coins.

Obviously, proper preservation is a lot more complex
than simply sticking your coins in plastic holders, tossing
those holders in your safe-deposit box, then walking away.

As with any other aspect of coin collecting, though …
or any other aspect of life in general … the more you put
in, the more you get out.

And if you don’t expend enough time and effort
protecting and preserving your coins, what you get out of
your safe-deposit box may prove to be a whole lot less than
what you put in.

[Note: Since this article was first published, new production
of trichlorotrifluoroethane, a highly evaporative freon, was
banned because of its destructive effect on the earth’s protective
ozone layer. And a superb new product designed to maintain and
protect coins, Intercept Shield, was introduced by John Albanese.]


by Scott A. Travers

1869-S Liberty Seated half dollar MS67 Eliasberg in a vintage green-insert PCGS holder
1869-S Liberty Seated half dollar MS67 Eliasberg in a vintage green-insert PCGS holder

“Independent third-party certification and encapsulation.” It’s quite a mouthful to say, and it’s every bit as important as it sounds.

Simply stated, “slabbing” has revolutionized the rare coin market, fundamentally changing the way people buy and sell coins.

Since its introduction in 1986 by the Professional Coin Grading Service (PCGS), slabbing–the encapsulation of coins in sonically sealed, hard plastic holders with tamper-evident holograms–has greatly diminished the grading controversy that plagued the market prior to that time. It also has eased the crisis of confidence that up to then was spreading insidiously through the marketplace. Today, there is widespread acceptance of the grades assigned to rare coins by PCGS and the Numismatic Guaranty Corporation of America (NGC). But while the Slab Revolution has been a tremendous blessing, it also has given rise to a number of misconceptions–some of them downright myths–among the coin- buying public. Some of these have even been perpetrated, or perpetuated, by members of the numismatic press–the very journalists whose knowledge, integrity and independence serve as security blankets for their readers. Some of these misconceptions are fairly obvious; others are much more subtle. But either way, a myth is as good as a mile.

Here, then, is my list of the 10 greatest myths about slabbing:

MYTH NO. 1: You can’t get ripped off when you buy a certified coin.
This is absolutely not the case: You can get a terrible deal on any kind of coin if you choose the wrong dealer. Certified coins offer important safeguards. First and foremost, they carry grades assigned to them by impartial experts–informed, independent assessments regarding their level of preservation–and these provide protection against overgrading by unscrupulous sellers. It’s up to the consumer to correlate this grade with a reliable price guide stating how much each coin is worth in the designated level of preservation.

In one recent case some years back, a coin dealership grossly overcharged customers for coins which had been certified by major grading services. The grading itself was fine, and many of the coins were extremely rare and highly desirable. The problem: The dealer priced the coins at multiples of their fair market value. Just because a coin is accurately graded, that doesn’t mean it’s fairly priced. Overpricing also occurred in connection with esoteric coins which have been certified–unusual pattern coins, for example. Often, these coins fall into gray areas and people have difficulty determining their value. You might have a coin of which only three examples have been independently certified–but that doesn’t necessarily mean that it’s worth a great deal of money.

You need to do your homework–your research–in order to establish the fair market value of any coins you’re interested in buying. Just because a coin has been independently certified doesn’t mean it’s a good value.The first step in protecting yourself as a consumer is to get the coin properly certified, and the second step is to pay a fair price at the correct time in the market cycle.

MYTH NO. 2: All slabbed Mint State-65 coins are created equal. Coin grading is performed on  a spectrum–on a continuum. Some coins are high-end for a given grade, some are low-end. Some coins graded 65 are magnificent–beaming with luster and shimmering in their allure, to the point where they might be just a hair away from meriting a grade of 66. Others are dingy, lackluster, spotted or lightly fingerprinted, and barely qualify as 65s. Still others are somewhere in between.

NGC recognized this early on by using the letters A, B and C internally in the grading room. Shortly after NGC’s founding in 1987, I worked there for three years as a part-time grader. If we looked at a coin that we believed was a high-end 65 (or a high-end coin of any grade, for that matter), we would use the letter
“A.” If we believed it was a low-end coin, we would use the letter “C.” And if we believed it was in between, we’d use no letter at all or the letter “B.” To add to the confusion (or at least to the complexity), there are A-plus and A-minus coins, C-plus and C-minus coins and so forth.

My discussions and explanations in public forums of this coin grading spectrum were relentless over many years. Despite David Hall, founder of PCGS, publicly disagreeing with my explanation, in 2010, he did an about-face and asked me to introduce PCGS’s new system of recognizing that coins are graded on a spectrum. PCGS introduced “plus” grading, and I cheerfully accepted the post of its paid spokesman in the rollout. NGC caught up quickly and joined the “plus” revolution, recognizing with PCGS that not all coins of the same grade are equal–at least not all coins bearing higher grades.

So whether the coin is graded with or without a plus, you should take a close look at any coin you’re thinking of buying, even if it’s housed in a slab. If it looks attractive to you, it might very well be attractive to someone else, as well. But if it looks ugly to you–if it looks as if you had taped it to the bottom of your shoe and tap-danced on it–then pass on the coin and tap-dance to the next deal.

MYTH NO. 3: Population and census reports tell you exactly how many coins are available. For a number of years, PCGS and NGC have been issuing periodic population and census reports detailing how many coins of each date, mint and type they have certified in each of the various grades–and these can be extremely useful to buyers and sellers. By no means, however, should these be considered precise reflections of how many different coins are actually available. The problem is, these reports contain no consistent corrective mechanism to account for resubmissions–cases where the same coin is submitted over and over in hopes that it will receive a higher grade the second, third, fourth or 50th time around. A given coin might have been graded dozens of times because the submitter thought it might be given the next-higher grade and thus command a much higher price. In such a situation,
the population and census reports can be extremely misleading. Take the case of a coin worth $1,000 in Mint State-64 and $10,000 in Mint State-65. If it’s a very high-end MS-64 piece, its owner might crack it out of its holder multiple times and keep resubmitting it, trying to get it upgraded to 65 and thus increase its market value $9,000. The population and census reports do not correct for this irregularity.

MYTH NO. 4: Slabbing has established a completely fixed, totally consistent grading standard.
The grading services may indeed have striven for completely fixed, totally consistent grading standards. But the realities of the marketplace–and of the slabbing business–have at the very least created the perception that the standards have not remained fixed. The Rosen Numismatic Advisory, an award-winning newsletter published by market analyst Maurice Rosen, conducts a “crystal ball” survey each year in which leading professionals in the coin industry express their views on the market. In the 1994 survey, virtually every participant stated that since the mid- to late 1980s, grading standards have loosened at both PCGS and NGC–despite representations by the companies and their backers that the standards have been fixed. These experts could be wrong, of course–but even if they were, complete precision and total consistency are impossible in the real world. Almost any dealer who handles certified coins will tell you that although the services’ standards are reasonably consistent today, they are certainly not totally consistent–and it’s possible to take a high-end 65 one day, crack it out of its holder, and next day get a
grade of 66. In the face of falling revenues caused by declining interest in rare coins, the grading services might very well be tempted to increase their business by loosening their grading standards slightly.

MYTH NO. 5: Slabbed coins protect you against volatility and make better investments than unslabbed coins. This statement is so fallacious that PCGS warns consumers that this is NOT the case. In its
literature, it places the following statement: “Certification by PCGS does not guarantee protection against the normal risks associated with potentially volatile markets. The degree of liquidity of
PCGS-certified coins will vary according to general market conditions and according to the particular coin involved. For some coins, there may be no active market at all at certain points in time.” If anything, the advent of certification actually has created more volatility in the marketplace. And limiting your purchases to certified coins isn’t going to protect you from this volatility. Let’s say a Mint State-65 Saint-Gaudens
double eagle is worth $1,050 sight-unseen in a slab and suddenly the sight-unseen price increases to $1,500 and then, at the snap of a finger, plunges in a day down to $900. The fact that the coin is certified will enable you to sell it at its high when it’s $1,500 … or sell it quickly at its low for $900–but won’t protect you against the market conditions themselves. Anyone who thinks or says otherwise doesn’t
understand the nature of the marketplace or is misrepresenting the way the marketplace works. Buying slabbed coins helps to protect you against two primary risks: the acquisition risk and the sale risk. The
acquisition risk is the risk that you might overpay when you buy a coin. With a slabbed coin, the grade is established and all you have to do is look in a price guide to be sure you’re not overpaying. The sale risk is the risk that you might be offered less than a coin is worth when you go to sell it–that someone might offer you a Mint State-63 price for a Mint State-65 coin. Again, with a slabbed coin, you know the grade and thus can determine the value quite readily. Certification doesn’t necessarily make coins a better investment, but it does eliminate some of the acquisition risk when you buy a coin and helps you maximize your return when you sell that coin.

MYTH NO. 6: A coin can’t deteriorate once it is encapsulated in a slab. On the contrary, the deterioration of coins–even when housed in slabs–is a source of growing concern and represents a problem that’s likely to occupy us increasingly over the next several years. NGC conducted some very intriguing age-acceleration simulations in which coins that were sonically sealed in tamper-resistant holders had their age accelerated by decades. The results proved unsatisfactory, at least in terms of copper coins: The coins actually deteriorated while they were in the holders. I have seen a number of copper coins in PCGS holders which actually broke out in spots while in the holders. There’s really no way that a coin can be completely protected against environmental variables, whether it’s in a slab or otherwise. We have seen a number of cases where moisture in the air permeated the holders, as well as other cases where coins made of highly susceptible and vulnerable metals such as copper were, in a sense, choking in their holders–trapped inside with airborne particulate matter which was causing the coins to deteriorate. Because copper coins are so susceptible to damage and deterioration, NGC does not guarantee the grades it assigns to them, as it does with coins produced in other metals. PCGS does guarantee the grades of copper coins–but I have seen no difference in the way these coins deteriorate while encapsulated, whether the holders came from one service or the other. This is a real problem, one I sense we’ll have to address more urgently over the next several years as coins that are susceptible grow older in holders and their deterioration becomes more apparent.

MYTH NO. 7: Slabbed coins can always be liquidated at Coin Dealer Newsletter prices.
Dream on! The Coin Dealer Newsletter (familiarly known as the Greysheet) does not determine the marketplace; the marketplace is supposed to determine the values that are listed in The Coin Dealer Newsletter–and often, there’s a great discrepancy. To cite just one example, the monthly Coin Dealer
Newsletter listings for Mint State-65 Barber half dollars early this year were, in my opinion, just about double what they should have been. There were coins listed for $6,000 which my own company, Scott Travers Rare Coin Galleries of New York, was offering to clients for half that much–$3,000
to $3,500. Many CDN prices are notoriously high. Conversely, if you have one of these Barber half dollars and you see it listed for $6,000 in the CDN Monthly Summary, don’t think you can sell it for $6,000. You might be lucky to get $3,000 for it. There are many similar examples, but this should suffice. The Certified Coin Dealer Newsletter (or Bluesheet) is more accurate, especially for generic, fungible coins–coins which are available in great quantity and tend to duplicate each other. The Bluesheet is certainly a better reflection of market conditions than the Greysheet. But once you start talking about truly rare coins
costing many thousands of dollars, the publishers of the Bluesheet and Greysheet have greater difficulty determining the levels at which these coins actually trade, and have difficulty confirming transactions. As a consequence, the price levels listed in these guides become less reliable for such coins. Just because a coin has a value of $20,000 or $30,000 in the Bluesheet or Greysheet, there’s no assurance at all that you can get that much for it if you sell it. The transaction reflected in the listing may have occurred many months ago and the market may have dropped 10 or 15 percent in the interim.

MYTH NO. 8: Slabbing has attracted billions of dollars from Wall Street, and the money is here to stay. The money that entered the coin market from Wall Street sources, through limited partnerships, amounted to millions of dollars, not billions. And to those Wall Street sources–companies such as Merrill Lynch and Kidder Peabody–this was really an experiment. On Wall Street, where stocks trade at the rate of $40 million per minute, rare-coin funds totaling $10 million apiece, or $20 million–or even $50 million-
don’t represent a major outlay. The experiment proved to be unsuccessful; as a result, the money left the coin market as quickly as it had arrived. Given that experience, it’s highly unlikely that new Wall Street money will be flowing into the coin market anytime soon–and anyone who says it will return soon is either misinformed or an outright liar.

MYTH NO. 9: Inexpensive slabbed coins are always worth at least as much as the fee you pay to get them certified. This is a myth with special appeal to the unwary. Many non-knowledgeable investors buying inexpensive coins feel comfortable paying $40 or $50 apiece for these coins because that represents such a modest markup over the certification fee. They assume that since the slabbing fee was $25 and they’re paying just $15 or $25 more than that, they must be getting a good deal. The fact is, coins can and do change hands for less than the amount of the certification fee. When all is said and done, you’re buying the coin, not the plastic, and you should never pay more than the coin itself is worth. Many inexpensive coins–common-date silver dollars and modern U.S. coins, for example–are readily available for significantly less than what it cost to get them certified.

MYTH NO. 10: It’s easy to crack slabbed coins out of their holders. In reality, it takes a great deal of time and effort to remove a coin from a slab–and it takes even more time and effort, combined with practical experience, to avoid damaging the coin in the process. These holders are sonically sealed, and they’re meant to be permanent. Ease of removal wasn’t a key concern in their design. Dealers often do crack coins out of slabs in order to resubmit them in quest of a higher grade–and even they have trouble on occasion. If you go to a coin show, you’ll sometimes see dealers trying in vain to remove such coins.
Occasionally, when an inexperienced person does the cracking, you’ll even see coins fall to the floor as they’re being removed. This sort of thing can be traumatic, and I strongly recommend that if you want some coins cracked out of slabs and you’re not an expert yourself, you entrust the job to a professional.

There you have them: 10 basic myths about slabbing. Do these misconceptions tarnish the achievements of the Slabbing Revolution or diminish the contributions it has made? Not at all. Third-party certification has been highly beneficial for numismatics. But, like anything else, it needs to be put in perspective. It needs to be viewed in a clear, bright light, not through rose-colored glasses.

The truth–not the myth–is that even under a searchlight, slabbing still looks very good indeed.





Looking at rare coins is one of the great pleasures of
our hobby. Every true collector delights in picking up a rare
and valuable coin–or even a more common coin with some
special characteristic–and studying it carefully and
There’s more than one way to look at a coin, however,
just as there’s invariably more than one side to every story.
And knowledgeable numismatists should–and do–look at a coin
in all these different facets before reaching conclusions
about that coin: whether to buy it, whether to sell it or how
much it is worth, for example.
The physical details are fairly standard. Every informed
collector knows enough to pick up and handle a coin only by
its edge. And I generally recommend that in looking closely
at coins, you use a 5-power or 10-power magnifying glass if
you’re making a general evaluation and a 20-power glass if
you’re zeroing in on some specific feature, such as a mint
For the most part, however, the different ways of
looking at coins are not so much physical as mental. What
makes these approaches different from one another isn’t how
you look at coins, but WHY–what’s going through your mind
while your eyes are on that coin between your finger and your
With all this in mind, here’s my list of the 10 Top Ways
to Look at Rare Coins:

(1) Looking for beauty.
This may very well be the most significant way to look
at a coin, for beauty is really what coin collecting is all
about. In looking for beauty, you might be looking for a
certain type of toning … or a coin that’s extremely well
struck … or you might be looking for a coin which best
displays the artistic genius of the person who designed that
particular coin type.
Collectors who purchase coins for their artistic
significance are buying them for their beauty–and whether
you’re buying a Lincoln cent that grades About Good-3 or a
proof Morgan dollar grading 69 on the 1-through-70 scale, to
you each coin you purchase is beautiful in its own way.

(2) Looking for positive attributes.
In looking at coins they own, many people tend to feel
they’re in a higher grade than they really are. When
something is yours, it always seems better than when it
belongs to somebody else. It’s only natural that when you own
a coin, you’re looking for its positive attributes. And if
you have a coin to sell, it’s always going to seem nicer to
you than if you were trying to buy it from somebody else.
Looking for positive attributes is always a useful
approach, even when you’re buying, rather than selling–for
these are the characteristics that will give you pride of
ownership if you buy it, and truly enhance its value if and
when you later decide to sell it. Magnificent toning … a
needle-sharp strike … blazing mint luster–these are the
kinds of attributes you should look for.
At times, a coin’s positive attributes can blind you to
its flaws, and you need to be on guard against this danger.
Take the good features into full account, but don’t let them
overwhelm you.

(3) Looking for imperfections.
In purchasing coins, it’s only natural to look for
imperfections, because those may lower the price you have to
pay. If you convince the seller that a coin is not as good as
he or she first thought it to be, you might be able to buy it
for considerably less than the price first quoted.
Looking for imperfections is a good policy just on
general principles, aside from the edge in may give you in
your bargaining. After all, if you don’t look for
imperfections when buying a coin, you might not find them–
and then you’ll really get the short end of the bargain.

(4) Looking at both the strengths and the weaknesses.
You need to evaluate each of your coins as impartially
as you can. If a coin has been assigned a high grade, you
need to ascertain just what strengths went into that
determination. Conversely, if the grade is low, you need to
pinpoint the weaknesses that contributed to that rating. You
need to check for eye appeal, mint luster, strike and all the
other characteristics which, when combined, serve as the
determinants of the coin’s grade or level of preservation.

(5) Looking at a coin as if it were a clock.
This is an approach I explain in detail in my book The
Coin Collector’s Survival Manual™ published by
Bonus Books. Essentially, you view the top of the coin as 12
o’clock, then scan the coin in a clockwise direction (or
counterclockwise, if you prefer), tilting and rotating it as
you do so. You do this first with the obverse of the coin,
then repeat the procedure with the reverse.
I liken this technique to proofreading a letter. If you
simply skim a letter, you probably won’t spot too many
mistakes. But if you examine it closely, and in an orderly
way, you’re far more likely to pick up any errors. Similarly,
you may miss important details on a coin if you view it
simply as a whole, without scanning each sector individually
and in a logical sequence.
If you look at enough coins with the coin-and-clock
method, you’ll be able after a while to readily identify
their strengths and weaknesses and expertly determine their
overall grade and value.

(6) Looking for valuable varieties.
One of the most interesting–and potentially rewarding–
ways of looking at coins is to seek odd characteristics that
set certain coins apart from others. Whether you call them
“errors” or “varieties,” these coins hold undeniable
fascination. And, in many cases, that translates into very
substantial premium value.
A case in point is the current national treasure hunt
for 1995 doubled-die Lincoln cents–coins on which the word
LIBERTY and other obverse elements appear to be doubled.
These cents are now trading for well over $100 apiece, so
those who find them in pocket change, laying out just one
cent, are reaping enormous profits. They’re also deriving
tremendous satisfaction from the knowledge that their
investment consisted almost solely of time, rather than
money–and that the discoveries happened because of their own
keen wits and sharp eyes.
There are many worthwhile coins in pocket change and old
accumulations. I recommend that you get a copy of The
Cherrypickers’ Guide to Rare Die Varieties, co-authored by
Bill Fivaz and J.T. Stanton, published by Bowers and Merena
Galleries. This extremely helpful guide and handy reference book
will assist you in identifying and cherrypicking coins that otherwise
might escape your detection.
Often, people spend such coins without realizing their
value. And coin dealers sometimes have them in their
inventory–perhaps even in their “junk boxes”–without being
aware that they’re scarce and valuable oddities. Your
purchase of The Cherrypickers’ Guide will pay for itself
many times over if you’re able to find one of these

(7) Looking for upgrades.
Many coin dealers earn their living by going through
boxes of coins which have been certified by the Numismatic
Guaranty Corporation of America (NGC), the Professional Coin
Grading Service (PCGS) or ANACS and picking out coins that
might be good candidates for a higher grade. And you can
improve the grades of your coins, too–as well as the level
of your income–by gaining the expertise to do likewise.
Let’s say you found a coin graded Mint State-64 by NGC
or PCGS which, if resubmitted, might be good enough to
qualify for a grade of 65. In some cases, the difference in
price between a 64 coin and its 65 counterpart is many
hundreds of dollars, even though the difference in grade and
appearance is slight.
Looking for upgrades may not be the No. 1 way to look at
rare coins, but it certainly could end up being the most
profitable way for you, if you’re able to spot the right coin
to upgrade.

(8) Looking for signs of wear.
Third-party grading services such as PCGS, NGC and ANACS
have given collectors and dealers a strong sense of security.
They trust the services’ grading–and, in most cases, that
trust is merited. Unfortunately, though, this also has caused
many hobbyists to let down their guard and relax their former
vigilance in checking each coin closely when they buy it. A
lot of them just don’t bother to look for signs of wear
anymore, as long as a coin has been certified and
encapsulated by one of the leading services. And this is very
The fact is, even the experts at the grading services
can–and do–sometimes overlook things as fundamental as
wear. You absolutely can find coins in holders bearing grades
such as MS-61, MS-62–or even higher–and discover, on close
inspection, that those coins have wear or friction on their
very highest points. Even though a grading service says a
coin is mint-state, it may have wear. And, if it does, it
isn’t mint-state, no matter what anybody says.
In looking for strengths and weaknesses on their coins,
people tend to look for obvious things such as flaws or
scratches or signs of coin doctoring. All too often, they
don’t examine the high points for signs of wear. Or, if they
do, they conclude incorrectly that the high points’ lighter
color is just part of the toning. In fact, it may be good,
old-fashioned wear.
Looking for signs of wear, and learning how to recognize
those signs, can be extremely valuable to you, and I
certainly suggest that you make this an integral part of your
coin-evaluation procedure.

(9) Looking for a specific type of toning.
Many collectors like sets of coins that are matched–and
when it comes to coins of the same metallic composition, they
like those coins to have similar toning. For instance, some
collectors like silver coins with concentric-circle toning–
perhaps an ocean-blue periphery which fades into a sunset-
golden center. And when they purchase silver coins, they try
to find coins with that kind of toning.
Matched sets tend to be more aesthetically appealing,
and therefore more valuable, than unmatched sets. They
bespeak a higher level of care on the part of the collector
who put them together. Thus, this would be a good way for
anyone–you included–to look at coins.

(10) Looking for signs of deterioration.
This recommendation is last, but it definitely isn’t
least. Looking for signs of deterioration is very important.
You could put a coin away for two or three years and find,
after taking it out, that its surface has been under chemical
attack–even if that coin is resting (supposedly safely) in
the holder of a leading grading service.
You need to look at your coins on a regular basis to
make sure they haven’t deteriorated–that they’re still in
the same level of preservation as they were when you
purchased them.
Incidentally, if you do find signs of new damage–say, a
greenish area–on a coin, that doesn’t necessarily mean the
coin’s grade has been permanently lowered by two points.
In many cases, it is a good idea to neutralize or degrease such
a coin in either denatured alcohol or E&T Kointainer’s Koinsolv.
Removal of polyvinyl chloride from the surface of the coin can
help maintain the grade and prevent serious loss of value. The
key is to check your coins–look at them closely–on a regular
basis, even if they’re stored in a place that is supposedly secure.

There you have them: the 10 Top Ways to Look at Rare
Coins. Follow these steps on a regular basis, and you’ll find
that your coins are looking better than ever.
Here’s looking at you, kid–and here’s looking at them!





Minding your p’s and q’s is a sign of good manners and
common sense.
Minding your PQ’s can be a sign of extremely good
judgment–and uncommon investment sense–when it comes to
rare coins.
“PQ” is shorthand for “premium quality”–and frequently,
it translates into very substantial profits for those who
pursue and obtain it in their rare-coin acquisitions.

SHOWN ABOVE: This Premium Quality, hairline-free 1886 Proof Liberty head
double eagle might well re-grade PR65DCAM or higher. It was hand-picked
and sold by Scott Travers to a collector.

In 1989, when the coin market was experiencing
unparalleled increases on a weekly–and even a daily–basis,
premium-quality (PQ) coins were selling for significantly
more than ordinary pieces. This led some market analysts to
question whether the extra cost was justified, or really
would prove worthwhile with the passage of time.
Those doubts were demolished at two recent auctions
where PQ coins took center stage. They changed hands for
prices far in excess of current market levels for ordinary
coins of the same grades–far more percentagewise, in fact,
than the price differentials at the time they were acquired,
which, in many cases, was at or about the last big market
peak in 1989.
The term “premium quality” was coined by Q. David
Bowers, one of the nation’s best known and most respected
coin dealers for more than 40 years. It describes a coin that
is better–often much better–than typical examples in the
assigned grade for the date and mint.
Some words of explanation are in order.
Coin grading is performed on a spectrum or continuum.
Not every Mint State-65 or Proof-65 coin is equal. Some coins
graded 65 on the 1-to-70 scale are high-end 65s–almost 66s.
Other 65s are low-end 65s–not much better than 64s. And many
other 65s are right in between, making them solid 65s on the
spectrum or continuum.
Some years ago, I served as an occasional grader for the
Numismatic Guaranty Corporation of America (NGC), a leading
coin certification service located in Parsippany, New Jersey.
During the time I was there, we used the letters A, B and C
internally to designate whether a given coin was high-end for
its grade, low-end or right in the middle. These designations
did not appear on the tabs that accompanied the coins when
they were encapsulated (or “slabbed”), but the company did
incorporate them in its computerized records.
A high-end or premium-quality coin was referred to by
the letter “A,” a typical coin of the given grade was labeled
“B” and a low-end coin was said to be “C.”
In the late 1980s, “A” coins–those that almost
qualified for the next-higher grade–commanded impressive
Let’s say the going price for a typical Mint State-65
example of a certain coin was $1,000 and the Mint State-66
price was $5,000. A premium-quality Mint State-65 specimen
easily might have sold for $2,000 at the time–possibly even
$3,000. In other words, it might have brought two or three
times as much as an ordinary coin of the same grade.
There was considerable debate at the time as to whether
it was prudent to buy coins for $3,000 or $2,000 or $1,500
when those prices were sharply higher than the figures
reflected in standard price sheets–figures that corresponded
to ordinary coins of that grade.
There were persuasive advocates–and arguments–on both
sides of the issue. For my part, however, I always considered
premium-quality coins well worth the extra cost, and I always
encouraged my clients to seek out PQ coins and pay the
additional money.
Some of those clients were glad they did, for when their
PQ coins crossed the auction block in late 1998 at two sales
held–appropriately enough–by Bowers’ firm, Auction by
Bowers and Merena, they realized exceptional prices.
Among the clients consigning coins to those auctions
were Dr. Craig M. Morgan and Dr. Leonard J. Torok, two
physicians with highly discriminating tastes in rare coins
and a shared commitment to buying only the best.
Another client-consignor, who prefers not to be
identified, assembled what I called the “Time Capsule
Collection” because it consisted of high-grade certified
coins–premium-quality coins–that were encapsulated, for the
most part, in the early days of NGC and the Professional Coin
Grading Service (PCGS), when grading standards at both firms
were unusually strict.
Dr. Torok’s collection was sold at an auction in early
September, while the Morgan and Time Capsule collections both
came under the gavel at the same Bowers and Merena auction in
Consider these examples of the prices that were achieved
by premium-quality coins:
An 1877 Liberty Seated quarter graded MS-65 by NGC,
purchased around 1989 for a relatively modest premium over
the Bluesheet price at the time, brought $3,335–nearly four
times the 1998 Bluesheet price of $950.
A 1912 Barber quarter graded Proof-69 by NGC–a
premium-quality Proof-69, if such an animal exists–realized
almost $50,000, at a time when Proof-69 Barber quarters
generally trade for 18 or 19 thousand dollars.
An 1863 Seated Liberty dollar graded Proof-65 NGC went
for $20,700–more than twice the Bluesheet price of $9,250
for a similar coin without the premium quality.
An 1879 Trade dollar graded Proof-66 by NGC sold for
$25,300–more than three times the Bluesheet price of $7,850.
One of my favorite examples was a different Trade
dollar, an 1875-S graded Mint State-66 by NGC. We put a
reserve of about $10,000 on that coin–or the Bluesheet price
for an MS-66 coin of this type, year, mint and grade with NGC
certification. If that coin were perceived to be full MS-67,
its Bluesheet value would be about $30,000. But it ended up
realizing even more than that: an eye-popping $46,000.
A cornerstone of the books I have written, in particular
The Coin Collector’s Survival Manual™, has always been to
advise people to buy premium-quality coins–coins that on
that grading spectrum or continuum appear to be the next-
higher grade, coins which are absolutely magnificent.
In the revised third edition of The Coin Collector’s
Survival Manual™(Bonus Books Inc., $14.95), I wrote as
“If you came across a magnificent PCGS or NGC MS-65 in
the 1980s, it would have cost you 20 percent to 40 percent
over published bid levels. But in 1994, when this third
edition is being written, the premium on these coins in the
$500 to $1,000 price range is nominal–in some cases, 20 to
40 dollars. It appears that this premium cost factor
fluctuates with market conditions. Also, a number of premium-
quality coins for which you may have paid the 20-percent to
40-percent premium qualify today for a grading service
upgrade. NGC and PCGS graded very strictly during their early
months of operation.”
I then went on to quote a coin dealer who said the
“MS-65 today does not mean what MS-65 meant five years
ago. And in five more years, it could mean something else
altogether. That is why wise coin buyers do not buy coins as
certified products. They buy coins as raw coins that happen
to be accompanied by certification. With a premium-quality
piece, you have a rare-coin investment. With a generic-
quality piece, you have an investment in a certified product.
Grading services have yet to prove their longevity. Rare coin
investments have decades of strong appreciation behind them.”
PQ coins possess inherent potential for enhanced price
appreciation–potential to rise in value faster and more
sharply than typical coins of their grade level simply
because they are, in and of themselves, better coins.
Beyond that, however, two other factors have been at
work in recent years to give them even greater potential.
Those factors are a perceptible softening of grading
standards and a change in market attitude toward coins that
are toned.
Grading standards today are unquestionably softer than
they were in 1989–so much so that significant numbers of
coins that were certified in 1989 at one grade would qualify
today for a grade one point higher, possibly even two points
I interviewed John Albanese, the founder of NGC, for the
third edition of The Coin Collector’s Survival Manual™, and
he told me that at the very inception of the third-party
certification services, during their first six months of
operation, grading standards at both PCGS and NGC were too
I interviewed David Hall, PCGS’s founder and president,
on a radio show I had some years ago, and he conceded that a
small percentage of coins graded 66 and above during PCGS’s
first several years might grade higher today upon
For the most part, the coins that were graded too
conservatively in those early days were premium-quality
coins. So PQ coins dating back to that early period are
getting a double-strength booster rocket today as the overall
marketplace gathers momentum.
Changed attitudes toward toning can be viewed as a price
deterrent to toned PQ coins today–but, on the flip side,
it’s a major plus for untoned PQ coins.
During the early years of the Grading Revolution, coins
with attractive toning were graded somewhat more loosely–and
favorably–by both services than brilliant untoned coins. Put
another way, the brilliant coins were graded more tightly.
Today, the pendulum has swung the other way and toning tends
to be viewed more as a possible problem than as a plus.
If you have (or come across) brilliant PQ coins that
were graded in 1986 and 1987 by NGC and PCGS, in particular
by NGC, you might find it extremely advantageous to remove
them from their holders and resubmit them. Coins of this type
that received grades of 65 and 66 during that period might
very well be regraded today as 67 or even 68.
Some of the coins sold by my clients in the two Bowers
auctions were looked upon by prospective buyers with changing
standards and attitudes in mind. And some of those would-be
buyers calculated in advance that the coins would be regraded
not just one but two levels higher–and they factored this
into their bidding. That anticipation does much to explain
why a coin with a Bluesheet value of $10,000 would instead
realize close to $50,000.
The moral of the story is that premium-quality coins do
pay, as long as you end up selling those coins in an upbeat
In a bull market, grading standards loosen. In boom
times, people’s perceptions of coins and the grades of those
coins are not as strict as they are during bear markets or
business-as-usual markets.
In the rip-roaring bull market now under way, my
clients’ PQ coins brought two times–and in some cases three
times or more–their Bluesheet levels.
It pays to buy the best. And when it comes to PQ coins,
it’s well worth the premium to get the extra quality.

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