Category: US Coins

By SCOTT A. TRAVERS

COPYRIGHT © 2002, 2003 BY SCOTT A. TRAVERS
ALL RIGHTS RESERVED.

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.

By SCOTT A. TRAVERS

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.