By Doug Winter – RareGoldCoins.com

As much as coin dealers–myself included–try to compare the coin market to the art market, the more you look at coins, the more you realize how insignificant this market (currently) is when compared to art. Will the coin market ever “catch up” to the art market and is it fair to make any coin vs. art comparisons? I’d like to share my thoughts on this with you.

If you look at art from an outsider’s perspective, the prices that great objects bring seem baffling. $50 million dollar Warhols? $100 million Giacometti sculptures? And what seems all the more baffling are that prices like this are for items that not everybody agrees is a masterpiece.

But examine the art market with a little bit more perspective and the prices that make coin dealers exclaim that MS64 Indian Head half eagles at $3,500 are a smoking value seem less relevant.

The market for seven, eight and even nine figure art objects is extensive and it is world-wide. If a Vermeer painting was discovered and authenticated, there would be a deep pool of buyers waiting to purchase it; even if the final price realized at auction was in excess of $200 million. Compare this to a famous rare coin like a 1913 Nickel or an 1804 Dollar. Sure, these are famous and desirable coins and an example of either would bring $5 to $10 million in the right market conditions. But the number of buyers who would be competing for these classic rarities is probably less than ten; maybe even as few as five.

The lack of depth in the coin market is even more apparent in thinly traded areas like Territorial gold or Patterns. A coin can be extremely rare and there might only be three examples known. But if there are only two strong buyers for that issue and both already have the coin, the thinness of the market is detrimental. This tends not to be the case in the art market which is deeper and which has institutional buyers as well.

There are hundreds of art museums in the Western world and a small but significant number of these have the money available at most times to buy great art that fits into their collection. Sadly, the Mint Museum in Charlotte has no budget (or desire) to purchase a great Charlotte quarter eagle if it becomes available. The Getty Museum, on the other hand, has been a major buyer of antiquities and photography for years and has helped to push values upwards in those areas.

The art world does a wonderful job of cultivating new buyers. In addition to museums there are active art scenes in cities like New York, London, Berlin and Los Angeles that have beautiful, high-end galleries where collectors (or potential collectors) can go to learn about new art, view exhibits and socialize with other collectors. The number of high-end coin stores in the United States is next to none, and I somehow can’t imagine hedge-fund directors in New York or trust-fund kids in London spending Saturday mornings chatting with the proprietor of the local coin shop.

While I personally love rare coins and I do think the market has come a long way in the past decade or two, it still has a long, long way to go as far as self-promotion goes. Art shows are much more upscale than coin shows, and gallery exhibits introduce new works to collectors or reinforce the greatness of existing masters. When’s the last time you went to your local museum to see a coin exhibit?

The rare coin market has become increasingly internet-driven and I think that’s a great thing; I know that it has certainly helped my business immeasurably. But the personal interaction between dealers and collectors in the art world remains more sophisticated and “better” than in the coin world and I think the art world is healthier for this.

Another thing to remember about the art market is that it is far more international and cosmopolitan the the coin market. When a great French Impressionist painting is offered at auction, it is possible that the winning bidder might be American, British, French, German, Swiss, Russian, or even Chinese. When a great Liberty Head half eagle is made available, the chances remain very strong that it is going to sell to an American buyer.

Buying art serves an important social function that doesn’t yet (and may never) apply to coins. When a billionaire Russian oligarch wants to makes a splash in the West, he does three things: buys an English Premier League soccer team, purchases a great apartment in New York, and makes a splash at the season’s Christie’s and Sotheby’s Contemporary and Modern Art sale.

Coins are not on the radar of many big money buyers because they are too small to display and you can’t impress your friends by laying out a PCGS box full of Gem rare date Saints.

But I think that the transportability and compactness of coins may ultimately appeal to big money buyers. Its a lot easier to move your coins from New York to London to Dubai than it is your art collection. As the world becomes a more complex, dangerous place the ability to quickly transport significant amounts of personal wealth gains in importance.

Would the rare coin market have a sudden transformation if coins, as a category, were suddenly included in Sotheby’s and Christie’s roster of sales? Probably not. There are not enough expensive coins around to keep these two firms interested in maintaining departments and both firms don’t appear to want to fool with art objects that are worth much less than $25,000-50,000 and up. And even when Sotheby’s and Christie’s had coin departments, their sales were primarily attended by American dealers.

If anyone is going to take the coin market to an international audience, it’s Heritage and I would assume that selling coins to Chinese industrialists is on their radar. And let’s not forget that both PCGS and NGC have overseas offices and are focusing considerable time, energy and marketing dollars on appealing to foreign collectors and dealers.

For the United States coin market to become more like the art market, I think a few things need to happen. Some of these are possible, some are already happening, and others seem more like a pipe-dream.

1. There needs to be more and better high-quality general numismatic reference books. We are in a golden age of numismatic research but most of the books published appeal to a narrow range of specialists. We need more books like “The 100 Greatest U.S. Coins.” A superb quality coffee table book on United States gold coins, for example, would be a great way to get more high net worth individuals interested in coins.

2. There needs to be a few upscale coin stores in New York. Manhattan remains the financial and social capital of the world and it is filled with superb art galleries. But there is no place a hedge fund manager can go and look at great coins for sale in comfort and privacy. Heritage has launched a New York office and Stack’s-Bowers will become more retail friendly (I assume), but there is still a huge void in New York.

3. The Smithsonian collection needs to reopen and there need to be touring exhibits of great American coins at locations more accessible than coin shows. There are hundreds of places in the United States to view great American art. There are only a handful of institutional collections available to view in this country.

4. There needs to be at least one or two upmarket coin shows in New York every year. Captains of Industry aren’t going to fly to Rosemont or Long Beach to go to shows. I doubt if an Armory-style show for coins would work but I’d be curious to see what happened if a coin dealer were allowed to exhibit at a fancy east coast art and antiques show.

5. The coin market needs to think with a long-term perspective. Dealers need to be thinking about the market in 2021 and 2031, not just in 2011. Coin doctoring is bad for the long-term health of the rare coin market just like scandals in the art market can hurt that industry in the long run. In a good market, coin dealers are too busy to promote numismatics and in a down market, they are too poor. There are times I wish there was a Benevolent Dictator in the coin business who told us dealers what to do and how to do it.

6. The professional side of the coin business desperately needs an infusion of fresh young faces. The art market has the advantage of hundreds–if not thousands–of smart, enthusiastic Art History majors who enter the market each year from college. The coin market has a lot of the same faces who have been around for two, three, and even four decades.

That said, I still like the future of the rare coin market. I think there is real value in selected areas of American numismatics. The relative affordability of Classic American Rarities is a compelling factor for wealthy collectors used to seeing average quality artwork priced in the millions of dollars. And the fact that the $5 Indian in MS64 that I mentioned above is within the price range of most upper middle-class Americans means that coins have the potential for much more widespread appeal than great (or even good) art.

What are your thoughts about the coin market versus the art market? Leave your comments about this below.

Summary

There has been very little attention paid to type coin collecting in numismatic literature. Largely because there are few, if any individuals, who are truly qualified to treat type coin collecting in depth.

This article was originally printed in the latest issue of Numismatic News.
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In reality there has really been very little attention paid to type coin collecting in numismatic literature in large part because there are few, if any individuals, who are truly qualified to treat type coin collecting in depth. It is a simple fact of life as there are many great dealers, collectors and scholars all of whom may have nearly encyclopedic knowledge in a given area.

Having that in-depth knowledge for the entire span of U.S. coins is a very different thing and few, if any, have the qualifications of Q. David Bowers. It is natural that Bowers would be interested in type collecting as he has over the years handled literally every coin of the United States.

Such a claim may sound like hyperbole, but in Bowers case it is legitimate. Moreover, over the years he has handled most of the great collections, meaning he has not only had experience with every coin of the United States but also in most cases with the finest known example. It makes him a natural for a book on typecollecting and it makes his observations especially valuable.

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Serious discussion of type collecting has been neglected for a long time. The circulation finds generation wanted an example of every date and mintmark. It was wired into their brains by the Whitman albums they filled as kids.

However, for a long time it has really not been possible for collectors to approach collecting as they once did attempting to acquire an example of every coin issued in the history of the United States.

There are  number of coins now in the group where there is only one possible in private hands such as the 1933 Saint-Gaudens double eagle, 1870-S half dime and $3, a single 1822 half eagle in private hands, the 1873-CC no arrows dime and a number of others. That means there are simply not enough of the great rarities to have many collectors attempting a complete collection at the same time.

There are other factors that make type collecting more logical today. Even though few can attempt a complete U.S. collection, it is also becoming increasingly difficult to attempt even a substantial collection for a period of a century. Back in the 1950s when people would talk about a 20th century type collection few would take it very seriously as such a collection was easy to assemble even in uncirculated grades as back in the 1950s any uncirculated Barber quarter or half dollar would suffice. Such a collection is much more difficult today as now the demanding buyer wants an MS-65 and those are not as easily found as a simple uncirculated.

While a type collection for a century has become more difficult, the individual collections possible have become even more of a problem. Today you might be able to attempt a collection of one or two major sets, but very few have the financial resources and patience to attempt all the half dollars of the United States or all the coins of the past century.

In some ways it is probably not being negative but rather realistic to suggest that the day of the truly enormous private collections like Norweb and Eliasberg is basically at an end. That does not mean there will be no great collections as there will always be great and important collections. It is simply a case where the great collections of the future are likely to be different from the great collections of the past, which were clearly an attempt to obtain one example of every date from every mint in the history of the United States. Those collections are rapidly becoming impossible, giving way to more realistic challenges such as having the nicest collection of Seated Liberty dollars or Barber quarters.

The times and the collecting patterns are changing and type collecting fits in well as a potential source of increased interest in the future. In fact, the 50-state quarters may well be a sign that a new generation of collectors while interested in collecting in a traditional manner may be even more interested in a collection that offers diversity of designs.

That diversity has always been at the root of the appeal of type collecting. Whether a type collection involves just the coins of the past century or all the coins of the United States, there is significant diversity and in attempting such a collection you are basically forced to study the coins of a period.

Certainly one major feature of the Bowers book is that it has given real credibility to type collecting, which it might have lacked in the past. There have probably been type collectors throughout U.S. history from the time someone back in 1793 looked at the reverse of a large cent and was startled to discover that it no longer had a Chain reverse but rather a Wreath. Later in the year that early observer of U.S. coins could have found still another different 1793 cent design and if they had decided to obtain one of each they might have been starting a large cent collection, but it is equally likely they were collecting by type.

Since the 1930s, the focus has been basically on acquiring an example of every coin of every date and mint. The type collection almost had a stigma of being basically ordinary coins that were easily assembled. Of course, that view assumed you were not concerned about the condition of those coins and that you were also not attempting gold coins where many early issues are difficult. In fact, even if the type collection was of the 20th century, it could be basic or it could be made more difficult by adding some coins like the 1909 VDB Lincoln cent or the 1921 Peace dollar, which are legitimately different types, but which are not included in the most basic of collections.

If the Bowers book makes a single important contribution to numismatic literature, it is that perhaps America’s most respected expert is clearly taking type collecting seriously and equally clearly pointing out that there are a number of type coins that are legitimately challenging. In fact, Bowers not only explains that some designs are tough, but includes lists of the toughest designs as well as another important piece of information regarding which types, while perhaps readily available in circulated grades, are extremely difficult in Mint State.

For example, he states, “Among type coins the 1794 and 1795 Flowing Hair half dimes, half dollars and silver dollars are scarce, but still readily available in such grades as VF or even EF. But in gem Mint State each is incredibly rare. The same can be said for most other early copper and silver issues.”

In fact, the book, which gives a description of every type, also includes charts of availability. Market value and past market performance in assorted grades. For the type collection or potential type collector it is a virtual road map as to what the challenges will be in your collection.

It might seem like a stretch to suggest that one book can make a significant difference in the market, but consider for a moment the 1796 and 1797 half dollars with a Draped Bust obverse and small eagle reverse. The combined mintage for the two years was just 3,918 pieces and of that total Bowers estimates fewer than 350 remain today, which would be well within the normal 3-10 percent some suggest as a survival rate for early issues. As Bowers suggests, “Among the design types of  United States silver coins made in circulation strike format (not proof finish) this is the Holy Grail, the rarest by far.”

When you examine the availability in terms of the estimates Bowers provides as to numbers known and numbers certified you can easily see that a book such as this if it were to encourage even just a small number of collectors to consider forming a high-grade type collection it could have an enormous impact. After all, Bowers suggests that there are only a couple dozen of the 1796 and 1797 half dollars combined in Mint State and there are even doubts the number is that high with the remaining 200 to 300 examples in circulated grades.

Even in circulated grades with the number certified from AU-50 to AU-58 being no higher than the Mint State total the impact of even a few new serious collectors with substantial budgets can be understood as there is simply no supply at today’s prices of the 1796 or 1797 half dollar to meet any new demand.

What can be surprising as you read through the descriptions of various issues is that there is a significant number of issues where the numbers known in any grades are just a few hundred and even more where the numbers known in Mint State are also far too small to satisfy any new demand.

Take, for example, the first $2.50 gold piece of the United States, the 1796 without stars on the obverse. If a number of new collectors were to surface requiring the 1796 no stars quarter eagle for their collection, where would the coins be found at today’s prices as the no stars 1796 had a mintage of just 963. In fact the no stars 1796 seems to have a decent survival rate as Bowers estimates 150 to 225 in circulated grades, but the number in Mint State is put at just 20 and all but three of them are in the MS-60 to MS-62 range. Just a small number of serious new collectors could have an enormous impact when the numbers known are so small and that is the case over and over again in the early issues of the United States and especially in early gold issues.

In his analysis Bowers is also not at all timid about his views on the appropriate place for certain issues. A good example are Gobrecht dollars, which many have basically dismissed as patterns over the years. In fact, Bowers includes them as two different types with the 1836 having no stars on the obverse but stars on the reverse, while the 1839 has stars on the obverse but none on the reverse. Including the two at all is important recognition, which Bowers supports, noting in the case of the 1839, “now it is known that in 1839 the mintage of 300 coins of this type was mostly placed into circulation.”

Suffice to say with a mintage estimated at 300 even though many still survive today, the 1839 has suffered over the years as not being seen as the type coin it is and this recognition by Bowers may well change the view of many or at least suggest to some who have not really studied the situation that there are two types of Gobrecht dollars with both being tough and extremely desirable. As Bowers concludes, “The 1839 Gobrecht dollar stands today as the rarest of all types in silver,” and that statement alone could well produce additional interest in what was for many a somewhat obscure and misunderstood coin in the past.

The Gobrecht dollar is simply scarce, although among the numbers known the bulk would tend to be in better grades although that is less evident in the case of the 1836, but generally speaking it is the opposite of the situation found with most early issues.

In general for early issues of U.S. coins, the numbers known while perhaps low will be in circulated grades with VF-20 being a fairly average grade. In Mint State, however, many early issues simply are unavailable. The 1794 Liberty Cap large head facing right half cent is a good example. Once again Bowers takes a clear stand as to whether this coin should be considered a distinct type by including it as a type and if you do consider it a distinct type and not included with the other 1795 to 1797 issues you find an immediate problem. There might be 2,000 examples of this type known to exist in all grades although the number Bowers places between 1,000 and 2,000, so while available there is a severe problem if you want an example in Mint State as there the estimate is just 15 to 25 pieces, which is hardly enough to supply many with an example if new demand were to surface either from half cent or type collectors. That, while perhaps more extreme than others is typical of the real difficulty in assembling a Mint State type collection especially if you include types from the 1790s and early 1800s.

There is more than ample food for thought in some of the other information to be found in the Bowers book. Having read Q. David Bowers for more than four decades, it would be fair of me to suggest that no one has more consistently advocated purchasing the best coin you can afford. That wisdom if practiced results not only in more enjoyment from your collection but normally speaking a better return on the dollars you invest in your collection. Anyone who tried to cut corners in obtaining the best will usually find themselves wishing they had listened to Bowers and others who have preached quality over the years.

As Bowers readily admits when it comes to coins of the past century, Mint State examples are not rare. In fact, only a few issues of the 1900s would be seen as tough even in a grade such as MS-65 and the more recent the coin normally speaking the more easily it is discovered in top grade.

In his information on all the individual types we find more than ample evidence to suggest that at least in type and very probably in regular sets as well the standard of quality most would assume they want in their coins is perhaps not good enough. Certainly, in the case of most coins in U.S. history, obtaining an example in Mint State is desirable and an example in MS-65 is even better. Advanced type coin collectors might even go higher in grade if the potential exists.

What we can learn from the information in the Bowers type coin book is that realistically if you want a truly top quality type collection in some cases MS-65 is not good enough. For example, in the case of silver clad Kennedy half dollars from 1965-1970 Bowers lists the certified population at 2,508 in MS-65, but in MS-66 it is even higher at 2,811 while in MS-67 the total is 1,886. Only in MS-68 where just 132 have been certified is there a significant decrease in numbers available. Those totals would certainly suggest that if you are to buy the best you can afford when it comes to the silver clad Kennedy half dollars from 1965-1970 the coin you want is an MS-68 or at least an MS-67 and not an MS-65.

In fact the situation is hardly limited to Kennedy half dollars and it is not all that surprising as after all the current grading system comes from the 1949 Harper Brothers Early American Cents by Dr. William Sheldon and the system dealt with large cents from 1793-1814. In fact, if you counted up all the large cents from those years certified in MS-67 and above you would probably find that the total is not even equal to one year of the Kennedy silver clad half dollars or any other types currently in production and that is no surprise as the methods for production are significantly improved since 1814 and the number of collectors to save top quality example is substantially larger.

While it is easy to understand why there are more coins being produced today in top grades the fact is that if you are assembling the best possible collection of type coins, or any others for that matter, some adjustments in the grade you are seeking will be required. That shows clearly in the special section Bowers has on the 50-state quarters where he includes the grade seen most often at the grading services of each of the quarters. For example, the most often seen grades for the Delaware quarter are MS-65 and MS-66, but in the case of Texas, the grades seen most often at the grading services  are MS-67 and MS-68. While it is still very early to draw conclusions for the 50-state quarters as a whole the fact is that the possibility is very real that some of the 50-state quarters will prove to be tougher than others in some grades although they all seem uniform at least for now as in the case of proofs the grade you want is at least Proof-69.

With a wealth of information about the entire history of U.S. coins, A Guide Book of United States Type Coins is a significant contribution and it might mark the point in numismatic history where a change in collector attitudes will come to be seen as a break with the full-set approach that prevailed for much of the 20th century.

Type coin collecting could become the dominant method in the 21st century, but not before the Baby Boomers hang it up.

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