News and Analysis on scarce coins,  markets, and the coin collecting community #77

A Weekly Column by Greg Reynolds

The topic this week is several important dimes and quarters that were auctioned by Heritage at the first Fall ANA Convention, on the evening of Oct. 13th, in Pittsburgh. In recent columns, I discussed some gold coins in this same auction event, an 1856-O Double Eagle ($20 coin), the Eliasberg 1796/5 Half Eagle ($5 coin), and the Norweb 1854-S Quarter Eagle.  This auction also included copper and nickel coins, plus other numismatic items. The total of the prices realized was more than fifteen million.

The gold coins in this auction were relatively more important and famous. These tended to bring stronger prices than the silver coins. Plus, a collector consignment of a set of Liberty Head Quarter Eagles ($2½ gold coins) drew a lot of attention.

There is just not time or space to cover all the significant items in a major coin auction, nor is it practical to discuss herein all the significant dimes and quarters. So, each of my selections is based upon one or more of the following factors: (1) coins that I have personally examined, (2) coins that are rare or are condition rarities, (3) coins that are particularly appealing because of their high degree of originality, (4) coins that have important pedigrees, (5) coins that are traditionally popular with collectors, and/or (6) coins that realized strong prices in this auction event.

I. Expensive or Inexpensive?

Although this is not one of them, many of my columns and articles are directed towards beginners and/or people who cannot afford to spend a lot of money on coins. There is no need to spend a lot of money to collect coins that are considered significant in the traditions of coin collecting in the U.S.

About a year ago, with contributions from a few carefully thinking dealers, I presented advice for beginning and intermediate collectors of U.S. coins. In February, with input from John Albanese and Kris Oyster, I devoted a column to Basics for Beginners. Furthermore, during the spring, I wrote introductory pieces, which are appropriate for beginners and are intended to be useful to non-rich collectors. These include introductions to collecting Two Cent Pieces, Three Cent Nickels and Dimes. It takes just a small amount of money to get started in such quests.

When covering major coin auctions, it makes sense to discuss expensive coins. It is true that most collectors cannot afford the individual coins that tend to be very newsworthy or lend themselves to extended discussions for other reasons. This generally does not, and should not, discourage collectors from reading about expensive coins.

To understand 19th century art, there is a need to read about paintings that only a few people can afford. To understand scarce and rare U.S. coins in general, there is a need to learn about coins that are very expensive.

II. 1796 Dimes

There were three 1796 Draped Bust Dimes in this auction. These are important for several reasons, not the least of which is that U.S. Dimes in general were first minted in 1796.

One of the three is NGC graded “MS-62” and has a sticker of approval from the CAC. It was part of the “Milly Chaykin Collection.” In Jan. 2005, this same dime was auctioned by Heritage as part of the Richard Chouinard Collection. He was one of the few collectors who actually acquired a very large number of scarce or rare coins by attending auctions in person. During the 1990s, Chouinard was present at innumerable coin auctions. He collected coins from the 1940s to around 2003 or 2004.

In Jan. 2005, this NGC graded “MS-62” 1796 dime sold for $16,100. It was then, or soon afterwards, acquired by the late Jack Lee, a famous collector and part-time dealer from Mississippi. According to Heritage, Lee consigned this dime to a November 2005 auction, in which it sold for $14,950.

On Oct. 13, 2011, it brought $21,850, not a very strong price. Current market levels for such a coin are markedly higher than they were in 2005.

This dime seems to have a lot of friction for a “MS-62” grade coin. A certified “MS-62” 1796 dime that is more clearly uncirculated might have brought much more in this auction.

Yes, I know that 1796 dimes tend to be characterized by weakly struck design details. The most famous of the three 1796 dimes in this auction has a particularly weakly struck eagle on the reverse (back of the coin). The NGC graded “MS-64” 1796 in this auction was previously in the Ed Price Collection, which featured incredibly comprehensive sets of Draped Bust Dimes and Bust Right Quarter Eagles.

Ed Price had representatives of all die pairings of 1796 dimes, and this is one of six varieties of 1796 dimes. Heritage auctioned the Ed Price collection on July 31, 2008, just as markets for rare coins in general peaked. This dime then brought $34,500.

Earlier, Heritage auctioned this same 1796 dime in Nov. 2004 in West Palm Beach for $23,000. It was then PCGS graded MS-63. In October 2011, it sold for $54,625, a very strong price.

This Ed Price 1796 dime has naturally toned nicely, mostly brownish-russet, with a lot of blue. There are exceptionally few contact marks on this coin. The weakly struck reverse is unsurprising. Overall, it is a very attractive coin.

A third 1796 dime in this sale is certified by a service other than the PCGS or the NGC, which is unusual. Expensive pre-1934 U.S. coins in major coin auctions are typically PCGS or NGC graded, unless they are judged by the PCGS or the NGC to be ungradable. In any event, I was not impressed by this coin. Jim McGuigan suggests that it has been artificially toned. This circulated 1796 sold for $7475, a strong price and not a good deal.

III. 1832 Capped Bust Dimes

There were two certified “MS-65” 1832 Capped Bust Dimes in this auction. The first is NGC certified and brought $4614.95, not a high price. The second is PCGS certified and CAC approved. I did not see either of them.

Mark Feld regards this second 1832 as “a nice accurately graded coin, though not especially attractive or lustrous.” Feld was a full-time grader for the NGC for more than seven years, in the 1990s. This second 1832 dime went for $8625, a very strong price

IV. “MS-69” 1874 Dime

Only a very small number of business strike Liberty Seated Dimes have been certified as grading “MS-69.” The Eliasberg 1845-O dime is PCGS graded “MS-69.” The Knoxville-Lull 1853 ‘Arrows’ Dime is NGC certified “MS-69” with a star for eye appeal. The 1874 dime in this auction was also formerly in the James Lull type set. The Knoxville-Lull 1853 ‘Arrows’ is, in my view, clearly superior to this Lull 1874. B&M-Spectrum auctioned James Lull’s type set in Fort Lauderdale, on Jan. 9, 2005.

Later, this James Lull 1874 dime was in the “Joseph Thomas” Collection, most of which Heritage auctioned in April 2009. This dime then realized $51,750, the exact same price that it realized on Oct. 13, 2011.

Indisputably, this is a cool coin, with appealing natural toning. In my opinion, its grade is not close to the MS-69 level. If many leading experts determined that it really does merit a grade of “69,” then it would have sold for substantially more than $51,750.

V. 1805 Quarter

An 1805 quarter in this auction is a pleasing representative of a Very Fine grade Draped Bust, Heraldic Eagle quarter. This 1805 quarter is PCGS graded VF-20 and has a sticker from the CAC.

The 1805 quarter issue is not a rarity. Quarters of the Draped Bust, Heraldic Eagle type are somewhat scarce overall. Also, many circulated Draped Bust quarters are ungradable.

This 1805 quarter has pleasant natural toning and very few contact marks. It was well struck on a relatively high quality planchet (prepared blank). While it is not the most attractive Draped Bust Quarter that I have ever seen, it is very appealing in its own way.

The $1495 result for this 1805 quarter is strong, about in the retail price range. This result is, though, a little less than I expected. It was part of the consignment of a collection. If a collector bought it, he or she obtained an especially desirable coin at a very fair price.

VI. 1807 Quarter

An 1807 quarter in this auction is newsworthy because it is one of only four 1807 quarters that have been certified as grading “MS-66” or “MS-67” by the PCGS or the NGC.

The Draped Bust, Heraldic Eagle type comprises of only five dates, and a very small number have been certified as grading “MS-66.” The Eliasberg 1807 is the only coin of this type that I have ever seen that merits a MS-67 grade. I wonder if the PCGS and NGC listings, respectively, of one “MS-67” 1807 both refer to the same Eliasberg 1807.

This 1807 is NGC graded “MS-66” and it brought $115,000 in this auction, a strong price. Yes, I know that the PCGS price guide retail value is “$225,000.” This value is a little high in general and my guess is that the PCGS would not grade this coin as “MS-66.” It is relevant that the PCGS price guide value for a “MS-65” 1807 is “$120,000.”

I am not comfortable with this coin. Jim McGuigan and I compared our respective notes regarding this specific coin, and our views are mostly consistent. For decades, Jim has been a recognized expert in pre-1840 U.S. coins. This coin does not have enough eye appeal to merit a 66 grade and does not score very high in the category of originality.

Jim and I both noted a substantially imperfect, sizeable area near the first and second stars on the obverse (front of the coin). It is hard to tell whether the strange texture in this area can be largely explained by U.S. Mint caused imperfections that were later lightly cleaned over by a non-knowledgeable collector or whether the imperfections in this area are indicative of serious problems that came about after this coin left the Philadelphia Mint. If such problems are minor, then this coin grades “64 or 65,” in Jim’s view.

I also asked a leading grading expert of gem quality coins about this 1807. While he declined to be named in this context, he stated that he does “not think” that the grade of this coin is close to the MS-66 range. He also suggested that its grade should be a high end “64 or a 65.”

McGuigan points out that “it is pretty well struck” for a Draped Bust, Heraldic Eagle quarter. Yes, the reverse has tremendous detail and Miss Liberty is well struck, too. It is also fair to point out that it has hardly any contact marks. Jim and I are in agreement that, if it has serious problem and it may have, it should not have received a numerical grade. It otherwise grades at least 64, in accordance with prevailing grading standards. The $115,000 result is really more than I expected this coin to bring. The price realized was strong.

VII. 1853 ‘No Arrows’ Quarter

My favorite silver coin in this auction is an 1853 ‘No Arrows’ Liberty Seated Quarter. Because the 1853 ‘Arrows & Rays’ Liberty Seated Quarter is a famous one-year type coin, collectors sometimes forget that the 1853 ‘No Arrows’ Quarter is very scarce, or perhaps rare, in all grades. In contrast, thousands of 1853 ‘Arrows & Rays’ Quarters exist, though these will always be more valuable because they are needed for many type sets. Even so, Mark Feld emphasizes that the 1853 ‘No Arrows’ quarter is “a really tough” date to find in gem grades.

This 1853 quarter is NGC graded MS-67 and has a sticker from the CAC. The NGC holder is of an early vintage as it lacks a hologram on the back. On average, though not nearly always, coins in early PCGS or NGC holders tend to be worth more than equivalently certified coins in later holders.

The catalogue indicates that this coin is from “The George Marin Collection.” It is certainly much more appealing than the Richmond Collection 1853 ‘No Arrows’ Quarter, which DLRC auctioned on March 7, 2005 for $11,212.50 and Heritage auctioned in Jan. 2007 for $13,800. The Richmond coin is also NGC graded “MS-67.”

This Marin 1853 ‘No Arrows’ Quarter is a wonderful coin. It features exceptional natural toning, with soft blue centers and orange-russet outer fields. Other shades of blue and russet are present, as well as some violet hues. In addition, there are almost zero noticeable contact marks. Furthermore, it is sharply struck. It is very attractive to extremely attractive overall. The Marin 1853 ‘No Arrows’ Quarter almost has the eye appeal that would be associated with a MS-68 grade Liberty Seated Quarter.

Mark Feld states that “it looks original and solid for the assigned grade.” I graded this 1853 ‘No Arrows’ Quarter as 67.7 the first time I saw it and as 67.6 the second time. Later, I found that my interpretation of this coin is extremely consistent with that of Matt Kleinsteuber. This is a “very nice coin, solid 67, maybe 67 plus,” Matt declares. Kleinsteuber is the lead trader and grader for NFC coins.

The Marin MS-67 1853 ‘No Arrows’ Liberty Seated Quarter sold for $21,850. In my view, this is a very fair price, less than I expected.

VIII. 1878 Carson City Quarter

The 1878-CC Liberty Seated Quarter in this sale was also “From the George Marin Collection,” according to the catalogue. Mr. Marin had some excellent coins. Furthermore, Carson City, Nevada Mint coins tend to have a special allure and a devoted following. (Please see my report about a set of CC Half Eagles that was sold privately in 2010.) Some people collect only Carson City Mint coins and others integrate Carson City Mint coins into extended type sets, especially sets that include representatives of each Branch Mint.

The Marin 1878-CC quarter is PCGS graded “MS-66” and has a CAC sticker. “A coin with a highly pleasing appearance, particularly on the obverse,” says Mark Feld about this 1878-CC. Mark “wouldn’t be the least bit surprised to see it in a 67 holder one day.”

Like several of the other coins in this collection, this 1878-CC quarter is in an old holder. This one is from the 1980s. Unless such an old holder is badly scratched or damaged, it is usually a good idea for the old holder to be maintained. Coins in old PCGS or NGC holders often realize premiums in auctions.

I very much like this coin. There is no doubt that its grade is at least in the middle of the MS-66 range. Moreover, it has terrific cartwheel luster. The obverse has much appealing natural toning. The reverse is mostly white and brilliant. The Marin 1878-CC is more than very attractive. This quarter deservedly brought an extremely strong price, $12,650.

IX. Two 1901-S Quarters

The leading key date in the series of Barber Quarters is the 1901-S. Indeed, this is one of the most valuable of all 20th century coin issues. Even in Good-04 condition, a 1901-S Barber Quarter may retail for more than $4000! Tens of thousands of collectors fervently demand 1901-S Quarters. In this auction, there were two ‘Mint State’ 1901-S Quarters.

The more highly certified of the two is NGC graded “MS-66” with an NGC awarded star for eye appeal. Although no pedigree is mentioned in the catalogue, I note that Heritage auctioned this exact same 1901-S quarter in April 2009 for $80,500, when coin markets in general bottomed out. It was then part of the “Joseph Thomas” Collection. Moreover, I believe that I have identified it as being the Richmond Collection 1901-S, which DLRC auctioned on March 7, 2005 in Baltimore. I was not thrilled about it when I saw it then either. I covered the DLRC sales of the Richmond Collection for Numismatic News newspaper. If my pedigree research is correct, this same 1901-S quarter sold for $66,125 in 2005.

Matt Kleinsteuber recollects that this coin reminded him of “Mint State 1913-S quarters because most of them are semi-prooflike like this 1901-S.” Matt says that his coin is “okay for a 6 star” and he “likes it.”

I did not grade it as “MS-66.” I acknowledge, however, that it is flashy and cool in an unusual way. It is entertaining.

The Richmond-Thomas 1901-S just sold for $86,250 on Oct. 13th. While other certified MS-66 1901-S quarters are or should be worth more, this amount is a strong price for this specific coin.

I am more enthusiastic about the NGC graded MS-64 1901-S Barber Quarter in this auction. It has a CAC sticker. Kleinsteuber remarks that it is a “very nice coin, [with] wonderful blue and red original toning, a true gem, [should] really grade 65.”

Although the catalogue does not indicate that is from “the George Marin Collection,” it is in a very ‘old’ holder like many of the coins from the Marin collection. I recommend that the buyer keep this coin in its present ‘old’ holder rather than ‘crack it out’ to seek a “MS-64+” or “MS-65” grade. Great coins in old holders really impress experts and excite collector-buyers. Besides, it may not upgrade.

This 1901-S is exceptionally original overall and has terrific multi-colored natural toning. Viewing it was very pleasurable.

©2011 Greg Reynolds

By Louis Golino for CoinWeek

A quarter century after the establishment of the first professional coin grading companies, many coin collectors remain skeptical of the benefits of third party grading. For many of them buying raw, ungraded coins is a kind of badge of honor that shows they have not succumbed to the mania for plastic holders. They rely on their own ability to grade coins and believe third party grading is a waste of money.

There is no question that the grading companies are not perfect. Sometimes they make mistakes, giving a grade that is clearly too high or too low for a coin. But overall, they perform useful functions by authenticating coins, protecting consumers from subjectively graded coins, adding market value in many cases, and generally facilitating the buying and selling of coins.

The grading of modern U.S. Mint coins has become a huge cottage industry for the grading companies and a major source of revenue for them, especially with all the large bulk orders they receive from dealers. But the grading of these coins continues to be especially controversial for a number of reasons. Some collectors feel slabbing reduces the value of coins, no matter what grade they receive. They think slabs are like caskets and prefer to be able to view the coin more closely. Others are convinced their coins are mishandled during the grading process, or that Mint capsules offer better protection than slabs. I am doubtful of both propositions.

In addition, the labeling of coins delivered to third party grading companies within 30 days of their release as “first strikes” or “early releases” remains controversial. There is no way to prove those coins were actually struck first. But some coins were hard to obtain within 30 days of their release because of delays in processing Mint orders, such as the 2009 Ultra High Relief double eagle, and UHR’s with the first strike or early release labels do bring higher premiums than coins without the label.

Perhaps most importantly, there is a growing preference among collectors and dealers for modern coins in their original government packaging (OGP) over the same coin in a slab of any grade or grading service. Some people view modern coins which are graded MS69 or below as “damaged goods.”

Modern coins which receive the top grade of MS70 are viewed with skepticism by some collectors and dealers. That is because the Mint tends to produce collector coins to very high standards, for the most part, and virtually any coin submitted for grading will receive either MS or PF69 or 70, although once in a while one gets a coin back with a 68 grade or lower. There are some exceptions to this general rule. The bullion versions of the five ounce America the Beautiful coins, for example, have not received grades higher than MS69 from PCGS and NGC, but the collector versions have produced plenty of MS70 coins.

The main problem with modern MS70 coins is that their market value is largely a function of the population numbers for the coin in question in the top grade, and those numbers change all the time as more coins are submitted and come back as 70′s. A lot of collectors of modern U.S. coins make the mistake of paying a high premium for a 70-graded coin when it is relatively new to the marketplace, and over time the value of their coin declines substantially as the population numbers in that grade continue to increase because more people submit their coins.

So the first recommendation I would make is if you are not submitting coins yourself which come back as 70′s, and you are buying previously-graded coins which received the top grade, wait until the coin is no longer new to the market. Track how the premium for that coin in 70 evolves over time before purchasing one. There is no set amount of time, and clearly one can wait too long, but it is a good rule of thumb with modern coins not to get too caught up in the hype that tends to surround recent releases.

In addition, shop around. There are times when one can purchase 70′s for a very small premium over raw coins. For example, last year I was able to purchase a 70 of a certain precious metal coin for virtually the same price the Mint charged for a raw coin. In this case, I acted sooner rather than later because I knew the coin was a great deal. Today it carries a nice premium.

Third, if you collect top-graded modern coins, I would suggest avoiding those from companies other than NGC and PCGS. There are certainly other grading companies which are reputable such as ANACS and ICG, but they tend to use different standards when assigning grades to modern coins than do the two top companies.

Fourth, even experienced collectors and dealers have difficulty telling the difference between a 69 and a 70. Examine your coin from the Mint for possible flaws, and if possible obtain the opinion of a local dealer who has more than likely seen a lot more coins than you have. Grading fees, especially at NGC and PCGS, are costly, especially if you add fees for first strike coins, and in most cases, if you do not receive a 70, you will have overpaid. Dealers send in lots of coins at once and can be assured of getting some 70′s that will recoup a lot of their grading fees, but most collectors are not submitting large numbers of coins at once, so it is a gamble. In addition, the competition for registry sets sometimes drives the prices of very common coins in perfect grades to levels that do not make any sense such as MS70 Lincoln pennies that have sold for more than $10,000.

Finally, the market for MS70 coins as opposed to those in OGP is evolving. I recently attended the Baltimore Expo and had the opportunity to discuss this issue with John Robinson of Edgewood coin store in Florida. He told me that his company pays more for modern coins in their OGP than for slabbed versions, including MS-70′s, which surprised me. In his view thirty party grading is really only suitable for classic coins.

But remember that some coins graded MS70 are worth a lot more than raw or MS69 examples. A case in point is the rare, proof-only 1995-W silver eagle, which has a value in MS70 that is ten times its value in OGP or MS69. In addition, if you are trying to get a good price for an MS70 coin, sell it to a company that specializes in modern coins such as John Maben’s Modern Coin Mart.

Louis Golino is a coin collector and numismatic writer, whose articles on coins have appeared in Coin World, Numismatic News, and a number of different coin web sites. He writes a bi-weekly column for Coin Week called “The Coin Analyst.” He collects U.S. and European coins and is a member of the ANA, PCGS, NGC, and CAC. He has also worked for the U.S. Library of Congress and has been a syndicated columnist and news analyst on international affairs for a wide variety of newspapers and web sites.

News and Analysis of scarce coins, coin markets, and the coin collecting community #49

A Weekly Column by Greg Reynolds

While I often write about topics of interest to knowledgeable collectors, today’s column is aimed at beginners and at other collectors who buy “Choice” or “Gem Uncirculated” uncertified coins. I am concerned that some advertisers in widely read ‘print’ coin publications are selling uncertified coins as ‘Choice’ (implied or thought to be MS-63 or higher), Very Choice (thought to grade MS-64), or Gem Uncirculated (thought to be MS-65 or higher) that do NOT come close to qualifying for such grades. Put simply, I wonder if many “Choice” or “Gem” uncertified coins would not receive equivalent grades if submitted to the PCGS or the NGC, AND would be regarded as overgraded by most leading, expert graders?

From advertisements in a recent issue of a widely read coin magazine, I have selected a few examples, which I honestly believe to be well representative of a large phenomenon of the advertising of uncertified “Choice” or “Gem” pre-1935 U.S. coins. I am not criticizing this particular magazine. Besides, there are similar advertisements in at least one other widely read periodical.

The topic of questionably graded uncertified coins is of tremendous importance. Many buyers will eventually submit such coins to the PCGS or the NGC. Others will eventually show them to grading experts and/or leading dealers in the mainstream, perhaps at major coin conventions. In many cases, though not necessarily of the advertised coins mentioned in this column, buyers of “Choice” or “Gem” uncertified coins will eventually find out that they have been sold coins that are overgraded according to the views of experts in the mainstream. Consequently, many such buyers of pre-1935, uncertified, supposedly ‘Choice’ U.S. coins will stop collecting or will voice negative remarks about coin collecting to their friends. It is really important for coin buyers to become educated to a reasonable extent before ordering coins that are listed in advertisements.

As for why I limit this discussion to pre-1935 coins, please see my two part series on 1933/34 being the dividing line between classic and modern U.S. coinage. I address the topic of collecting modern coins in another recent column. (As always, clickable links are in blue.)

As for those readers who are very unfamiliar with coin markets, please read my columns on Basics for Beginners, Advice for Beginning and Intermediate Collectors, and the PCGS SecurePlus Program (part 1). It is my intention, though, for this column to be easily understandable and to be beneficial to beginning and intermediate collectors.

I. Choice & Gem, PCGS & NGC

In the mainstream of the coin business, for a pre-1935 ‘mint state’ (uncirculated) U.S. coin to qualify for a certain grade, at a MINIMUM, it must be certified as such by the PCGS or the NGC, or be likely to be so certified IF submitted. For a coin to be accepted by knowledgeable collectors and leading dealers as grading ‘MS-65,’ ‘Gem Uncirculated,’ it is necessary, though not always sufficient, for the PCGS or the NGC to grade it as MS-65 or to be likely to do so IF it were to be submitted. Likewise, in the mainstream, a ‘Choice Uncirculated’ coin must meet PCGS or NGC criteria for grading MS-63 or higher.

Even if the PCGS or the NGC grades a coin as a Gem, MS-65 or higher, all experts may not accept it as such. Yes, I have seen coins that are PCGS or NGC graded MS-65 that I do not really believe should grade MS-65. I have never, though, seen a PCGS or NGC graded MS-61 or -62 coin that I believe truly grades MS-65. If such a coin exists, it would be an anomaly. To understand a rule, it is best not to be distracted by rare exceptions.

If both the PCGS and the NGC, on more than one occasion, assign a grade less than MS-65 or even less than MS-64 to a coin, then it is extremely unlikely that experts in the mainstream of the coin collecting community will regard such a coin as being a Gem, grading MS-65 or higher. Moreover, some dealers represent coins as Gems that the PCGS or the NGC would never even grade at all, let alone as MS-65. There are a lot of pre-1935 U.S. coins that have problems that are too serious for them to even qualify for numerical grades from the PCGS or the NGC. Some rejected coins, though, are borderline cases.

The imperfections and inconsistencies of the PCGS and the NGC are beside the point here. No one should ever expect a grading service to be anywhere near perfectly consistent. A consideration here is the possibility that several dealers, with large advertising budgets, sell uncertified coins at grades that are significantly or even far above the grades that the same coins, if submitted, would receive from the PCGS or the NGC.

For decades, MS-65 has been another term for the Gem Uncirculated grade; ‘Very Choice’ Uncirculated means MS-64, and “Choice Uncirculated” refers to coins that grade MS-63 or higher. The numerical grades MS-63, MS-64 and MS-65 have been gradually replacing corresponding adjectives over a period of decades, though the adjectives and the numbers are sometimes employed together. Most any honest coin expert in the mainstream would agree that MS-63 and Choice Uncirculated (or Choice BU) typically mean the same thing. MS-64 and ‘Very Choice Uncirculated’ are also synonymous.

The ‘Gem’ grades are a little more complicated as 65, 66, 67, 68 and 69 are all Gem grades. At some point, usually at 67, the term ‘Superb’ is employed in addition to the term ‘Gem.’ Almost all honest, leading experts agree, however, that a Gem Uncirculated (or Gem BU) coin must grade AT LEAST MS-65! It is otherwise not a ‘Gem’! Therefore, if a dealer, in an advertisement, offers a U.S. coin as “Gem Brilliant Uncirculated,” many readers are likely to think that the coin is being represented as grading at least MS-65, even if the respective advertiser’s terms of sale disclaims any correlation with numerical grades.

II. “Gem” 1934-D Quarter for $179!

In the April issue of a widely read coin magazine, on page 61, a “Gem Brilliant Uncirculated” 1934-D Quarter is being offered for “$179.00.” According to this advertisement, the 1934-D is on “a list of better dates that offers a great investment potential.”

The Numismedia.com price guide lists a wholesale value of $725 for MS-65 grade 1934-D quarters, and a retail value above $900! In the Oct. 2010 CoinFest Auction, in Stamford, Heritage sold two PCGS certified MS-65 1934-D quarters, one for $546.25, and the other for $661.25. Plus, at the same event, an NGC graded MS-65 1934-D realized $690.

The five PCGS or NGC graded MS-65 1934-D quarters that Heritage auctioned in 2010 realized prices in the range of $546.25 to $690. Furthermore, on Jan. 31, 2011, the Goldbergs auctioned a PCGS graded MS-65 1934-D for $690. Currently, the PCGS retail guide value is $1100. How are collectors to interpret a “Gem” 1934-D quarter being offered in this magazine for $179?

Is it likely that the 1934-D being offered on p. 61 would not be graded MS-65 if submitted to the PCGS or the NGC? What, though, would this 1934-D quarter grade if it were to be submitted? Even a MS-64 grade 1934-D would have a wholesale value of more than $179. In Sept. 2009, Stack’s auctioned an NGC graded MS-64 1934-D for $345.

The PCGS price guide indicates that a MS-60 grade 1934-D would have a retail value well above $200. Would the coin being offered grade as high as MS-60 if it were submitted to the PCGS? I do not know. This, though, is the kind of question that a collector who reads such an ad should consider in his or her mind.

III. “Gem” 1902 Morgan for $44.95!

Could the just discussed price of “$179” for a “Gem Brilliant Uncirculated” 1934-D quarter be a typesetting error or a mis-understanding? Consider that, in the very same advertisement, three Philadelphia Mint Morgan silver dollars, all in “Gem Brilliant Uncirculated” condition, are being offered, a 1902 for “$44.95,” a 1903 for “$57.50” and a 1904 for “$67.50.”

In March and so far in April 2011, Heritage has auctioned six 1902 Morgans that are PCGS or NGC certified MS-65 for prices in the range of $345 to $488.75. On Jan. 31, 2011, the Goldbergs auctioned a PCGS graded MS-65 1902 Morgan for $426. Accepted price guides value these in the range of $300 to $550.

Even a MS-64 1902 Morgan is worth more than $100. Over the last six months, Heritage has auctioned several PCGS or NGC graded MS-63 1902 Morgans for prices ranging from $84 to $126.50. In the coin collecting community, a “MS-63” grade coin is considered “Choice,” not “Gem Brilliant Uncirculated.” Would the coin offered in this advertisement as “Gem Brilliant Uncirculated” grade as high as MS-63 if it were submitted to the PCGS? I do not know.

The 1903, at $57.50, and 1904 Morgans in the same advertisement lend themselves to the same kind of comments. I would be surprised if a collector could buy, for “$57.50,” a 1903 Morgan that is widely accepted as a ‘Gem,’ one that either the PCGS or the NGC would ever grade as MS-65! I cannot bring myself to comment on a price of “$67.50” for a “Gem” 1904 Morgan.

Consider another advertisement, from a different dealer, in the same magazine, on page 47, which lists prices for Morgan silver dollars in “VCH/GEM” among other grades. Presumably, “VCH/GEM” refers to coins that grade either “Very Choice Uncirculated, MS-64, or Gem Uncirculated, MS-65. In the coin collecting community, the letters “VCH/GEM” in this context would certainly be interpreted as meaning MS-64 to MS-65 grades, or at least MS-64!

In this ad on p. 47, a 1902 Morgan in “VCH/GEM” is priced at “$65.00”! Yet, MS-63 grade 1902 Morgans recently realized from $84 to $126 in Heritage auctions. Could it be true that the coin being offered would not even grade MS-62, if it were submitted to the PCGS or the NGC? I do not know. I wonder about the offering of an uncertified 1902 Morgan that is said to grade “VCH/Gem” for a MS-62 level price.

IV. “CH BU” 1893 Columbian for $29!

The same dealer, in the same advertisement on page 47, offers a “CH BU” 1893 Columbian Half Dollar for $29. For a coin to be widely accepted as ‘Choice Uncirculated,’ it must grade MS-63 or higher by experts in the mainstream.

In fairness to this advertiser on p. 47, I point out that the ad does state that “grading is based on our own company standards; we don’t use the number grading system.” Do beginning collectors understand the possible implications or consequences of such a statement? How would others grade the 1893 Columbian Half that is said by this advertiser to be “CH BU”?

Over the last six months, Heritage has auctioned two NGC graded MS-63 1893 Columbian Halves, one in November for $115 and one in February for $69. On the same day in Feb., Heritage sold a PCGS graded MS-63 1893 Columbian for $138.00. The Numismedia.com retail price estimate is $77 and the PCGS retail value is $85. Back in June 2010, Stack’s auctioned a PCGS graded MS-63 1893 Columbian for $69.

It needs to be mentioned that it costs money to have a coin certified. In theory, it could be argued that it is not cost-effective for a “Choice,” MS-63 grade, 1893 Columbian to be submitted to the PCGS or the NGC. There are at least two flaws in this argument. First, the increase in market value as a consequence of certification, and the resulting increase in liquidity, would probably cover the cost of certification, even for a MS-63 1893 Columbian. Secondly, there was a time when MS-63 grade Columbian Half Dollars were worth substantially more than their current values and my guess is that it was then definitely efficient for MS-63 Columbians to be submitted to the PCGS or the NGC. Indeed, the PCGS reports having graded more than fifteen hundred 1893 Columbian Half Dollars as MS-63, and the NGC has graded more than one thousand.

Many Columbian Half Dollars that are not certified failed to receive at least a MS-63 grade from the PCGS or the NGC or obviously would be unlikely to be assigned a MS-63 or higher grade. Collectors who are interested in a ‘Choice’ 1893 Columbian Half are advised to buy one that is graded MS-63 by the PCGS or the NGC.

V. “Select Unc.” Gold Dollar for $300!

In still another ad in this same magazine, on page 33, at least one Type One Gold Dollar in “Select BU” is being offered for “$300.” Presumably, the seller is claiming that it is a brilliant uncirculated coin that grades from MS-61 to MS-63. After all, if it graded just MS-60, there would be nothing “Select” about it. An uncirculated coin can have a lot of contact marks and medium scratches and still truly grade MS-60.

It is important to remember that many U.S. gold coins have such serious problems that they do not even qualify for numerical grades from the PCGS or the NGC. The ‘no grade’ coins include those that have been polished, heavily scratched, harshly cleaned, treated with chemicals, etc. Unsurprisingly, U.S. gold coins that the PCGS and the NGC refuse to grade are often sold uncertified. I am not assuming, though, that the coin being offered in this ad is a coin that would not receive a numerical grade if submitted to the PCGS or the NGC. I have never seen it. It is important, though, to consider realistic possibilities. It makes sense to think about the characteristics that this coin might possess, as buyers who read advertisements should think before effecting purchases.

Gold Dollars are around the size of dimes and are generally acquired by people who are interested in coins, rather than by buyers who are focus on gold as a precious metal. Type One Gold Dollars were minted from 1849 to 1854, and a few dates are not particularly rare.

A non-rare Type One Gold Dollar, such as an 1852, in MS-61 grade is valued at $655 by the PCGS retail price guide and at $650 by Numismedia.com. Is it hard to believe that a dealer would be advertising one, in a widely read coin magazine, for $300?

Yes, it is hard to believe. It will occasionally happen, however, that a non-certified Type One Gold Dollar is purchased for around $300 and then is graded MS-61 by the PCGS or the NGC. A focus on an exception, however, would deflect attention from the rule that most Type One Gold Dollars that are sold for around $300 in the current market environment have no chance of ever grading MS-61 or higher by the PCGS or the NGC.

In fairness to the firm that advertises a “Select Unc.” Type One Gold Dollar for “$300,” I mention that this firm states, in the ad in question, that ‘grading is based on twenty-six years of experience.’ I am not impressed by such a statement. In the coin community, the best graders are not necessarily the graders who have the most experience. Indeed, one of the sharpest graders in the nation is under thirty-five. The development of grading skills involves experience, determination, positive influences from experts, and a natural aptitude.

Most collectors should not attempt to become advanced grading experts. It is very helpful, though, for collectors to have some idea of the grading standards and criteria that are accepted by most coin experts. If a collector is considering buying a coin, which is being represented as “Select” Uncirculated, the collector should think about whether most experts would grade this coin as MS-61 or higher. Examining relevant coins that have been graded MS-61 and thereabouts by the PCGS or the NGC may be helpful to such a collector.

VI. Who is to say what a coin grades?

So far, I have raised the issue of advertised prices that may be ‘too good to be true,’ in terms of the prices and grading criteria that prevail in the mainstream. Unfortunately, mainstream publications sometimes accept advertisements from dealers who are clearly outside of the mainstream in relation to grading and selling practices.

Is it legal for a dealer to grade and sell a coin as ‘Choice Uncirculated’ if he knows that almost all recognized experts would not grade it higher than MS-61 or not even higher than AU-55? Suppose that the coin was judged ungradable by both the PCGS and the NGC. I am not putting forth a legal opinion here. The advertisements that I cited above may embody business practices that are clearly legal. I am not suggesting otherwise and I am not accusing anyone of wrongdoing.

My overall point is not about asking prices for advertised, uncertified coins. Instead, I am asserting that collectors should buy coins that are certified by the PCGS or the NGC and should think very carefully about uncertified pre-1935 U.S. coins that are said to (or implied to) grade MS-63 or higher, or are represented as being of ‘Choice’ or ‘Gem’ grades. Even when advertised prices seem fair for the claimed grades, such uncertified coins will often be overgraded in terms of the grading standards and criteria that are widely accepted in the mainstream of the coin collecting community.

I concede that, for some pre-1935 coins that grade MS-63 or higher, the costs of certification outweigh the benefits. Curiously, though, many such coins are already in PCGS or NGC holders, partly because it was cost-effective for them to be certified in past eras. In any event, my suggestion is to avoid uncertified ‘Choice’ uncirculated pre-1935 coins.

For those who collect circulated coins that are valued at less than $250 each, it is important to learn how to grade them. Grading circulated coins is less difficult than grading uncirculated coins. Even so, grading circulated coins is not really easy. Collectors should ask questions of experts and practice.

For those who are collecting scarce or rare coins that are valued at more than $250 each, circulated or uncirculated, buy only coins that are PCGS or NGC certified, Of course, I am not asserting that all PCGS or NGC certified coins are desirable. Buying PCGS or NGC certified coins involves much less risk than buying uncertified coins.

PCGS and NGC certified coins are traded at prices that are commensurate with the grades that are stated on the printed inserts (labels) in the respective holders. Even if the coin inside has been doctored or is just mistakenly overgraded, a PCGS or NGC holder has value, often considerable value. Stickers from the CAC have value as well.

As for choosing among PCGS or NGC certified coins, there is a need to learn and ask questions of experts. Please read my articles on natural toning and on the widening gap between coins that are ‘high end’ or ‘low end’ for their respective certified grades.

While there are subjective elements involved in all collecting pursuits, the field of rare U.S. coins is relatively objective. Yes, there will always be disagreements regarding grading, quality, the greatness of individual coin issues, and the importance of particular collections. Such disagreements, however, tend to fall within understandable, logical boundaries. On the whole, there is tremendous agreement on notions relating to quality, tradition, collecting logic and the greatness of specific coins. Beginning collectors should seek the advice of experts in the mainstream and should be very cautious about buying pre-1935 U.S. coins that are uncirculated AND uncertified.

©2011 Greg Reynolds

Editors Note: The images used to illustrate this article are all raw coins but are Not images of the actual coins described within the article. Images are included for illustrative purposes only.

How are Proof gold coins from the 19th century graded differently than their business strike counterparts?

By Doug Winter – RareGoldCoins.com

In order to fully grasp the topic of this blog, there are a few concepts that I’d like to introduce. The first is the mistaken concept that “Proof” refers to a grade. Proof is actually a method of manufacture that entails striking coins with care on specially polished planchets and often using multiple blows of the dies. Proofs are made in limited quantity and are produced by the Mint for collectors. Business strikes, on the other hand, are not afforded any special care or striking and they are produced for circulation with little thought regarding their appearance or quality. Thus, by their very nature, Proofs should have a “better” appearance than business strikes.

As I have explained before, grade is a shorthand that denotes the appearance of a coin. As collectors we have established expectations of a grade. In other words, we expect an MS63 or PR63 coins to have a nice appearance but a few noticeable marks or flaws which remove it from a higher category in the grading continuum.

Expert graders use a number of factors to establish the grade of a coin. These include surface preservation, strike, luster, coloration and eye appeal which, in theory, is a combination of these individual factors.

The area in which Proofs differ most from business strikes is surfaces; both characteristics and preservation. Proofs generally did not circulate so they are not as prone to nicks, abrasions and marks as much as business strikes are. Proofs were generally better handled as well as they went into collections (i.e., people who cared about the coins and ostensibly knew how to handle them) as opposed to going into circulation (where they were roughtly handled by non-collectors). Also, Proofs were carefully transported after minting unlike business strikes that were often shipped loosed in bags to banks.

When determining the grade of an Uncirculated gold coin, the quantity and placement of abrasions is extremely important. With Proofs, marks tend not to be as big of an issue. Around 15-20% of all known Proof 19th century gold coins are in some way “impaired.” This is typically from having been placed into circulation at one time. (The reason for this, I believe, is that Proof gold coins sold for a very small premium even as late as the early 1930′s and as the economy grew weaker and weaker during this era, coins like double eagles with a high face value and low numismatic premium were placed into circulation as a matter of survival for their owners). But most Proofs have “better” surfaces, for the grade, than do their Uncirculated counterparts.

The bane of Proof gold coins are hairlines. Hairlines are thin, fine scratches in the surfaces that are caused by cleaning, wiping or poor handling. On a proof coin, with bright, reflective surfaces, hairlines are easy to see and can be very detracting. On a business strike, with surfaces that tend to be satiny or frosty, hairlines can be more difficult to detect; especially by an unsophisticated eye. Therefore, Proof gold coins are graded more based on a standard that involves hairlines or a lack of them.

I just mentioned that business strikes have a number of different textures such as frosty or satiny or even prooflike or semi-prooflike. Brilliant Proofs from the 19th century all have the same basic reflective appearance although some issues (especially gold dollars and three dollars) might have an “orange-peel” texture while others have a smoother, more even texture. This consistency of texture makes it easier, in my opinion, to grade Proof gold coins than it to grade business strikes.

One negative aspect about a Proof’s reflective, brilliant surfaces is the fact that marks and hairlines tend to be more amplified. An MS63 might have a few marks or hairlines that don’t really detract much from the overall appearance. On a PR63 gold coin, the same marks or hairlines could be extremely detracting based on the fact that they are more “in your face” because of the surface’s reflectiveness.

On 19th century business strike gold coins, strike is a fairly minimal factor in determining grade. On Proofs, it is basically a non-issue. Because they are well-made with great care, most Proofs gold coins are very well struck. On the few that show some degree of weakness, this isn’t considered enough of a factor to remove a point or two from the overall grade.

Color is an important factor on business strike gold coins. A reasonably abraded Dahlonega half eagle with good luster but poor color might only grade MS60. The exact same coin with great natural color could be pushed up to an MS62 because the hues it shows add great eye appeal.

Until a decade or so ago, it was not uncommon to find Proof gold coins with deep, original coloration. Today, such coins are nearly impossible to find. The reasons for this are many but the most significant is that the grading surfaces tend to like bright, flashy gold coins and an 1874 eagle with deep, naturally hazy surfaces won’t have the “look” that is favored by today’s graders and collectors.

In my experience, the highest grade that a totally original, hazy 19th century gold coin will be graded by NGC or PCGS is PR65 or possibly PR66. In order to get a “supergrade” (PR67 and above) a gold coin has to be bright and shiny. Thus, it gets dipped.

Another interesting factor to consider is the premium paid for adjectival modifiers such as Ultra Cameo or Deep Cameo. A deeply toned, hazy gold coin almost never gets one of these modifiers. A bright, reflective gold coin that shows contrast between the devices and fields does. Thus, Proof gold coins with attractive deep color get dipped or brightened in order to become Deep Cameos or Ultra Cameos. Its sort of sad but its also an economic reality of the rare coin market.

There are a few other things to consider when discussing how Proof gold coins get graded differently than business strikes. Early Proofs don’t show adjustment marks as on business strikes but early business strikes don’t tend to show lintmarks as seen on some Proofs. This tends to nullify each other and neither factor is ultimately that important. In other words, a PR65 gold coin can have a few lintmarks just as an MS65 Heraldic Eagle ten dollar gold piece might have a few light adjustment marks.

Ultra rare Proof gold coins tend to get a one point to one point plus push just like their business strike counterparts do. In other words, because of its rarity and mystique, a Proof 1875 three dollar gold piece might get graded a little less strictly than a similar quality 1885 Proof three. I’m not saying that this is right or wrong but it just seems like a numismatic fact of life.

So are Proof gold coins held to a different standard than their business strike counterparts? I would say that the answer is a strong yes. I don’t think that grading of Proofs is any less strict (or more strict) than it is for business strikes. It’s just different, for a number of reasons as touched on above.

I’d love to hear your comments on grading Proof gold coins. Please feel free to add a comment to this blog or email me at dwn@ont.com.

By CoinLink on Monday, September 20, 2010