Time for a New Bull Market in Coins?
From Their Television Broadcasts January 21, 2002
Did you feel the Earth move Sunday night, January 20, 2002? It
wasn't an earthquake, but it really did shake up the world of coin
collectors.
It was the sale of a Susan B. Anthony dollar coin that shook the
world. It shook up a lot of people because of it's price. Fifty-seven
hundred dollars. That's $5,700 for a Susie, as they're called.
Yes, a Susie for fifty-seven hundred bucks. The same kind of Susie
that you didn't want in your pocket, and the same kind of Susie
that you frowned upon when it came out of a postal service vending
machine, and the same kind of Susie that you couldn't find a vending
machine to take. That kind of Susie.
This particular SBA dollar was made recently-- in 1999. That's
one heck of a return on a two or three year investment.
Well, how many $5,700-Susies have you let slip through your fingers?
Before you pull your hair out in amazement and frustration, let
me relieve your fears: chances are you NEVER had a $5,700 Susan
B. Anthony dollar.
You see, what made this Susie so valuable was its condition. It
was pristine with barely a mark or a flaw or a scratch or a nick.
And it was certified as being near flawless by the independent coin
grading service Professional Coin Grading Service (PCGS) of Newport
Beach, California.
You see, most new SBA dollars when they come from a bank probably
grade as uncirculated -- but the $5,700 SBA was a sper "gem
uncirculated" coin and was graded a 68 out of a possible high
score of 70 (70 is perfect). The kind of SBA coins that come out
of the bank (if never used in commerce) probably only grade a 64
or a 65 out of a possible score of 70.
In the world of numismatics (coin collecting) a one point difference
can mean big money.
Take for example a new New Jersey Statehood quarter issued in 1999.
Coins in common, new or uncirculated condition, are worth about
two-dollars each. But if you happen to have one in gem condition
-- and it has been certified as being in gem condition -- it can
be worth several hundred dollars.
In the world of coin collecting, this is known as "buying
the plastic holder." Because these "graded" or "certified"
coins are sealed in plastic holders with a label attesting to their
grade by the various independent grading companies. There is the
PCGS and others including Numismatic Grading Corporation (NGC) and
Independent Coin Grading Corporation (ICG) and Sovereign Entity
Grading Service (SEGS) and still another called Accugrade. Each
of the grading companies builds their reputation for "getting
the grade right." However, before you buy a coin that has been
"slabbed" (sealed in a plastic holder by a grading company)
you should know that the numismatic community treats the various
grading companies differently.
PCGS is perhaps known as the industry leader and with the grades
that best describe the coins in its holders. NGC is also highly
regarded. The other grading services also have their devoted followers,
however PCGS graded coins tend to have the best market following
and the best prices.
One of the worst experiences for any collector or investor is to
buy a graded coin and then be told that the grading service inflated
the grade or "overgraded it" and the coin isn't as good
as the label on the holder says it is.
Outside of the plastic holder, one coin might look like another,
and some collectors shun so-called "coins in plastic"
for this reason. But some collectors covet the plastic holders and
the coins they contain for independent third-party certification
of the condition of the coin they own.
That $5,700 SBA dollar, by they way, is so valuable because of
two reasons: first, it was certified as scoring a 68 out of 70 by
PCGS, and second -- it is the only 1999 SBA ever certified to have
such a lofty grade.
Some coin collectors are now bidding big bucks in public and online
auctions for these "condition rarity" coins, or coins
with high grades that have low populations.
In the last week, a 1936 half-dollar sold for more than $27,000
at an auction only because the buyer thought that it was worth a
grade of 67 out of 70. The buyer was correct in his assumption:
he submitted the coin to PCGS and it received the lofty, and rare
grade. But had his new purchase been graded only a 66, he would
have had a coin that was valued in the marketplace at only about
$4,000 and he would have lost the coin grading lottery.
There is a lesson in all this: first, do not try to buy or invest
in "condition rarity" coins or coins with valuable "grades"
unless you have confirmation that the coin you are buying is indeed
rare and in pristine condition. The best way to have this determined
is to buy a coin that has been graded by a third-party organization
such as PCGS.
Second, beware anyone trying to sell you a "condition rarity"
coin that has not been graded by a third-party -- because unless
you are an expert yourself, you might not be able to determine the
true condition or rarity of the coin.
Third, shop around. Even if a coin has a high grade and is rare,
prices and values will still vary in the marketplace-- and the variations
can be significant.
Here's one more example about "grade" and value: A 1964
silver Washington quarter that you might have in your top drawer
(kept as a piece of silver) might be worth only 75-cents because
of its silver content. But a 1964 quarter that is certified in proof-70
condition meaning it was specially struck for collectors and is
flawless with no scratches or dings might be worth $300 or more.
And here's something else to keep in mind: no 1964 quarter in anyone's
top drawer can be worth $300 -- not unless it is encased in plastic
with a certification label from PCGS.
A NEW BULL MARKET IN COINS?
Coin dealer and expert David Hall is out with a new and interesting
newsletter. In this newsletter he tracks the history of bull markets
for coins. Yes, coins have bull markets just like the stock market
has bull markets. Coins and stocks also have bear markets.
Hall reports that the last big bull markets for coins were 1961-64,
1971-74, 1976-80, and 1983-89. The last bull market was fueled primarily
by the interest of big Wall Street investment firms in "rare
coin portfolios." When Wall Street went away, a long bear market
developed for coins. That bear market is now ending and some coin
dealers are predicting a new bull market for coins.
The recent sell-off in stocks might also fuel the new bull market
as investors seek hard assets for the money they rescued from stocks.
Hall reports that a major factor in the new, stronger coin market
is the State Quarters Series now being produced by the mint. The
new quarters have brought millions of new collectors into the hobby
and has generated intense interest in certain coin series including
Washington quarters and Lincoln cents. Prices for these coins have
risen as well.
Hall also reports that there is a coin collecting "obsession"
now with the PCGS Set Registry. This is a competition among collectors
the world over to build the finest-known sets of coins. "The
coin collecting renaissance is very real," Hall writes.
A NEW GOLD RUSH?
Goldline International, the gold and silver trading firm in Santa
Monica, California, says it is busier now that the stock markets
are melting down and worry about the world economy continues to
grow. Goldline is forecasting higher prices for the metals, and
reports there are signs of a "squeeze" in the markets
-- that's when there is a lack of gold and silver to meet demand.
The metals traders say that the sell-off in the stock market is
also shifting money out of "paper assets" into the hard
assets of bullion. It is also predicting higher sales for gold and
silver jewelry as consumers seek out gifts that will "hold
value."
The firm says that the price of circulated Morgan silver dollars
could double in price in the next year from the current level of
$7 a coin to about $15 a coin.
Goldline also is now marketing high grade collector coins including
$20 gold pieces and gem unciruclated Morgan silver dollars and it
believes these pieces will also climb in value because of the new
rush for the metals. The firm says that some numismatic gold and
silver coins (coins with rarity and collector value) could gain
30-percent in value over the next year.
For information call Goldline at 1-800-827-4653.
Alan Mendelson, KCAL 9 News
