By Charles Morgan and Hubert Walker .....
The sentiment among collectors who deride modern coins is that they’re overpriced and just plain common. They often argue that high-grade certified “condition-rarities” are nothing more than fool’s gold. And we have to admit, it’s hard to argue with that sometimes. So this week, we discuss one coin that could very well be “Exhibit A” in this argument: the 2001-S Sacagawea Proof.
This coin, far from alone in its precipitous decline in value, is an interesting case study in how the market works and how irrational collectors can be in the face of obvious downward pressures. The fact that some collectors still believe it’s one of the keys of the series, and some dealers promote it as such, speaks to a curious problem in the hobby - that despite scores of magazines, web blogs and news sites, it’s still possible for such misguided notions to persist.
THE 2001-S AS THE KEY TO THE SERIES
Tackling the notion that the 2001-S Sacagawea Proof is any kind of key date, it serves to compare the mintage against other issues from the series. The assumption that this 2nd year issue was somehow scarce and therefore more desirable manifested early on. With only a few years of production, dealers and collectors were ready to promote and accept a coin that was only marginally less abundant than those minted the year before and actually more available than those minted in 2004 and 2006-2008.
The 2001-S has long been hyped as one of the keys to the series despite the fact that it’s more common than the 2004, 2006, 2007, and 2008 Proof releases.
Granted, at the peak of the 2001-S price run, collectors didn’t have the benefit of knowing how many Sacs would be minted in the last few years of the series. And yes, the popularity of the 50 State Quarters series may have eaten into the available stock of 2001 proof sets, but certainly not to the point that it justified the extreme upwards price pressure applied to not only PR-70DCAM 2001-S coins but also PR-69DCAM (read: typical grade) and raw coins. There was never a time when this coin wasn’t readily available through coin dealers or eBay. Yet even now, long after the lower mintages of later releases have been revealed, price guides such as Whitman’s Red Book continue to place key date emphasis on the 2001-S, listing it at $60 for PR-65 (raw). [Yeoman, 236]
A PRECIPITOUS DECLINE
When the first coin listed here sold for $3,300, only four pieces were certified as perfect. The population now exceeds 440 and that coin has declined in value by 95%.
The earliest auctions for the 2001-S in PR-70DCAM took place in October of 2004. PCGS Price Guide Editor Jaime Hernandez told us that the first PR-70s were graded in this time frame. When Teletrade sold their first one on October 18th, there were only four available. It sold for $3,300. On November 15th, Teletrade offered its second PCGS-perfect Sac, which sold for $1,870. There were now 15 PR-70DCAMs certified by PCGS. A week later 20 coins had made it and Teletrade’s third offering sold for $1,650.
The $1,870 piece (Cert #72895263) was dumped in May of 2005 for $770. That buyer got extremely lucky, as two years later the same coin sold at the 2007 May/June Long Beach Show for $2,300. No 2001-S Sacagawea dollar would ever sell for that amount again, and by January 2009 the coin had dipped below $650 for good. The first 2001-S to sell at a major public auction for under $200 was sold at a Heritage Auction in November, 2009. By then the population in perfect grade had reached 277. It now stands at 440 coins, but only because the frenzy is over. There’s no lack of perfect coins out there sitting in government packaging.
In the heyday of the coin, several PR-69DCAMs rode on the PR-70DCAM’s coattails, with examples selling at various auctions for $100 or more. While some outliers reached insane pricing levels approaching $450 (could these be instances of dealer manipulation? We wonder…), for the most part PR-69DCAMs sold for $30 to $60 each. For bulk submitters, getting scores of 2001’s graded was like printing money. Nowadays, you’d be lucky to get your submission fees back. Collectors still interested in Sacagawea dollar proofs can easily muster up a little more to get “perfect coins”.
2001-S NOT ALONE IN EXUBERANT HAMMER PRICES AND SUBSEQUENT DECLINE
The 2000-S sold for as much as $3800 in 2007 and fell permanently below $1000 in March of 2009, dropping to $200 by January 2010 before falling below $100 in November 2010. The coin now sells for about $80.
The 2002-S saw one example sell for over a thousand dollars, that piece selling at a November 2003 Heritage Internet Auction and then reselling four years later for $644 on Teletrade. The 2002-S sold below $100 for the first time in May 2009 and now routinely sells between $35 to $50.
2003-S debuted at $690 in October of 2003, fell to $200 by June 2008, and trended below $100 by July 2009.
2004-S sold for $523 out of the gate, became a $200 coin by June of 2005, and experienced a price resurgence in 2006 and 2007, with one example selling for the ridiculous price of $805 in February 2007. That coin sold two years later for $115. Today, the 2004-S sells for about $50.
For nearly all of the issues from 2005 onward, you’ll find that early buyers paid $200 or more for the first PR-70DCAMs, and that the price held for a year or so before following the trajectory of the earlier releases, becoming consistently available for $100 or less by 2012. The newest release (2012) is still in its low population $200 phase.
THE ONE EXCEPTION (SO FAR)
The one exception to the Sacagawea dollar trend of high prices followed by a brisk bottoming out has been the 2008-S, which we argue is now embraced as the key to the series. The release is the last of its type and the coin’s total mintage of 2,169,561 makes it the release with the lowest mintage of the eagle reverse type (though it’s worth noting that subsequent Native-American reverse type issues have significantly lower mintages still).
Historically, its current price point of about $130 in PR-70DCAM is soft when you take into account the available population of 234 coins. The 2001-S, for example, was selling for three times that price in 2009. But those overly exuberant days are over, at least for this series, at the moment. The same potential exists for the 2008-S to join all of the other coins in this proof series as 2008 Proof Sets are by no means scarce and there’s no reason to believe that PCGS’ current 6% PR-70 grading rate would not hold up if thousands of additional coins find their way into slabs.
ARE PROOF 70 MODERNS WORTH IT?
With mintages in the millions, only a fraction of the available proofs from any given year has been submitted for grading.
The answer to this question requires a degree of introspection. Clearly, the 2001-S illustrates the tenuous nature of buying into this market too early. Some collectors who bought at $1,000 or more may not even care that the coins have lost much of their value. Others, we suspect, may not even be aware that their #1-ranked Registry sets can be replicated for a fraction of the cost. There are currently 44 perfect PR-70 Sacagawea sets registered at PCGS; the great majority of them being of recent vintage. Two sets, named ErasmusHall and GGSac have held the top spot since 2005. These collectors undoubtedly have lost most of their equity stake in the series
A while back we wrote Q. David Bowers to ask him about his Optimum Collecting Grade for modern proof coins. Bowers developed it as a strategy for buyers looking to get the best coins for their investment. The OCG strategy calls for collectors to buy the best coins they can find in grades immediately preceding a major jump in price. A case in point would be the 1892-O Morgan dollar. In MS-64, it’s a $900 coin. In MS-65, the price jumps to $7,500. A well struck and attractive MS-64 is certainly a better buy than a technically correct, but otherwise mundane, MS-65. When applied in this way, OCG makes sense and is a logical and easy-to-grasp buying strategy.
However, when it comes to modern coinage, Bowers seems to apply OCG differently. For instance, in his Guide Book of Washington and State Quarters, published by Whitman, Bowers states that the Optimum Collecting Grade for modern quarters is PR-65. The use of PR-65 is likely a carryover from the Yeoman price guide, which lists PR-65 as its default proof grade for the series and can be understood as visually pleasing, problem-free raw coins.
We wondered whether Bowers truly meant to discredit the market for third party graded proofs, as the grade PR-65 is rarely, if ever, encountered when it comes to modern proof coinage.
Bowers responded by agreeing with us in part, saying that even though “just about every modern Proof ever minted is PR-69.... What happens is a lot of people don’t understand this and realize that a Proof-69 Barber half dollar, for example, can be worth tens of thousands of dollars. When they see a Proof-69 Statehood quarter offered for sale, they say to themselves, ‘Great! Now I can join traditional old time collectors by getting the best quality available.’ What they don’t realize is that the coins they are buying are exceedingly common.”
In that respect, you have to wonder what could possibly motivate a collector with the means to spend $3000 or more, to choose to pay that for a coin that’s slightly more perfect than three million other coins that are nearly perfect. Could Bowers be right and some well-intentioned but misguided collector thought that he was buying a big time investment coin? In 2006, when Bowers’ quarter book was published, could that have really been the case?
And what of the collectors who bought in when that $3000 fell to around $1000? Maybe they just wanted the coin that badly. Maybe $1000 was finally within their price range. Or did they think the price would go back up? The pop numbers were out there, didn’t they look?
There is some marketing involved in the promotion of PR-70DCAM coins, be it through public leaderboards or the inherent nature of owning a holdered coin carrying a certified grade. Whether they’re worth it now, at current pricing levels, or not is a matter of personal taste. PR-69DCAM coins routinely sell for less than it costs to grade them, essentially reducing them to worthlessness. PR-70DCAM coins carry a modest premium and thankfully do not have as much room to fall if the market bottoms out again.
Some will point to the auction prices realized for PR-70DCAM coins from other grading companies - specifically NGC - and say that because it’s only PCGS PR-70DCAMS that receive a significant market premium for common coins such as Sacagawea proofs, that the prices being commanded in the marketplace are due to collectors buying the plastic and not the coin. They are right about this point, to some degree. There is most certainly a marketing premium at play. How much this applies to what each individual collector seeks from the hobby should be considered on a case by case basis. While those early adopters may have lost big by not bailing out of the series when it was in free fall, the winning bidder who picked up a PR-70DCAM last week for $90 might have just gotten themselves a good deal.
-With many thanks to Q. David Bowers and Jaime Hernandez for sharing their time and expertise.
FLIP OF A COIN:
Roll Hunters take note: An acquaintance of ours recently acquired a large number of bags of Eisenhower dollars from a branch Federal Reserve Bank, which yielded a few Morgan dollars, American Silver Eagles, and NIFC silver-clad Ikes. He hauled in a few hundred dollars in silver coins alone. Whether or not your bank has access to these abundant stockpiles of obsolete coins is anybody’s guess… but the coins are out there.
From the Walker/Morgan Numismatic Files: You may not hear it much anymore, but the term “weenie” was once used in the hobby to describe someone that specializes in a specific series or type coin. If you can help yourself, please resist the temptation of thinking about someone being a President Clinton dollar weenie.
New term: bullionaire- hypothetically, someone who has a billion dollars worth of bullion. At current gold pricing levels of 1569.76 an ounce, it would take 637,040 double eagles to achieve this level of bullion wealth. 637,040 is a little more than the entire 1859 output of large-denomination gold coins from the San Francisco Mint in 1859. An MS-63 example of one will set you back $52,500 in today’s dollars.
 Hubert and I tried to reach out to these collectors for comment, but received no reply by the time this article went to press. - Charles