A Weekly CoinWeek Column by Greg Reynolds
News and Analysis regarding scarce coins, coin markets, and the coin collecting community #94
Over the last two months, I have covered early large cents (Loring’s 1793s; Eliasberg Chain Cent), early $5 gold coins (in Baltimore auction; Jacobson Half Eagles in FUN sale), Saint Gaudens $20 gold coins (Duckor’s Saints), numerous quarters, and plenty of half dollars, about which I wrote multiple columns. (Clickable links are in blue.) I am now focusing upon 1794 silver dollars and on an extremely important 1799 dollar.
Flowing Hair Silver Dollars were minted only in 1794 and 1795. Those dated 1794 are among the most famous of all U.S. coins. These are the first U.S. silver dollars. In 2004, Martin Logies, the leading researcher of 1794 dollars, estimated that one hundred and forty survive. There were three offered in the Heritage FUN Platinum Night session of Jan. 4, 2012, at the convention center in Orlando.
I. Very Fine Details 1794
Unsurprisingly, the first was determined by experts at the NGC to be not gradable. The holder indicates that it has “VF DETAILS” and was “REPAIRED.” The ‘Very Fine details’ term means that it has the level of detail that would be expected of a Very Fine grade 1794 dollar, if it was gradable, and that it has severe problems. Someone performed surgery on this coin. It sold for $86,250, a strong price.
An interesting aspect of this coin is that it has been traced, perhaps with the use of Logies’ book on 1794 Silver Dollars, to auctions that were conducted in 1866 and 1882! Coin collecting was a very popular hobby in the second half of the 19th century, and many coin auctions were then conducted in New York, Boston and Philadelphia. Of course, coin collecting is now an extremely popular activity.
II. NGC graded VF-20 1794
The second 1794 dollar in the January FUN auction is NGC graded ‘VF-20.’ The outer design elements and periphery tend to be very weakly struck on 1794 dollars and are even a little weaker than usual on this specific coin. Even so, I like this 1794. When I examined it, I noted that it is very original, has honest wear, lacks serious problems, and has imperfections that are typical for a circulated 1794 dollar.
I understand how someone could have doubts about the assigned Very Fine-20 grade, as Jim McGuigan does. While I would prefer it to be graded Fine-15, the VF-20 grade is not ridiculous. Much of the detail that is missing was never there, missing due to striking weakness not wear. It does not make sense to grade 1794 dollars as if they were 1795 Flowing Hair Dollars, which were struck with much more detail.
The coining press that was used to strike 1794 dollars was designed for coins that are smaller than silver dollars. A different press was used to strike 1795 Flowing Hair Dollars. Plus, there are other differences relating to the manufacturing of 1794 and 1795 Flowing Hair Silver Dollars.
McGuigan remarks that this coin has “probably original color.” I maintain that the toning is natural, though it could be natural re-toning rather than first toning. McGuigan refers to this 1794 as having “tan medium gray” colors with “light hairlines and handling marks.” Jim suggests that such hairlines and marks are minor and I agree.
This same coin was auctioned by Stack’s in June 2008. It then realized $207,000. On Jan. 4, 2012, it sold for $120,750.
It is likely that there are multiple forces behind the $86,250 differential. Here are six factors to consider: 1) Markets for rare coins were booming in June 2008 and peaked in August 2008. 2) Prices for rare silver dollars, in particular, have not returned to their respective 2006-08 era peaks. Many of Queller pedigreed silver dollars, for example, are worth significantly less now than the prices these realized in April 2008.
3) The auction result of $207,000 was an above-market price for this coin in June 2008. 4) The current $120,750 result is not strong, given current market conditions. 5) The premiums for PCGS certified and/or CAC approved coins over NGC certified coins have became greater, on average, since 2008.
6) Most importantly, as I indicated in August 2009, the current group of serious buyers of rare U.S. coins tend, on average, to view certified grades in a manner that is different from the ways in which buyers interpreted certified grades during the boom period, especially from 2004 to early 2008.
Despite the fact that this 1794 dollar is certified as grading “VF-20,” many experts grade it as Fine-15 or lower. The price that this coin brought at auction falls within the retail range for a Fine-15 grade 1794 dollar.
III. NGC graded VF-25 1794
The third 1794 dollar in the January FUN auction is NGC graded ‘VF-25.’ Again, the certified grade is debatable. This coin sold for $109,423.65, significantly less than the $120,750 that the previous coin realized.
Jim McGuigan concludes that, if this coin had “a little stronger numerals in the date, it would have sold for more money.” Undoubtedly, it might have. Collectors know, however, that the numerals 1794 are often weakly struck on 1794 dollars. McGuigan adds that it has “decent feathers on back” and “original color.” A few dealers, including McGuigan, spent minimal time examining this coin because of the weak numerals and/or because they did not agree with the assigned “VF-25” grade.
In my view, a large number of collectors intensely demand 1794 dollars, even those with very weak numerals. There are other reasons for the apparently weak price. I like the surfaces, including their color, of the previous NGC graded “VF-20” 1794 dollars much more than the surfaces of this “VF-25” grade 1794.
While I would have to examine this coin again to draw a firm conclusion, I found some abrasions underneath the toning that are bothersome. Plus, I am not completely comfortable with all of its toning. Generally, this NGC graded VF-25 coin has relatively more technical issues than the NGC graded VF-20 1794 dollar that I already discussed.
Given the characteristics of this specific coin, the $109,423.65 result was not weak. It may even be strong.
IV. 1799 Draped Bust Dollar
One of the most talked about coins in this auction is a 1799 Draped Bust Silver Dollar that is PCGS graded “MS-66.” Several of the experts who viewed it in Orlando seem to agree that it is a great coin, yet does not merit a 66 grade. This 1799 has very pleasant toning, and minimal abrasions. Unfortunately, there is a large fingerprint, perhaps a thumbprint, in the right obverse (front) field. There is a lighter fingerprint on the left as well.
“It is a beautiful coin,” John Albanese exclaims. “I have always really liked the coin. [However,] the fingerprint is something you have to explain. It is hard to get past 65 for the coin. I first saw it when it was submitted by Gene R. in the 1980s” to the NGC, which Albanese operated at the time. Gene R. “is a collector. He had a dozen really beautiful early dollars,” John adds. Albanese is the founder and president of the CAC.
Matt Kleinsteuber says that he “would rather see the coin in a 65 holder, than a 66 holder, because of the fingerprint. The reverse is 66+ quality. If it did not have the fingerprint, it would have brought $350,000. The fingerprint held it way down,” Matt emphasizes. Kleinsteuber is the lead trader and grader for NFC coins.
Mark Feld states likewise that it is “an impressive coin, despite its conspicuous obverse print. It appears to be otherwise pristine and is one of the most obviously truly uncirculated Draped Bust Dollars I have seen,” Mark adds.
Bruce Morelan, who is now the owner of this coin, quotes the late Jack Lee as having “said of this particular dollar that ‘it’s the only truly unc’ bust dollar he’d ever seen. But, the print creates a problem,” Morelan concedes. “It’s a distraction that is the focus of one’s eye. I think it is a coin that grows on you the more time you spend with it. The initial focus is the print, but eventually one moves on to the wonderful other attributes.”
There is no doubt that this 1799 dollar has some terrific attributes. Indeed, it is a fabulous coin.
Many early U.S. coins have friction on the highpoints, including many with ‘mint state’ grades, or are so weakly struck in some areas that it is difficult to tell whether wear is present. I agree with the point put forth by Feld and implied by Morelan that this coin has no wear and no apparent friction on the highpoints. Feld was a full-time grader at the NGC for most of the 1990s. Also, Mark worked for leading coin firms before returning to self-employment.
I asked Feld how he would grade this coin if it was not certified. “Probably MS-65,” Mark responded.
Before I discussed this 1799 with anyone else, I wrote notes about it. The toning is definitely natural. Indeed, I really like the green shades. Further, this coin is lustrous. The reverse (back of the coin) is excellent, with much luster, even toning, and sharp detail. While it should not be graded 66, it has technical characteristics that are very much consistent with a 66 grade. Because of the fingerprints, it just does not have sufficient eye appeal to be a 66 grade, early silver dollar.
In the Jan. 4, 2012 Platinum Night session, this 1799 sold for $260,015. Bruce Morelan was the successful bidder, through Legend Numismatics.
“That’s a lot of coin for that kind of money,” David McCarthy declares. “It is definitely an attractive original coin. It was nicely struck. At least, it was not [recently] dipped. It is a gem; there are other [certified MS-66] silver dollars that do not look as good as this one. I am not offended by the 66 grade,” McCarthy maintains. David is a coin expert with the Kagin’s firm.
The buyer, Bruce Morelan, is a collector, and not an active dealer, though he is a minority shareholder in Legend Numismatics. He is best known as having previously owned two different 1913 Liberty Head Nickels. Furthermore, Bruce assembled the all-time greatest set of business strike Liberty Seated Silver Dollars, which he sold a few years ago. Moreover, Morelan has owned many important 19th century rarities and super-grade type coins. Bruce’s collecting plans keep changing and he has not seen the other PCGS graded MS-66 1799 Draped Bust Silver Dollar.
I remember the other one. It was previously in the collection of “Joseph Thomas” though it was not included in the April 2009 auction of a large part of the “Joseph Thomas” collection. In March 2007, Heritage auctioned the other one for for $379,500, at which time the collector known as “Joseph Thomas” may have been the buyer. According to Heritage cataloguers, he did own it.
The “Joseph Thomas” 1799 again, in the Jan. 2011 Platinum Night event, for $299,000. I did not grade the “Joseph Thomas” coin as MS-66 either. This one, with the fingerprints, scores higher in the category of originality. Both coins deserve MS-65 grades, in my view.
As for this one, with the fingerprints, Kleinsteuber states that it is “a true gem; I didn’t quite get to six. It brought what it would have brought in a 65 or 65+ holder,” Matt concludes.
Bruce Morelan, the buyer, has very publicly declared that he was aware, before the auction, that the assigned “MS-66” grade of this coin may not be accurate. “It’s a very tough coin to grade,” Morelan says. “All classic coins are a net graded combination of factors summed up in a number. This particular coin has fantastic luster, color, surfaces and strike, and a prominent fingerprint,” Bruce acknowledges. “The market has spoken that it is a 65 since that’s the price it realized, but as a 65 in my opinion its PQ.”
Morelan is asserting that its grade is above the midpoint of the MS-65 range. Bruce is widely regarded as a talented grader.
I suggest Morelan paid a price that would be fair for a mid range to high end 65 grade 1799 dollar. In Bruce’s view, “a true all there MS-66 1799 dollar [would be] worth $600,000 or more.” Furthermore, Morelan maintains that “the overgrade actually hurt the realized value.” In another words, Bruce argues that this silver dollar would have realized more on Jan. 4 if it had been PCGS graded “MS-65” or “MS-65+” rather than MS-66.
A factor in Morelan’s calculation is that it would have received a CAC sticker if it was certified as grading “MS-65.” Bruce is a former shareholder of the CAC.
V. Certified Grades and Prices Realized
In my view, this 1799 brought a $260,000 mid range “MS-65” price rather than a $350,000 to $425,000 “MS-66” price. Back in 2009, I discussed the ‘widening gap’ in prices between coins of the same type, same date (or equivalent date) and same certified grade.
Since 2009, there has been a trend of fewer buyers blindly accepting certified grades without thinking about the physical characteristics of the respective coins. More buyers now seek to learn about the details of the coins that they are considering buying.
So far in 2012, major bidders at auctions seem, to a greater extent than even in 2009 and 2010, to be looking past the certified grade stated on each holder and seeking information about the true grade of the coin inside. By ‘true’ grade, I am referring to an average, really an estimated weighted average, of the grades that most experts would assign to the respective coin. The bidding for this 1799 dollar is one example of this phenomenon.
The Duckor 1921 Saint Gaudens Double Eagle is PCGS graded “MS-66,” yet most experts grade it as “MS-65” or “MS-65+.” If many specialists in Saints really graded it as “MS-66,” it probably would have brought more than $1.15 million on Jan. 5, when Dr. Duckor’s set of Saints was auctioned. It instead realized $747,500, a moderate price for a “MS-65” grade 1921 Saint.
In my column three weeks ago, I mentioned an NGC graded “MS-67” 1821 quarter that was also in the FUN Platinum Night session of Jan. 4, 2012. The NGC Coin Explorer and Numismedia.com then valued 1821 quarters at “$89,380” in “MS-67” grade and at “46,150” in MS-66 grade. This 1821 realized $40,250. Its toning is natural and it is an excellent coin overall. It seems likely that the leading bidders graded it as MS-66, despite the certified MS-67 grade, and bid accordingly.
The fate of a 1918/7-D Buffalo Nickel in the same FUN auction is relevant. It is NGC graded “MS-65.” If leading bidders for gem quality Buffalo Nickels really thought that it merited a grade of “MS-65,” it would have realized more than $200,000 at the auction, or, at the very least, $160,000. It went for $138,000.
John Brush, vice president of David Lawrence Rare Coins, examined this 1918/7-D nickel. “While lustrous and fairly attractive, the surfaces of the piece were less original than what we [at DLRC] had hoped,” Brush laments.
I am not certain as to Brush’s thinking about this coin. In my view, the toning on this coin is not natural.
In regards to expensive coins being offered at auction, each collector-bidder should consult an expert before committing to pay a large sum. Two coins of the same type and date that have received the same numerical grade from the same service may be very different.
©2012 Greg Reynolds