News and Analysis on scarce coins, coin markets, and coin collecting #45
A Weekly Column by Greg Reynolds
In the recent auction in Sacramento, two 1881-S Morgan Dollars with eye-catching toning realized sums that caught my attention. While the prices realized for these two silver dollars are not huge in the realm of auctions, these two brought super premiums over the market values of relatively untoned coins of the same date, type and certified grade. (Morgans are silver dollars that were minted from 1878 to 1904 and then again in 1921. “Mint State” coins are graded on a scale from 60 to 70.)
I. An 800% Premium for an 1881-S
For a PCGS graded MS-66 1881 San Francisco Mint Morgan silver dollar, the Numismedia.com retail value is $331 (on March 22nd) and the PCGS price guide value is $325. One just sold by Heritage in Sacramento for $2,990, about nine times the supposed retail value for a coin of the same date, type and PCGS certification.
Although this coin has been approved by the CAC, a green sticker could not explain an 800% premium in this case. Indeed, on the CoinPlex trading network, there are bids of $235 per coin for MS-66 graded 1881-S Morgans with CAC stickers. Undoubtedly, these typically trade among dealers for more than $235. I emphasize here is that the CAC sticker could not account for this 1881-S selling for $2,990. A likely explanation would relate to at least two collector-bidders being very attracted to the particular toning on this specific coin.
II. $1,667.50 for an MS-65 1881-S
A PCGS graded MS-65 1881-S in the same auction sold for $1,667.50. It does not have a CAC sticker. As of March 22nd, the Numismedia.com retail value is $194 and the PCGS price guide value is $195 for an MS-65 grade 1881-S Morgan. In a Heritage Internet-only sale in late January 2011, another PCGS graded MS-65 Morgan sold for $149.50. Prices for common date Morgans, in general, increased in February and in early March.
Unfortunately, I did not attend the recent auction in Sacramento and I never saw these two coins. One thought that occurred to me is that the buyers or other leading bidders were planning to ‘crackout’ these coins and re-submit them to the PCGS or the NGC in hopes of receiving higher grades. While it is possible that crackout artists were the leading bidders, it is unlikely.
An MS-67 grade 1881-S Morgan has a retail value of only around $800. In recent Heritage sales, two PCGS graded MS-67 Morgans, with CAC stickers, sold for more than $800, though less than $900 each. On CoinPlex, sight unseen bids by traders tend to be in the range of $600 for MS-67 grade 1881-S Morgans.
A PCGS graded MS-68 1881-S Morgan, in contrast, could be worth anywhere from $2500 to $7500, depending upon the characteristics of the individual coin. Most probably would currently retail in the range of $4000 to $6000 each.
Could the bidders have pegged these two as eights? While this is plausible, I doubt that leading bidders graded both of these as MS-68. Morgan Dollars are not extremely difficult to grade. If these two did not have significant contact marks or hairlines, or other relevant imperfections, a very high technical rating would probably have been noticed by experts long ago. Typically, attractive silver coins have more imperfections than white silver coins with the same respective certified grades. Very attractive natural toning adds to a coin’s grade, and frequently offsets grade reductions stemming from contact marks and hairlines.
Although Kris Oyster did not see either coin, he often trades Morgan Dollars and has sold many with very colorful toning. Oyster maintains that, in most cases, toned Morgans sell for large premiums “because of the toning, the buyers are usually not trying for upgrades. They want pretty coins.”
In Oyster’s experience, a “MS-62 to MS-65” grade, “common date Morgan” with “real pretty toning will sell for “$500 to $1000 more than a white one.” The 1881-S issue is certainly a common date. For the most part, Rich Uhrich agrees with Oyster, “for MS-65 common dates, very attractive bag toners often sell for $500 more, sometimes even for a $1500 premium. A very attractive MS-64 1881-S toner could sell for a $600 to $800 premium, though some toners will sell for a lot less. A monster six could sell for $1500 over the price for a white [MS-66 grade] 1881-S Morgan,” Rich explains.
Oyster states, “better date Morgans with real pretty toning usually do not bring as much of a premium. They can bring $1000 more or they can bring zero” more. Most such better-date Morgans in MS-63 to MS-65 grades will, Oyster says, “bring a premium from $200 to $400 over a white one”!
Oyster is the managing director of numismatics for DGSE. Kris has bought and sold millions of dollars worth of Morgan Dollars.
Oyster finds that most “collectors of toned Morgans do not care about the dates and are not much interested in the grades.” The numerical grade seems to be a secondary issue for such buyers. Typically, such a collector wishes to acquire a group of silver dollars with varying colors, Oyster has learned. It seems to Kris that such collectors wish to have toned Morgans that look different from each other.
Rich Uhrich also figures that some collectors of “bag toners” seek a group with varying color-arrangements. Uhrich suggests, though, that more often that the buyers of Morgan “bag toners” are collecting by design type, and want colorfully toned coins of other denominations as well. A few buyers, who Rich knows, are assembling sets of more typical looking Morgans and regard a “bag toner” as an addition or a complement to such a set.
Someone who collects Morgans ‘by date’ or a subset of Morgans, Carson City dates for example, would be less likely to pay a premium of more than 200%, much less 800%, for a very attractively toned better-date Morgan. Complete sets of very colorfully toned Morgans are difficult to assemble, and few collectors attempt to complete such sets.
III. Sunnywood Collection
An exceptionally accomplished collector, Doug K., who refers to his collections as “Sunnywood,” did complete a set of toned Morgans. “The goal of this endeavor was to show the [coin collecting] community that Morgans can be collected with originality and color,” Doug said in the PCGS registry. Colorful Morgans constitute a very small percentage of all Morgans that survive. “Because there are millions of white Morgans,” Rich Uhrich declares, “the bag toners really stand out!”
The Sunnywood set of colorfully toned Morgan Dollars was exhibited at the Jan. 2009 FUN Convention in Orlando and elsewhere. In Dec. 2009, Laura Sperber bought it from Doug K. and then sold most or all of it to the collector known as Simpson. While the Simpson set of Morgans currently includes a few coins that were not part of the Sunnywood set, most of Sunnywood’s Morgans, including the Eliasberg 1893-S, are now part of the Simpson set. Both the Sunnywood and Simpson sets of Morgans are listed in the PCGS online registry, with images.
“Each toned coin has a very distinctive appearance and personality that results from its decades of history,” states Doug K. The connection between toning and the history of a coin is discussed in my three part series on natural toning. (Please see part 1, part 2 and part 3. )
When a silver coin is dipped (in an acidic solution), part of the history of the coin is destroyed. There exist a few coins for which the benefits of a dip outweigh the harm done. The dipping of Morgan Dollars, however, is generally harmful. The fact that so many Morgans have been dipped is one of the reasons that naturally toned Morgans sell for premiums ranging from 30% to more than 1000% over the prices of white ones of the same respective dates and certified grades.
IV. Commonality of Morgans
Frequent sales of attractively toned, common date Morgans for prices in the $500 to $1500 range reflect, to an extent, the value of natural toning to knowledgeable coin collectors. An MS-65 grade common date Morgan has a retail value of around $200. As the 1881-S issue is one of the most common dates, and a MS-65 grade 1881-S in the recent Heritage auction in Sacramento sold for $1667.50, the commonality of the 1881-S issue is worth discussing here to further illustrate the value of natural toning.
In all grades, the PCGS has certified more than 200,000 1881-S Morgans and the NGC has certified more than 180,000. Of course, the total of more than 380,000 is a little misleading, as it may only be indicative of just 250,000 different coins. I doubt that the true total could be much less than 250,000, though, as, in most cases, there would be little to be gained by ‘cracking out’ an 1881-S Morgan from its PCGS or NGC holder. Indeed, over time, on average, ‘crackout’ artists probably have lost money on 1881-S Morgans.
It very likely that more than 35,000 different 1881-S Morgans are currently PCGS graded MS-65. Therefore, the 1881-S that just sold for $1667.50 is one of more than 250,000 certified 1881-S Morgans and one of some 35,000 that are currently PCGS graded MS-65. In addition to being very common overall, an 1881-S Morgan is not a condition rarity in MS-65 grade. An 1881-S Morgan becomes a condition rarity in MS-68 grade, as very few 1881-S Morgans qualify for a MS-68 or higher grade.
V. Bag Toning
For political reasons, millions of Morgan dollars remained in U.S. Treasury Dept. canvas bags for decades. In the late 19th century, people who were financially linked to the silver mining industry influenced the U.S. Congress and brought about laws that required the U.S. Treasury Department to produce and store many millions of Morgan Dollars that no one, at the time, wanted. Most Morgans were not made for commerce and were stored by the U.S. Treasury Dept in canvas bags.
Consequently, there came about a special kind of natural toning that is unique to Morgan dollars. This is typically referred to as ‘bag toning,’ as substances from a certain variety of canvas bags came into contact with the surfaces of silver dollars. Very colorful toning often resulted.
If such ‘bag toning’ were said to be found on a Liberty Seated Half Dollar from the 1880s or a Barber Half Dollar from the 1890s, any such toning would be correctly determined to be ‘artificial.’ Liberty Seated coins and Barber coins did not sit in such bags for many decades. In this context, ‘bag toning’ probably took a half century or more to develop. The U.S. government released millions of 19th century silver dollars in the 1960s and 1970s.
In the framework of the culture of coin collecting in the U.S., ‘bag toned’ Morgans have a special place. Indeed, ‘bag’ toning on Morgans is widely regarded as natural and similar looking toning on other silver coins would, in almost all cases, be widely condemned as ‘artificial.’
Therefore, the only way to acquire legitimate coins with ‘bag toning’ is to buy such Morgans. Personally, I find ‘bag toning’ to be awkward. Furthermore, I believe that beginning to intermediate collectors are often confused by it. Moreover, I prefer the blues, greens, and russet shades that are often found on 19th century silver coins of other denominations. While typical colors are usually not as flamboyant “bag” tones, natural colors on other 19th century silver denominations seem much more pleasing and historically important to me. Even so, I understand why many connoisseurs of U.S. coinage would desire to have at least one ‘bag toned’ Morgan in their respective collections. Bag toned Morgans are extraordinarily distinctive, and are fascinating in their own way.
©2011 Greg Reynolds