by Charles Morgan and Hubert Walker for CoinWeek….
As a member of the Ike Group, Charles tries to stay informed about the current goings-on in the series and keeps in touch with collectors and Eisenhower dollar researchers. They generally like to talk about the popularity of the series, research into new varieties, and the state of the Eisenhower dollar market. Several top-tier collectors we know cite recent auction results for two high-end, PCGS-graded and CAC-stickered Ike dollars offered at Heritage Auction’s Summer FUN Show as cause for concern about the overall health of the Eisenhower dollar market and as a potential portent of future bad returns on the series from an investment standpoint.
The Eisenhower dollar, like many modern coin series, has a small but fanatical following. From that small following, only a handful of collectors are active in the upper end of market. For those collectors, any increase in the number of certified coins puts dramatic pressure on their perception of the value of the coins at the top end. These “Top-Pop” Ikes, many of which can trade for upwards of $10,000 or more apiece, have enjoyed more than 20 years of slow growth. The fear among the high-end Ike collectors that we talk to is that this is changing.
Admittedly, the Heritage Auction results were bad. The two lots offered, a PCGS-graded 1971-P in MS-66 CAC and a 1974-P in PCGS MS-66 CAC, were both toners. Not exceptional in terms of color, but, based on the past performance of similar Ikes at major auctions, they should have brought more money. The 1971-P brought $1645, while the 1974-P brought $499.38. A Heritage representative confirmed with us that Heritage actually won the ’74-P, which at least indicates that the auction company believes there exists enough of a market for the coin that it should sell later for more money.
Blip on the Radar, Weak Market, or Portent of Things to Come? (Part I)
Are these returns indicative of future trends, or do they simply suggest that the Ike dollar market isn’t exactly humming along at the moment? It’s impossible to answer that question based on a sample size of two, but we can say with certainty that several issues in the series have seen a decline in value in recent years. Perhaps the following chart of PCGS-graded coins can help explain why.
We chose August 2010 as the start date for this study because that was when Charles started to collect PCGS-certified Ike dollars. The number of new coins certified is current as of July 14, 2014.
In the 44 grades* we tracked along 23 issues, 30 (68%) of the possible collectible Ike dollar grades experienced population growth above 20%. Nine issues topped 40% growth over the past four years.
Even if you remove low population grades for issues such as the 1973-S in MS-69 or the 1972 Type 2 in MS-66, six Ike dollar issues/grades experienced massive population growth. 13 saw populations increase by more than 500 coins.
Of all the issues, business strike silvers seem to have had the most pressure applied to them. Of the 30 coins on our list, 12 are silver issues. Thousands of newly-graded silver business strike Ike dollars have caused a major price decline in grades MS-67 and below. For the most part, the MS-68 grade has held its own.
Also, the clad issues that have seen the biggest increases in number of coins graded tend to be ones that are known to yield better coins on average, like the 1971-D or the 1976-P and D Type 2.
Having said all of that, seeing most of the “collectible” issues and grades in the series experience such an increase in newly-certified coins would give us reason for concern if we were collectors heavily invested in the series. CAC sticker or no CAC sticker, the price a collector is willing to pay for a coin is largely impacted by the ease with which one can acquire a similar coin.
And like it or not, Ike dollars in PCGS holders are getting more common by the day.
We have a name for the level at which a coin is no longer worthy of certification.
Meet “Terminal Point™”:
“Terminal Point™” (T) is the highest grade (G) for an issue where the cost of certification (C) is higher than the coin is likely to realize when offered on the market (Realized Price, or RP).
For Ike dollars, the terminal point varies from issue to issue, but strictly speaking, when a coin isn’t likely to bring $16 despite being in PCGS plastic, it’s a coin in a terminal grade.
For common-date clad Ike dollars, the terminal point used to be MS-63 (with MS-64 coins bringing only a slight potential for profit). Now, we’re seeing an environment where MS-64 Ike dollars–by no means the prevalent grade in the wild–are terminal and MS-65 examples bring prices previously associated with coins of lower quality. In today’s market, PCGS MS-63 coins for all but the 1972-P Type 2 will bring only a dollar or two more than a raw uncirculated coin.
When looking at the tracked issues that didn’t see double digit increases in population, we see issues that are too risky for the submitter. The 1976-P Type 1, for instance, is uncommon in MS-65 but terminal in MS-64. In four years, the issue saw only 27 new coins made in MS-65 and one in MS-66.
Another issue, the 1972-P Type 3, is equally uncommon in MS-65 but common in MS-64. This coin saw its population grow by 8.87%, with a total of 34 new coins registered at MS-65.
As certified populations in this series continue to grow, the market value of Eisenhower dollar type coins in MS-65 will continue to slide. Simply put, if we go by the rising terminal points of our admittedly limited data set, then the Ike market isn’t robust enough to support the sheer volume of professionally-certified coins entering the market.
What pressure the midrange brings to bear on the top end remains to be seen. What’s clear is that the number of collectors currently involved in the series that are willing to spend thousands of dollars per coin to build registry sets is not growing. With midrange and upper-midrange material coming online at current levels, the impetus to go “all in” on PQ Ikes, such as the CAC-certified coins mentioned at the top of this article might not develop. For many collectors holding high-end coins, it’s no longer a question of price appreciation, but defense against massive price declines.
Blip on the Radar, Weak Market, or Portent of Things to Come? (Part II)
This is the point in the article where we sound like the naysayers who said all along that the modern market is a fool’s game. We don’t necessarily agree with that, since there are still many conditionally-rare coins post-1964 that will probably never be discovered in quantity. But a series cannot be supported solely by one or two oddball coins that never come nice.
For the Eisenhower dollar–or any coin series of recent vintage–to remain collectible, the industry has to market them carefully and capture the imagination of the collecting public, just as the dealers of the National Silver Dollar Roundtable did with Morgan dollars, a series much more abundant in attractive Mint State grades than the Ike dollar.
The decline in Ike dollar prices in recent years is a complicated issue, and we believe that the Ike dollar’s fall has wide-ranging implications for other modern series. If the industry doesn’t exercise caution, it will strip-mine this once-fertile ground of modern coins and render it useless for years to come.
In other words, dealers who submit coins by the hundreds, hoping to strike it rich by scoring conditionally-rare material, have an obligation to support and grow the rest of the market. By clogging the pipeline with material that the market doesn’t yet have an appetite to consume, they could very well kill the goose that laid the golden egg.
A coin series, no matter how cool, cannot thrive without happy collectors. If we’re not careful, Ikes will go the way of the U.S. commemorative series–and not just the modern one; the classic one, too.
* We broke down each “collectible” grade in the series for clad and silver-clad business strikes, starting at MS-65 for clads and MS-66 for silver-clad coins. Plus grades were not offered by PCGS in 2010; therefore, for the sake of clarity, we ignored them.
Charles Morgan is a member of the American Numismatic Association, the American Numismatic Society, the Numismatic Literary Guild, Central States Numismatic Society, and the Richmond Coin Club. Hubert Walker is a member of the American Numismatic Association and the Numismatic Literary Guild. Together, they have written numerous articles for publication online and in print, including two 2013 NLG award-winning articles for CoinWeek.com.
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© July 2014 COINWeek.com, LLC.