Values are Quietly Rising for Ultra Rare Coins

By Mark Ferguson for CoinWeek – MFRareCoins.com

The rich are getting richer and they’re pushing values higher – sometimes much higher – for ultra rare coins.  It was back on July 7, 1989 that the first coin sold for the million dollar level – an 1804 silver dollar at $990,000, a coin that I have a vested interest in.  That was an exciting sale of a rare coin, one that made national news outside the hobby, but it just missed the million dollar mark by $10,000.

It took another seven years for the first coin to actually sell for more than $1 million – the Eliasberg 1913 Liberty nickel, at $1,485,000 on May 21, 1996.  Collector Bruce Morelan, who is publicly known to have owned examples of both of these rarities, told me several years ago that he’s observed that first one of the above coin issues sells for a record price, then it’s leapfrogged by the other, and so on.  And that’s just what we’ve seen.

Three years after the 1913 Liberty nickel smashed the million dollar mark, the finest example of an 1804 silver dollar sold for a record $4,140,000, on August 30, 1999.  It was graded by PCGS as Proof 68!  Then, during spring 2007, the finest of the five known 1913 Liberty nickels sold in a private transaction for a reported $5,000,000.  Surely, a sale of the finest specimen of the fifteen known 1804 silver dollars, previously mentioned, would leapfrog that amount by a significant sum, if it was sold again today.  Offers of more than that have reportedly been turned down for one or more of the other 1804 dollars, which are not graded nearly as high as the finest.

The coin market has so far seen three ultra rare coins sell for more than $7 million!  The first was the famous 1933 Saint Gaudens $20 gold coin that sold at auction in 2002 for $7.59 million; then the finest 1794 silver dollar sold privately two years ago for a reported $7.85 million; and most recently, the famous 1787 Brasher Doubloon with the “EB” punch on the breast, for Ephriam Brasher the coiner, sold privately for $7.395 million during December, 2011.

Clearly, much of the action in these ultra rare coins is quietly taking place “under the radar” – in private transactions.  The two high-priced sales mentioned above were privately transacted; and I’m privy to several other similar deals taking place or that have been proposed – in the private market.  There’s great demand for such ultra rare coins by wealthy collectors and investors, and sellers of these rarities often prefer to transact this business out of the limelight, away from the auction scene.

One public example of why private transactions are sometimes preferred for ultra rarities, rather than by auction, is found with the 1913 Liberty nickel that sold privately for $5 million in 2007.  A few months before this private sale it was offered in a major public auction, with a reserve price, but it failed to attract any bids at all.  This is a risk when these coins are publicly auctioned.  The timing has to be right.  Qualified buyers don’t always have ready cash to execute such transactions immediately, and there are also possible tax consequences for sellers – so it goes both ways.

Aside from those “minor” details, demand continues to be active for ultra rarities.  While the market has seen several sales in recent years of 1804 silver dollars, 1913 Liberty nickels, and the third coin of “The Big Three” that collectors dream about owning, the 1894-S Barber dime, there are many other coin issues that have now topped the million dollar level – some by significant amounts.  The 2013 issue of the official “Redbook,” A Guide Book of United States Coins, lists 45 coins that have topped the million dollar mark at public auction.  Of course the top piece is the 1933 $20 Saint Gaudens gold coin that sold at public auction in 2002.

There are also several more million-dollar plus coins that are not on this list because they’ve sold privately, such as the 1794 silver dollar and the 1787 Brasher Doubloon, previously mentioned.  Prices for top rarities are being pulled higher by such well-publicized record-breakers.  Once the $10 million level is broken by a single rare coin, it will open up price levels for ultra rare coins to heights never imagined by experienced numismatists, until recent years.  We’ve seen how prices shot up for rarities once the $1 million dollar benchmark was crossed, and a similar scenario is expected to take place again, once the $10 million mark has been crossed.  Rumors of offers being turned down for single coins for much more than $10 million have already surfaced through reliable insiders!

The fine art market is an obvious comparison that numismatists have looked at for price leadership.  For example, recently, the famous painting “The Scream,” by artist Edvard Munch, sold for a record-breaking price of about $120,000,000!  While the rare coin market is not nearly as big as the fine art market, it shows how much money wealthy collectors are paying for items they treasure.  It’s now within consideration to expect that some rare coins will begin to sell for between $10 million and $20 million, and maybe even between $20 and $30 million in the not too distant future!

This scenario will surely pull prices much higher for many other important coins that have already crossed the million dollar mark or those which have sold for six figure levels.  Hundreds of rare coins have sold for six figure prices in recent years that appear on The Redbook list.  These are the future million dollar coins.  And let’s face it – many rare  U.S. coins often have historical significance that many famous paintings do not have.  They are part of our rich history as a young nation – they carry with them stories of economics, government and our society in general.  They have market potential!

A recent World Wealth Report, compiled by Merrill Lynch Global Wealth Management and Capgemini Financial Services, states that the U.S. has the largest concentration of high-net-worth individuals – more than 3 million people who have at least $1 million in investable assets.    And more than 100,000 ultra-high-net-worth individuals worldwide have at least $30 million of investable assets.  These numbers of high-net-worth and ultra-high-net-worth individuals have been growing during recent years by roughly 10 percent, and their wealth has returned to pre-financial crisis levels of more than $40 trillion in assets!

So…coin market enthusiasts, collectors, and investors…hold on to your seats and prepare yourself for the next bull market in rare coins!  People who will be selling today’s ultra rare coins for multi-million dollar prices will likely buy back into the coin market, chasing other rare coins that catch their interests, and that money will wind its way through the entire coin market.  Many collector/investors of ultra rarities will very likely want to avoid high tax liabilities when they want get out of what they’ve owned for years, looking for new areas to collect, and they’ll very likely want to trade.  Get yourself positioned!

Mark Ferguson has been dealing in high-end rare coins and precious metals since 1969. He has graded coins professionally for PCGS and was the Market Analyst for Coin World’s Coin Values magazine between 2002 and 2009. He has written feature articles and regular columns for Coin World, Coin Values magazine, The Coin Dealer Newsletter, Numismatic News, The Numismatist, ANA Journal, Coin News – a British publication, and currently writes a weekly column for CoinWeek. He is a recognized authority in appraising rare coins and a recognized expert on the 1804 silver dollar, which is known as “The King of American Coins.” Mark can be reached at Mark Ferguson Rare Coins, LLC (www.MFRareCoins.com).