News and Analysis regarding scarce coins, coin markets, and the coin collecting community, #22
A Weekly Column by Greg Reynolds
Until CoinFest occurs at the end of the month, there will not be a live event conducted by any of the four leading auction firms of rare U.S. coins. Plus, I am not aware of any private sales of newsworthy rarities over the last week. So, this is a good time to address another topic. Often, I hear about collectors who have decided to start acquiring U.S. coins and who are unsure as to how to proceed.
Sometimes, adults who collected coins as kids wish to return. In many other instances, people who have never before bought a rare or very scarce coin wish to get started. Further, people who collect paintings, sculptures, baseball cards, antique silver objects, or rare books, frequently find themselves drawn to coins. This week’s theme of suggestions for beginners will, I hope, be of interest to many intermediate collectors as well.
I. U.S. Coins valued from $250 to $1000
The focus here is on advice for a collector who seeks U.S. coins valued at over $250 each. Of course, I realize that not everyone can afford to pay $250 for a coin. I am not ignoring people who cannot. I strongly believe, though, that collectors who buy $10 to $100 coins may learn by reading this column. In order to understand the coins that a collector owns, the collector needs to understand coins that he (or she) cannot afford. It is important for all collectors to learn about the values and traditions relating to the coin collecting community. Besides, I will devote a future column or article to coins valued in the $10 to $100 range.
Advice and suggestions put forth here are geared towards a collector who is just starting, though may be of use to any collector who is willing and able to spend $250 or more per coin. Suppose he (or she) has decided to collect U.S. coins and thus will not be considering (at least not yet) colonials, territorials, patterns, or world coins. Also, further suppose this collector is not likely to will spend hours studying books on die pairings or other technical matters.
In general, the average collector spends a limited amount of time reading about coins, and is much more likely to read articles than books. Indeed, most collectors I know do not take the time to read entire books on coins, though I would recommend doing so.
Most collectors wish to have fun. It is true, however, that beginning collectors tend to enjoy coins more after they spend a few weeks or months learning.
So, herein, consider a collector who plans, over a period of years, to buy plenty of coins in the $250 to $1000 range, plus a few that cost more or less. Such a collector is flexible. On occasion, this collector may spend $1000 to $3000 per coin. The emphasis here, though, is on getting started collecting U.S. coins in the $250 to $500 range.
Rather than focus on my own advice, I have asked experts to provide their respective opinions. I selected experts who are knowledgeable about a wide variety of U.S. coins in copper, nickel, silver and gold, and have each played different roles in the coin business. Moreover, it is beneficial for collectors to be aware of the views of several experts, especially from highly qualified people that may not be available to most collectors. Below, please find recommendations from John Albanese, Kris Oyster, Nick van der Laan, and Andy Lustig.
Before putting forth detailed recommendations from these four, I relay Ira Goldberg‘s more general advice. Ira is a partner in the Goldbergs auction firm and he has been a leader in the coin auction business for decades.
Ira “would suggest a type set as a start. This will give one a good ‘taste’ of what U.S. coins offer. I [Ira] also strongly suggest one purchase only PCGS or NGC graded coins in whatever grades they can afford. The best advice in forming this type of set is to spend more on less. Meaning, purchase fewer coins of higher quality than more coins in lower more ‘affordable’ grades. All newcomers have a tendency to gather as many coins they can for the amount they plan on spending. Don’t give in to this urge, buy better quality and fewer coins. Favorites will emerge and the collector can go on from there,” Ira relates. A type set includes just one representative of each design type, usually one of the least rare dates of the respective types.
II. John Albanese
John Albanese founded the CAC in 2007 and was the sole founder of the NGC in 1987. He sold his shares of the NGC in 1998. Currently, he is the president of and sole finalizer for the CAC. In addition to being one of the sharpest graders in the nation, he is a leading wholesaler. As I reported on June 16, the CAC then passed a milestone of having sold more than $150 million worth of coins since its founding in Oct. 2007.
For such a collector, Albanese recommends 19th century silver coins in Extremely Fine (EF) to Almost Uncirculated (AU) grades. He explicitly refers to Capped Bust, Liberty Seated, and Barber coins, plus Trade Dollars. “Half cents, 1809 to 1857, in EF and AU also,” John adds.
“I [John] am thinking for $50 to $2000 [per coin] a collector can nearly complete every series I mentioned,” Albanese states. Of course, “nearly” does not mean totally or absolutely. Most collectors do not expect to ever own Great Rarities like the unique 1870-S half dime, an 1873-CC ‘No Arrows’ quarter or an 1817/4 half. Moreover, John is referring here to business strikes. Proofs are a different matter.
If a collector is willing to spend $1000 to $3000 for relatively low grade 1815/2 Capped Bust and 1836 Reeded Edge halves, then Albanese recommends those as well. Except for the 1817/4, a fairly defined set of Capped Bust halves could be completed and a set of Reeded Edge Bust halves could be completed. (The 1838-O is a Proof-only date, even though some circulated.)
In Albanese’s view, building sets of 19th century silver series in EF to AU grade “would be lots of fun and would offer better potential than some supergrade coins.” John reminds collectors, though, that it “would take lots of patience” to nearly complete all these sets.
I pointed out to John that for around $250 per coin, certainly for less than $750 each, many silver coins, especially Barber dimes, could be obtained in grades from AU-58 to MS-64. Generally, many silver coin issues throughout the 19th century could be obtained in MS-61 or MS-62 grade for less than $1000 each. Albanese responds that he would “rather have a matched set of original EF-40 and 45 [grade] coins than a mixed set of EF, AU, MS61 and MS62 [grade] coins.”
For coins in the $50 to $2000 range, Albanese would “rather own a super Extremely Fine set of Barber Halves or Quarters than almost anything”! A 1901-S and a 1913-S may need to be omitted from such a set of Barber Quarters. Except the 1892 Micro O variety, a complete set of Barber Halves in EF-40 to AU-50 grades could be completed for $150 to $2000 per coin, with a very small number costing more than $750 each.
I (this writer) find it to be interesting that Albanese emphasizes complete or nearly complete sets. One of the characteristics that separates coin collecting from some other collecting pursuits, like art objects or historical documents, is that, in coin collecting, there are clear, objectively defined sets. Not only is completing a set fun, doing so tends to bring about a good feeling of accomplishment.
III. Kris Oyster
Mr. Kris Oyster is the managing director of numismatics for the Dallas Gold & Silver Exchange (DGSE), which acquired Superior Galleries in 2007 and has a subsidiary in South Carolina as well. DGSE has a large headquarters in Dallas and another store nearby. For information about Oyster’s background and qualifications, please click here to read my interview of him.
For the collector who is willing and able to pay $250 or more per coin, Oyster does not hesitate to recommend “high grade circulated silver type coins, like Three Cent Silvers, Capped Bust half dimes, Twenty Cent pieces, and Liberty Seated half dimes, dimes, quarters, and half dollars. Seated Dollars seem undervalued in proportion to Morgan dollars,” Kris adds. “EF to AU Seated Dollars are a great value for a collector today. There is no downside to buying those coins, even Fine to Very Fine” grade Liberty Seated silver dollars. “All Capped Bust coins,” Oyster emphasizes, “are a good value in Fine to AU. They are undervalued at today’s current levels.”
When I asked Oyster whether a collector should seek to complete sets of 19th century silver coins, he makes clear that he is recommending collecting “by type, not by date. Basically, I [Kris] am referring to the more common dates. I would encourage the collector to buy some better date coins at reasonable prices when the opportunities arise.”
I also asked Oyster if collectors should buy circulated silver coins that are certified. “Yes,” he says, “PCGS, NGC or ANACS.” Plus, Oyster “would not be afraid of an ICG holder for that type of coin.”
I (this writer) disagree with Oyster in regard to grading services. I recommend that collectors buy coins certified by the PCGS or the NGC. My guess is that more than 95% of all appealing, naturally toned, pre-1917 silver coins that do not have serious problems, and are valued at $250 or more, are certified by the PCGS or the NGC. Beginning collectors of U.S. coins should demand PCGS or NGC certified coins.
I asked Oyster about gold coins. He states that “One Dollar gold pieces are a good value in AU grades. Buy one of each type.” Gold Dollars were minted from 1849 to 1889, and there are three design types. Oyster adds, “MS62 to 63 grade Liberty Head Quarter Eagles are a good value, common dates.” Furthermore, Oyster suggests that a beginning collector may wish to buy a Liberty Head Quarter Eagle. Only one type was minted from 1840 to 1907. It is interesting that Goldberg and Oyster emphasize type coins while Albanese recommends completing sets ‘by date’!
IV. Nick Van Der Laan
Nick van der Laan is a young coin dealer, who is very knowledgeable about collecting trends, 20th century coins, modern issues, Indian Cents, coins found in shipwrecks, generic gold, and Liberty Head Double Eagles. He operates a firm called Legacy Rare Coins.
Nick’s answer to the question is much different from the responses put forth by John Albanese, Kris Oyster and Ira Goldberg. “For a beginner,” who plans on spending at least $250 per coin, but rarely more than $2000, Nick “would strongly suggest collecting famous key dates in lower grades, affordable in [the individual collector’s] price range.”
Specifically, van der Laan says, “collect key dates that have been popular in the past: 1909-S VDB and 1955 Double Die Lincolns, 1916-D Mercury dimes, 1918/7-D Buffalo Nickels, 1916 Standing Liberty Quarters, 1918/7-S quarters, and 1893-S Morgan silver dollars.” A group of key dates “gives a new collector diversity,” Nick says.
“These are fantastic coins for people to get started with, are very enjoyable to collect and are very popular,” van der Laan declares. A beginner can build “a nice collection of coins that kids dream about,” Nick continues, “and branch off from there.”
“A lot of people are buying and selling these particular key dates. They are not as sophisticated [as some other collecting objectives], but they are safe and are extremely liquid,” van der Laan explains. “Later, if the collector wants to go with something more complicated, these key dates would be easy to sell. [A collector does] not even need a dealer to sell them,” Nick adds.
For the beginner who wishes to buy one particular coin that is especially interesting, van der Laan recommends the 1854-Huge O Liberty Seated Quarter. According to Nick, this variety is “extremely rare, extremely cool and extremely overlooked. You can get one in a lower grade for a pretty reasonable price,” van der Laan points out.
Nick also maintains that the 1854 Large Date Double Eagle ($20 gold coin) is an interesting variety that is “rare, undervalued and overlooked.” Circulated pieces are not extremely expensive.
As the beginner learns more about coins, he or she will choose specialties and cool items that are of interest. Nick concludes that “it is best to start out with coins that are very popular, very liquid and are very enjoyable to collect.”
V. Andy Lustig
Andy Lustig has been a coin collector since the early 1970s and a dealer since the late 1970s. He has owned or co-owned many Great Rarities and an amazing array of U.S. coins, territorials, world coins and mint errors. For example, the Carter 1794 silver dollar that is PCGS certified as ‘Specimen-66’ was formerly in Andy’s personal collection. Also, for decades, Lustig has been a specialist in U.S. and world patterns.
Andy surprised me by suggesting that a beginning collector not complete a type set or a series ‘by date.’ Lustig suggests instead that a new collector find a “wild and imaginative quest that is fun and challenging,” and is in uncharted territory.
One option that Lustig “would strongly recommend is to collect the entire Nickel Five Cent series, 1866 to the present, with cuds or severe die cracks. It can be a lifetime project, will not cost a ton of money, and [the resulting collection may] become something quite spectacular, if seriously pursued.” Andy emphasizes, though, that “this is not a project for everyone. It is for someone who is ambitious and adventurous.” For those who are not familiar with Cuds or die breaks, I (this writer) define these terms below.
Lustig reveals that “the market for these is not well defined.” Premiums for nickels with marked Cuds or the features of severe die breaks range from zero to $500 over the price that the same nickel would command if it did not have such a feature. There may exist a few choice or gem uncirculated Shield Nickels and Buffalo Nickels that command premiums of more than $500 if the Cuds are incredible or the die breaks extremely severe. Generally, with just a few exceptions, in grades below MS-64, Five Cent Nickels are not expensive coins.
Cuds and die breaks are found on nickels in all grade ranges. Blatant representatives of such phenomena in the Liberty and Buffalo nickel series are rare, in all grades. Lustig points out, though, that there are a small number of collectors who demand them.
Die cracks lead to raised lines, often curvy, or other shapes of roughly defined metal on the surfaces of coins. A die is a metal rod, usually somewhat cylindrical in shape. An obverse (front) die and a reverse (tail) die are used in a mechanical press to impart designs on prepared, blank, round pieces of metal (planchets), which are then transformed into coins. As dies wear down through repeated use, fractures or cracks sometimes occur. Some experts refer to a die crack as a later stage of a fracture.
If an active die has a crack, there will be raised metal on the coins that are struck after the crack occurs. Before it is fed, the planchet (prepared blank) is heated, and as it is struck by dies in a press, metal from the planchet is forced into the design elements, which are (usually) recessed in the dies. Die cracks become rough recessed areas, usually irregular lines. When coins are struck with cracked dies, metal is forced into the die cracks, and the metal that is so forced becomes rough raised metal on the resulting coins, shaped like the die cracks that were filled during striking.
Cuds come about when a crack or fracture occurs near the border of a die. On occasion, a piece of a die, near an edge, will become detached. The detached portion of a die will break off and cuds are formed if such a die continues to be used to strike at least a few more coins. During subsequent strikings, metal from the hot planchet (prepared blank) will rise and fill the void left by the small part of the die that ‘broke off.’ Therefore, a Cud is a lump or patch of metal in a small area of a coin that came about because a small piece of the face of a die, near the edge, ‘broke off.’ Cuds may also occur on coins that are struck before a detached portion of a die actually ‘breaks off,’ and these are termed ‘retained cuds.’ A ‘retained cud’ is usually not as prominent as a regular Cud, which is typically very noticeable. In my column of Sept 1st, I wrote about an 1806 quarter with a Cud.
So, Andy is recommending nickels with raised lines and lumps of metal. Though this sounds odd to those who have not studied such coins, these are interesting and extremely curious items. Many of them are exceptionally distinctive. Raised lines from die cracks are often arc-shaped and may travel strange paths on the surfaces of coins. Each die fracture is different, and some of the shapes that result on coins are quite entertaining.
In the early 19th century, lines and lumps from die fractures were often seen on U.S. silver coins. In later times, these were much more likely to appear on nickel coins, because nickel is such a relatively hard metal. Hardened steel dies will fracture much more often when striking nickel coins than when striking copper, silver or gold coins. Therefore, Cud enthusiasts who demand coins from the 20th century or late 19th century are much more likely to collect nickels that coins struck in other metals.
©2010 Greg Reynolds