Over 200 Years Of Combined Numismatic Experience At Your Disposal.
|May 2016 Issue|
A Newsletter By:
My Coin Journey Part XI
By Warren Mills
The market upswing from 1987 to 1989 was like the Roaring Twenties of the coin business. There were brokerage firms offering coins, but not blindly. They were trying to discern if the coin industry was even worth the time and effort to bother with. The coin market is so small in comparison to stocks, bonds and currency trading, that there were concerns. If you spend a few billion dollars, you could suck up virtually the whole certified coin market in one swoop. If they were trying to get people to diversify out of prudence, what would they do if they can’t fill the orders?
To me, it made sense to view it as a passing fancy and stick with their strength, which they did. From a numismatist's view, they were in a position of trusting maybe one or two suppliers. How much due diligence and trust do you put in one or two suppliers? Suppose there is collusion going on for pricing or some form of misrepresentation in desirability or marketability. Their exposure wasn’t worth the time involved. If you look at it from a risk/ reward perspective, the risk was too great to get involved with a small specialty market.
In 1989, I became very concerned about the overheated condition of the market. It seemed that every week high grade coins, MS-64 to MS-67, were plusing 2% to 3%, which lasted for a while. Yes, there was demand and coins were trading hands but the speculative aspect of the glory days of Wall Street was what everyone was hanging their hat on. Non-numismatists with deep pockets were entering the market to ride the cash cow. When I observed this first hand, I issued an all-out sell signal.
Today, if you were to get a copy of the June 2nd, 1989 Coin Dealer Newsletter sheets, you would be shocked at how far the market has fallen. Some issues are down over 90% from their speculation fueled highs. Some people say that the grading was tougher, so the product was better. Yet, in many instances, even if you were to compare an MS-66 coin at today’s pricing to an MS-65 price of 27 years ago, the differential in some maybe 50% to 90% less.
It would have been wonderful to keep getting clients out at the top of the market. People were pocketing hundreds of percent profit on their hard earned money. As I stated earlier in Part X of My Coin Journey, we had a win-win scenario set up with two luminaries of the rare coin industry. Even today, they are still influencing the coin industry. But, alas the owner of the company I worked for thought it was too risky and even blamed me for putting the company in jeopardy! So, we had to abandon buying back the coins and leaving people to their own devices. This was unfortunate and left a bitter taste in my mouth. I knew I was not long for that company and once again, the winds of change started to blow. I enjoyed working in the retail side of the industry and I maintained a strong group of wholesale contacts that I had developed.
So, in 1990 I moved on to what I hoped were greener pastures towards a new adventure. I will pick up in the next issue with the last company I worked for until we started RCNH. The 1990s were a challenging decade.
Take A Walk On The Wild Side
By Warren Mills
I am shocked and amazed at some of the things I have seen in the coin business. In the 1980s and 90s, I was surprised at how many coin dealers were legends in their own mind! They were conjured up by slick advertising campaigns that they paid a lot for, or split the profits with advertisers for all the leads that they sold. As time goes on, many of these guys have made enough money and retired or passed away. Yet, some reinvent themselves and come back around.
In the 1980s, I remember telling clients that a dealer was running a Ponzi scheme. For decades, I have been threatened to be sued and worse in this industry for uncovering or telling the truth on varied perpetrated scams. The most amount of times that I was threatened to be sued was by a dealer who was eventually shut down by the government, served the penalties imposed, came back into the business and absconded with fifteen million dollars the second time around. Yet, he had newsletters and brokers endorsing him. He had done more business than I’d ever dreamed of doing, but when you’re up against people that will lie to get the deal, you’re at a big disadvantage.
Even today, there are shady people that for years have ruined lives by stealing coins or going bankrupt over and over again. We recently ran into a situation that really surprised me. Many years ago, I told a shady dealer that I would not do business with him because of all the people he had hurt over the years. I didn’t know if he was selling a coin to me that he may have taken from another dealer or collector. I didn’t want that on my conscience. A client we know has coins for sale. He can sell them through us at the same price for a quicker payment or to the shady dealer. We could sell the coins to another collector we know for less money than what the shady dealer would sell them for. No, we didn’t get the deal. The collector that owns the coins will be paid in July, I hope.
Say what you will, but a person with a long history of ruining lives in the business should be looked at cautiously. Even if this deal all comes together, the profit made here allows this dealer to stay around longer and potentially hurt many others over time. This is more like the smarmy side of the industry. It’s like Russian roulette. You are taking a walk on the wild side, hoping you’re not the one left holding the bag.
What Else Do You Like?
By Warren Mills
I like silver dollars! The 1794 is a wish for most people. If you can afford it, good for you, it will always be a classic.
The Flowing Hair 1795’s have minused on the last Quarterly sheet in VF! Really, if the grading services did not grade so many of the cleaned, altered, adulterated and then recleaned & toned back messes in holders, you’d never see these coins minus. I love them in original wholesome VG to VF grade. However, wholesome and original is key! CAC will help but CAC’s strength is not in early circ type. In my opinion they sticker many pieces that don’t deserve it.
Draped Bust Small & Large Eagles are great coins in VG to VF. Again, with the same criteria for purchase as mentioned for the Flowing Hair issues. I also like them in higher grades, but for the budget conscious buyers, VG to VF is safe and nice. I like the Large Eagle in XF too!
Seated Dollars are great from VF to MS-64. A dealer walked into my office two weeks ago with an old green holder XF coin, white as paper! Again, concentrate on original coins and watch out for subtle damage the grading services and CAC miss. An original coin should be pleasing to the eye. Avoid overly dark unattractive issues. Don’t be afraid to pay more for the sweetness of originality. Every show I go to, I look for nice early dollars. If I buy one or two, I’ve scored, because they met my criteria. For every hundred certified pieces I see, I may buy one or two…if I am lucky. Avoid 65’s, they are all the money.
Trade Dollars from VF to MS-64 are nice buys. I do like 65s but the spread from 64 to 65 is so large that a P.Q. 64 has a lot of room for growth…. just like the Seated Dollars.
Morgan and Peace Dollars will be addressed in later issues.
Partner and owner of Rare Coins of New Hampshire, Inc. since June, 1990 and a full time coin dealer since 1979. Warren is a full member of the Professional Numismatists Guild and a life member of the American Numismatic Association. He was selected by the Rosen Numismatic Advisory as one of the ten leading numismatists in the country for twelve consecutive years. He was selected by PCGS and written up in their newsletter as handling and submitting some of the nicest coins they have ever seen.
1. What does the small “D” next to the word dollar on the Pilgrim 50¢ stand for?
2. What is the shortest lived US coin denomination?
3. What was the first series of US coin, not to have a date on the obverse or reverse?
I guess the answer to that question depends on whether or not you own coins. For those who may not know, the CDN is an acronym for the Coin Dealer Newsletter, better known in the trade as the Grey Sheet. The CDN is a pricing publication that comes out weekly, monthly and quarterly and publishes prices for all series of coins. They also publish a Green Sheet focusing on paper money and a Blue Sheet focusing on certified coins. For this article I will discuss the implications for the Grey Sheet.
Since the CDN was initially published in 1963, it was controlled by one family, and for the most part they did a fair job reflecting prices. But, as the market evolved I feel that as a publication they did not evolve. CDN attempted to be more reflective of the current market by publishing other pricing guides, but they did not do an adequate job of reflecting the true market. Then, in 2015 the family decided to sell the publication and a consortium of coin dealers bought it. To maintain an impartial view for CDN, the editor and majority owner no longer works as a coin dealer.
This was in the eyes of many, the solution to a huge problem with the original owners of the CDN, they were not coin dealers. While not being a dealer may seem the perfect solution to impartial reporting of prices, in reality it created a major problem. For years, the CDN would reflect price decreases in coins at the drop of a hat, but would be loath to increase prices. For instance, many times there would be several examples of the same coin, same grade, same date in the same auction. If there were four of the same coins in an auction and one or two examples sold for less than bid, then the next week's Grey Sheet would reflect a decline in price for that coin. But, if a coin sold in an auction for more than the bid price, no action would be taken. As anyone who had been collecting coins knows, there could be many reasons a coin sells for less than bid. The coin could lack eye appeal, be over graded, have no interest, or it just slipped through the cracks, as often can happen when you have 5000-7000 lots in an auction. But, to lower a price immediately versus not showing any increase when a coin sold for more than bid was ludicrous. The end result was that for the last 15 years we had a self fulfilling prophecy, the coin market stunk. For most collectors or smaller dealers not on the national circuit, just looking at the Grey Sheet would get the impression that everything was going down and no one bought coins.
The new owners of the CDN have attempted to correct this issue. Along with other improvements, they realize they must reflect the true market. An example of this would be at a recent national auction, a Grant w/star 50c graded PCGS-67/CAC brought $37,500 compared to a $33,000 bid. This is a coin with a population of five (5) and hardly ever comes to market. For a pricing mechanism such as Grey Sheet not to reflect an actual auction sale is not to reflect reality.
Another issue we had with the way the old ownership reflected prices, was that we would be quoted much higher prices at coin shows in relation to bid. The result would be, we would not be able to purchase enough inventory. How do you purchase a coin with a bid of $2000, for $2600, and mark it up 15-20% and justify it to a customer? So, we were often caught between purchasing high quality coins at inflated prices based on the Grey Sheet bid levels, or not coming home with any coins at all. It made our job incredibly difficult because want lists often went unfilled because we refused to buy coins just to fill orders. We also had to consider how good a value that coin was reflective of current market levels.
There will always be abnormalities in the coin market, but to reflect a hiccup as “the truth” is not right and undermines reality. As dealers, we hope that new ownership understands this and is on its’ way to correcting this.
Below I've put together a chart of a few of my favorite coins using the same appreciation formula as I did above.
|Denomination||Grade||1962||Inflation Today||2016 Red Book|
|1793 Chain Ameri Cent||Fine||$140||$1,150||$28,000|
|1856 Flying Eagle Cent||Fine||$325||$2,560||$9,000|
|1909-S VDB Lincoln Cent||VF||$50||$394||$1,000|
|1877 Indian Cent||Fine||$50||$394||$1,550|
|1893-S Morgan Dollar||Unc.||$250||$1,970||$120,000|
|1907 Saint Gaudens High Relief||XF||$160||$1,250||$11,000|
|1927-D Saint Gaudens||XF||$300||$2,365||$350,000|
These numbers and opportunities bring on my wishes to fire up the Wayback Machine. If I had one, I’d probably go back to the day these coins were issued and buy them at face and if that were the case, all my coins would be Mint State 67 or 68. Mr. Peabody….”fire up the Wayback Machine.”
David Carleton, a New Hampshire native was introduced to coin collecting by his father and Grandfather in the 50’s. Gold bullion speculation dominated the 70’s culminating in 1980 when focus on Numismatics returned. He became a life member of the ANA , met Warren Mills (his coin Guru) and they cofounded RCNH in 1990.
By Paul V. Battaglia
I speak of my (still) raw 1917 T.I. Liberty Standing Quarter. I purchased this original beauty back in 1980. At the time, I was employed at the now long-gone New England Rare Coin Galleries in Boston, MA. The description on the coin was what intrigued and piqued my curiosity….”extremely rare with only six or so known.” After viewing the coin I became enthralled with the possibility that it could be a matte proof. Why? Read on and you shall learn why I paid the original buy price. “Hope springs eternal” and I fed my hope from the moment I laid out my after-tax dollars.
The 1982 Boston A.N.A. found me walking the bourse floor. My goal was to intercept both Walter Breen and J.H. Cline for their opinions. I found “J” first, who studied the coin long and hard with a variety of facial expressions. Ultimately, he was perplexed by the coin’s past history and revealed much eagerness in anything else I could tell him. He stated the coin might actually be a matte proof, yet a couple striking characteristics showed borderline business strike possibilities. He did want to buy it, as the coin favoured it being a matte proof or at least one of the earliest first strikes he had ever encountered. I passed on selling the coin, let alone giving a price, as my showing it to him was for solely advice. J was gracious and more than understood my wanting to retain the coin. However, he also asked for first shot in the future if I was so inclined to offer it. I then showed it informally to ANACS with the nearly identical outcome as I had with J. H. Cline. Yes, “it is a totally fresh and original coin with unusually fine and stunning relief” are my ANACS notes from that time. I was also informed they would have “no opinion” if I formally submitted the coin. Limbo again.
On to Walter Breen who was more than generous with his time. I received a note from Walter signifying it had “considerably more proof or first striking qualities than any other typical 1917’s that he had seen, etc.” Readers will please note that while our scans are of excellent resolution one does not have the advantage of being able to hold, tilt, spin, twirl or otherwise move the coin about for the "dimensionality" (my word creation here). The inner and outer rims of my coin exhibit a 90 degree/knifelike squared appearance consistent with multiple strikings, but not entirely about the circumference. All ten toes are extra sharp, the shield and rivets are all there, inescutcheon, breast, billowing drapery folds, a rounded “apple cheek-like” knee, chiseled head features, finer features upon the right hand, all lettering, eagle’s breast feathers, crisper tips of wings and their endings, stars appear to have been first hand tooled and then set onto the field, etc. Finally, the reeding is equal in feel and texture to our modern day silver eagles: very sharp throughout and sharp in terms of a knife’s edge. Yet, there are subtle and not so subtle areas of this coin that suggest an extremely early business strike. One might also say in the next breath that measures used to produce this coin (if a matte proof) were not as strict as the very few struck before or afterward. We can only speculate, but Walter Breen’s note is enough for me.
Finally, at another national show in 2002 I pulled the coin out and had it looked at through a friend-dealer by the national services, unofficially again. In every case, I was told it was authentic, but a “no opinion” would be assigned to this coin if submitted. The coin intrigued everyone to say the least from my friend’s report. Word got around about this coin at the show and inquiries were made as to who owned it, but my anonymity was there for a reason. I put the coin back in storage and a self-imposed limbo in doing so.
What will become of my special quarter? Well, I have not decided, but I am hardly concerned. Our hobby is filled with strange and wonderful things both metallic and human. I am content to see what time and its inevitable change presents us all. I would strongly encourage your opinion, please.
Paul Battaglia is the Senior Numismatist and a Life Member of the ANA. He travels with owner, Warren Mills, to the major coin shows across the country. Paul has 50+ years numismatic experience and has been with RCNH since 1990. He also cherishes reading, cooking, language, music, classic cars, lily/orchid culture, chess, economic statistics, differing viewpoints and FISHING.
I collected stamps as a kid from around the world, providing a wonderful distraction as a brand new teenager during my several months convalescence at home from the effects of rheumatic fever. The hobby provided a geography education that was not available in school, a subject which now is virtually ignored by schools; collecting foreign stamps also provided an exposure to other languages. I learned that Polska was Poland, Sverige was Sweden, a bit of cyrillic in CCCP (SSSR), España was Spain, Magyar was Hungary, and so on. The DDR featured scenes of workers in the fields and in factories; the Chinese featured Sun Yat Sen; African countries, many still governed at the time by European nations, offered their wildlife and geographical features, while Australia featured that (now) isolated continent’s unique collection of critters.
Another aspect of stamps was the engravers’ skill, an appreciation that developed in me much later. The early stamps bore the fine work of hand engravers. I discovered the bank note series had ‘secret’ marks.
The simple wonder of discovery that many of us experienced in our youth by collecting stamps, coins, or even baseball cards of our heroes, has been lost in the midst of the overwhelming volume of social media and attention to the trivial details of new, often undeserving, role models in the world of entertainment (including the business of sports), and communicating trivial daily details to friends. I do not recall thinking one wit about how much Ted Williams, Joe Dimaggio, Willie Mays, Mickey Mantle or Bob Feller made in salary. In addition, we knew little of their personal lives or, in some cases, their indiscretions. They were the people we pretended to be in critical situations in our imaginary games. I do not recall, now or since, having any similar fantasy imaginings of politicians, excepting perhaps Daniel Boone or Davy Crockett, but not for their brief political lives.
As a relative new comer to the business of rare coins, I have found, again, that I am attracted to the engraver’s skill and art. As with stamps, one can appreciate a finely executed but inexpensive coin. The historical aspect of coins is much more subtle. No U.S. coins had actual individuals depicted on coins until the Columbian, Isabella, and Lafayette/Washington commemorative issues in the late 19th century (and only one was American), and no regular circulation issue until the Lincoln Cent. Perhaps it took well over 100 years to rid us of the fear of creating a king.
For me, the history is in the imaginings of the times in which the coin circulated, especially coins minted during and before major events, during the gold rush, the war for Texas, the Civil War and so on. A Capped Bust 1812 half dollar was in our inventory last week. There is the interesting story of the minting of the 1804 silver dollar 30 years after that date because of Jefferson’s suspension of minting silver dollars with the 1804 date chosen to predate that suspension. When asked who fought the US Civil War, many American kids have no idea. I am tutoring (math) to a young Russian kid who knows about the Blue and Grey from his schooling in Russia!
A very important point is that my interest in stamps and coins came by influence of my grandfather, by influence of my family, not by means of any commercial factors. It was then easy and affordable to buy beginner’s albums from Scott and Minkus, and to buy from Harris or Brookman catalogs; for a while I had approvals from Zenith stamps. Bags of mixed foreign stamps were sold at Woolworths, providing hours of picking through and sorting (and soaking) – a learning experience – though very common material.
Where is that curiosity today? That curiosity was fostered and supported by my family because they were interested. In the Grey Sheet of 8 April, in a letter to the editor, the writer spoke of the situation (source of these data not given) that in his opinion for every new collector entering the coin collecting hobby, 20 lifetime collectors leave us. The editor suggested we concentrate on the 40 to 50 year old population. I suggest further that some of this group may now be closing in on grand-fatherhood in a few years, and that part of the strategy might be to encourage the curiosity about history in that demographic group so as they might impart the same to their sons and daughters. When the grandchildren become part of the family, the groundwork will have been put in place. Family matters in so many ways. So many ‘old fashioned’ family connections have been broken.
The historical aspect of collecting is being exploited by medal manufacturers selling products that have absolutely no investment benefit at all. When considering a purchase, think about the huge overhead burden imposed by major marketing efforts with advertising or TV broadcast costs that must be recovered.
In contrast, encouraging young people to have some interest in the history of this country’s coinage with 19th or early 20th century United Stated minted coins may yield some very positive results later on in their newly begun lifetimes.
Lou Roten - current adjunct instructor - mathematics / physics, Franklin Pierce University; environmental scientist; fiddler; life-long interest in collecting coins and stamps with some interruptions; very interested in the evolution of the coin making process.
Questions and Answers:
Question: I enjoyed talking to you recently and appreciate your knowledge, honesty and expertise relative to coins and the coin market. How about an RCNH sticker system (similar to CAC) that meets your strict standards? This would give buyers an additional “comfort” level of security that they are getting a truly original, undipped, and untampered coin.
J.S. in CA
Answer: Thanks for the vote of confidence. I’ve always been a proponent of buying the coin, not the holder. If RCNH sells the coin, we stand by it. To do it on the level that CAC does it on, is very difficult.
The founder of CAC is John Albanese, who is also a founding member of PCGS and the founder of NGC. So, the fame of the Albanese name garners instant credibility. This is important for dealers to sign up and endorse or use the services as well as coin dealer customer acceptance. We just don’t have the exposure. Secondly, CAC has a substantial retail company that they supply a lot of coins to, so they can market the product and have a large bankroll to buy and support the product by positing bids on varied forums. Kudos to CAC for a product we’ve been espousing for, a long time. We’ll just have to settle for one of the highest CAC approval rating of coins in the industry. In addition, we do submit coins to CAC that we never sold to our customers.
Thanks again and please keep those questions coming.
Coin Trivia Answers
1. The “D” is the last initial of designer Cyrus Dallin.
2. The twenty cent piece 1875-1878.
3. The presidential $1. The date is stamped on the edge of the coin.