# RCNH Monthly Newsletter: June 2018

*Over 200 Years Of Combined Numismatic Experience At Your Disposal.*

June 2018 Issue |

**Central States Numismatic Show**

**By Warren Mills**

Welcome to the summer edition of The Rare Coin Enthusiast. I’ve been remiss in putting together an issue due to planned trips and overwhelming business. Just recently, we’ve acquired a collection with 13 large bins of mixed coinage that has taken hours just to break down a single box. We are always thankful for any opportunity that we get, but sometimes things can get a bit frantic.

In May, I decided to take a trip out to Illinois for the Central States Numismatic Show. I haven’t attended the Central States Show for over ten years. My hope was to find a group of dealers from the Midwest that I may not have a relationship with and maybe find some new fresh material. I’m glad I went, but it was the old tried and true dealers that I saw early that had the best material. I spent more money at this show than even the F.U.N. Show! Unfortunately, it sold very fast and most of it never even made our inventory list. Considering how hard it is to find nice fresh material, I was elated. With diligence, the odd nice pieces are out there, just don’t expect to look at a Greysheet and figure you are going to buy primo coins without stretching. By stretching, I mean like Gumby.

The venue for the show was great. Schaumburg was easy to get to, and everything is right there from soup to nuts so you do not need to even travel outside of the hotel! There were quite a few empty tables and the price for early bird entry is the most expensive in the business. They also charge every potential customer that wants to enter the show a fee; I believe it was $5. In my opinion, it was well worth it. I just hope that it doesn’t discourage some people from attending. I would definitely recommend attending it. Auction lot viewing was also smooth and Heritage had additional security to make everyone feel safe.

Also, I must say that it is getting harder and harder to find really nice material. Sotheby’s offered the Stone Collection of Type and Morgan dollars, and in many instances, the prices realized were stunning! It goes to show that if you have the material people will not only travel to have an opportunity, but will spend big money to buy it. I hope that the advanced coin buyer starts to understand the difference between low-end and high-end for the grade. If you remain a slave to Greysheet prices, you will never learn the lesson.

Thank you,

Warren

**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.**

**Passing of our Friend**

**By Warren Mills**

It is with regret that I inform you, our loyal friends that Charlie Browne has passed away. Charlie and I first worked together in 1979 at New England Rare Coin Gallery. He was a mentor to me and instrumental with assisting me on learning how to grade rare coins. We worked together at different times and in between his stints at PCGS. He was always a kindhearted gentleman and was willing to give his opinion or help anyone that needed it. Many people took advantage of his time and kindness, but to Charlie, it was something he enjoyed. He was always welcome here at RCNH and many times he would just come by to spend an hour or two with friends.

If he was in a pinch, I would take him to and from his dialysis appointments. Then, when he needed his kidney transplant, I took him to the hospital. I spent many hours with him and I find it hard to believe that I will not pick up the phone again and hear, “Hey Warren, it’s C.B.” I can only hope that I can aspire to have the kind hearted and knowledgeable reputation that Charlie had. You will be missed my friend.

Another very knowledgeable numismatist that I worked with has also recently passed away. His name is Martin Paul. He was a very underrated numismatist that had a wealth of knowledge.

I’d like to ask you all to pray for the repose of their souls.

Thank you,

Warren

**A Very Strange Way to do Business By Dave Carleton**

I often say that if you stick around in this hobby/business long enough, you’ll see just about everything. Here’s a situation that recently left me scratching my head in disbelief. A customer of mine called to tell me about an upcoming local auction. He said that he saw a few coins that he thought might be of interest to me.

I was not familiar with the auction house, so I went online to check them out and see what they had for numismatics. There was quite an assortment of coins, but I zero’d in on three that happened to be CAC’d. On closer scrutiny, I saw that the coins had our RCNH sticker on the reverse of the holders. I was able to get our inventory numbers from the stickers so I could look them up in our database to see who we sold them to. I knew that they looked familiar, and sure enough it turned out that I had placed them with one of my collectors.

It turns out that I have a very good relationship with this collector, so I didn’t have any problem jumping on the phone and calling him. I told him about how the auction had been brought to my attention, and that I was kind of taken aback when I found that he was selling these three coins. I told him that we always sell coins that we would want to buy back, and if they ever decide to sell or trade, we would like the first opportunity to recover the coins. He told me that he had done a trade with the auction house for some antique toys and it hadn’t occurred to him to sell them back to us. This all made sense to me. I brought this up to Joe Presti, who is one of our buyers, and asked him to contact the auction house to place some bids.

The next day I asked Joe how it went, and he told me that the auctioneer wouldn’t allow him to place a bid over the phone. He told Joe that he would have to come down there in person to review the coins and place our bids. Joe explained that we didn’t have to review the coins because we had sold them to his consigner. That’s when the auctioneer got a bit testy and told Joe that it was his auction and he could run it anyway he wanted to, this completely puzzled me.

A day later I called my customer to tell him of the weird experience Joe had encountered and he wasn’t too happy about it. It seems that the trade for the toys hadn’t been consummated and it still hinged on how much money was received from the winning bids. I’m not in the business of causing trouble, but I do feel obligated to try to help out my customers if I feel they are not being treated fairly. My customer who is a heck of a nice guy, told me to let it go and not to get involved. He also wanted me to know full well that his relationship with the auctioneer had been dramatically changed forever.

Personally, I think the auctioneer should have been called out because in my opinion he wasn’t treating my friend fairly and that’s wrong. But then like the auctioneer said to Joe, “It’s my auction and I’ll run it the way I want to.” I’ll bet that the winner of those coins is a buddy of the auctioneer. Ya think?!

**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.**

**What Does Average Price Mean with Respect to CAC Coins?**

**By Lou Roten**

Almost every day we have conversations with clients that involve a reference to the PCGS Price Guide, comparing our pricing to those in the guide.

*“The prices listed in the PCGS Price Guide are **average dealer asking prices** for PCGS-graded coins. The prices are compiled from various sources including dealer ads in trade papers, dealer fixed price lists and website offerings, significant auctions, and activity at major coin shows. Dealer specialists and expert collectors provide pricing input. Remember that the prices are just a guide, a starting point for asserting value. Some PCGS coins sell for less than the prices listed and some PCGS coins sell for more than the prices listed.” **(from the PCGS Price Guide)**.*

So, what does average mean, and how does that average relate to the market for a CAC coin compared to a coin that does not have a CAC sticker? I thought I would select two popular and relatively available coins to determine how prices from auctions behaved going back 4 years. The objective: to find out if that behavior could be modeled by what in statistics is called a Normal Distribution. The usual statistical method to determine the variation of prices around the average (mean) price, involves finding the standard deviation of the price distribution, represented by the Greek letter sigma, σx (n-1 degrees of freedom). The Normal Distribution shows the behavior of random data around the average value of those data. 99.74 % of the data collected in a sample should fall within +/- 3 standard deviations from the mean, the regions 3σx above the mean and 3σx below the mean; the sample consists of large number random observations, in this case auction prices (see the figure below).

The standard deviation is a calculation of the average variation of prices (the auction prices in this case) from the mean of a sample data set (the average price of the auction prices in this case). 99.74% of the prices should fall within 3 average variations from the mean, or +/- 3 standard deviations around the mean. Then a mere 0.26% of the prices, or 26 out of 10,000, should fall outside that area in the two extreme 0.13% wings of the distribution, are considered very unlikely to occur and can be called strong outliers (I am using a more inclusive 3Z approach rather than the IQR 2.68Z definition for outlier - Z number is “shorthand” for the number of standard deviations). A strong outlier could happen because of an unusual situation. For example, a highly toned coin could create serious competition, raising the price well above what might be expected. The data sets used here are PCGS MS64 graded coin auction prices from 2014 to present.

I decided to use a 1910-S Saint Gaudens $20 gold piece and a 1925-S Peace Dollar, both MS64, and the PCGS prices realized from recent auctions. The n-1 degrees of freedom (one less than the number of data in the sample) in the standard deviation calculation yields a standard deviation slightly larger than if all 41 auction results (the calculation uses 40) and 50 for the Peace dollar below (the calculation uses 49) were to be used in its calculation. The calculations were done on a TI-84 calculator.

**1910-S Saint Gaudens $20 Gold **I used the last 41 St. Gaudens MS64 auctions going back to the start of 2014. I did not do an analysis of the NGC coin price distribution because there were just too few to make up a proper sample size during the period 2014-18. Also, because the buyer’s premiums vary among auction houses, I used the prices which include those premiums. Including the fees essentially neutralizes their effect on the distribution.

Standard deviations provide the price distribution around the mean of a set of random prices. The graph below is called a Normal Distribution, a Gaussian distribution, showing the 3 standard deviation regions surrounding the mean (average) at 0 on the graph. If the price distribution can be represented by a Normal Distribution, 99.74% of the prices will be within ± 3 σx of the mean (average price).

68.26% of the prices should fall within ± 1 σ

_{x}, with 34.13% on each side of the mean,

95.44% should fall within ± 2 σ

_{x}with 47.72% on each side of the mean,

and 99.74% should fall within ± 3 σ

_{x}with 49.87% on both sides of the mean,

while a tiny 0.26% of the samples will fall outside ± 3 σ

_{x}. (outliers).

The standard deviation of the 41 prices of a 1910-S MS64 Saint, no CAC sticker, turned out to be $278; the mean of the 41 prices turned out to be $2025. (should anyone like to see the data set I used, I will be happy to supply it.)

So, 68.26% of the prices should fall between $2025 and ± $278, or $1747 and $2303

95.44% of the prices should fall between $2025 ± $556, or $1469 and $2581

99.74% of the prices should fall between $2025 and ± 834, or $1191 and $2859

**The Results**:

- Of the 41 prices PCGS auction results, 28 fell within ±1 standard deviation (28/41 : 68.29%),

- Of the 41 prices, 38 fell within ±2 standard deviations (38/41 : 92.68%)

- 3 of the 41 fell outside 2 standard deviations on the high side, in an area which includes only 2.28% of the Normal Distribution area above the mean. All 41 fell within ± 3 σ_{x} . There were no outliers in this group of 41.

- I can conclude that this price distribution can be modeled by a Statistical Normal Distribution.

**Conclusion regarding the prices of 1910-S MS64 CAC Saints**.

We sell CAC MS64 Saints. In the time period I used from present back to the start of 2014, I found 6 1910-S PCGS MS64 CAC Saints.

The average price for the 6 CAC MS64 Saints was $2898, more than 3 standard deviations higher than the mean; that average would be considered an outlier in that distribution, in the 0.13% tail of the MS64 sample distribution area above the mean. The highest price of the 6 for an MS64 CAC was $3760 (in 2018), more than 6 standard deviations higher than the mean. The lowest price (in 2014) was $2350, almost 1.2 standard deviations above the mean.

Looking at the 64+ prices realized, the average was $2608, less than the 64 CAC! This average is more than 2 standard deviations above the mean for MS64.

The point is that CAC 1910- S Saints in MS64 may be expected to cost more than MS64+ and a lot more than MS64 examples.

Looking at the PCGS Price Guide, the average price listed for a 1910-S MS64 Saint is $2400, and for an MS64+, $3000. From recent auction results, one can conclude that the PCGS guide in this example does not reflect auction prices. Other factors used by the guide increase the expected value above the auction results. I do not have the other factors included in the price estimates of the guide. On the other hand, the auction results are reasonable gauges of the market behavior at some point in time, and the data are available to all of us. The Greysheet lists the MS64 1910-S for $1800.

However, the point of this treatment is that for a 1910-S $20 Saint Gaudens, one would expect to pay considerably more for an MS64 example with a CAC sticker. It can also be observed that the gap is widening between the MS64 non CAC and MS64 CAC during the 4 year period. From recent show experiences, we have observed that the availability of MS64 CAC Saints of all dates/mints is diminishing significantly.

**1925-S Peace Dollar **

I used a total of the last 97 auction prices, 50 MS64, 14 MS64+, 11 NGC MS64, 9 PCGS MS64 CAC, 8 PCGS MS64+ CAC and 5 PCGS MS64 OGH (**O**ld **G**reen **H**older)

The mean of the most recent 50 auctions for PCGS MS64: $540, The standard deviation, σ_{x}, was $89

**The Results:**

- Of the 50 MS64 prices available to me (PCGS Auction Results), 37 fell within ±1 standard deviation (37/ 50 : 74%),

- Of the 50 MS64 prices, 48 fell within ±2 standard deviations (48/50 : 96%)

- 2 of the 50 fell outside 2 standard deviations the high side, in an area which includes only 2.28% of the Normal Distribution area above the mean. All 50 fell within ± 3 σ_{x}. Below, I use the MS64 standard deviation as a comparison tool. There were no outliers in this group. The fit is close and I can conclude that this price distribution can be modeled by a Statistical Normal Distribution.

The average auction results for 9 PCGS MS64 CAC coins was $920, more than 4 standard deviations above the mean for a PCGS MS64.

The average auction results for 5 PCGS MS64 OGH (none was CAC) coins was $846, almost 3.5 Standard deviations above the mean for a PCGS MS64.

The average auction results for 11 NGC MS64 (there were no NGC CAC results) coins was $520, very close to the PCGS mean.

The average auction results for 14 PCGS MS64+ (no CAC) coins was $1249, almost 8 standard deviations above the mean for a PCGS MS64.

The average auction results for 8 PCGS MS64+ CAC coins was $1684, almost 13 standard deviations above the mean for a PCGS MS64.

The PCGS guide price for MS64 1925-S Peace dollar is given as $850. The Greysheet, $525.

**Overall Conclusion:**

The above discussion is meant to be an observation of price trending, not an absolute determination of pricing, for these two coins having the same MS64 grade assessments. I attempt to make the point that the market response in auctions is a good measure of coin pricing, and, in particular, a good measure of pricing increments for coins with CAC stickers. The statistical treatment does support the contention that a CAC label on a coin, though not 100% perfect, does provide some buyer protection as an indication of a quality (PQ) coin. In addition, the statistical treatment supports the RCNH policy of buying only CAC coins, or coins that have a good potential for successful CAC submissions, a policy in the interest of and for the protection of our clients. This treatment is, as I mentioned, an observation, not an endorsement. It is more than obvious that PQ coins have and will invariably sell for more than lesser quality coins, for which a statistical treatment is unnecessary; better coins have always outperformed lesser coins in sight seen situations regardless of any labeling. However inexperienced numismatic eyes far outnumber very experienced critical numismatic eyes.

**Lou Roten - adjunct instructor retired - 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 From Our Mail Bag**

**By Warren Mills**

Question:* “I’ve been watching auction prices realized for the last year or so and noticed that many coins that are the same grade and service can have a huge difference in price, what gives?” -Q.M*.

**Answer:**Thanks Q.M. This is an important question, since I mentioned that I also use auction records to research pricing.

There are many factors that can be attributed to the difference. The best way to learn the exact reason why depends on having access to viewing the coins ahead of time. Many of the larger auctions have multiple lot listings of the same grade and service. By viewing the coins, you can get a better feel for whether one coin was low-end for the grade and vice versa, high-end for the grade. Also, a coin may have attractive toning, which can lead to a high premium, or unattractive toning that could lead to a discount. Plus, if someone is a variety specialist or is enamored with a field that is a bit esoteric or specialized, coins can just fall through the cracks. If a few collectors can’t make a show or are tapped out due to recent acquisitions, a person can find a great bargain due to dumb luck!

If you cannot view coins ahead of time, your only option is to look at the coin scans. These scans can also be very helpful, and keep in mind a nice coin will usually bring strong money. Just because a coin has a CAC sticker, doesn’t mean it is nicer than a non-CAC’d coin. If you’re unsure about your grading abilities, get the opinion of someone you trust to help you out.

I remember I missed a lot that sold for half of my price at an auction. I went to the buyer and asked what he would sell it to me for. I had a bid of $2,500 and it sold for $1,250. He had a bid of $2,750 to pay. He offered it to me for $2,750, so I passed on it, but he did end up selling it. The $2,750 was a fair price to me, that is what he was willing to pay. I just passed on it because I thought $2,750 was a bit too much for me. Some of you may look at this and say that he only paid $1,250, so why not price it for less. But since he was willing to pay $2,750, the value was there. This is just a lot that fell through the cracks.

I hope this helps. Please keep your questions coming.

Thank you,

Warren