The following is reprinted from Maurice Rosen's annual Crystal Ball Survey. Warren was one of five nationally recognized experts asked to answer Maurice's questions and give his picks for the upcoming year. His answers for the first half of the survey appear below with the second half coming next month.
In the introduction of the participants Maurice introduced Warren Mills as "a past panelist here, is known for his high ethics and outspokenness."
Maurice Rosen’s “Crystal Ball Survey.”
Answers by Warren Mills, Rare Coins of New Hampshire, Inc.
11. Two sophisticated investors come to you for a coin portfolio for the long term, one for $25,000, the other for $250,000. How would you construct those portfolios. Please note specific issues, grades and prices, and why you made those selections.
I assume that these clients already have an insurance bullion position.
I advocate that buyers should always be diversified with acquisition of hard assets. At this point I would probably consider 2/3rds in gold and 1/3 in silver, copper & nickel. Negotiate ahead of time with the dealer and allow room for profit to be made. Depending on the size of the portfolio, dealer markup should range from a 5% to 15%. I don’t want to get involved in specific pricing because the bargain hunter will always find a horrid example of less expensive coins and think it is a good deal! Try to find a long established trusted dealer that knows how to combine technical knowledge, marketability and future potential. There are not many dealers left that can bring those factors to the table but there are a ton of pretenders and legends in their own minds.
A nice 2 Cent Piece in Mint State or Proof 65 Red. True Red…not the brightened up or altered coins mostly found in the market. I like Shield Nickels in Mint State 65 or 66 but because they are scarce, aside from a handful of dates, they lack the ability to be promoted. I may opt for a brilliant proof Buffalo Nickel. They are down now. Also, A Proof-67 Type II Jefferson has had a lot of price compression between grades and at current price levels could be a double or triple up. A nice PR-67 3 Cent Nickel is a good value now. Total allocation to copper and nickel…about $2,500.
Approximately $7,500 allocated to silver Type. I am a Mint State proponent due to the lower survival rate. My favorites are “No Motto” halves in MS-64 to MS-66. “With Motto” halves in MS-65 and MS-66 “No Motto” Seated Quarters in MS-65 and MS-66 and “With Motto” MS-66 and 67. Proof 65 and 66 “No Motto” quarters and Proof 65 “No Motto” halves. You can round out the portfolio with a bit scarcer date 64 or 65 Morgan or Peace Dollar.
Approximately $15,000 in gold type coins. A nice dated “CC”, “C” or “D” gold piece in solid original XF with a mix of gold type in MS-64 to MS-66 original all there for grade $2.50 to $20 denominations.
About $15,000+ allocated to copper & nickel. Again, a nice 2-Cent piece as specified in the $25,000 portfolio and a nice MS-65 Red Half Cent or Large Cent. Avoid heavily colored or faded red pieces. Nickel coins, as described in the $25,000 portfolio, also consider a Proof-67 Shield Nickel.
Total silver position, $85,000. Try to stay with MS-66 and Proof-66 No Motto quarter and halves and MS-67 and Proof-66 With Motto quarters and halves. Multiple coins here are also fine if the coins are available. If a nice Seated Dollar in MS-64 presents itself, buy it the spread is gigantic to MS-65. I would consider a non 59-O or 60-O date although if a really nice 59-O & 60-O were available, I’d also buy it. Here you can look at other series in superior grades with great color & appeal. Also I would acquire a couple of nice MS-66 Walkers. Some of the issues in the early 30’s appear to be good buys now. A scarcer early date and even a couple of the common issues in the 1940’s, though cheap could yield nice gains. A scarcer date MS-65 or 66 Morgan and Peace Dollar would also be good purchase. Here you could afford an outstanding Trade Dollar in Mint State or Proof as well as a nice Proof Morgan.
Approximately $150,000 would be allocated to gold…incorporating Proof and Mint State coins. Again, deal with an expert here. Over 90% of brilliant gold has been dipped or worked on. There are also still a lot of lasered brilliant proof and re-matted matte proofs in older holders that were taken off the market years ago by unknowing collectors and investors, be careful when buying these coins! If unsure, get a second opinion from CAC or in-holder reviews from the grading services. One brilliant and one matte piece proof and a nice “CC”, “C”, or “D” uncirculated would make nice additions to any portfolio. Original pieces and the rest filled in with MS-65 to 67 mixed Type gold.
Now that PCGS & NGC have offices in Europe, they will see a lot of fresh U.S. gold and grade it before the mass submitters get to play with it so some nice pieces could be coming on the market .
For questions 12 to 17, I would like your Best Buy picks in each category. Please list the issues, grades and prices and why you made your choices and their potential.
12. Your Best Buys for U.S. Type Coins
“No Motto” Seated Halves graded XF to MS-66. Prices range from $150 and up. As always try to buy original coins. I recommended these coins in MS-64 & 65 in previous Rosen Advisories and our clients made 50% to 500% on the lower population issues.
Seated Dollars in MS-64 too! For less than $10,000 for P.Q. 64’s, it seems like a deal compared to $80,000+ for a 65.
13. Your Best Buys for Gold Coins
MS-66 Saints @ $3,000 to $4,000 each. The price gap between MS-65 and MS-66 is not that large but when you compare MS-66 to MS-67 coins the price spread is huge. Nice quality MS-66’s offer great potential for the money.
14. Your Best Buys for U.S. Silver Dollars
With silver going up so quickly premiums on original XF to AU coins have not caught up and can now be acquired for close to melt! These coins will benefit greatly from silver bullion upswings as well as coins graded up to MS-64, these could be huge promotional coins. Current prices in circ, $20 to $25; MS-64’s @ $50 to $60 each.
15. Your Best Buys for U.S. Commemoratives
A tough area due to continued over grading and over-dipped coins flooding the market. They have been beaten down so much that a nice 50-piece set in strict MS-65 to 66 grades with pretty toning may be a nice buy.
16. Your Best Buys for 20th Century series.
Peace Dollars in AU to MS-64. They will benefit from silver bullion movements and promotions. Current prices $20 in AU; $25-30 in low unc. And $40-50 in MS-64.
17. Your Best Buys for Generic issues and Modern issues?
Junk silver and BU late date silver rolls and if possible any modern silver proof sets at approximately silver melt, and MS-64 original Saints at small premiums over melt. I also like the proof 1 ounce Buffalo gold coin. In many instances they can be acquired for the same price as a B.U. gold eagle.
18. Your Best Buys for any other area of your choice.
Nice gold in MS-63 to MS-66 grade. The premiums on some of these issues are lower than they’ve been in years. There are tons of over-graded altered surface pieces in the market. If you don’t have the expertise or if you buy coins from a dealer that just sells you what you want, then buy CAC pieces.
19. What one series or area strikes you as particularly undervalued? Please explain why and state any specific issues you favor.
I like scarcer mint state 65 or better Shield Nickels…these coins are typically low pop and hard to find. Great put away pieces. I’d avoid the 82 and 83 and the 1880. It’s still tough to verify a true business strike on the 1880.
I also like all nice gem Walkers now in MS-66 grade. They’ve been beaten down mercilessly and look like good opportunity coins.
20. What is a favorite "put-a-way" coin of yours? It can be a cheap one you like in quantity or a specific high-priced issue. Please explain why you selected it.
I’d put away any Seated Half, “No Motto” or “With Motto” that is original, affordable and attractive. Many Seated coins have been cleaned over the years and original coins are getting very difficult to find. I like them from Fine to MS-66 grades.
21. Our industry is blessed with a great number of magnificent books and reference works. A) But, what's missing? What area(s) need more coverage and recognition? Why so? B) Does the lack of widespread information here create an opportunity for investors? If so, how might an investor best take a position in this area?
What we need is for more dealers and collectors to use the ones we have. The thirst for knowledge will make our industry better and add to its longevity. Unfortunately, anyone can write a book and there are quite a few out there that are useless.
22. There is a pronounced two-tier market: great, eye-catching, high-grade popular coins and seemingly everything else! Buyers are extremely picky, vie for the best of the best and seem to avoid most everything else. A) What does this portend for the future? B) Can this narrow demand sustain a healthy, vibrant coin market?
A) There are less and less knowledgeable dealers in the business and many buyers are mislead about eye-catching and great appeal. To me, an over-dipped coin is altered. To others, it is great appeal. The best of the best can be just the highest grade coin. I’ve assisted a lot of registry buyers assemble the number one registry sets to multiple top 10 sets in many categories. When they asked about CAC or Plus Grades, I said the amount of money to spend for CAC or the grading services for the grading fee is so small that it can’t hurt for another opinion. Our percentages of CAC and coins plusing for clients was so high that in many instances coins purchased from us were the only ones that worked for them. There are many clients with 6 & 7 figure coin collections that just buy labels. They get them in auctions and over the internet or from label dealers just to feed their egos for having the best. I remember you talking about the “Ticking Time Bombs.” Now, you just have another affluent ego driven new money buyer to buy the next or old mistake in the highest grades. There are less and less dealers to educate buyers on what true premium quality really is and less and less that even care. They just want the commission or sale. Stewardship of preservation for the industry for future generations is going out the window.
B) Yes, as long as the grading services are willing to give bonuses on grading to artificially brightened up coins. There will be less and less original fresh material and less people that care. Dinosaurs like you and I will have passed away or retired or just “driven” out of business if we don’t seriously compromise our standards. The industry has changed for the worse in my opinion and adopted an accepted standard that twenty years ago I could never dream of. The only solace for our clients is that by sticking with choice original coins for the grade, knowledgeable buyers recognize how scarce they are and in auctions or private sale the coins can bring multiples of bids due to what they can become when they are re-surfaced or dipped out. Our clients make a lot of money but there goes another coin to the new commercial standard.
23. A) What are the industry's biggest challenges to encourage greater investor participation? B) How would you propose to handle those challenges?
A) Honest dealers that operate in an ethical fashion. This is why Rep Weiner and other government officials even look at our industry. When hard assets have great exposure or cycle up, every worm and unethical marketer with a big ad budget crawls out from under their rocks.
We have a client that wanted to buy bullion. He contacted a telemarketer in Texas that bamboozled him into buying an MS-62 set of $2.50 Indians. Not only were they over-priced, the quality for grade was horrid. The telemarketer would not even take his calls when it was known that he wanted to sell. A true and unfortunately typical scenario I see over and over in our industry.
B) A true self policing agency in our business. PNG has the right foundation but if you are affluent enough to pay membership, they accept many that shouldn’t be accepted. We need an organization with teeth and legit tough requirements and standards to abide by.
24. Please take this opportunity to ad-lib on any subject of your choice that would be of interest to my readers.
Coin doctoring has been around forever in our business. One of the main reasons for the viability of the grading services was to standardize and reduce some of the subjectivity of grading and to eliminate all of the whizzed and puttied coins sold in the market. PCGS, NGC, PNG have known and know the coin doctors for decades. They are still perfecting their craft. I’ve seen many top registry sets assembled through auction or e-bay that have more doctored coins than original ones. When CAC first started, John was CACing some altered surface gold but when informed about it went on to correct it.
Until dealers and collectors are willing to stop doing business with known doctors, they will always be around. Ticking time bombs are everywhere and PCGS & NGC fight like crazy to not have to buy back coins. I know because on the PCGS twelve biggest mistakes list, are multiple ones I fought with PCGS for months to take off the market and believe me, they love me for it. Unfortunately, I don’t expect a big penalty for known doctors. When PCGS, PNG and NGC are willing to expel and expose these doctors and a self policing policy of not doing business with them is instituted, maybe then when a real consequence is attributed to the practice will it ease.
For decades I’ve heard the phrase “It’s in a holder” or “it’s certified isn’t it” to justify acquisition of anything slabbed. Coin grading is constantly evolving. CAC came about due to the diverse amount of coins found in just one grade point. A, B or C quality, or altered in any number of ways, or outright mistakes too!
NGC now has NCS. PCGS sends out a memo on bulk submissions that they will even dip the coins for you! Gee thanks! These are not as bad as outright doctoring but it still eliminates the stewardship we should all have to preserve the hobby for future generations. And to teach buyers look for the untampered with original or real coins for all collections.
Know your dealers and try to get educated. It’s hard but the few % more you pay per coin and the extra value and potential appreciation makes it all worth it.