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Auction prices show pause in

“Gold Hits All-Time High,” “Unemployment Tops 10 Percent,” “10 Percent of Homes Are in Foreclosure,” “Dollar Rises, Gold Falls,” screamed the headlines in 2009. But how has the uneasy economic situation affected you personally?

And how has it affected the coin industry?
It would certainly make sense for coin collectors to cut back on hobby purchases because of the troubled economy.

But has this really happened? One way we might be able to tell is to take a look at numismatic auctions in 2009.

The year certainly started well enough for Heritage Auctions, one of the industry giants, as the Heritage FUN auctions in early January brought in $65 million in sales of rare U.S. coins, U.S. paper currency, and ancient and world coins. Highlighted in their U.S. coin sales were pattern pieces from the Queller Family Collection. (David Queller’s 1804 dollar realized $3,737,500 in a Heritage sale in 2008.)

One of the Queller collection’s better patterns was an Numismatic Guaranty Corp.-graded PR-62 1880 $4 gold Stella, Coiled Hair type. With just 18 pieces known, this popular rarity realized $575,000. The auction record for the type is $977,500, achieved by a PR-66 Cameo example in 2005.

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One metric I’ve used in recent years as a gauge to the health of auction activity is the number of $1 million coins crossing the auction block. In 2008, for example, I noted four such coins. In 2007, I counted five million-dollar sellers, and in 2006, the figure was again four.

For 2009, I counted only three million-dollar coins, although a fourth coin came really close. With one exception, the million-dollar coins are not ones you would have predicted to receive such exalted amounts.

The one you could have predicted, however, is sometimes called “The King of Coins.” It’s an 1804 dollar sold by Heritage Auction Galleries at its April 29 to May 2 sale in Cincinnati, Ohio, at the Central States Numismatic Society Convention. The coin was part of the Joseph C. Thomas Collection.

Once owned by Amon G. Carter, Sr., who paid $3,250 for it in 1950, this is a Class III 1804 dollar, of which just six are known. Class I, or original, 1804 dollars were minted in the 1834-1835 period, and eight are known. Restrikes were made in 1859 and have a slightly different reverse than the originals; Class II, of which there is only one piece, has a plain edge.

Graded PR-58 by Professional Coin Grading Service, this coin is the best of the three Class III dollars available for private ownership. It sold for $2.3 million, “a new world record for its class,” according to Greg Rohan, president of Heritage. “Thursday [April 30] night’s price made this particular 1804 dollar the seventh most valuable coin ever sold at auction.” (Note that all figures given in this article include the buyers’ fee, which is typically 15 percent of the winning bid.)

Although $2.3 million sounds good for a Class III 1804 dollar, the same coin sold by private treaty in a deal brokered by Heritage for $2,475,000 in 2006. Thus, it’s possible that the current buyer, NGC founder John Albanese, got a bargain in a depressed market.

The second million-dollar coin sold on May 29 at a Heritage auction conducted at the Long Beach Expo, in Long Beach, Calif. The winner was the finest known 1856-O $20 gold piece.

Graded Specimen-63 by PCGS (and also by NGC earlier), the $20 gold piece realized $1,437,500, more than double the $542,800 it brought in 2005. (“Specimen” refers to coins that are neither business strikes nor proofs but are obviously specially made, with some characteristics that distinguish them from business strikes.)

Is this coin actually worth the amount it brought? Bob Green, a specialist in Liberty Head double eagles, “was very surprised that this coin sold for $1,437,500. I would not have bid more than $1 million.”

Similarly, Greg Reynolds, a numismatic researcher and expert, said, “In my view, the price realized was a little high, given current market conditions. A circulated 1856-O could probably be purchased, at some point over the next 18 months, for less than $475,000.” His prediction proved prophetic, as an NGC-graded AU-58 1856-O sold for $460,000 at a Heritage auction in Los Angeles in mid-summer.

Amazingly, the third coin that sold for more than a million dollars was a large cent. Specifically, it was a 1795 large cent with reeded edge, which is typically listed along with normal varieties, so it’s considered enough of a regular issue to be included in a complete collection of large cents.

This particular 1795 reeded edge cent was PCGS-graded VG-10 and was part of the Dan Holmes large cent collection. The collection was sold in an Ira and Larry Goldberg (with Chris McCawley and Bob Grellman) auction held Sept. 6-8 at the Beverly Hills Crowne Plaza. When the bidding stopped, the coin, which is the best of the five or six pieces known of this variety, had realized a whopping $1,265,000. The pre-sale estimate was just $250,000.

Another coin in the Goldberg sale almost achieved the million-dollar mark, a 1799 large cent graded MS-62 by NGC. This coin realized $977,500, again with a pre-sale estimate of $250,000.

In an article about the Holmes collection sale, Greg Reynolds noted that the 1799 cent now resides in a PCGS holder with a grade of MS-61. Reynolds himself grades the piece AU-58, and McCawley and Grellman consider it AU-55. I view  this as a good illustration of the grade inflation that often occurs at the certification services when a scarce or key date is involved.

Two other coins worth mentioning are a pair of 1793 Strawberry Leaf cents. One (NC-2 variety) graded Fair-2 by PCGS sold for $264,500, and the other (NC-3 variety), optimistically graded G-4 by PCGS, went for $218,500. Surely the Fr-2 coin is one of the lowest-grade coins ever to sell for more than a quarter million dollars.

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2009 must have been the year for large cents, as another example of the 1793 Strawberry Leaf (NC-3) variety became the most valuable large cent (until later in the year) when it sold for $862,500 on Jan. 5 at a Stack’s auction in Orlando. After the sale, the coin received a grade of VG-10 from PCGS. It’s the finest of just four known examples of this variety.

Another auction with record-breaking large cent sales occurred early in the year, at Ira and Larry Goldberg’s Pre-Long Beach auction held Feb. 1-3. Featured was part of the Ted Naftzger Collection of large cents consisting of middle date cents (1816-1839). Highlights included an 1823 cent graded MS-66 Brown by PCGS. Against an estimated value of at least $35,000, it realized an astounding $299,000.

Another key in the Naftzger collection was an 1839/6 PCGS-graded MS-65 Brown. This cent was described in the auction catalog as an “indispensable piece for anyone trying to assemble a Mint State ‘Red Book’ collection of Middle Date … large cents.” With a PCGS population of one, with none finer, the coin was estimated at $50,000 and up. The final price was up, way up, in fact, as the coin realized $264,500.

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Of course, 2009 was the 200th anniversary of Abraham Lincoln’s birth and the 100th anniversary of the Lincoln cent. Thus, it seems appropriate to consider how Lincoln cents fared at auction.

In the sale held March 27-31 in Baltimore by Heritage, for example, one of the top ranked lots was a 1969-S doubled-die obverse cent. Graded MS-63 Red by PCGS, this coin, with an estimated population in all grades of between 17 and 32 pieces, brought $86,250. Heritage sold two more 1969-S doubled die Lincolns at an auction in October. Graded MS-63 Red by NGC and AU-55 by PCGS, the two sold for $57,500 and $54,625, respectively.

At the March Heritage sale in Baltimore, a 1955 doubled-die Lincoln cent, graded MS-63 Red by PCGS, realized $5,750. This amount is nearly 100 percent over the wholesale value given in the Coin Dealer Newsletter (CDN or Greysheet).

A 1917-S cent, graded MS-65 Red by PCGS, went for $12,650 in the Heritage Long Beach Signature Auction held in February. This is more than 140 percent over the CDN wholesale bid. Also, this price illustrates the meaning of “condition rarity,” a common coin in lower grades but rare in higher grades.

An even better illustration of condition rarity can be seen in a Lincoln cent result at the Heritage September sale in conjunction with the Long Beach Expo. There, a 1925-D cent, graded MS-66 Red by PCGS, realized an astonishing $74,750. This is a coin with a PCGS population of just two pieces.

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Condition rarities in other denominations also garnered major amounts in 2009. For example, in the Heritage FUN auction, held in Orlando from Jan. 7-11, an 1892-S Morgan dollar graded MS-67 by PCGS sold for $460,000. In low grades, the 1892-S is worth little more than a common date.

In late March, at the Bowers and Merena auction at the Baltimore Coin and Collectibles Expo, the second highest seller was another 1892-S Morgan. This coin, graded MS-66 by PCGS, realized $201,250. As you can see, a single grading point made more a quarter-million dollar difference. Although I haven’t seen the two coins, I wonder if the MS-67 piece looks $250,000 better than the one graded merely MS-66.

In the Buffalo nickel series, one example of a condition rarity is the 1926-S, a low-mintage date that’s relatively common in grades such as Good and VG, but decidedly uncommon in VF and above. Two uncirculated 1926-S nickels sold in the Bowers and Merena auction at the American Numismatic Association National Money Show in March in Portland, Ore. One, graded MS-63 by PCGS with a CAC sticker, sold for $25,300. The other, PCGS-graded MS-64, without a CAC sticker, realized only $14,950.

CAC stands for Certified Acceptance Corporation, and for a fee, CAC will examine a certified coin and determine whether or not it’s accurately graded. If it is, CAC attaches an oval-shaped green sticker as a stamp of approval. As you can see from the above example, the CAC sticker appears to have made a huge difference in how the two coins were evaluated.

Another Buffalo nickel condition rarity crossed the auction block at the Bowers and Merena auction at the ANA World’s Fair of Money in August in Los Angeles. The coin was a 1925-S nickel NCG-graded MS-66, which realized $87,400. This is a date that doesn’t cross the $100 mark until the grade of XF.

Earlier I mentioned a 1925-D Lincoln cent graded MS-66 Red by PCGS that sold for $74,750. At the same sale, a common (in low grades) 1920-D Buffalo nickel, graded MS-66 by PCGS, with a CAC sticker, brought the same $74,750 as the 1925-D Lincoln.

In the Walking Liberty half dollar series, the 1919-D is a slightly better early date in circulated grades that becomes a condition rarity in mint state. As one illustration of this, Heritage auctioned a 1919-D PCGS-graded MS-66 at the Central States convention in late April, early May for the astounding figure of $253,000. Of course, this coin is considered the single finest certified 1919-D.

The final condition rarity I’ll mention is an 1886-O Morgan dollar. This coin is valued as a common date in most circulated grades but becomes much less common in mint state. At the Heritage Summer Fun Signature sale, held in early July, an 1886-O, graded MS-65 by PCGS, with a CAC sticker, sold for $149,500.

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Key date coins, coins that are the keys to completing a particular series, also brought in large amounts at auction in 2009. At their Central States auction, Heritage sold a 1918/7-D Buffalo nickel for $253,000. It undoubtedly helped that the coin graded MS-66 by PCGS and was tied for the finest certified example.

At the Scotsman Auction Company’s Midwest Summer Sale held in St. Charles, Mo., the second highest price in the sale went for the big key Mercury dime, the 1916-D. Graded MS-65 FB (Full Split Bands) by PCGS, the coin realized $38,525. This amount is $25 over the current CDN bid price, which means that the coin sold for wholesale.

A high-grade example of the key date 1918/7-S Standing Liberty quarter appeared in the Heritage Long Beach sale in February. Graded MS-65 by PCGS, the coin brought $66,125, which is slightly below the current CDN bid price.

In Morgan dollars, I noted two sales of high-grade Mint State examples of the key date 1889-CC. In NGC-graded MS-64 PL (prooflike), one sold at the Heritage February Long Beach sale for $51,750. A much better example sold at the Heritage January FUN sale for an unimaginable figure of $531,875. The coin was graded MS-68 by PCGS.

For collectors who consider the proof-only 1895 Morgan part of the series, an NGC-graded PR-66 Cameo example realized $57,500 at the Heritage Dallas Signature Sale held in October. This would have to be considered an incredible bargain, as the current CDN bid price for this coin is $75,000. This may be just another example of the sale of a great coin in a down market.

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Unusual items found ready buyers in 2009. Some of the most unusual items were found in Stack’s Americana Sale held in late September in Philadelphia. For example, a 1906 Indian Head cent struck in gold realized $276,000. The coin was probably struck on a planchet intended for a gold quarter eagle. Graded AU-58 by NGC, the coin may be unique.

Another unusual item was a large-size Thomas Jefferson Indian Peace medal struck as thin silver shells. The medal realized $345,000, which was well beyond the pre-sale estimate and set a new record for U.S. silver medals sold at auction.

A 1942 aluminum pattern Lincoln cent realized $126,500 in the Heritage Signature sale in May in which an 1856-O double eagle grossed more $1 million. The Lincoln pattern was graded PR-66 by PCGS, and is considered to be R8 (Rarity 8, 2-3 known).

Last, but not least, another new record was set at an auction sale held in conjunction with January’s FUN event. Held by the Original Hobo Nickel Society, the sale’s 145 lots garnered $47,728.95, eclipsing 2008’s record by more than $11,000.

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Proving once again that Registry Sets (sets of coins certified by either PCGS or NGC and ranked according to average grade and completeness) can bring in big bucks, a complete set of nickel three-cent pieces went for $304,750 at a pre-FUN sale held by Bowers and Merena Auctions in Orlando. The nickel three-cent pieces comprised the top-ranked PCGS Registry Set in their category (Business Strike Three-Cent Nickels). At the same sale, a PCGS-graded MS-63 example of the always-in-demand 1921 Saint-Gaudens double eagle sold for $287,500.

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One way to get an idea of the state of the auction market in 2009 is to look at coins that sold more than once during the year. For example, Heritage offered the same 1933 $10 gold piece twice, first in January and then again in August. Graded MS-65 by PCGS, the coin sold for $488,750 early in 2009 but brought only $460,000 in midyear. Did the market decline more than 6 percent in a little over six months?
As another illustration of a particular coin selling for less later than it did earlier, the 1880 Coiled Hair Stella that I mentioned as part of a Heritage sale in January was auctioned a second time in August. The realization was “just” $546,250, or slightly more than 5 percent below the $575,000 it earned in January.

Instead of asking whether the sale of these two coins represents a decline in the market from January to August, perhaps a better question would be, “Why were the two coins placed in auction again so soon after being purchased?” I’m reminded of the TV commercial in which a man purchases a painting at auction and then immediately tells the auctioneer that he wants to sell it. Obviously, this is not a good way to handle items that are bought for investment.

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That’s my survey of the auction scene for 2009. What does it show? As always, desirable coins brought big money, although perhaps not as big as in some recent years.

Still, given the state of the economy things undoubtedly could have been a lot worse in 2009 than they were. If the recession is really over, as we’re told, then numismatic auctions in 2010 should make banner news. I, for one, will be a keen observer.

More Resources:

2010 U.S. Coin Digest, The Complete Guide to Current Market Values, 8th ed.

State Quarters Deluxe Folder By Warmans

Standard Guide to Small-Size U.S. Paper Money, 1928 to Date

Strike It Rich with Pocket Change, 2nd Edition

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