Have major American coin rarities stopped appreciating in value?
You be the judge.
Stack’s Bowers Galleries generated fantastic headlines overnight after selling the finest-known 1913 Liberty Head nickel for $4,560,000.
That’s a lot of money. Big bucks. Mucho dinero.
The firm conducted the auction during the American Numismatic Association World’s Fair of Money in Philadelphia.
The coin is graded Superb Proof-66 by the Professional Coin Grading Service.
It was consigned by the family of Dr. William Morton-Smith.
The California physician is the most recent owner of a coin that most hobbyists know as the Louis E. Eliasberg Sr. specimen.
Eliasberg was the Baltimore banker who in the mid-20th century became the only person to have assembled a complete collection of U.S. coins.
Huge price. Fabled history. What more can be asked?
How about: does it make money?
This coin was reported sold for $4.15 million in 2005
Ed Lee, president of Lee Certified Coin, Ltd., of Merrimack, N.H., was the seller 13 years ago.
Legend Numismatics of Lincroft, N.J., was the buyer.
Brokering this sale was John Albanese, president of John Albanese Numismatics of Far Hills, N.J.
Subtract $4.15 million from $4.56 million and you have a notional profit between the two numbers of $410,000 over 13 years.
That is a big number, too, but not so much if you look at it in terms of compound interest.
The rarity showed a return of three-quarters of one percent per year.
That does not seem like much in our current era of million-dollar coins.
But just like average collectors, the prices that wealthy hobbyists can pay for great rarities depends on their ability to do so.
Critically, it also depends on their judgment. They are not fools.
They will not overpay.
The 1913 Liberty Head nickel is one of the rarities that leaped higher during the high inflation of the late 20th century.
I remember when Aubrey Bebee paid $46,000 in 1967 for the 1913 Liberty Head nickel now in the ANA museum.
However, in much of the last 13 years, inflation ran much lower.
Interest rates were hardly above zero.
If you compare three-quarters of one percent annual return to what you could have earned in a money market fund, the coin comes out better.
That’s all that can be expected.
We collectors are part of the times we live in.
If interest rates continue to rise and/or if inflation soars again, price gains achieved by the 1913 Liberty Head nickel and other great rarities will rise with them.
We also have to remember that because there are only three of these 1913 Liberty Head nickels in private hands, they do not sell often.
Who is to say that the anonymous buyer in last night’s sale won’t double his money in the next 13 years?
Buzz blogger Dave Harper won the Numismatic Literary Guild Award for Best Blog for the third time in 2017 . He is editor of the weekly newspaper "Numismatic News."
- Like this blog? Read more by subscribing to Numismatic News.