By Richard Francis
I really enjoy spending time with my 11-year-old son, Jonathan. Last weekend, Jonathan and I got up early, ate a big breakfast at Burger King and went to an estate sale. While Jonathan didn’t find anything at the estate sale, I found a piece of glassware and new magnifying glass. It was a fun morning.
After lunch, we assembled a prehistoric display complete with dinosaurs, dinosaur bones, quicksand and erupting volcano. We are already looking forward to next weekend.
Like most children, Jonathan is very inquisitive. He asks a lot of questions. I don’t mind this because asking questions is one of the ways in which we learn. Jonathan’s favorite type of question goes something like this: “Would you rather have: the ability to fly, or the ability to run super fast?”
At this time, I would like to do as Jonathan does and pose a “would you rather” question of my own to Numismatic News readers. Would you rather have a Professional Coin Grading Service MS-67 MAC (Modern Approved Coin) 2010 Lincoln Shield Cent or a PCGS MS-66 Red 2010 Lincoln Shield cent plus an additional $2,979.50 to spend on other coins? Or to put it another way, are modern condition rarities really worth the money?
While reviewing recent eBay sold items (Note: all “sold item” prices referred to in this article are from recent eBay sales), I found that a PCGS MS-67 MAC (Modern Approved Coin) 2010 Lincoln Shield cent recently sold for $2,995 In comparison, a PCGS MS-66 Red 2010 Lincoln Shield cent recently sold for $15.50. Is the MS-67 coin really worth the additional $2,979.50? My personal opinion is no.
While I do understand condition rarities, it must be pointed out that the difference between MS-66 and MS-67 is so slight that in many cases I daresay it is not even noticeable, even to the most skilled graders. I will take this point a bit further.
Any seasoned numismatist is familiar with the “crack-out game,” the act of resubmitting a coin to a professional grading service in hopes that the coin will return with a higher grade. In cases where, for example, there is a significant price difference between, say, an MS-64 and MS-65, it might be financially worth the risk to submit a coin several times for recertification. While it may take several attempts, if the coin eventually makes it to MS-65, the gamble has paid off.
Also, as we get higher up the grading scale, it stands to reason that the difference between grades is even harder to identify. Regardless, the grade a coin receives is simply the opinion of the one grading the coin. Bob’s MS-66 may be Larry’s MS-67. If all graders were the same, and all grades absolute, the “crack-out game” would not exist. Clearly, that is not the case. Again, I must ask, when there is such a significant price difference, is it really worth it to purchase an MS-67 coin over a nearly identical coin that has an MS-66 grade? As stated, I say no.
The minimal difference in condition is not the only reservation I have with regard to paying significant premiums for modern condition rarities. I feel that high mintages may make it difficult for modern condition rarities to retain their value. Let me explain.
Revisiting the 2010 Lincoln Shield cent noted above, it is likely that other MS-67, or higher grade, coins exist, especially when you consider it had a mintage of 1,963,630,000. Furthermore, there is usually a high rate of saving the first year of a new coin design. With mintage figures that high and the likelihood of significant saving, the primary reason we have not seen many other MS-67 2010 Lincoln Shield cents is probably because most people would not spend the money to certify one due to the financial risk. If the coin came back less than than MS-67, they would certainly lose money.
As previously noted, a PCGS MS-66 Red 2010 Lincoln Shield cent recently sold for $15.50. Also, a PCGS MS-65 Red 2010 Lincoln Shield cent recently sold for $11.01. Whoever paid to certify those coins clearly lost money.
As other MS-67, or higher grade, 2010 Lincoln Shield cents likely exist, one must ask what would happen to the value of the 2010 Lincoln Shield cent that sold for $2,995 if others came to market? The answer is quite obvious. As moderns typically have high mintages, this is a very real risk.
One may think that the sale of the $2,995 2010 Lincoln Shield cent is an exception to the rule, but that is not the case. It seems that there is quite a demand for modern condition rarities.
A PCGS MS-67 Red 1982 Bronze Lincoln Cent, small date, sold for $2,111.40, while a PCGS MS-66 Red example sold for $69. Many other examples can be found by reviewing recent eBay sold items. Again, I feel those who pay large premiums for modern condition rarities are treading on dangerous ground.
It should be noted that those who purchase condition rarity bullion moderns could also be treading on dangerous ground. Let’s look at silver Eagles. As there are large supplies that have as yet not been certified, today’s condition rarity may be tomorrow’s common item. As many people purchase monster boxes, boxes containing 500 same date silver Eagles, it is likely that more MS-70 Gems will come to market at some point in the future.
It is not unusual for some dealers to submit full monster boxes for certification. That being said, paying an extremely high premium for an MS-70 silver Eagle, when an MS-69 is nearly identical and drastically cheaper, may not be wise.
Reviewing recent eBay sold items, I found a PCGS MS-70 1996 silver Eagle, with a QA (quality assurance) sticker, that sold for $9,450. There were two from Numismatic Guaranty Corporation. One sold for $2,810, while the other sold for $3,070. It should be noted that the NGC pieces did not have QA stickers. In comparison, two PCGS MS-69 examples recently sold. One sold for $69 and the other for $95. Neither of these had QA stickers, either.
There were several recent sales of NGC MS-69 examples, none of which had QA stickers. The prices range from a low of $46.89 to a high of $142.49. As a side note, I would like to mention that the $142.49 example was in a green holder labeled “From U.S. Mint sealed box.” As this was the most expensive MS-69 example, one has to ask if the increase in cost was related to the label. If so, why? Buy the coin, not the holder.
Again, when dealing with moderns, many sealed boxes and rolls exist. That being said, where significant numbers of a certain coin, or bullion modern, exist, the possibility of future submissions cannot be ignored. The value of today’s condition rarity could certainly be affected in a negative way.
While not a modern, the 1903-O Morgan dollar is a perfect example of this scenario. It was a very rare coin until 1963, when significant numbers from government vaults came to market. The coin went from rare to common almost overnight, and the price fell dramatically.
In my opinion, the only time it is safe to purchase condition rarities is when there is little chance that other like coins could surface. A perfect example would be the 1853-O Seated Liberty half dollar, without arrows and rays, of which only four are known. Of those, the highest grade is VF-35. If someone were to find one today that was AU or Uncirculated, that would be a true condition rarity. There would be little chance that others would come to market and lower the value of said coin. Anyone who purchased such a coin could do so with confidence.
The points made above beg the question, why do people pay significant premiums for MS-70 coins when almost identical MS-69 coins can be purchased for hundreds or thousands of dollars less? I feel those who make such purchases are doing so in order to build registry sets. Upgrading a coin from MS-69 to MS-70 can dramatically increase the overall grade of a set. In other words, the thrill of competition and the satisfaction of being able to say “I have the best”. Numismatics is so much more than that.
Another reason people may make the aforementioned type of purchase could be simply for investment. If that is the case, I am afraid that when the time comes for them to sell they may be highly disappointed.
To clarify, I am not saying to avoid the purchase of moderns. I am saying that purchasing a MS-69 over an MS-70 can provide more bang for your buck and better protect your assets. Using the purchase price of the PCGS MS-70 1996 silver Eagle (with QA sticker), $9,450, let me ask you the following:
Would you rather have of the following option one, two, three or four?
Option 1: PCGS MS-70 1996 silver Eagle (with QA sticker)
Option 2: 94 PCGS MS-69 1996 silver Eagles (using an average purchase price of $100 each) (with $50 left over)
Option 3: One PCGS MS-69 1996 silver Eagle (using an average purchase price of $100)
PCGS AU-50 1877 Indian Head cent, $3,095
PCGS MS-65 1912-S Liberty nickel, $745
PCGS MS-63 1909-S VDB Lincoln cent, $1,399
PCGS VF-35 1921-D Walking Liberty half, $1,231
PCGS MS-64 1913-S Type 2 Buffalo nickel, $1,495
PCGS XF-40 1895-S Morgan dollar $1,100
PCGS VF-25 1914-D Lincoln Wheat cent $278
Total: $9,443.00 (with $7 left over)
Option 4: PCGS MS-64 1895-S Morgan Dollar (CAC Stickered) $9,450
For the investor, ask yourself, if you were to place the above options in order of which would best retain its value and be the easiest to liquidate, where would the PCGS MS-70 1996 silver Eagle (with QA sticker) fall?
For the registry set competitor, ask yourself, if there was no registry set competition, would you pay a significant premium for an MS-70 coin when an MS-69 is almost identical in appearance and costs much less?
Let me take a moment to go a little off point and make a couple observations. It should be noted that while some coins may qualify for a high grade, they are not always pleasing to the eye. In many cases, a lower grade of mint state may look better than its next higher grade counterpart. Just sayin’. Also, if you can purchase an MS-65 coin for a small premium over what an MS-64 would cost, that may be the best way to go.
In conclusion, we should purchase what makes us happy. However, I feel those who purchase for competition only, or for investment only, are missing the true enjoyment the field of numismatics has to offer.
By the way, for those who are wondering how I answered Jonathan’s question, if given the option between super speed or flight, I would rather be able to fly.
This “Viewpoint” was written by Richard Francis.Viewpoint is a forum for the expression of opinion on a variety of numismatic subjects. To have your opinion considered for Viewpoint, write to David C. Harper, Editor, Numismatic News, 700 E. State St., Iola, WI 54990. Send email to firstname.lastname@example.org.
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