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Coin Rarities & Related Topics: Upcoming LB Auctions, PCGS Secure Plus & Metallurgic Analysis May 26, 2010 at 4:55 AM Coin Rarities & Related Topics #2 – News and Analysis regarding scarce coins, coin markets, and the coin collecting community A Weekly Column by Greg Reynolds for CoinLink I. Today's Theme Welcome to the second installment of my column. Today's primary topic is upcoming auctions. A secondary topic is the new policies of the PCGS and the NGC, which I will discuss often in the future. Below, I will put forth a proposal regarding the NGC's new metallurgic testing program. For an explanation of the purpose and scope of my weekly column, please see last week's installment. Yes, I said last week that this year's Spring auction offerings, in total, pale in contrast to those in the Springs of 2004, 2005, 2007, 2008 or 2009. Even so, there are some noteworthy coins being auctioned. Besides, most collector-buyers will hone in on coins of interest to them, without considering market phenomena as a whole. Additionally, prices realized will shed light upon market conditions. I will focus here on the upcoming auctions in Southern California. At the Beverly Hills Crowne Plaza hotel, in late May and early June, the Goldbergs will auction the Daniel Holmes collection of Middle Date large cents, plus assorted U.S. and World rarities. On May 30, the firm of Bonhams will conduct a coin auction in Los Angeles. The star of the Bonhams event is a 1795 Eagle ($10 gold coin) of the very rare variety with just nine leaves on the branch. (For some explanation, please see my Feb. 2007 article on 1795 Eagles.) In conjunction with the Long Beach Coin, Stamp and Collectible Expo, Heritage will auction a wide variety of numismatic items. II. Dan Holmes' Middle Dates On May 30, the firm of Ira & Larry Goldberg will auction the Dan Holmes collection of U.S. cents that date from 1816 to 1839. The specialty firm of McCawley & Grellman handled the cataloguing. Previously, I reported on Holmes' Early Date cents, which were auctioned in Sept. 2009. Furthermore, I wrote a series articles about the sale of the late Ted Naftzger's Middle Dates on Feb. 1, 2009 (Part 1, Part 2, Part 3). Naftzger's collection of large cents, early dates, middle dates and late dates, is the best of all-time, in almost all categories. No one is expecting Holmes or anyone else to come close to equaling Naftzger's collecting achievements, which required many decades, intense concentration and some luck. Holmes' Middle Date collection includes some exceptional representatives of 'better dates' and relatively rarer varieties. In my view, it is a little disappointing. I was expecting it to be of higher quality overall, or, at least, contain better representatives of some of the scarcer dates. Further, I was hoping for some more and better quality Proofs. Indisputably, however, Holmes has one of the five best, currently intact collections of Middle Date large cents, maybe one of the top three. I predict intense bidding competition for the rarer varieties. Curiously, there are more than a thousand large cent collectors who focus upon die varieties. There are more than twenty-five thousand, though, who collect 'by date,' including readily apparent varieties that are collected 'as if' these are separate and distinct dates. Holmes has impressive representatives of some of the scarcest dates of the Middle Date type. The 1823, 1823/2 and 1839/6 are probably the only Middle 'dates' that are rare, or almost so, though not one of these 'dates' is extremely rare. While the "1826/5" may possibly be rare, it is debatable as to whether it is really an overdate. Even if it is so, the difference in the date, versus an 1826 Normal Date issue, is just too subtle to be collected as if it is a distinct date. In my view, even if the 1826/5 is a true overdate, it is just a die variety. The 1821 large cent issue is very rare in grades of AU-50 or higher. Holmes has five 1821s. The finest he has of the first die variety is PCGS graded AU-58, and is graded AU-50 by Chris McCawley & Bob Grellman, the cataloguers. Holmes' best representative of the second die variety of this year in large cents is PCGS graded MS-63. McCawley & Grellman grade it as "MS-60+," which means MS-61 or -62 in standard terms. This 1821 cent was earlier in the Wes Rasmussen collection that Heritage auctioned in Fort Lauderdale in Jan. 2005. The Holmes 1823 'Normal Date' is not certified. It is graded Very Fine-35 by McCawley & Grellman. While it may be a very appealing coin, I was expecting Holmes to have a higher grade 1823. Holmes' 1823/2 overdate is more impressive and will attract much more attention. It is PCGS graded AU-58 and is the highest graded 1823/2 by the PCGS. McCawley & Grellman grade it as AU-50. Yes, the 1823/2 and 1839/6 are overdates. It could be argued that, as overdates, these are not truly distinct dates. An overdate that is long recognized, and is readily apparent without a magnifying glass, however, often has the status of a distinct date. Consider 1918/7-D nickels, 1918/7-S quarters and numerous blatant overdates in the Capped Bust half series, all of which are listed in standard guides as if these are separate dates. The 1823/2 overdate is a more blatant than the 1839/6 overdate. It is typical for the 1839/6 to be granted, by collectors and by the editors of price guides, the status of a distinct date. If it is so, it is the rarest date of the type, by far. I hypothesize that there exist around three hundred 1839/6 cents, in all grades. McCawley finds my estimate of three hundred to be "fair." Chris points out that "two-thirds of them grade Good at best, and maybe ten to twelve could be called Extremely-Fine 40 or better." While it is mind boggling that the Naftzger collection contained three relatively high-grade 1839/6 cents, the Holmes collection does too! Holmes, though, does not have one that is in the same league as the best of Naftzger's three 1839/6 cents, which is PCGS graded MS-65 and is widely regarded as the finest known. It realized $264,500 on Feb. 1, 2009. The second Naftzger 1839/6 is PCGS graded AU-58. McCawley & Grellman grade it as AU-50. It is certainly among the top six known, and could be second or third. It sold for $52,900 The third Naftzger 1839/6 cent was formerly in the epic Parmelee collection, one of the greatest U.S. coin collections of all time. It is graded Extremely Fine-45 by McCawley & Grellman (M&G), though it certainly has a level of detail that is associated with a higher grade, but exhibits more than a few pinpricks. It brought $27,600 in 2009. As for Holmes' three 1839/6 cents, McCawley & Grellman maintain that the one that is PCGS graded AU-53 is of a higher grade than the one that is PCGS graded AU-55, which they regard as grading EF-40. The third Holmes 1839/6 is PCGS graded EF-45 and M&G graded VF-35. These three will be subject to intense bidding. III. Goldbergs Auction Among the other U.S. coins in the upcoming Goldberg auction event, no other collections of U.S. coins seem to jump out of the catalogue. The Goldbergs are offering a variety of numismatic material in their Spring auction event. It is not unusual for Goldbergs auctions to have significant runs of bust dollars, and the run this time is noteworthy, including two 1794s. In this auction, there is a group of certified MS-65 or higher grade, relatively common Liberty Head Quarter Eagles ($2½ gold coins) and Half Eagles ($5 gold coins). Further, there will be offered three Capped Bust [Facing] Left Half Eagles that are highly certified by the NGC, including the Kaufman-Bass 1812. Significantly, there are two 1842 'Small Date' Charlotte Mint Half Eagles, one is PCGS graded MS-62, and the other is NGC graded MS-61. There are other high grade, Liberty Head 'No Motto' Half Eagles in the sale. Furthermore, four NGC certified Liberty Head Carson City Mint Eagles will be noticed, an 1872-CC, an 1875-CC and two of the 1876-CC date. In addition, an 1870-CC Double Eagle that is NGC graded AU-53 will come on the block. (Please see my article on the 'Queen of Carson City Gold.') Also, there are a few PCGS or NGC certified 'better date' Saints that are certified as grading "MS-65." A serious collector of world coins from the 1700s to the 1900s who was unable to attend the Goldbergs sale of the Millennia collection in May 2008 should attend this sale. A collector who bought a substantial number of coins at the auction of the Millennia collection has consigned his world coins to this auction. He was floor bidder #514 on May 26, 2008. Sometimes, collectors of U.S. coins get started in world coins and then later stop because they find it hard to formulate and sustain a collecting plan. There is no simple guide to collecting world coins. A meaningful collection of world coins is a little more complicated than a meaningful collection of U.S. coins. In other cases, collectors stop collecting because of personal or financial reasons. On May 26, 2008, the Goldbergs sold the greatest collection of world coins ever to be auctioned in one event, and it was a tremendously exciting auction. (Please see my six part series on the Millennia collection: Part 1, Part 2, Part 3, etc.) The Millennia collection was almost unbelievable. A highlight of the Goldbergs June 2010 auction is a Roman gold coin, dating from 42 BC, which depicts Brutus, a famous figure in ancient history. Brutus is much more famous now, than he otherwise would have been, as a consequence of being a character in a historical play by William Shakespeare, regarding Julius Caesar, which was first staged in 1599. This Brutus coin was formerly in the collection of John Whitney, who is well known in the history of coin collecting as 'Mr. 1796,' as he assembled an amazing collection of U.S. coins dated 1796. On May 26, 2008, this Brutus gold coin sold for $661,250. It weighs 8.07 grams, about 0.285 ounce. I am not prepared to comment on the other ancient coins in this sale, of which there are many. For coins dating after 1600, many of the more important pieces in this sale were previously in the Millennia collection. Additionally, however, there will be offered quite a few Ducats or similar gold coins that were formerly in the epic collection of Dr. Jacob Terner. Much of Dr. Terner's collection was auctioned, or sold privately, by the Goldbergs in the past. This is third Spring in a row, in which the Goldbergs have offered an excellent selection of British gold coins, including far too many to even to begin to list here. A considerable number were previously in the Millennia collection, though there will be offered very rare and important British gold coins that were never in the Millennia collection. I have always found English coins from the 1500s and 1600s to be exciting. English gold coins from the 1300s and 1400s are cool, too, and are excellent values for collectors. There are plenty of them in this sale. IV. Heritage Long Beach Sale The "BrendaJohn" collection is the lead consignment in the next Heritage coin auction. Among other coins, it contains many Buffalo Nickels that are NGC graded MS-66 or -67, often with star designations for eye appeal. The BrendaJohn 1926-S is NGC certified MS-66* and it was auctioned by B&M in April 2008. It was then part of the Colorado collection of Buffalo Nickels. Actually, it was the price realized for this coin on April 15, 2008, $322,000, that encouraged me to write an article about the collection of which it was a part. I was flabbergasted that a 1926-S Buffalo Nickel sold for more than $300,000. I am not surprised that a 1916 Doubled Date nickel has sold for more than $300,000. These are collected as if they are separate dates, and these are truly rare. My guess is that there exist four hundred to five hundred 1916 Doubled Date nickels. In contrast, there are probably more than ten thousand 1926-S nickels. I realize, of course, that very few of the extant 1926-S nickels grade MS-65 or higher. Even so, the 1916 Doubled Date is much rarer. I admit that I have never seen this 1926-S nickel. Perhaps if I did, I would then be less surprised that it realized $322,000 in the past. As coin markets were much stronger in April 2008 than in May 2010, I am not expecting this nickel to realize more than $300,000 now. This 1926-S nickel is not the only star of the "BrendaJohn" collection. The NGC graded MS-64 1916 Doubled Date will command attention, as will the MS-65 graded 1918/7-D nickel. The "BrendaJohn" 1937-D, of the variety with just three legs on the Buffalo, is NGC graded MS-67. This is certainly one of the most famous 20th century coin issues. Almost every kid who collects coins has heard of the three legged Buffalo issue. I emphasize that I have not, nor have I interviewed experts who have, already viewed lots in the upcoming Southern California auctions. So, I am not here recommending any specific coins. I suggest that collector-buyers discuss coin with experts who have seen them, before bidding. From the online images, the 1901 Morgan in the upcoming Heritage sale appears to be much better struck than the typical 1901 Morgan silver dollar. It is PCGS graded MS-64. Of the twenty-one that the PCGS has graded MS-64, maybe fewer than ten are different coins? There are only three that are PCGS graded MS-65 and no business strike 1901 Morgans have ever been PCGS graded higher than 65. As I reported last week, one of three MS-65 grade 1901 Morgans was sold by Laura Sperber for more than $500,000. (Please see the May 19 edition of Coin Rarities & Related Topics.) Like many Buffalo Nickels and some Morgan dollars that are condition rarities in MS-65 and higher grades, Indian Head Quarter Eagles tend to be plentiful in MS-61 to MS-63 grades. For the whole series, the PCGS has graded just four or five as MS-67. One of them is coming on the auction block, a 1908, probably formerly in the Virgil Brand collection. Its price realized may depend on whether experts regard it as a 'low end,' mid range or 'high end' MS-67. (Please read my article on the Widening Gap for an explanation of the terms 'low end' and 'high end') The 1803 Eagle in this Heritage sale is not really a condition rarity. Further, its die variety is not extremely rare. It attracted my attention because it is PCGS graded MS-62+. So far, this may be the first early gold coin with a plus grade to be offered at auction. Of course, it would not make sense to draw a conclusion on the basis of the physical characteristics and/or the auction result of one coin. Even so, I am curious about it. At the Heritage Central States auction in April, a 1928-S Peace Dollar, which is PCGS graded MS-64+, sold for $1840. A month earlier, Heritage auctioned two 1928-S Peace Dollars that are PCGS graded MS-64, one for $690 and the other for $603.75. In Jan. 2010, B&M auctioned one that their cataloguer regarded as 'premium quality' for an MS-64. It sold for $1051, much less than the 64+ graded coin recently realized. Further, in March 2010, B&M sold a PCGS graded MS-64 1928-S dollar for $721, and an NGC graded MS-64 1928-S, with a CAC sticker of approval, for $1265. Again, I emphasize that it is not logical to draw conclusions about a whole category of coins from one auction result. Even so, the price realized of this 64+ 1928-S, $1850, is worth noting and contrasting with other certified MS-64 grade 1928-S Peace Dollars. Besides, Heritage will auction another PCGS graded MS-64+ 1928-S dollar at Long Beach. In the June Heritage Long Beach auction, there are numerous coins in PCGS SecureShield holders, but very few of them received plus grades. A 1936 nickel and a 1938-D nickel are each graded 67+ and have CAC stickers. These are, though, very common coins. In this auction, Morgans of the following dates are PCGS graded MS-64+: 1881-O, 1882, 1884-CC, 1886, 1889-O, 1891-O, and 1892-CC. Another 1886 is graded 66+ as is an 1878-S and an 1883-CC. Another 1892-CC dollar is graded 62+. Two different 1909-D Half Eagles are graded 62+, as is a 1912. There are too many plus grade coins in the upcoming auction to list in this column. My point here is that there may soon be enough evidence to draw some tentative, preliminary conclusions regarding the market values of plus grades and SecureShield holders. V. Plus Grades & Secure Holders Several collectors and dealers have been talking to me about the two-month old PCGS SecurePlus program and the brand new NGC policy of allowing for plus grades, which was introduced yesterday. It is just too early, however, to draw conclusions, or even to form hypotheses, regarding either service's awarding of plus grades. One important plus of the plus programs is that collectors will always know that a coin with a PCGS or NGC plus grade must have been graded in 2010 or later. Grading standards were looser during the period (roughly) from 1997 to 2006 than at other times since the founding of the PCGS in 1986. Moreover, since 2006, both services have more effectively filtered artificially toned and surgically altered (doctored) coins. Provided that both services continue to be stricter and more consistent than they were, respectively, from 1997 to 2006, this will be one certain positive attribute of a plus grade, even if the merits of a plus grade for some individual coins are disputed by recognized experts. A coin in a PCGS SecureShield holder, without a plus grade, may have been moved by the PCGS from an old PCGS holder to a SecureShield holder. The PCGS allows for coins in old holders to be placed into SecureShield holders via two methods, a reholder service or a regrade service. According to PCGS policy, a submitter has 'nothing to lose' (other than a standard fee) from exercising either option. A coin that is PCGS graded MS-65 in an old holder may, for a fee, be placed in a new SecureShield holder with the same MS-65 grade. Further, a coin that is already PCGS graded MS-65 grade may be submitted, for a fee, through the 'regrade' service. If PCGS graders determine that it merits a 65+ or 66 grade, it is upgraded. If not, it will remain PCGS graded MS-65 unless PCGS 'buys it back.' The PCGS may offer to buy the coin from the submitter if PCGS graders determine that the previously awarded grade is too high. Likewise, submitted coins, under the 'Secure' reholder option, are subject to an additional screening, according to Don Willis, and the PCGS may 'buy back' those as well. It remains to be seen, however, just how many coins that are submitted under these two options are actually 'bought back' by the PCGS. For now, the PCGS certainly deserves the benefit of the doubt. In my view, David Hall and Don Willis are very sincere in their efforts to implement a new service that should lead to greater consistency of grading, more secure holders, much less grade-inflation, and much less 'coin doctoring' by dealers. There is good reason to believe that coins in the PCGS SecureShield holders (even without plus grades), over the long run, will be worth substantially more than the same exact coins would be worth if these resided in regular PCGS blue-label holders. While some controversially graded coins will sneak into Secure Shield holders via the reholder or regrade services, these will not constitute a large percentage of the coins in SecureShield holders. As for whether expert collectors and dealers are in agreement with PCGS grades of specific coins, that is a different topic. Here, I am referring to the value of some PCGS certified coins versus other PCGS certified coins. Moreover, the laser scanning by CoinAnalyzer devices, for future identification, of coins to be placed in SecureShield holders has the potential, I really believe, to sharply reduce the practice of 'coin doctoring' overall. It will not put an end to this hideous and under-reported practice, yet it may! very well substantially reduce its incidence and scope. VI. Metallurgic Analysis by the NGC I very much like NGC's new optional program of identifying the metallic composition of submitted coins. Even though only two or three primary metals will be mentioned on the NGC inserts inside holders, a reliable source indicates that this technology identifies trace metals as well. The first thought that comes to my mind is that this metal-testing technology can be used to identify coins. Perhaps it would not be as effective, for this purpose, as the CoinAnalyzer devices that the PCGS purchased from the CoinSecure scientific firm. Even so, if a coin is artificially toned, it will, in most cases, have the same metallic composition, especially including trace metals, as it di! d before it was artificially toned. I suggest that the NGC maintain a database of the metallic compositions of all submitted coins, valued at more than a certain amount (perhaps $5000), regardless of whether the metallic testing service is ordered by the submitter. Those who pay the $75 fee for the service would, of course, benefit from an insert that spells out the percentages of primary metals and, I hope, a lab report that lists trace metals as well. I am not suggesting that those who do not pay this testing fee should receive free information. I realize that the metallurgic testing service is expensive and that the NGC is a profit-making business. For submitted coins that are not accompanied by a request for testing, the test results could be inputted into an NGC database and not revealed to the respective submitters, at least not right away. Incurring the additional costs of testing all coins, valued at more than $5000 (or perhaps less), would be worthwhile to the NGC over the long run. It could be analogous to the PCGS use of CoinAnalyzer devices. Coins that were cracked out of NGC holders and re-submitted, which is a common practice, could be identified and the NGC finalizers could become aware of the NGC grades that these same coins received in the past. Employing such information would make it easier for NGC finalizers to identify doctored coins and would probably reduce grade-inflation. As I said above, I am not asserting that this method would be as effective as the PCGS use of CoinAnalyzer devices. Even so, an identification system does not have to be nearly perfect to be very beneficial. Even if the management of the NGC does not adopt my proposal, I still maintain this metallurgic testing program is exciting and very useful. For many patterns, mint errors and pre-1800 coins from around the world, analyses of metallic content will often be illuminating. In Part 5 of my six part series on the Millennia collection, I discussed the gold or silver content of specific coins and how the coins of some societies became world currencies. Determining exact metallic compositions and comparing those to contemporary stated standards may shed light on the success or lack thereof of some coinage issues and may contribute to a better understanding of monetary history. This is just one of several benefits of determining the metallic compositions of pre-1800 coins. ©2010 Greg Reynolds for CoinLink Related posts: New Weekly Column: Coin Rarities & Related Topics NGC Launches New Metallurgic Analysis Service for Coins PCGS Announces PCGS Secure Plus™, The Most Important Innovation in the Coin Industry Since the Advent of Third Party Grading.