Thursday, August 31, 2006

Mislabeled Certified Coins Could Cost You Thousands of Dollars

One of the first things I realized when I started collecting coins was that I could not grade or authenticate coins myself. I was totally at the mercy of others. So I decided that I would limit any high priced coin purchases to coins graded and certified by either Numismatic Guaranty Corporation (NGC) or Professional Coin Grading Service (PCGS).

I had heard that gold coins were the most counterfeited coins of all. I also heard how one of the newest techniques for altering gold coins was the lasering of hairlines. Apparently this results in the gold melting and smoothing out the hairlines but is detectable because it affects the luster. So if I was to work on creating a $20 Liberty Type 1 Double Eagle set, I would only buy certified coins for my protection. Since many are shipwreck coins, I would be buying certified coins anyway in order to prove the attribution to the shipwreck. I was also buying most of these coins literally from the man who wrote the book on Type 1 Double Eagles (which I had read). So I felt pretty safe in my purchases. I had done my homework.

One of the coins in the Type 1 series is the 1854 Philadelphia. This date and mint has two varieties that are generally collected (if they list it in the Red Book, it gets collected). The two varieties are the Small Date and the Large Date with the Large Date being considerably rarer of the two. Graded AU55 by NGC or PCGS, a small date would run about $1,200, a small date double date about $1,500, a large date about $8,000, and a large date from the S.S. Republic about $9,000.

After I already had aquired a small date and large date for my collection, I was offered a Large Date Double Date from the S.S. Republic for $10,000. This seemed reasonable, especially since no current book or price guide listed a Large Date Double Date. It must be a new variety of the Large Date discovered from the shipwreck. So I bought it. (click photo to enlarge)

It actually is a beautiful coin for the grade and the doubling of the date is clearly visible to the naked eye. At first I was very happy with my purchase because the doubling was so visible. But the longer I looked at it and moved beyond the doubling, I began to think that this did not look at all like my other Large Date which is not from the shipwreck. I pulled out my Walter Breen's Encyclopedia of US Coins and look up 1854 double eagles. The description of the small date double date (Breen 7167) seemed to match this coin perfectly. But I needed to compare the size of the dates to be sure.

So, the first chance I got, I went to the bank and retrieved my small date and other large date so that I could do a comparison of the dates. The following photo shows the dates for the three coins, one on top of the other, to make it easy to compare. The small date is on top, the supposed large date double date in the middle, and the definite large date on bottom. So what do you think? (Click photo to enlarge)

My new $10,000 Large Date Double Date was indeed a $1,500 Small Date Double Date. An $8,500 difference in price! NGC had incorrectly labeled this coin as a new variety that apparently doesn't exist (or is at least still undiscovered). I sent the coin back to the dealer who sold it to me. He immediately agreed it was a small date, apologized that he hadn't caught it (remember, he literally wrote the book on Type 1 Double Eagles!), and refunded my purchase.

So the moral of this story is that everyone needs to be a numismatist, at least as far as their own collections are concerned. Even the professionals can make honest mistakes. If I hadn't caught this error, I could have sat on the coin for 20 years, went to sell it and found out the truth. The dealer and NGC could well be gone by then and I would have no recourse for my purchase. The fact that I not only collect Type 1 Double Eagles, but that I also study them, is the reason I caught the error.

Finally, if someone offers you an 1854 $20 Liberty Type 1 Large Date Double Date, make sure you take a close look at it first. Hopefully, it won't be one graded AU55 from the S.S. Republic (#5055511-007) as that one should be on its way back to NGC to be holdered correctly. But according to the NGC population reports, there is still a XF45 out there somewhere being held by an unsuspecting collector. I hope he or she reads this.

Tuesday, August 29, 2006

Shipwrecks and their Treasure

After having bought a "shipwreck effect" 1861-O Seated Liberty half dollar recovered from the SS Republic shipwreck, I was still not yet a coin collector. I loved the fact that I now possessed a coin from an important event in history, even if it was a tragic one. I wanted to know more about the shipwreck and if there were any other similar shipwrecks with coins recovered that I could own.

What I found was that people have been recovering treasure from shipwrecks since the beginning of time. But I immediately started to see a problem. How do you authenticate that an item you purchase is really from a specific shipwreck? I first started questioning this as I found many items in online stores and on auction sites claiming to be from old Spanish shipwrecks that were part of the famed Spanish treasure fleets. The most famous of these being the Nuestra Señora de Atocha.

The Nuestra Señora de Atocha was a Spanish galleon loaded with treasure that sank in 1622. After 16 years of searching, the main part of the treasure was found in 1985 by Mel Fisher. Today, you can find many places selling a piece of the treasure and guaranteeing the authenticity. But how does a simple certificate of authenticity prove a coin is from a shipwreck? It doesn't take a genius to see there is plenty of opportunity here for misrepresentation.

For example, I came across an auction (ebay #8375370870) for 2 certificates of authenticity, each for an 8 reale coin, from an unknown shipwreck apparently excavated by a company called Maritime Explorations. The key here is that only the certificates were being auctioned, not the coins with them. Someone actually bid on and won the auction. So again, it doesn't take a genius to see that there probably is going to be two non-shipwreck coins paired up with these certificates and sold to an unsuspecting buyer! So, am I going to pay a premium for something whose authenticity is always going to be in question? I don't think so.

But the coin from the SS Republic was different. Odyssey Marine Exploration had enlisted Numismatic Guaranty Corporation (NGC) to certify and encapsulate the coins from the shipwreck. NGC and PCGS (Professional Coin Grading Service) are considered two of the more reputable of the third party coin graders. (some dealers only deal in certified coins from these two companies) This more than took care of my concerns about authenticity. I now was on the hunt for more shipwreck coins certified by either NGC or PCGS.

This new hunt of course led me to gold $20 Type 1 Double Eagles (1850-1866). There were four major shipwrecks that have been found with hoards of $20 Type 1 Double Eagles. These were the SS Yankee Blade (sank in 1854), SS Central America (sank in 1857), SS Brother Jonathan (sank in 1865), and the SS Republic (sank in 1865). If I really wanted to own some nice coins from shipwrecks, it looked like I would have to start collecting $20 Type 1 Double Eagles. Collecting gold was going to cost more, but at least I felt confident about the authenticity of the coins being from a shipwreck. . . . And anyway, who doesn't like gold?

They say to buy the book before the coin. So my bible became "An Insider's Guide to Collecting Type 1 Double Eagles" by Douglas Winter and Adam Crum. I read this book from front to back and I began my quest for shipwreck gold. Eventually, I acquired $20 Type 1 Double Eagles from the SS Central America, SS Brother Jonathan, and SS Republic. But there was still the elusive SS Yankee Blade?

Then this past summer, I came across lot #355 in the American Numismatic Rarities "William H. LaBelle, Sr. Collection" auction on July 25th, 2006. There was an 1854-S $20 Type 1 Double Eagle in MS64 listed as being from the SS Yankee Blade. On top of that, it was being auctioned from the reknowned Q. David Bowers's own personal collection. . . . What a pedigree! . . . But my understanding is that very little is known about the 1977 recovery of gold from the SS Yankee Blade and nothing has really been printed as to what exactly was found. So I asked the owner (and clearly an expert on the subject), Mr. Bowers, the following questions:

1) Has the coin been certified by one of the grading services, and if so, is the attribution to the SS Yankee Blade designated on the holder?

2) If there are no real records of the coins recovered from the SS Yankee Blade, how sure are you of the attribution of this coin to the shipwreck.

3) What is the history of the coin before you acquired it? Did you purchase it soon after the recovery or has the coin changed hands a few times?

Basically, I was concerned with the proof of authenticity. If I bought it and then later wanted to sell it, what proof would I have that the coin was from the SS Yankee Blade? Here is Mr. Bowers's response:

Thank you for your inquiry. There are no 1854-S $20 coins that are directly attributed to the S.S. Yankee Blade, but it is presumed that all with slight seawater effect and with myriad tiny die cracks are from this source. There is a spread on this ship in my American Coin Treasures and Hoards book. I never sent it into a certification service, but if I did, and they marked “S.S. Yankee Blade” on it, this would by (sic) probable but not certain. I did interviews, etc., as mentioned in my book, and that is why my attribution is such.

Hmm? He probably is right and all the coins with seawater effect and myriad tiny die cracks are probably from this shipwreck. But is it certain? Is it evidence enough to pay a premium? Will others in the future agree with this attribution? Needless to say, I did not bid on the coin. In hindsight, I probably should have bid on the coin if for no other reason than it is pedigreed to Mr. Bowers. But again, without certification and encapsulation, how would I prove that pedigree in the future?

So, it would appear that my collection of shipwreck coins will not include an example from the SS Yankee Blade. But more importantly, this quest for shipwreck coins, and the reading of the Winter/Crum book, was the turning point for me. It is from that point on that I consider myself, not only a coin collector, but a numismatist. Not only do I want to learn more about shipwrecks, I want to learn more about coins. . . all coins! I have the bug!

In the Beginning . . . there were the Shipwrecks

There I was, watching the History Channel, when up popped the commercial about "The Ship of Gold". It told about the recovery of $100,000,000 in gold from the S.S. Central America which sank in 1857. Now I too could own a piece of this exciting treasure simply by calling the number on my screen.

I didn't collect coins, so my interest wasn't about the coins. It was about the historical link to a tragic event in history that grabbed me by the collar. I had to have a piece of shipwreck treasure! But gold is expensive, and I wasn't ready to pay thousands of dollars for a coin, even if it was from a shipwreck. So I Googled "shipwrecks" and "gold" to see if I could learn more. That was when I learned about another shipwreck, the S.S. Republic, which sank in 1865.

Odyssey Marine Exploration was the company that recovered the treasure from the S.S. Republic. The difference between this shipwreck and the S.S. Central America was that there were also tens of thousands of silver half dollars recovered. Finally, I could have a piece of shipwreck treasure without paying thousands of dollars.

Another search on Google came up with more than a few coin dealers selling the S.S. Republic half dollars. They were priced from $999 up to over $1,500. Hmm? Still a little expensive for one of these coins, even if it did come from the bottom of the ocean where it sat for 140 years. But then I discovered the coins on ebay. A quick look at the history showed that occasionally you could get one of these coins for as low as $900. You just had to be patient.

So each time a nice one of the coins was auctioned on ebay, I put in my maximum bid of $900. The first few auctions I did not win, but as luck would have it, I eventually won one. It went for my maximum bid of $900. (Later, dealers would sell these as low as $800, so I guess I wasn't patient enough) When I received the coin, I thought it was beautiful. It came with a nice cherry wood display box along with the National Geographic special about the recovery of the treasure on DVD.

The coin was slabbed (what is that?) by NGC (who is NGC?) and designated as "Shipwreck Effect" (what does that mean?) instead of a grade (what is grading?). These were all questions that, at the time, I not only did not know the answer, I didn't even know to ask them. All I knew was that I had a piece of the treasure and I loved it. (Very cool!)

But as it turned out, this coin was the start of my interest in numismatics and the start of my collecting coins; I just didn't know it yet.