Saturday, October 28, 2006

In the Spotlight: The Arlington Collection 1850 $20 Liberty Head Gold Double Eagle

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SS Republic Population: 2/0 finer (Tied for Finest Known)
NGC Population: 29/39 finer
PCGS Population: 10/30 finer

Overall Rarity: Approx. 1500-2000
Mint State Rarity: Approx. 30-50

Overall Rank: 36 of 44 coins
Mint State Rank: 27 of 44 coins

Mintage: 1,170,261
Mintage Rank *: 37 of 42 coins

* 42 coins due to 1853 and 1854 varieties being combined

The Arlington Collection's 1850 double eagle is one of two graded MS61, with none finer, recovered from the SS Republic shipwreck, tying it as the finest known from the shipwreck for that date and mint.

1850 is the first year of issue for the double eagle. There is a unique 1849 specimen generally regarded as a proof, but in fact, is a pattern.

There was a single obverse master die used for all double eagles from 1850 through 1858. A new obverse master die was created for 1859 and used through the end of the type 1 double eagles. There are two differences, among others, that can be easily seen upon close inspection.

The first difference is that the master die used from 1850 until 1858 had the word LIBERTY misspelled as LLBERTY which was corrected by placing the I over the second L.

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The second difference is that the engraver's initials, J.B.L. for James B. Longacre, were moved from under the hair curls further to the left on the neck truncation.

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This date is very popular among collectors due to it being the first year of issue and the fact that it is relatively common overall among type 1 double eagles with over 1000 examples believed to exist. But as you can see from the rarity totals above, the coin is very rare in mint state with no more than 50 examples believed to exist. A total of 55 coins were recovered from the SS Republic shipwreck with only three of those grading mint state.

Recommended Reading:
Encyclopedia of U.S. Gold Coins: 1795 - 1933, Circulating, Proof, Commemorative, and Pattern Issues

A guide Book of Double Eagle Gold Coins: A Complete History and Price Guide

Sunday, October 22, 2006

Before Buying Your First Gold Coins, Read this!

Recommending two articles in one day is highly unusual for me, but I just had to recommend this one also (click here to see the other article). I just couldn't have responded any better than Mr. Berko did. Kudos to Mr. Berko.

The article can be found here: berko/104192,3_3_EL20_BERKO3_S1.article

Recommended Reading:
The Experts Guide to Collecting & Investing in Rare Coins

Hoping gold will climb above $1000 an ounce soon? Better read this!

Every now and then I come across an excellent article that I have to recommend. Historically, there has been a strong correlation between the price of gold and the prices of rare coins. So if you have an interest in either of these two topics, you should really read the following article on written by Robert Blumen. Also, be sure to read what he says near the end of the article about silver.

Article can be found at:

Recommended Reading:
The Experts Guide to Collecting & Investing in Rare Coins

Saturday, October 21, 2006

Every Coin Collector Needs to Learn About Die Varieties

Okay, "need" is probably too strong a word, but there are many reasons why you as a collector should be familiar with the die varieties that exist among the coins that you collect, even if you don’t collect by die variety. If for no other reason, you should learn about die varieties because it can save or make you money.

Throughout the 19th century, people that tried to put together a complete set of coins usually did so by only acquiring one example per date. It wasn’t until the end of the 19th century and beginning of the 20th century that people began to collect by date and mint. In the latter half of the twentieth century, collecting by die variety became more common as more information about die varieties became available to collectors. Today, with so much information about die varieties being published, there really is no roadblock to learning about the die varieties for what you collect.

Definition of Die Variety

New collectors may be asking, “What exactly is a die variety?” A die variety is the result of some form of change or damage done to the die. This change or damage is repeated on every coin struck with that die. What it does not include is planchet errors that occur before the coin is struck or damage done to a coin after it is struck. Both of these situations result in errors or varieties that are unique to the coin struck and are not repeated on other coins.

In general, how can you tell the difference between damage to the die versus damage to the coin? One of the best examples to illustrate the difference is to look at die scratches versus coin scratches. How do you know a scratch occurred to the die before a coin was struck versus a scratch to the coin after it was struck? The way to identify a die scratch versus a coin scratch is to look at the scratch under magnification. If the scratch occurred to the die, it would result in a “raised line” on the coin when the coin is struck. A scratch on the coin itself would leave a “sunken or incuse line” on the coin. Also, a scratch will sometimes run uninterrupted from the field to the devices; a die scratch will usually occur in the field and end abruptly at the devices.

Example of scratched coin
(click to enlarge)

More common than die scratches are die cracks. These will leave an “irregular raised line” on the coin’s surface similar to a die scratch.

Example of die crack
(Click to enlarge)

Reasons to Learn about Die Varieties

You may be thinking “who cares about die varieties, I don’t collect them anyway.” If you collect raw, uncertified coins, knowing what die varieties are out there can help to identify if a coin is authentic or not. One of the main diagnostics used by collectors to authenticate an 1859-O $20 Double Eagle is a group of clash-marks that are found on the obverse of most, but not all, examples. One set of clash-marks appear as horizontal stripes above the ear of Liberty. Another set of clash-marks appear as somewhat vertical stripes on the neck between the two lowest curls. Although the presence of these clash-marks helps to identify an authentic 1859-O double eagle, care should be taken to not dismiss examples based on the absence of the clash-marks, as these examples do exist too.

Another reason to learn about die varieties is that it can be financially rewarding. I saved myself from losing $8,500 because I knew about the different varieties for the 1854 $20 Double Eagle. Large date examples graded AU55 currently run about $10,000 while small date examples in that same grade are only about $1,500. I made a purchase, site unseen, of a supposed large date double-date variety that was reportedly recovered from the S.S. Republic shipwreck and graded AU55 by NGC. Since doubled-date varieties were previously unknown for the large date variety, it seemed that this was an even rarer variety of large date. Unfortunately, when I received the coin, it just didn’t look right for a large date. After comparing it to a small date doubled-date variety, I realized that NGC had mislabeled the holder as large date doubled-date when in fact it was really a small date doubled-date. Had I not caught this error, this could have cost me $8,500 by overpaying for a small date doubled-date variety. Knowing what varieties exist and what they look like allowed me to catch this error and save losing that money. (More about the mislabeled holder story can be found by clicking here: Link)

Finally, knowing what varieties exist can allow you to cherrypick varieties that might otherwise be overlooked. As previously stated, the 1854 $20 Double Eagle of the large date variety is currently priced about $10,000 versus $1,500 for its small date counterpart. The 1854 large date in The Arlington Collection of Type 1 Double Eagles is in a holder that does not designate the large date variety. This is an example of how knowing what varieties are out there would allow you to know that this is the $10,000 variety versus the $1,500 variety since the description on the holder does not reveal its true identity.

There is also the possibility of finding a new die variety that was previously unknown. If other collectors think the variety is significant, it is possible that the price could command a substantial premium versus the price of a normal variety.

Some Die Variety Examples from The Arlington Collection of Type 1 Double Eagles

1853/2 Overdate

The 1853/2 Overdate variety shows what is believed to be a part of a 2 within the lower loop of the 3. This variety is listed separately in the Redbook and currently commands a substantial premium over a normal 1853 example.

Example of 1853/2 Overdate
(Click to enlarge)

1854 Small Date versus Large Date Doubled-Date Varieties

The large date variety is said to be anywhere from 5 to 10 times more rare than the small date variety. The large date variety was apparently caused by a die being punched with a date normally used on silver dollars. The image below shows the difference between a small date variety (top) versus the large date variety (bottom). The Redbook lists both varieties separately and the large date variety does command a considerable premium over the small date variety.

Example of 1854 Small Date (Top)
Versus 1854 Large Date (Bottom)
(Click to enlarge)

1854 Small Date Doubled-Date Variety

This doubled-date variety occurred on one of the dies of the small date variety. You can see this doubling in the tops of the 1, 5, and 4. Currently, this variety is not listed separately in the Redbook and carries a small or no premium over the non-doubled variety. If this variety should get a separate listing in the Redbook in the future, it is reasonable to expect the values of this variety to begin commanding a premium. All else being equal, I would choose the doubled-date variety over the normal variety.

Example of 1854 Small Date Doubled-Date
(Click to enlarge)

1854 Large Date Variety not Labeled as such on the Holder
This is an example where the holder does not designate the coin as the rarer large date variety. Only by being familiar with the various die varieties would you know that this is currently a $10,000 coin and not a $1,500 coin.

Example of 1854 Large Date
Not Designated on Holder
(Click to enlarge)

1859-S Double-Die Obverse

The doubled-die of the 1859-S shows up best in the “BERTY” of the word LIBERTY. This variety is considered scarce and is now starting to show a premium over its normal counterpart. If you plan to purchase an 1859-S, this would be a good coin to try and cherrypick a doubled-die variety of the coin that is not already designated as such.

Example of 1859-S Doubled-Die Obverse
(Click to enlarge)

1859-O Clashed-Die Obverse

There are a couple of sets of clash-marks that show up on most examples of the 1859-O. One set of clash-marks appear as horizontal stripes above the ear of Liberty. Another set of clash-marks appear as somewhat vertical stripes on the neck between the two lowest curls. If you look closely, you can see how the former set of clash-marks match up to the shield on the eagle while the latter set of clash-marks match the rays above the eagle’s head. Currently there is no premium being realized on either variety. Part of the reason for this is because of the overall rarity of the 1859-O makes obtaining any example a challenge.

Example of 1859-O Clash-marks above Ear

Example of 1859-O Clash-marks on Neck

1859-O Cracked-Die Reverse
In addition to the obverse clash-marks, some examples also show a very noticeable die crack on the reverse. The die crack extends from the eagle’s wing-tip through the “E” in UNITED out towards the denticles along the rim. Although this variety does not command a premium and probably won’t in the future, it is a good example of die progression or change in appearance over the life of the die.

Example of 1859-O Cracked-Die Reverse
(Click to enlarge)

1859-O Die Progression
There have been three 1859-O examples in The Arlington Collection of Type 1 Double Eagles over the years. The current example shows neither the obverse clash-marks nor the reverse die crack. Another example showed the clash-marks without the die crack. The final example showed both the clash-marks and die crack. It is believed that all three coins came from the same obverse and reverse die pair. If this is the case, then you can easily follow the die progression and know in what order the coins were struck.

So just because you don’t collect by die variety does not mean that you do not need to know about the different die varieties. Just one incident regarding the fantasy 1854 $20 large date, doubled-date variety saved me from losing $8,500. Hopefully you will find being knowledgable about die varieties to be just as profitable as I have.

Recommended Reading:
Cherrypickers' Guide to Rare Die Varieties of United States Coins: Half Dimes Through Dollars, Gold, and Commemoratives (Official Whitman Guidebook)

Wednesday, October 04, 2006

Is Coin Collecting a Good Investment? Even the Experts Can’t Agree!

Is coin collecting also a good investment? This is a question I hear a lot about coin collecting. First, whatever I say on this topic is going to have plenty of people who disagree. This is one of those topics where a room full of very smart people will have one thing in common, they all disagree on the answer to this question. Second, I am looking at this question in the context of collecting non-bullion coins. Bullion as an investment is a much different topic worthy of a discussion on its own.

So, is coin collecting also a good investment? The simplest answer I’ve heard to the question is that, first and foremost, coin collecting is a hobby and not an investment. If you have to ask the question in the first place, then your experience with coin collecting is probably not enough to overcome the pitfalls of coin collecting as an investment. As a collector, you’re better off just keeping it a hobby and having fun with it.

Coin Collecting: A Good Investment

Does that mean all coin collections are bad investments? Absolutely not! Many of us have heard the story about John Jay Pittman, who with limited resources, amassed a collection that was eventually sold for over $30 million. Or how about the Philadelphia 1861 $20 Liberty Head Paquet that recently went for $1.6 million in the Heritage auction at the ANA convention in Denver? Apparently the coin was purchased by the seller only 5 years ago for $345,000. In hindsight, these were obviously good investments.

Recently, there has been a plethora of media articles in financial papers and magazines touting how investing in rare coins can help an investor to diversify their portfolio. These articles usually quote some obscure rare coin index that purportedly shows how rare coins have forever outperformed stocks as an investment. According to these articles, you really can’t lose investing in rare coins.

Coin Collecting: A Bad Investment

There have also been a large number of articles that tell you how bad coins are as an investment. These articles claim that there is no way for an investor to win. They talk about how buyer’s and seller’s fees create too much of an obstacle to overcome. They state that if it’s not the dealer’s markup that gets you, it is the tendency of dealers to overgrade coins that will. Or altered coins. Or counterfeits. The pitfalls are many and there’s no way to avoid them.

So, who is correct? I believe there is some truth to both sides of the story. How do you navigate all the pitfalls and have the best chance to both enjoy the hobby and realize a profit if and when you sell? I could list all the usual items that books and articles tell people such as:

· Find a reputable and knowledgeable dealer to work with.
· Acquire coins in the best possible grade that you can afford.
· Never stop learning about the coins that you collect.
· Condition, rarity, and demand affect a coin’s value.
· The economy and inflation can affect a coin’s value.
· Understand retail prices versus wholesale prices, auction fees, etc.
· Inexperienced collectors should stick with 1st- or 2nd-tier third party graded coins.
· Etc., etc.

What Makes a Coin’s Price Move?

The one thing that all these books and articles fail to really point out is what makes a coin’s price move. Yes, rarity and condition are important components in a coin’s value. Yes, the economy and inflation are factors. But what really makes the price move? Supply and demand! At the most basic level, a coin’s price is simply dependent on supply and demand, nothing else.

Supply and demand are the only factors that cause fluctuation in a coin’s price. If there is more demand than supply, then the coin’s price will rise. If there is more supply than demand, then a coin’s price will fall. It’s as simple as that. What is not so simple is predicting where supply and demand will be in the future for any given coin. Today, collectors may favor Buffalo nickels, tomorrow it may be Indian Head cents. If you knew where the increased demand would be in the future, then your collection would have a better chance for appreciation.

Things that Affect Demand

I believe publications have a huge impact on demand. For example, how many $20 Liberty Head Type 1 Double Eagle collectors would include the 1853/2 Overdate or 1854 Large Date varieties if they were not listed separately in the current Red Book? How many Hard Times Token collectors would there be if it were not for Low or Rulau? Collectors use references as guides to their collecting. A new publication on a neglected area of numismatics can have a huge impact on future demand.

I have heard it said that when the stock market does poorly, the coin market does well. When the stock market is doing well, the coin market still does well. However, when the stock market does phenomenal, the coin market suffers (i.e. 1990-2000). I haven’t really analyzed the validity of this theory, but I don’t doubt that there is some truth to it.

An influx of counterfeit and altered coins would surely have a negative impact on demand for the coin market as a whole, or at least that series or type of coin where the problems are most prevalent. This is one of the many reasons that I support third party grading companies, such as NGC and PCGS. However, I feel some lesser third party grading companies actually hurt demand through their inconsistency in grading or just flat out failing to abide by ANA grading standards. People hurt by purchases of coins in these holders will surely be turned off to the hobby in the future which could lessen demand.

Things that Affect Supply

Even if you knew which coins would have the greatest increase in demand, you still run the risk of an increase in supply that outstrips demand. A case in point would be the 1857-S $20 Double Eagle. This coin was considered to be very scarce in mint state. But that was prior to the recovery of thousands of mint state examples from the shipwreck of the S.S. Central America. Any coin collections that had a mint state 1857-S $20 Double Eagle as a large part of the value of their collection took a big hit when the thousands of shipwreck coins hit the market.

A few years ago, what was thought to be the only surviving collectible 1933 $20 Double Eagle was sold at a Sotheby auction for $7.6 million (Two other examples are held by the Smithsonian Institution). Just this past year, ten more examples have come to light. Can you imagine how the buyer of the Sotheby coin must have felt when he heard about the increase in supply? What price would that coin sell for if it were to come up for auction today? My guess is that it would be significantly less than the $7.6 million.

The population reports of the third party grading services, particularly PCGS and NGC, are frequently used for judging supply. There is a definite risk with using these reports. At times, the reports may overstate supply making a rare coin appear more common. This is due to people “cracking out” the coin from its holder and resubmitting it with the hopes of getting a higher grade. If the “cracked out” holder is not returned, then the population of graded coins increases by double counting the coin. In general, however, the reports make a coin appear more rare than it actually is. This is because, in general, the counts of graded coins will only get higher, not lower, as more coins get graded. So what you think is the finest known example of a coin always runs the risk of a finer example eventually being found and graded.

How can you minimize market risk?

One of the suggestions that I constantly read is that collectors should concentrate on a single series of coins for their collection. The idea is that you can never learn everything there is to know about numismatics, therefore you should specialize in a series that you can learn very well. The more you know about that series, the better decisions you will make with regards to your acquisitions.

In general, I think this is very good advice if you are strictly looking at your collection as a hobby and don’t care about the future value. But, if you are also hoping that you will realize a profit when you sell your collection, then this may not be the best advice. It’s the same as putting all your eggs in one basket. What would happen if the series in which you specialize goes out of favor and the demand lessens? Or what if a hoard is found containing many examples of the key dates in your series thereby increasing supply?

I believe that the best way to minimize market risk is through type collecting. Type collecting avoids the pitfall of concentrating your collection in a single series that goes out of favor. It also avoids the pitfall of having a large increase in supply for a given series or key date affecting the value of your collection. But minimizing your risk does not eliminate your risk. There is still the potential that demand could go down in coin collecting as a whole. If the entire coin market is affected, then most likely any collection that you put together will be affected.


However you decide to collect coins, the most important aspect is to have fun and to use common sense. If a coin just doesn’t look good to you, it most likely doesn’t look good to others, regardless of the grade assigned by the dealer or the grade on the holder. A collection where every coin you can look at with pride and satisfaction is definitely a goal worth achieving. But, if you are also looking for the best possible return on your collection when you eventually sell it, I believe that type collecting provides the best possible return with a minimum of risk.

Recommended Reading:
United States Coinage: A Study By Type

The Experts Guide to Collecting & Investing in Rare Coins

A Guide Book Of United States Type Coins: A Complete History And Price Guide For The Collector And Investor (The Official Red Book)