My Best Coin Investments: Sunken Treasure Ship Coins
Some of the best coin investments I have ever made involved shipwreck coins.
I am not and never have been a coin dealer, just a collector. So it was with some interest that I read an article by Susan Headley on About.com titled "Before You Buy Sunken Treasure Ship Coins, Consider These Insider Secrets".
Now in fair disclosure, Susan is a friend of mine and I love most of her articles. And while her article on shipwreck coins has some great advice on how not to get ripped off, I do think there is more to the story.
I have been an active collector of shipwreck coins for a number of years, and I’d be surprised if you could count on more than one hand the number of collectors that have bought or sold more certified and graded shipwreck coins than me in the past 5 years. I don't know what it is, but I'm like a moth being drawn to the light when it comes to shipwreck coins.
The Value of a Shipwreck Pedigree
You’ll often hear that the value is all about the coin and not the pedigree. While I agree you should judge a coin by its merits, you cannot dismiss the value of a shipwreck pedigree on reliable 3rd-party graded coins.
I have experienced over the years that two equally graded coins in similar condition and appearance, but one with a shipwreck pedigree from a famous wreck, the shipwreck coin is going to command a premium above the non-shipwreck coin.
However, I must qualify this to say that this premium is on reliable 3rd-party graded coins (i.e. NGC or PCGS) and it does not include the popular "Shipwreck Effect" designation.
|SS Brother Jonathan Shipwreck|
1865-S $20 Double Eagle
Why is certification so important?
Prior to certification, the shipwreck pedigree was often in doubt. Before certification and the slabbing of coins, it used to be you'd buy a shipwreck coin that came in a nice display case with a certificate of authenticity (COA). But who was to say the coin was really from the shipwreck? Plus, who printed the certificate to begin with?
Would you pay a premium for something pedigreed in this way?
Unfortunately, many people did.
Shipwreck COAs on eBay
A few years ago, I came across an auction on eBay for shipwreck coin "Certificates of Authenticity." There were no coins in the auction, just the certificates. These were what constituted "proof" that a coin was from a shipwreck and here they were being sold on eBay without any coins. Anyone bidding on those certificates was surely going to pair them up with non-shipwreck coins to sell to unsuspecting collectors.
I would never buy a shipwreck coin whose proof lies solely on a COA.
S.S Yankee Blade coin from Q. David Bower's Collection
Four years ago, I came across an auction listing from a much respected dealer in the coin industry for an 1854-S $20 gold double eagle pedigreed to the S.S. Yankee Blade. The coin was being sold by Q. David Bowers from his personal collection. The listing made no reference to the pedigree being in doubt. It was stated in a way that made it sound like an undisputed fact.
And what a pedigree that is . . . the S.S. Yankee Blade shipwreck and Q. David Bowers in one coin!
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 Mr. Bowers, the owner of the coin and clearly an expert on the subject, about the coin and the pedigree.
In his response he stated:
"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."
Hmm? He probably is right and all the 1854-S $20 gold 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 significant premium for in essence a “shipwreck effect” coin? Will others in the future agree with this attribution?
Although I really wanted to add a S.S. Yankee Blade coin to my collection, I did not bid on the coin. In the end, I believe the coin went unsold in the auction.
In this case, the pedigree is what you are buying, and not the coin. However, there are instances where even damaged coins that are truly great rarities make for good investments, but these are the exceptions and not the rule.
|SS Republic Shipwreck|
However, more recent shipwrecks such as the S.S. Republic or S.S. New York did not have large hoards of a single date and mint mark. Instead the coins were distributed across many dates, mint marks, and denominations.
If you had waited until after the initial release to get the coin you wanted, you may never have gotten the coin at all. If you were able to get the coin later on the secondary market, there’s a good chance that you paid significantly more for the coin than when it was initially released.
“If you are buying treasure ship coins as an investment, keep in mind that only the highest grade coins are recommended. As a general rule, this means buying MS-64 or better specimens that have been graded and slabbed by a reputable grading service.”
But since that time, other shipwrecks have been found that now render this statement invalid. Those shipwrecks include the S.S. Brother Jonathan, S.S. Republic, and the S.S. New York.
Out of the many shipwreck coins that I have bought, very few met the MS-64 requirement. In fact, many of my best investments were AU graded coins.
|SS Republic Shipwreck|
1858-P $20 Double Eagle
So do not automatically rule out shipwreck coins if you are putting together a rare coin collection that is also an investment. Many of my best gains on the sale of my coins came from shipwreck pedigreed coins. I couldn’t imagine my collection without them.