Why Do Some Rare Coins Cost More Than Others?|
August 27, 2013
Last Friday, someone asked me why the 1996 silver Eagle dollar is retailing for three times silver value even though its mintage of 3.6 million is high in absolute standards. He pointed out that he could acquire a nice 1927 Peace dollar with a mintage of 848,000 for a lower price.
His question is sensible. At least part of the answer has to do in the changes in the collector base and also changes in collecting patterns.
When I was a youngster, I had all the coin folders for U.S. and Canadian coins to assemble date and mintmark sets of coins. To some degree, collecting the older series by date and mintmark seems to be less popular than it was in the 1960s and 1970s. There are more collectors working on type sets of older coins or varying definitions of a collection that do not involve collecting every date and mintmark of an older series. In my store, our sales of the blue coin folders have fallen dramatically in the past decade.
When the Statehood quarter series began, there was a natural, entirely predictable progression in collecting interests. A lot of people didn't want to wait 10 weeks to get the newest issue. So, they started looking at what was beautiful and affordable. For several years after 1999, the U.S. proof sets from 1968 onward soared in prices, as did Mint State silver Eagles by date, Proof silver Eagles by date, and high grade certified Mint State and Proof silver Eagles. These were all affordable products, their quality was top-notch (which means that the newer collectors didn't really have to learn to "grade" coins before buying), and they were common enough that it would be possible to assemble complete sets without getting stuck on the one, two, or a few pieces that would cost big bucks to complete a set. For a few years after 1996, that silver Eagle was not in high demand, so it was priced closer to other dates. But, when the influx of new collectors started going after the previous year issues of silver Eagles, then you started to see higher prices. This boom in low mintage silver Eagles lasted for a few years, then finally many of these issues fell in price. The decline was no doubt affected, in part, by the recession/depression that started in 2007-2008.
If you want to look at a couple contrasts, try classic U.S. gold coins. Here is a niche where you can often find scarcer date issues that are 10 to hundreds of times rarer than the “common” dates, yet you can often acquire many of these coins anywhere from close to common-date price to maybe 30 percent extra. For the most part, there are not many collectors working on a date and mintmark set of these gold coins, partly because of the unit cost. (The same also applies for some Morgan and Peace dollars, which help contribute to the popularity of these series.)
In the long term, I expect the 1996 silver Eagle will trade much closer to the price of common dates than is now the case.
The other example is the First Spouse half ounce gold $10series. Some mintages are absolutely minuscule. Most have lower Mint State mintages than any of the $1 and $2.50 gold commemoratives issued from 1903-1926! Yet, since virtually all specimens survive and are almost all in top quality, they are not traded at premium levels that you would expect for the rarity. Of course, the unit cost also inhibits the number of collectors.
The high premiums for certified high grade silver Eagles have come down a lot, but I expect them to further decline in the future. They may not decline to levels similar to somewhat rarer-date classic U.S. gold coins, but I don't expect any date to trade in Mint State for more than double the common issues. The tricky part is trying to figure out the timing. That's an incredibly difficult task, but part of what makes collecting fun.
Patrick A. Heller is the American Numismatic Association 2012 Harry Forman Numismatic Dealer of the Year Award winner. He owns Liberty Coin Service in Lansing, Mich., and writes “Liberty’s Outlook,” a monthly newsletter on rare coins and precious metals subjects. Other commentaries are available at Coin Week and CoinInfo.com. He also writes a bi-monthly column on collectibles for “The Greater Lansing Business Monthly.” His radio show “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 a.m. Wednesday and Friday mornings on 1320-AM WILS in Lansing.
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