Welcome to Steve's blog, sharing stories of his professional coin career, 1963 to date. Enjoy stories of Steve's numismatic journey.

Thursday, January 16, 2014

Sidestepping The Bubble

In my earliest years as a coin dealer – primarily the 1960s and 1970s – early coinage and key date pieces in the Seated and Gold series were very scarce, and when they appeared, it was an occasion to remember.

For example, I attended a show in Los Angeles sometime in the 1960s where there was a serious buzz pervading the bourse floor.  A dealer had brought one 1796 Quarter in XF-AU to sell.  A pack of dealers swarmed his table, each vying to outdo the other to procure the coin.  It’s difficult to adequately illustrate the drama and commotion created by a single not-unique coin during that time period.  Nowadays appearance of that coin would not elicit much more than “oh!”
1796 Quarter

So what made the presence of a single old rare coin such an event?  In those days rare coins were not worth a great deal, so the smart old money kept their rare coins in safekeeping.   They knew what they possessed!

This all changed during the inflationary binge of the late 1970s and early 1980s when increased coin values brought multitudes of rare coins to market.

The next development that unearthed closely held rarities from their storage cabinets was the creation of third party grading.  And what a party that became!

I remember 1989 like it was yesterday.  The certified coin market was boiling over and I sensed a price bubble soon to burst.  In April, Debbi and I attended a Central States show in Overland Park, near Kansas City.  We brought along all the certified coins in our stock, then roughly 400 pieces of mostly common U.S. coins.
Up, Up, Up:
How Far Will It go?

During the show set up period, I announced to dealers at hand that I was selling all certified coins at Graysheet bid.  First come, first served.

About one hour later every single certified coin was gone; we had completely sold out.  I have never seen such a feeding frenzy.

As luck would have it, the coin market for certified coins topped out in June 1989, so we sold just in time.
In case you wonder how crazy common certified coin prices were then versus now, take a look at these details:    

Certified Coin    1989 2014
1881-S Morgan Dollar, MS-65   $500 $135
1921 Morgan Dollar, MS-65   $600 $115
1941 Walking Half, MS-65   $475 $ 88
1926 Oregon Commem, MS-65   $770 $190

What about the scarce coins, like the 1796 Quarter discussed above?  While the good old blue chip coins were definitely affected by the overall market bubble burst in 1989, they have slowly and steadily continued to gain value.

Let’s look at the pricing for our quarter coin from the 1960s forward.  In the 1968 Graysheet we find no pricing information for old coins (pre-1900), except Dollars.  But, as we move closer to current date, we find these Graysheet values for our 1796 Quarter in XF-AU:

                                1978                           1989                            2014
                               $8,500                    $13,750                       $48,000

What can we take away from these examples?  Common coins are somewhat like commodities, evidenced by their sight-unseen market trading, and have regular up and down cycles.  Rare coins have no sight-unseen market and continue to become scarcer with the passing of time.  Rare coin prices are somewhat resilient to other market forces.

Both common and rare coin have their time and place.  Learn about the market; understand the forces and factors that affect its actions.      

Tuesday, October 15, 2013

Mixed Grill In El Paso

San Diego 1969
Trying to figure out how to stir up a little business, I have a brainstorm:  I should make a buying trip to El Paso, Texas.   El Paso is located on a major interstate highway, intersecting east and west, north and south, so I had a hunch it might be a good place for some action. 

The Adventure Begins
I jump into my trusty 1967 Chevy and head for Texas.  My buy ad in the El Paso paper runs for three days, so I am hopeful something good shows during my stay. 

Right off the bat, a neat deal arrives:  a rancher walks in with five rolls of nice, circulated 1895-O Morgan Dollars.  Today this would be unbelievable, but in the late 1960s the 1895-O issue was plentiful in Fine to AU, rare in uncirculated condition.

The rancher wants $20/coin or $2000 for the 5 rolls.  Since $2000 was 1/3 of the budget for this trip, I had to take a minute to consider the logistics of selling these coins.  An idea was generated, so I said “let’s do this deal.”

On Day 2 of the buying ad, lots of smaller deals drifted in.  At end of the day something exciting appeared – 150 Conder Tokens dated in the 1790s, all in Gem Uncirculated condition.