There are coins that are condition rarities and there are coins that are absolute rarities. A condition rarity is a coin whose value is primarily derived from its high degree of preservation. An absolute rarity is a coin whose rarity is based more on the total number known to exist than its grade. As a long-time participant in the coin market, I tend to prefer coins that are absolute rarities.
Let’s take a look at a few specific coins that easily fall into one of the two categories. Then, let’s take a look at another category (and for my money the most interesting): a coin that is not only an absolute rarity but a condition rarity as well.
Most new collectors buy coins based on condition. This makes sense. They are introduced to coins through mass marketers or they buy modern coins directly from the United States Mint. Mass marketers can’t sell absolute rarity for an obvious reason: there isn’t a large enough supply and mass marketing entails selling products on a large scale.
Certain mass-marketed coins aren’t strictly condition rarities in the truest sense of the word. A coin that most people would consider to be a condition rarity would be a common date Saint-Gaudens double eagle in MS65. But this isn’t really the case. A damaged, virtually destroyed Saint has a current market value of around $1,500 USD while an MS65 is worth $2,700. The 1.8x value ratio for a Gem is low when compared to the basal value.
A coin that I would consider a classic condition rarity is an Indian Head half eagle. This is a coin that is worth just a bit over $700 in very low grades but over $9,500 in MS65. That’s a 13.5x value ratio. I appreciate the fact that a true MS65 Indian Head half eagle is a reasonably scarce coin. But I have a hard time attributing this much value to a high-grade example, especially based on the fact that the series is not terrifically popular with date collectors.
So what is there to like and not to like about a condition rarity such as an Indian Head half eagle in MS65?
What I don’t like about this coin is exactly what turns me off about condition rarity in general: a significant portion of this coin’s value is based on a subjective factor (such as one grading point). In MS64, an Indian Head half eagle is worth $2,050. Most collectors would have a hard time telling an MS64 from an MS65, and a number of already-certified MS65 Indian Head half eagles might come back MS64 if they were (re)submitted for a regrade. And if certified grading were to suddenly disappear, you have a very expensive piece of plastic–in this case (pun intended), one that might be the only thing keeping a $9,500 coin from becoming a $2,050 one.
Another thing I don’t like about this coin is a point I touched on earlier. In theory, an MS65 Indian Head half eagle is a scarce coin. If you go to a major show, you won’t see more than a handful and it is unlikely that any will be what I would consider choice for the grade. But the demand for this coin isn’t really all that high. It’s a coin that’s rarely mass-marketed (there aren’t enough to go around), and type collectors of 20th-century Gem gold don’t appear to be extremely plentiful right now. So while the supply is admittedly low, the demand for this type in Gem might be even lower.
A coin does not have to be expensive to be an absolute rarity. Here’s a totally random example: an 1869 half eagle. Only 1,760 were produced and given the fact that the survival rate for Philadelphia half eagles from this era tends to be around 2-3% it’s safe to assume that only 35-50 pieces are known. I’d estimate that at least half of the known coins are either damaged or well-worn, making an accurately graded EF45 to AU50 piece about as nice as most collectors are going to locate.
What’s interesting about this coin is that its rarity is not predicated solely on its grade. You can’t buy a ratty, worn-out 1869 half eagle for $700 like you can an Indian Head half eagle. Basal value for this issue is probably around $1,000. This means that any 1869 half eagle that is gradable (i.e., not harshly cleaned or exhibiting major damage) has a value of at least $1,100 or so.
What’s even more interesting about this coin is that its value level does not skyrocket as you go higher and higher up the circulated coin ladder. You can figure that a decent quality AU55 is going to cost you around $9,000 to $10,000. That is a 9x to 10x ratio over the world’s worst 1869 half eagle, which seems like good relative value to me.
There is one key point that I haven’t made (yet) that is important. While the 1869 half eagle is a coin with true absolute rarity, it is also a coin with limited collector demand. At this point in time, there are few collectors attempting to assemble date sets of Liberty Head half eagles. This lack of demand, obviously, limits the upside potential of this issue.
Let’s choose another example of a coin that is an absolute rarity but one with a higher degree of collector demand. How about an 1861-D gold dollar?
This is a coin that is truly rare in all grades (with fewer than 100 known) AND has a high level of demand. It is admittedly an expensive coin but there always seems to be collectors looking for an 1861-D gold dollar; both at the low end and at the high end of the grading/price spectrum. If I were an investor looking to purchase a U.S. gold coin with good long-term upside, I’d personally be more interested in a coin like the 1861-D gold dollar than, say, a 1907 High Relief in MS64.
As I mentioned earlier in this article, there is one final subcategory of coin: one that combines both condition rarity and absolute rarity. Coins like this are far and few between and they form the cornerstones of truly great advanced collections. An 1861-D gold dollar that graded MS63 or MS64 and was properly graded and cosmetically appealing would epitomize this high grade/high rarity hybrid. It would be one of the finest known examples of a coin that is rare in all grades. Given the fact that it would probably command “only” a 5x to 6x premium over a very average quality example, the upside potential is apparent.
What’s my all-time favorite number one “hyrbid” rare U.S. gold coin? That’s hard to say. But one that clearly stands out for me is the Bass/Norweb 1864-S half eagle graded MS65 by PCGS. This coin is a classic in every sense of the word: it’s extremely rare in all grades, the coin itself is an amazing screaming Gem, and it is the finest known by a mile. There are not many U.S. gold coins that hit a home run on three of these parameters and this one does.
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About Doug Winter
Doug has spent much of his life in the field of numismatics; beginning collecting coins at the age of seven, and by the time he was 10 years old, buying and selling coins at conventions in the New York City area.
In 1989, he founded Douglas Winter Numismatics, and his firm specializes in buying and selling choice and rare US Gold coins, especially US gold coins and all branch mint material.
Recognized as one of the leading specialized numismatic firms, Doug is an award-winning author of over a dozen numismatic books and a recognized expert on US Gold. His knowledge and an exceptional eye for properly graded and original coins have made him one of the most respected figures in the numismatic community and a sought-after dealer by collectors and investors looking for professional personalized service, a select inventory of impeccable quality, and fair and honest pricing. Doug is also a major buyer of all US coins and is always looking to purchase collections both large and small. He can be reached at (214) 675-9897.
Doug has been a contributor to the Guidebook of United States Coins (also known as the “Red Book”) since 1983, Walter Breen’s Encyclopedia of United States and Colonial Coins, Q. David Bowers’ Encyclopedia of United States Silver Dollars and Andrew Pollock’s United States Pattern and Related Issues
In addition, he has authored 13 books on US Gold coins including:
- Gold Coins of the New Orleans Mint: 1839-1909
- Gold Coins of the Carson City Mint: 1870 – 1893
- Gold Coins of the Charlotte Mint: 1838-1861
- Gold Coins of the Dahlonega Mint 1838-1861
- The United States $3 Gold Pieces 1854-1889
- Carson City Gold Coinage 1870-1893: A Rarity and Condition Census Update
- An Insider’s Guide to Collecting Type One Double Eagles
- The Connoisseur’s Guide to United States Gold Coins
- A Collector’s Guide To Indian Head Quarter Eagles
- The Acadiana Collection of New Orleans Coinage
- Type Three Double Eagles, 1877-1907: A Numismatic History and Analysis
- Gold Coins of the Dahlonega Mint, 1838-1861: A Numismatic History and Analysis
- Type Two Double Eagles, 1866-1876: A Numismatic History and Analysis
Finally, Doug is a member of virtually every major numismatic organization, professional trade group and major coin association in the US.