On Collecting Bicentennial Quarters: Risks and Rewards

By Charles Morgan with Hubert Walker for CoinWeek …..

As a child of the ‘80s, I was always fond of the Bicentennial quarter. It still turns up in pocket change once in a while, and roll hunters can run across more than a few when poring over bank boxes. Most circulating specimens survive in F to XF, with AU pieces popping up from time to time- no doubt hoarded coins that found their way back into circulation after all these years. As for surviving mint-state coins, who knows? More than 1.6 billion Philly and Denver business strikes were minted in the Bicentennial quarter’s two-year run[1]. It’s possible that tens of millions are still being hoarded, not to mention the fact that this is the type of low-cost numismatic product that every coin dealer across the country has in stock.

The reverse of the Bicentennial quarter was designed by Jack Ahr. In a mint press release dated March 6, 1974, Ahr is described as the owner of Jack Ahr Design and Sales, a design firm he started in 1972. Ahr’s company designed awards and plaques for local businesses.[2] His firm is still active, and you can visit his website at www.jackahrdesign.com. On the site, Ahr briefly mentions his work on the coin. He points out that you can see his initials “JLA” underneath the left arm of the drummer. But outside of attending a few coin shows and signing Special Edition labels for PCGS, Ahr has not made too much of his numismatic celebrity in recent years.

Collecting the 1776-1976 Bicentennial Quarter

The key to collecting the 1976 Bicentennial quarter is finding not only a coin free of detracting marks and scrapes (good luck with that), but also finding one that is fully struck. A clean obverse plus a fully-struck reverse equals a premium quality coin.

Tips to finding a clean obverse:

Obverse scratches can happen anywhere, but the area high on Washington’s cheekbone tends to be the most susceptible to serious grade-limiting abrasions. Annealing chatter is another factor. This is caused during planchet preparation, and when not fully struck, the coin will have areas of literally thousands of tiny scratches, resembling a star field. These aren’t contact marks or scratches that happened to the coin after it has been pressed, but rather, abrasions to the planchet that occurred before pressing. Annealing chatter is typically grade-limiting. If you’re not sure what I mean, take a look at mint-state Jefferson nickels. The typical Jefferson nickel is riddled with chatter, especially on and around Jefferson’s jawline.

A fully struck reverse:

On the reverse, you’ll find that most Bicentennial Quarters are not fully struck, specifically near the top of the drum. I chewed through a little more than one hundred 1975 and 1976 mint sets this week to get a sense of the typical quality of mint set Bicentennial quarters. The fact that the drum details are seldom fully stamped out is no secret to Washington quarter specialists, but since it’s a low-value coin there hasn’t been much of a demand for third-party attribution of fully-struck examples.

I tracked Philly and Denver strikes using four unofficial categories of fullness: 100% Full (well-defined top clasp and top drum rim), 90-99% Full (Drum rim and clasp are there, clasp is flattened to various degrees), Flattened Drum, Some Detail (the barest elements of the clasp are present; drum is not washed out but not well-defined), and Incomplete Drum (top rim details are totally washed out).

Nearly all of the Bicentennial quarters that I came across were attractive and well-made coins. Some even had bold blast white luster and “knock-your-socks-off” eye appeal. But even these coins typically didn’t typically have that 100% full drum, so I imagine finding a blazingly nice coin that’s free of scratches and bag marks PLUS a full drum is a special coin, indeed. Clearly, 100 or so mint set coins is purely anecdotal evidence, so take it with a grain of salt- but I feel it does highlight what your expectations should be if you enjoy digging through mint sets like I do. Also, if you consider that the market really hasn’t focused on this coin, now is as good a time as any to save as many high-grade fully-struck examples as possible.

What Do Others Think?

Recently, I finished reading Q. David Bowers’ A Guide Book of Washington and State Quarters (2007), and I’m left puzzled by his assessment of the series. Now, I’m not pitting my numismatic expertise against his – I would lose every time. However, I wonder whether Mr. Bowers thinks that collecting modern era coinage like the Washington quarter is a worthwhile pursuit.

The collecting and selling of moderns is a specialty area. Its value proposition relies on the theory that selective taking from an enormous population of struck coins can create a much smaller pool of collectible coins. This is one of the driving principles behind strike-based attributions like “Full Bell Lines”, “Full Bands”, “Full Torch”, and “Full Steps”. Traditional collectors point to lower mintage classic coins as being the better buy, arguing that these are truly rare, can have a century or more of numismatic importance, and do not have millions unaccounted-for pieces waiting in the wings to pop up and throw off everyone’s population numbers.

My belief is that these assumptions are not entirely correct, since collectors aren’t presented with an either/ or proposition. There’s no reason to, say, collect 18th-century large cents at the expense of Seated Liberty Quarters, so the pursuit of top quality, toned Washington Quarters in MS-66 does not come at the expense of putting together any other set.

The collecting of high-grade moderns is a forward-thinking proposition: you’re paying premium prices for contemporary coins now in the belief that future specimens in very high grades will be harder to find. Ironically, one reason very high grade specimens will rise in value is a result of the prevailing assumptions about modern coins. Graded moderns are often valued lower than the cost of having them graded, so this keeps populations low and preserves the perceived scarcity of top population examples.

Mr. Bowers, however, does not give much currency to this argument, and instead advises collectors to collect mid-grade coins, specifically coins in MS-65.

Let’s take a look at in what kind of position taking his approach would put a collector, using data pulled from PCGS and NGC population reports for the Bicentennial quarter:

Based on PCGS and NGC population reports, 1976 Bicentennial quarters at MS-65 account for less than 25% of the total graded between MS-63 and MS-67. It is my opinion that holding onto an MS-65 graded quarter for long-term resale would put you at a disadvantage as there are nearly twice as many MS-66 coins in the marketplace and MS-67 coins are not sufficiently scarce enough to make MS-66 and MS-65 coins desirable to the price-sensitive collector.

If you look at the PCGS and NGC Grade Dispersal charts above, you’ll see that in all instances holding onto an MS-65 graded Bicentennial quarter will put you in a minority position. If the price of this date did appreciate in the future, why would a buyer choose your MS-65 coin when there are twice as many coins available in the next higher grade, and nearly as many coins graded at MS-67 than as MS-65? By following this advice, you lose any leverage whatsoever in terms of the potential for future price performance. Let’s test Bowers’ Optimum Collecting Grade (OCG) by comparing his 2007 price chart to NGC and PCGS’s current price guides:

Q. David Bowers 2007 Market Values vs. 2012 PCGS Price Guide 1976-P Quarter

Now let’s take a look at the same table taking out the submission fee for grading the coin. Note that any submitted coin that grades under MS-66 is a losing proposition based on current market conditions and based on PCGS’s price guide, a coin at MS-66 is a break even proposition:

Q. David Bowers 2007 Market Values vs. 2012 PCGS Price Guide 1976-P Quarter MINUS GRADING FEE[7]

Bowers does not list pricing for grades above MS-67 for any Washington quarter until the start of the state quarters program in 1999, where he lists pricing up to MS-68. For the state quarters series he does not offer his opinion as to which is the Optimum Collecting Grade. It’s possible that the market for state quarters has not matured to the point where Bowers feels compelled to form an opinion. Of course, I’ll gladly defer to Mr. Bowers for an explanation as to why the OCG for Washington Quarters for the 1976 P and D quarter is MS-65. Still, it seems to me that one requirement for an Optimum Collecting Grade is leverage- if you are in any way looking at your collection in terms of investment value and profit potential.

A Contrarian Viewpoint

Maybe all of this talk about strike, drums, condition rarity, and Optimum Collecting Grades is moot. The Washington Bicentennial quarter was minted for two years with a combined mintage of 1,669,902,855![12] That comes to $417,475,713.75 total face value. It’s certainly possible that this issue will never accumulate any significant numismatic value. It’s definitely not (at this point, anyway) the kind of coin that would be a big winner for someone considering submitting it to a third-party grading company for encapsulation. Of all of the quarters I looked at in my recent stack of mint sets, I estimate that perhaps two of them would grade at MS-66, which gives me a potential profit of $1 to $13.50, with $14 or more in costs per coin when you factor in grading, shipping and handling, and the purchase price. In the end, though, it’s up to the collector to decide. If you’re the kind of collector that wants the best quality specimens, you can pore over hundreds and hundreds of coins and submit them yourself or pay up to $160 for a ready-made coin – hopefully one that’s fully-struck with a well-defined drum. If you’re the kind of collector that doesn’t worry about having a registry quality set, then ignore everything I’ve just said. Because Bicentennial quarters are still out there and still cheap, and they’ll be that way for a long, long time. Ah, memories!

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References

Bowers, Q. David. A Guide Book of Washington and State Quarter Dollars (Official Red Books). Whitman, 2007 (1st Edition).

Yeoman, R. S. A Guide Book of United States Coins 2012. Whitman, 2012 (65^th Edition).