By Charles Morgan and Hubert Walker for CoinWeek ….
It’s inevitable that much of the highly publicized Newman collection will find its way back into the retail market. If recent eBay auction results are any indication, then some resellers may need to brace themselves…
By all accounts, Heritage’s high-profile November auction of more than 1800 U.S. coins from the collection of legendary numismatist Eric P. Newman was a huge success. Buyers, excited by the opportunity to own a piece of one of the hobby’s oldest intact collections, bid to the tune of $23.4 million.[1] The total take was 50% above Heritage’s pre-sale estimate, and served as the capstone to a busy fourth quarter for the coin industry.[2]
Which is why we found it interesting to watch the steady trickle of Newman coins arrive on eBay days after the new owners received them. We bookmarked and followed each of the listings, curious to see how they would sell on the secondary market so soon after the initial offering.
Because unlike most open coin market transactions, in the case of the Newman collection we know what the coins cost as of November 16 (and 15). Then we have the eBay sale price. From these numbers, we can calculate a gross margin and extrapolate transactional costs to arrive at an estimated net profit or loss. The consistency of these results, if any, can tell us about the power of the Newman brand as it enters the secondary market.
Newman at Heritage
The Newman collection was graded by NGC and encapsulated in holders with special edition Eric P. Newman (EPN) Collection labels. These labels bear the logo of the Eric P. Newman Numismatic Education Society, a not-for-profit corporation Mr. Newman founded in 1958. A select number of the coins had also belonged to “Colonel” E.H.R. Green, and are identified as such.
In this instance, marketing and pedigree certification are one and the same. And since the auction was so successful, our hypothesis was that the special labels and NGC plastic would drive up premiums, especially considering that a whopping 928 of the coins earned the CAC green seal of approval.[3]
What might surprise you–if you haven’t looked too closely at the overall makeup of the collection–is that, despite the number of rare and desirable pieces Heritage offered on the second day, most of the material sold was run-of-the-mill “collector coins”: coins of unexceptional character, readily available in the marketplace, and in easily obtainable condition.
Still, they brought strong prices. For many people, just taking part in a once-in-a-lifetime event like the Newman auction justified paying a little more than one might otherwise. For anyone who wanted to hold onto the coins and feel connected to one of the most important collections in American Numismatics, picking up a Newman specimen–whether common or rare–was a worthwhile investment.
But what about dealers, investors, and other profit seekers?
Hammer Prices and Market Value
Did the Newman Sale “Move the Needle”?
Determining the market value of a coin based solely on the results of a high profile auction is problematic.
For starters, no two coins (even in the same grade) are exactly alike, and the amount collectors are willing to pay for a coin of the exact type in the exact same numerical varies widely. We prefer to think of “value” in terms of a sliding scale. A coin can sell for more or less depending on a number of factors. This is the approach Charles has taken when computing values for the last two issues of the Red Book, and it’s a good thing to keep in mind when haggling with dealers or other collectors.
Comparing other sales figures for like coins (derived from readily available auction data on sites like Heritage, eBay, and Stack’s Bowers) with the hammer prices of Newman II, we see that many of the Newman pieces sold at or above top of the market prices. This is OK if the coins in question are spectacular, but that’s not the case for many of the Newman “collector coins” (mostly due to dark and unflattering toning).
For the Newman auction to serve as an indicator of the upward movement of the value of whole coin types and series, the sale of non-Newman coins would have to respond in kind and sell for stronger prices. Because these are “collector coins”, we have a hard time imagining this will happen.
Conversely, one can also look at the resale value of Newman coins on the secondary market to determine whether the Newman label carries a sustained market premium. If that’s the case, then a market analyst would have to factor in the “halo” effect of the Newman pedigree, but not overly inflate the value of non-Newman generic coins simply because collectors will pay more for this particular pedigree.
While a thorough analysis will take years to conduct, in the short term we can look at leading indicators in the market to determine how Newman’s more common pieces are doing in relation to the rest of the market. Our analysis here was compiled by looking at active and completing listings on eBay.
Sine the auction took place only four months ago, we’re assuming that any EPN piece currently or recently offered on eBay was purchased speculatively. We also assume that the original buyer didn’t have a specific customer in mind when they bid on the coin, and that they planned to make a profit reselling it.
At this point, it becomes obvious. If sellers move the coins consistently at a profit or manage to break even, then the strength of the market for Newman coins is holding or improving. If the coins don’t pull a profit but instead bring prices more in line with the present market rate for non-Newman pedigreed coins, then the Newman sale did not move the needle forward, and the excitement for Newman coins may be subsiding.
Newman on eBay
When we last checked on March 20, there were 33 live listings for Newman U.S. coins. Ask prices ranged from $180 (for a 1946-S Walking Liberty half dollar in MS-64) to $49,500 (for a 1847 Seated Liberty half in MS-62). By a slim majority, most of the coins listed were priced under $1,000. At the time, none of the listed coins had bids.[4]
While plenty of people are watching the auctions, the lack of bidding on these pieces tells us that the sellers’ prices are too high.
On the items sold side, we see that approximately 30 Newman U.S. coins have been resold on eBay since December 2013, which is about when the Newman coins would have arrived after being shipped out from Heritage.
Of the coins sold, three sales strategies were employed: 99 cent starting price (no reserve) auctions; reserve auctions starting above original Heritage purchase prices; and Buy it Now listings with a fixed price above the original Heritage purchase price.
The 99 cent option, generally speaking, is a good choice for those looking to generate excitement for a lot. Typically, un-serious bidders will chime in early and bow out once the price of the item increases. If the seller is reasonably sure that the sale price will exceed their cost, this becomes a low risk option. For the Newman sale, as we will see, this strategy carries significant risk.
Sellers who sold coins using the Buy it Now option, on the other hand, had full control of the spread between cost to them and return on investment. That so few Buy it Now listings have completed successfully relative to the number of currently listed Newman lots indicates that these coins are being offered for prices too far above current market levels.
When we analyze the sales prices of coins sold without a reserve price, this becomes even clearer.
Newman Morgan Dollar Listings
The Morgan dollar is by far the most widely collected “collector coin” in the American numismatic marketplace. To date, four Newman Morgan dollars have been resold on eBay. Three San Francisco issues (1881-S, 1882-S, and 1889-S) were listed with no reserve, while a 1903-O was listed at a fixed price.
The 1881-S, 1882-S, and 1889-S were offered by the same seller, who declined to speak with us. He listed the coins in no reserve auctions with a starting price of 99 cents. In all three instances, he purchased the coins for prices well above market value. The 1881-S, MS-65 CAC exhibits dark and dull toning, and brought a significant premium after seventeen bids. Of the three Morgans offered, this coin fared best but still sold for less than it did in November.
The 1882-S, a stronger coin, MS-66 CAC, sold in November for $170 over market value. On eBay, the coin brought slightly more than market ($380), which one might chalk up to a CAC premium (although the coin exhibited dark and dull toning).
The 1889-S in AU-58, sold for more than double its market value during the Heritage sale. On eBay, the Newman label still brought collector exuberance, as the winner of the auction paid a $70 premium over market for the coin, but that didn’t stop the seller from taking a more than $100 loss (before fees) on the listing.
The only coin to turn a profit was a 1903-O, MS-64 CAC, which brought $120 over cost. The coin sold for slightly above market value at the Heritage auction and exhibited average to slightly above average eye appeal, despite its subdued luster and drab toning (notice a theme?).
Assuming 10% cost for the transaction, the seller took away $60 for the sale of this coin. That’s a fairly small return, but the downside risk to the seller was minimized by the fact that he or she purchased the coin for only slightly above the going market price.
Seated Liberty Halves
A second, albeit smaller cluster of coins from the Newman sale that have now traded twice are circulated Seated Liberty half dollars. The coins listed were: an 1872 in XF-40 (2037691-038); an 1877 in AU-55 (2037691-051); and an 1880 in AU-58 CAC (2037686-019).
While the first two Seated halves in our chart brought modest prices compared to many coins in the Newman catalog, the buyer of the 1872 paid almost $150 dollars more than the going rate for an XF-40 type coin. Listed on eBay with a starting price of 99 cents, the coin brought $193.50, which is more or less what one might expect.
The 1877 and the 1880 both turned a profit (before seller fees, that is). The 1877 sold via fixed price listing for $349, bringing slightly more than the typical market price for an AU-55 ($282) and leaving a modest profit of about $20-25 for the seller.
The 1880 can be had for about $1000 in AU-58. This CAC’ed example with better than average eye appeal (still darkly toned, however) brought $1233.75 the first go-round. The coin found a buyer through a fixed price Listing at $1540, leaving the seller with a respectable margin of $150 on the transaction.
In two of these three instances, the market has behaved much like one would expect. The value of certified common date Seated Liberty half dollars remains unchanged, despite the results of last month’s high profile sale.
As for the 1880 (a low mintage coin, scarce in Mint State), we may be seeing an uptick in market price. In 2012, two NGC AU-58s sold at Heritage for $805 and $1,093, respectively. The last PCGS example sold in 2011 for $833, and again in 2010 for $920. We think we’ve seen the last of the days when you can find a quality AU-58 example of this coin for less than $1,000. It’s possible that the Newman Sale buyer paid close to the market rate. The eBay buyer, nevertheless, overpaid. $1,540 is MS-63 money.
Continuing a Theme
Our next graph shows the sale and resale prices of seven Newman coins from various series. All of these show the same basic trend: they were purchased at a premium and sold for a loss. Of the seven, the 1907-D Barber dime and the 1912 Liberty “V” nickel came closest to break even for the seller. They were also the two coins purchased at auction closest to the prevailing market price.
The dime, an AU-58 (2037628-029) cost seller Praxis Tangibles $188 and brought a final eBay bid of $122.50, which is actually about $25 dollars less than the expected market price. The coin suffered, as most of these issues do, from negative eye appeal and bad toning.
The 1912 nickel, an attractive MS-64 type coin (2037615-053), garnered 41 bids before selling for $159.59 in a January eBay auction. This again is a bargain price for the coin, as we’d expect it to sell for $175. The seller paid $200 for the coin in November.
The remaining five coins fared worse. The $1,000 purchase of a MS-65 (2037603-064) 1861 half dime ended up in a $330 loss for the seller. Dark toning hampered the marketability of a coin that routinely brings about $800.
A 1927 Peace dollar in MS-63, attributed VAM-2 DDO Motto (2037732-115), brought the market rate of $232. The seller paid $440 for the coin in November. Likewise, the 1911-D Barber dime (2037628-030) and the 1915-S Barber half brought about what we’d expect based on the current market rate of the two coins. Both coins were purchased at auction prices nearly double their actual value.
Of all of the coins, none fared worse by percentage than the 1935-S Buffalo nickel in MS-64 CAC (2037622-002). The original buyer lost nearly three fourths of his investment after paying nearly $200 for what is usually a $65 dollar coin!
Selling for Profit (A Simple Strategy)
This last cluster of Newman coins all sold for a profit on eBay. All but the 1947 Walking Liberty half dollar were listed either at a fixed price or in auctions where the starting price posted was higher than the purchase price.
The 1928-S Walking Liberty, the 1877 Seated half discussed earlier and the 1916 Mercury dime all sold for more than they cost last November. Both of the half dollar auctions were fixed price. The Mercury had a starting bid of $150 (for a $55 coin) and realized an astonishing $177.50.
Heritage realized less than the market price for the 1947 Walking Liberty half dollar on our list. The piece, MS-66+ CAC (2037691-131), is genuinely pretty, with pearlescent toning and strong luster. The seller listed the coins with better photographs than the ones Heritage used and realized a price of $500.76–exactly the market value we use in our price guide calculations.
That 1930 Buffalo at the end of the graph, MS-64 CAC (2037615-080), is interesting due to the fact that it has now traded three times. Well, twice, technically. The seller paid $141 for the coin when it was offered by Heritage and then sold it in December for $229.50. The buyer got the coin in hand, didn’t like it and returned it. The seller relisted the coin in January and realized a much more modest profit of $161.58. After fees, the coin probably netted $4 or $5. That’s a pretty hard way to make a living.
The Waiting Game
People buy coins at major public auctions for any number of reasons, including for the purpose of reselling the coins at a profit. For experienced dealers, the game is every bit as much about knowing your customer, your specialty series, and the strength of the market for a particular coin. Even with the Newman sale achieving 50% above the presale estimate, there were bargains to be had and dollars to be made, and dealers bought lots of material with plans to move it immediately.
The purpose of this article isn’t to disparage the collection or buyers simply trying to make some money speculating in the coin industry, but to look at the strategies of those trying to flip coins in the online market.
If we can take away one thing from our analysis, it’s that the buyers who lost money didn’t read the market all that well, especially those who opened themselves up to tremendous losses by listing pieces with no reserves and 99 cent start prices.
While the Newman label does carry strength in the market at this time, it’s not nearly enough to cover the over-exuberance of buyers who overpaid (sometimes by factors of two or three) for collector coins. Accounting for eBay fees, which can take anywhere from 10% to 13% of the hammer price, sellers fared even worse.
Newman Coins Today and Tomorrow
The Eric P. Newman Numismatic Education Society made out like a bandit with these sales. The prices Newman paid for most of his material are shockingly low to modern day coin enthusiasts; Jeff Garrett estimates that Newman spent $7,500 total for all of the coins offered in this auction.[5] But Newman also held onto this material for the better part of a century. That’s patience, perseverance, and great genes.
As has been the case for the hobby in general for the past hundred or so years, those buying coins for their personal collections will also find patience to be a key virtue.
Sophisticated dealers, well familiar with the ins-and-outs of their specific series specialties and client want lists, are already making money and will continue to do so.
Museum quality pieces, like the MS-67+ 1796 quarter that sold for $1.5 million, or the razor sharp 1799 Draped Bust 7×6 Stars dollar that brought $822,500, may come around only once in a lifetime. For issues like these, today’s profligate spending will look like tomorrow’s keen-eyed bargain.
Clearly, not every coin in every major collection can be that impressive. Newman certainly didn’t shy away from holding onto mediocre coins or maintaining redundant holdings.
For these coins, the Newman label might help on the secondary market, just as it did when Heritage offered the coins in the first place. Our gut feeling is that the “Newman” premium will subside. Too much of it has substandard eye appeal due to its toning and there’s so much slabbed material on the marketplace that common date, common grade coins in the lower register of Mint State can’t compete with better looking, better grade coins.
And while we doubt it will take 90 years for the buyers of these collector coins to turn a profit over their cash outlay, it seems certain that it’ll take longer than the 60 or 90 days some cavalier buyers have given them.
Notes
[1] http://coins.ha.com/c/print-prices-realized.zx?saleNo=1190
[3] Total of 928 coins based on our count.
[4] You can do this query yourself by searching Newman NGC in the eBay search box. For sold items run the same query in the Advanced Search Menu, selecting Sold Items.
[5] https://coinweek.com/market-reports/coin-collections-eric-p-newman-sales-scales-new-heights/
]
There is nothing really new here with regard to later sales of famous pedigreed coins.
When oldtime collections, Garrett, Eliasberg, Norweb, Ford etc get sold, the items often sell for inflated prices – due to pedigree and “freshness” in the market – and then the prices come back down to earth as time and market conditions change. This is especially true for basic type or common coins. Some Garrett seated proofs, for example, have still not recovered their original sales price 35 years later.
Buyers in these type of sales need to be careful as to what they are buying. There is no reason to pay a premium on a common coin in an average grade just because it has a great pedigree.
In fact some Newman coins have been removed from their original holders and placed in regular slabs in the hope that they will appear new and thus bring a better price. An example is Newman’s 1881 three cent pattern Judd 1669. It originally sold as an NGC64+RB CAC for $5,581 in the Newman sale and was then crossed over to PCGS as PCGS65RB with no mention of a Newman pedigree and brought slightly less, $5,288, in a later Heritage sale.
Outstanding research piece. Mirrors my observation that too much inexperienced (perhaps dumb) money is trying to make it “big” and quick with rare coins.
Actually, there was at least one coin resold on eBay, BIN, for LESS than the EPN sale hammer price. I figured it was a mistake, but snapped it up since I had been willing to pay more (although I was an underbidder) at the sale…