Posted by Jeff Garrett on the Numismatic Guaranty Corporation Weekly Market Report …..
Auction records are easily accessible for collectors and dealers today but 15 – 20 years ago they were hard to come by.
A quarter century ago, the world of rare coin pricing was considerably more difficult than it is today. Anyone wanting to establish the value of a coin had limited tools. The standard references of the time were generally Greysheet, Redbook and Coin World Trends. These were updated rather infrequently and were basic, at best. Most price guides also featured a much more narrow range of grades than what is offered today. Numismatic experience was very valuable for anyone with the skills to understand the nuances of coin values. Collectors and dealers today have so much more useful information at their fingertips. This explosion of information is one of the big reasons rare coins have performed so well in the last couple of decades. One of the key numismatic tools that has been developed in recent years is the creation of sophisticated auction record databases.
Professional numismatists today rely heavily on these auction records to establish values when buying or selling. For transactions of coins over $1,000 in value, auction records have become one of the most important elements when deciding to make a purchase. As with any pricing mechanism, however, there is much to interpret when studying a coin’s auction performance.
Many in the industry debate whether auction records are a reflection of the wholesale or retail markets. A very strong argument can be made for both sides of the fence. In my opinion, auction records for coins with a very strong collector base usually reflect retail prices more closely. This would be for popular series such as Morgan Dollars in high grade, Walking Liberty Half Dollars, and Mercury Dimes. Of course, anything at the top of the population reports usually sell to collectors for strong retail prices. Series with a weaker collector base are often purchased by dealers willing to wait for a buyer to materialize. Coins with a substandard appearance might also sell for much less than normal. Generic gold coins and other commodity based coins also sell for prices much closer to wholesale than retail.
Auction records today are available for most collectors or dealers considering a rare coin purchase. That has not always been the case. About 15-20 years ago, auction records were hard to come by. None of the auction houses made the information available in a database, and the only printed versions were the Rome’s Prices Realized books. These came out yearly, and only the most advanced dealers bothered to purchase them. The need for auction records in a database actually began as a tool for research. In the late 1990s, when personal computers became widespread, a couple of other researchers and I began to assemble auction records. We focused on sales starting in 1984, when third party grading took off. The first auction records were hand assembled by a group of college students who sat in my office and entered in the information from the actual catalogues. This was tedious and very time consuming, especially considering that these students knew little or nothing about rare coins. After about six months, we had assembled a very useful database of rare coin auction records.
It did not take me long to realize the value of these records. During a Michigan State coin show, for example, a dealer offered me an 1841 Quarter Eagle. The coin was priced quite high in relation to Greysheet and other retail guides. A quick check of my auction records showed that similar coins were selling for nearly twice his asking price. I realized that auction records were almost an unfair advantage when buying and selling coins. The original idea for the auction records was for research, but the commercial application was quite obvious. We soon hired more students and expanded the database. Others quickly followed offering auction record information. Heritage has made incredible use of the gigantic numbers of auction records they have assembled. Jim Halperin gave a speech recently and noted that Heritage saw the commercial value of keeping this information proprietary, but they opted to offer the information to everyone to expand the hobby. I believe the Heritage Auction database is one of the keys to the success of their incredibly popular website.
As mentioned above, auction records are a great tool, but they can be complicated to understand. Just because a rare coin sells for twice catalogue, it does not mean they are all worth that amount. The same can be said for coins selling for deep discounts to current price guides. Collectors and dealers need to consider many factors, including eye appeal of the coin, market conditions at the sale, and other issues. If you see an auction record that is unusual, try locating an image of the coin. A price could be the result of awesome toning, an old holder, or incredible luster. A study of auction records for actual examples is one of the best ways for collectors and dealers to more fully understand the series they have chosen. You can also use auction records in negotiations. It’s hard for someone to charge a much higher price than a current auction record without some sort of justification.
As with any tool, knowing how to use the records is vital to your success. Price guides are useful, but having the security of knowing what an actual coin sold for is very reassuring. Charles Anderson, owner of Whitman Publishing, assembled one of the largest Pattern coin collections ever assembled. He told me that he would not have collected them without the assistance of auction records. If you start using them, auction records will soon be a part of your collecting strategy.
Questions about the rare coin market? Send them to [email protected]
About Jeff Garrett
Jeff Garrett, founder of Mid-American Rare Coin Galleries, is considered one of the nation’s top experts in U.S. coinage — and knowledge lies at the foundation of Jeff’s numismatic career. With more than 35 years of experience, he is one of the top experts in numismatics. The “experts’ expert,” Jeff has personally bought and sold nearly every U.S. coin ever issued. Not a day goes by that someone doesn’t call on Jeff Garrett for numismatic advice. This includes many of the nation’s largest coin dealers, publishers, museums and institutions.
In addition to owning and operating Mid-American Rare Coin Galleries, Jeff Garrett is a major shareholder in Sarasota Rare Coin Galleries. His combined annual sales in rare coins and precious metals — between Mid-American in Kentucky and Sarasota Rare Coin Galleries in Florida — total more than $25 million.
Jeff Garrett has authored many of today’s most popular numismatic books, including Encyclopedia of U.S. Gold Coins 1795–1933: Circulating, Proof, Commemorative, and Pattern Issues; 100 Greatest U.S. Coins; and United States Coinage: A Study By Type. He is also the price editor for The Official Redbook: A Guide Book of United States Coins.
Jeff was also one of the original coin graders for the Professional Coin Grading Service (PCGS). He is today considered one of the country’s best coin graders and was the winner of the 2005 PCGS World Series of Grading. Today, he serves as a consultant to Numismatic Guaranty Corporation (NGC), the world’s largest coin grading company.
Jeff plays an important role at the Smithsonian Institution’s National Numismatic Department and serves as consultant to the museum on funding, exhibits, conservation and research. Thanks to the efforts of Jeff and many others, rare U.S. coins are once again on exhibit at the Smithsonian Institution’s Museum of American History. We urge everyone who visits Washington, D.C., to view this fabulous display.
Jeff has been a member of the prestigious Professional Numismatic Guild (PNG) since 1982 and has recently served as president of the organization. In 2009 and 2011, Jeff ran successfully for a seat on the Board of Governors for the American Numismatic Association (ANA), the leading numismatic club in the world. He plans to run for ANA vice president in 2013.