News and Analysis regarding scarce coins, coin markets, and the coin collecting community, #23-Part2
A continuation of a Weekly Column by Greg Reynolds
Usually, this column is published each Wednesday morning and not at other times. I came to believe, however, that this week’s topic is of tremendous importance and warrants two parts. [Click Here to View Part One] My survey of sophisticated collectors and expert dealers, shockingly, indicated that, while most realized that 1933/34 is the traditional dividing line between classic and modern U.S. coinage, few remembered or ever knew the primary reason. U.S. coins minted before 1934 are much scarcer than U.S. coins minted after 1934. Indeed, though there are a few exceptions, regular issue U.S. coins minted after 1934 are common.
From the perspective of a collector, this is the most important and clearest dividing line in the whole history of U.S. coinage. As the basis for this dividing line is not well understood, I feel compelled to explain and prove its importance. I presented logical points and evidence in part 1, and I provide more evidence herein. I then discuss one major reason why it is imperative to emphasize this dividing line now; many people are spending substantial or even vast sums for very common coins, usually without really understanding the factors involved and the traditions of coin collecting in the U.S.
IV. Walking Liberty Half Dollars
As the somewhat recent sharp rises in the price of silver has affected the values of circulated Walking Liberty Half Dollars, it makes sense here to consider those that grade AU-50 or higher. As no Walkers were minted in Philadelphia that date from 1922 to 1933, it may not be suitable to analyze comparative values for Philadelphia Mint halves in terms of the 1933/34 dividing line. Therefore, I refer to Denver and San Francisco Mint halves. Of all the Denver Mint Walkers minted prior to 1934, the 1929-D is the least expensive and the least scarce.
In AU-50 grade, a 1929-D half is worth about three to more than ten times as much as any Denver Mint half dating from 1934 to 1945, with one exception, the 1938-D. The 1938-D is the only regular issue exception, of the half dollar denomination, to the 1933/34 dividing line between relatively scarce U.S. coins and relatively common coins. The 1938-D half is scarce, much more so than any other Denver Mint half dollar issue in the 1930s or later.
In regard to San Francisco Mint halves, there is no such exception. In AU-50 or higher grades, any pre-1934 S-Mint Walker is worth substantially more, usually from two to more than ten times as much, than any San Francisco Mint Walker from 1934-S to the last S-Mint Walking Liberty Half, 1946-S. In relative terms, pre-1934 San Francisco Mint halves are ‘very scarce’ and post-1934 San Francisco halves are quite common.
V. Buffalo Nickels
Buffalo Nickels were minted from 1913 to 1938. As Type 1 Buffalo Nickels were only minted in the first part of 1913, these are not really relevant to the present discussion. Among Type 2 Buffalo Nickels minted in Philadelphia prior to 1934, the 1929 is the least valuable. There are only four dates of Philadelphia Mint Buffalo Nickels minted after 1933. (As the 1937 3-leg variety falls into a special category, it is not relevant the 1933/34 dividing line.) Dating from 1934 to 1937, the scarcest and most valuable Philadelphia nickel is the 1934.
Strangely, in two to four grade levels, the 1934 nickel is more valuable than the 1929 nickel. In every other grade, however, the 1929 is more valuable. The 1929 is worth a little more than the 1934 in EF-40 grade and more than twice as much in MS-65 grade. From MS-60 to MS-63, however, it seems that the 1934 Buffalo Nickel is worth more than the 1929. To some extent, this is an exception to the rule of the 1933/34 dividing line. Besides, coins struck in 1934 are almost on the dividing line and some may be viewed as transitional issues in this context. All Philadelphia Mint Buffalo Nickels dating prior to 1934 are worth more than all Philadelphia Mint Buffalo nickels dating AFTER 1934, in the same respective grades.
There is a similar anomaly among Denver Mint Buffalo Nickels. While the 1928-D and the 1929-D are each clearly scarcer than the 1934-D overall, the 1934-D is worth more in a few grades. In Very Fine and Extremely Fine grades, and in MS-64 and higher grades, the 1928-D and the 1929-D are each more valuable than the 1934-D. From MS-60 to MS-63, though, the 1934-D seems to be worth more than either a 1928-D or a 1929-D nickel. Denver Mint Nickels minted prior to 1934 are certainly much scarcer and more valuable, however, than D-Mint nickels minted AFTER 1934. (Die varieties and Mint Errors are separate topics.)
In some grades, 1929-San Francisco Mint nickels are similar in value to 1935-S nickels. Overall, the 1929-S is much scarcer and considerably more valuable. There are no 1932-S, ’33-S or ’34-S nickels. Pre-1934 San Francisco Mint Buffalo Nickels tend to be worth more than twice as much as any post-1934 S-Mint nickel.
VI. Coins Beside the Present Point
Generally, business strikes dating after 1934 are much more common than corresponding business strikes dating before 1934. It does not follow, however, that all U.S. coins dating from before 1934 are scarce.
There are some very common coin issues that were struck before 1934. These are exceptions to the rule, but they do exist. There are hundreds of thousands of Morgan Dollars dated 1921. Morgans dated 1881-S also exist in very large quantities, even in MS-64 and MS-65 grades. Additionally, there are several pre-1933 gold issues that are very common, including 1926 Eagles ($10 coins), 1932 Eagles, 1924 Double Eagles ($20 coins) and 1928 Double Eagles. Undoubtedly, some pre-1934 Buffalo Nickels and Lincoln cents are very common in grades less than Fine. There are other exceptions to the rule.
Commemoratives are not regular issue U.S. coins and this topic is complicated. Commemoratives constitute only a small percentage of all the coins minted in the U.S. during the 20th century. Vintage commemoratives were minted at times from 1892 to 1954, and only a few of these issues came after the mid-1930s. Modern Commemoratives have been minted since 1982 (or starting in the 1970s if Ike dollars and/or bicentennial coinage are considered commemoratives.) Some modern commemoratives are scarcer than a few vintage commemorative issues.
Mr. Kris Oyster states that modern commemoratives are often “a flash in the pan, when people are hot and heavy collecting new issues. The fervor dies down as the issue ages. That has happened with the Jackie Robinson [commemorative] and the [Library of Congress] bimetal coin. It has happened with several modern commems already. These are popular after they come out, prices go up fast, and they fizzle. After they lose their fervor, prices fall,” Oyster says.” Kris is managing director of numismatics for DGSE.
Vintage 1892 to 1954 commemoratives, in Oyster’s view, “have so much more going for them than modern commemoratives. Pricewise, they do not cost that much more than modern commems cost. They are better values. Most of the old commemoratives have already been PCGS or NGC graded, while a lot of the modern commemoratives have not been [submitted]. Potentially, there are lots more 67s, 68s, and 69s out there.”
Collectors who focus on classic U.S. coins are generally not enthusiastic about modern commemoratives or regular modern issues that are certified as grading “69” or “70.” The field of modern U.S. coinage tends to consist of extremely common coins and/or coins for which thousands exist in “66” or higher grades (in terms of PCGS and NGC criteria for modern coins.)
VII. Implications of the Dividing Line
For regular issue, business strike U.S. coins, the 1933/34 dividing line is not an opinion, but is based upon logic and fact. It divides coins that are scarce from those that are relatively much more common. Yes, there are few exceptions. Of course, Proofs and Mint Errors are in separate categories, as are unusual die varieties. Most importantly, there is a recognized, objective way of distinguishing classic, regular issue U.S. coinage from ‘modern’ much more common U.S. coinage. This dividing line is based upon BOTH tradition and truth.
Why is it imperative to focus upon the dividing line in the current era? There has been a trend, over the last two decades, for people, especially new collectors, to spend substantial sums on condition rarities of very common coin issues. Yes, condition rarities have always had considerable value. Even in auctions of famous collections conducted from 1904 to 1915, superb gem coins realized multiples of the prices that respective coins of the same issue, in lower grades, were worth at the time. Consider a distinction, however, between a condition rarity of a coin issue for which a few thousand (or even 20,000) exist in all grades and a condition rarity of an issue for which fifty thousand to more than one million in exist in all grades.
Consider market prices for MS-67 and higher grade State Quarters. For 1999 Delaware State Quarters, the PCGS price guide values a Philadelphia Mint issue in MS-67 grade at $90 and at $2350 in MS-68 grade. The mintage is more than 373 million, considerably more than the human population of the United States. Denver Mint Delaware quarters are priced higher, $150 in MS-67 grade and $8750 in MS-68 grade. The mintage for these is more than 400 million!
In Kris Oyster’s experience of managing coin purchases and sales in stores run by DGSE, Kris finds that “there are rolls and bags of State Quarters everywhere. There are guys who went out and bought all the Delaware quarters they could buy [in 1999]. People often bring in rolls of State Quarters. Of course, there are lots more 67s and 68s that have not been sent to PCGS or NGC,” Oyster concludes.
Although Washington Quarters from the 1950s and early 1960s are not as common as State Quarters, for decades, people have hoarded them as bullion investments because of their silver content. In April 2008, I wrote about some auction records for Washington Quarters. A PCGS graded MS-68 1954-S then sold for $10,350. In Jan. 2007, a PCGS graded MS-67 1954-S was auctioned for $1495. A PCGS graded MS-65 1954-S is worth around $30 and one that is not certified is worth perhaps $15. Prices of Good-04 to AU-50 grade 1954-S quarters are largely based upon their silver bullion value, though some of these are attractive coins.
There is a good chance that there are hundreds of thousands of 1954-S quarters in existence. More than ten million were minted! There could be many that currently grade (or would be graded) MS-65 or MS-66 and some of these will naturally tone in the future. Maybe many 1954-S quarters have nicely naturally toned already and have never been submitted to the PCGS or the NGC? Some of these may eventually be graded as MS-67 or higher. Of course, 1954-S quarters that grade MS-67 or higher should be worth more than silver bullion value. It is questionable as to whether these should be each worth more than one thousand dollars, let alone more than $10,000!
On April 15, 2008, the lone PCGS graded MS-67 1961-D quarter sold at auction for $18,975! The mintage of 1961-D quarters is more than eighty-three million. Further, Brilliant Uncirculated (Mint State) rolls of new coins were avidly, frequently and wildly traded in the coin business in the early 1960s. Although this is (or was) the only 1961-D quarter that is PCGS graded MS-67, it may be likely that more will be so certified in the future. Surely, many people possess rolls of 1961-D quarters, usually without even realizing that these may be worth more than bullion (silver) value. Anyways, the PCGS price guide values a 1961-D at $25 in MS-65 and at $210 in MS-66 grade. There are probably many thousands of 1961-D quarters that would qualify for a MS-65 grade. It may not be worth the cost of submitting them to the PCGS for grading. Furthermore, MS-65 grade quarters may naturally tone in the future. It is likely that the grades of some of them will legitimately rise.
Does it make sense to pay even $210 for a quarter if millions of the same coin issue are likely to exist? Even if just three percent of the mintage of eighty-three million survives now, there would be more than two million 1961-D quarters in existence. There are hundreds of thousands, or even millions, of many individual U.S coin issues minted since 1934. Does it make logical sense to collect AND pay substantial sums for coins that are extremely common?
©2010 Greg Reynolds