Or, Why One Bad Auction Price Result Shouldn’t Take Down Price Levels on Specific Coins
Bad Auction Price Result Shouldn’t Take Down Price Levels By Doug Winter – RareGoldCoins.com ……
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As a dealer, I’ve seen it dozens–if not hundreds–of times. A fairly scarce issue has been selling for, say, $5,000 USD for the last few years. Oh, sure, there’s been some variation: a PQ example sold for $5,750 and one with some scuffs in the left obverse field brought $4,750. But the auction price for this issue has remained fairly consistent over the last few auction appearances.
Until the unthinkable happens.
A very low-end example of this specific issue hammers for $3,250. And you happen to have a pretty nice piece in stock that you paid $4,750 for and were asking $5,250. You take the coin to the next major show and three people pull the coin from your box. You quote $5,000. All three people quickly pass on the coin. When a fourth potential buyer passes on it as well, you ask him why.
“This recent Auction Price Realized (APR) of $3,250 is going to make it hard for me to sell the coin,” he says.
“But look at the coin that sold for $3,250. It’s majorly ugly with splotchy toning,” you reply.
He hems and haws but you already know what he is thinking: your coin is now worth $3,250.
And that, in a nutshell, is the major problem with trading in a thinly capitalized market with a great deal of subjectivity inherent in coin grading.
There are instances when a downturn in price is 100% legitimate. As an example, there are numerous Carson City double eagles coming into the market in 2019. If you look at a coin such as the 1889-CC in AU58, you’ll see an issue that has dropped 30-40% in value. But this isn’t the result of a single bad coin; it’s the result of an oversupply of coins.
1838-C $2.50 PCGS AU58 CAC. Images courtesy Douglas Winter Numismatics (DWN)
Let’s look at a specific instance where the sale of one coin has hurt the value of a legitimately rare issue: an 1838-C quarter eagle in AU58. This coin is not only conditionally rare; it is numismatically significant as it is the very first quarter eagle from the newly-opened Charlotte Mint.
In December 2017, an example of this issue graded AU58 by NGC brought $13,200 at auction. In my opinion, the coin wasn’t especially nice and its price realized was reflective of this.
No other examples of this date in AU58 had sold at auction since 2012 when a PCGS coin brought $17,625 and, three months before this, an NGC coin realized $16,738.
As a result of the 12/17 APR, the value of an NGC AU58 1838-C quarter eagle theoretically dropped nearly 30%.
There is, of course, an argument that can be made against this.
Every coin is different, and a nice NGC AU58 1838-C quarter eagle is clearly worth more than an average or a low-end one. But unless your coin is stickered by CAC, there is a strong possibility that the next 1838-C that sells (privately or at auction) is going to have its value based on this one transaction.
What can be done to combat the One Bad Auction Price Result Conundrum that plagues the rare date gold market?
I think the answer is being an informed collector or dealer. It has been established that coins basically come in four flavors:
- PCGS non-CAC
- NGC non-CAC
If we have established that a mediocre NGC AU58 is worth $13,200, we can interpolate the following values for “better” examples:
- PCGS non-CAC: $14,000-15,000
- NGC/CAC: $15,000-16,000
- PCGS/CAC: $16,000-17,000+ (a really PQ example might actually bring as much as $18,000 or even $19,000)
The problem with this is that no price guide can publish four different values for each US coin in every pertinent grade. This would be a Herculean task, not to mention one which would take up considerable bandwidth.
The best answer I can give is to become knowledgeable with the series you collect – or if you are a dealer, the various series in which you specialize. Become comfortable enough with valuations that you know which coins are desirable enough to not lose 30% of their value based on one bad auction price result and which coins have a tenuous enough value that one bad apple can actually spoil the whole bunch.
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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 the recognized expert on US Gold. His knowledge and an exceptional eye for properly graded and original coins has 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 “Redbook”) 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.