By Charles Morgan and Hubert Walker for CoinWeek …..
We talked about Bicentennial quarters in one of the first pieces we wrote for CoinWeek. We discussed the characteristics of a full strike, analyzed the Mint State grade distribution of Philadelphia and Denver Mint coins by PCGS and NGC, and questioned whether the coin would ever see an appreciable rise in value. This week, we dip back into the well of America’s Bicentennial coinage to discuss the silver-clad three-coin Uncirculated Set.
This set was one of two silver-clad coin sets created for collectors to celebrate America’s 200-year anniversary. The coins are identical to circulating business-strike coinage except for the metallic composition and the relative care taken to produce and package them. These two differences make the coins more attractive than their business-strike counterparts
The first orders for the silver-clad Bicentennial Uncirculated and Proof Sets were taken in 1974, and the United States Mint began producing them in 1975. The price was originally $9 USD, but at various times you could buy them in bulk for $7 a set.
Interestingly, if you purchased one for $9 when they first came out, you still paid more than today’s silver spot price, as the coins melt for a hair under $17.00. For coins in original packaging, our survey of recent auction sales reveals an 18-20% numismatic premium (that is, price per coin over melt), though a set can sell for more if the listing includes high-quality photographs that present nice coins effectively.
Why so little appreciation in numismatic value? Judging by the Mint’s sales strategy, either the goal was to create a product virtually every American could own, or they were completely mistaken about the kind of demand the sets would realize. Such is the Bicentennial issue that, to this day, exact distribution figures are unknown.
The Red Book has long published an approximate figure of 11,000,000 sets minted. We know an untold number were melted before distribution, and many more have been melted since. Walter Breen believed that the set ended its production run on June 22, 1976, yet the Mint had a large enough stockpile to offer them for sale almost continuously through the end of 1986.
1976-S Coins: PCGS Grade Distribution Analyzed
While prices for original 1976-S sets haven’t increased much over the years, demand for premium quality pieces (driven by registry set and slabbed-coin collectors) means that certified coinage from each of the three 1976-S issues commands a significant premium over raw coin counterparts.
Let’s take a look at each of the three coins and see what we can take away from the current certified coin landscape.
You can’t see the MS-69 population of two coins in the chart, but they’re in there.
The typical raw 1976-S quarter is a minimum MS-63 and can vary wildly in quality thanks to contact marks and the effects of 35 years of exposure to the elements. Better examples can be found without much effort, although finding examples that grade MS-68 and above is challenging. To date, PCGS has graded two coins MS-69.
The S-mint quarter has been submitted at a significantly higher rate than its P- and D-mint counterparts, a trend we see throughout the set. We think this is because the coin is silver-clad and therefore seen as somehow more marketable than business-strike Cu-Ni-clad coins, and the S-mint silver-clad quarter is easier to locate in high grades, making the search for profitable coinage much less labor-intensive.
While it’s true that the 1976-S tends to be the nicest struck example of the three issues, the spike at MS-67 represents choice examples most likely submitted in bulk with a minimum cut off score at MS-66 or MS-67.
When looking at the results of all Cu-Ni clad quarter submissions, we see no saturation of select high-end grades. The market for base metal clad is so soft at this point that the benefits of finding scarce high-end material are outweighed by the challenges of locating it and the lack of value placed on the coins in the MS-66 to MS-67 range. This also feeds into the popularity of the 1976-S as a collector coin in the mainstream sense.
MS-68 half dollars are harder to come by than MS-68 examples of the other two 1976-S silver-clad denominations. There’s one example in MS-69.
The 1976-S Kennedy half dollar, like the quarter, is oversampled in PCGS population reports in higher grades. Compare the S-mint silver-clad to the P and D business strikes and it’s no contest. Despite two years of production, Cu-Ni clad half dollars tend to be mushy, marked-up, or both. The overwhelming abundance of Uncirculated half dollars from this year suppresses the price of premium quality P- and D-mint coins, which are extremely scarce in MS-67 and uncommon in MS-66. Silver-clad Ikes will typically be MS-63 and above in raw form. Nicer examples from early in the issue’s production run will have minimal marks in the fields, some shallow hits in President Kennedy’s hair, on the letters of the inscriptions on the reverse, and in the architectural detail of Independence Hall.
PCGS has graded one example at MS-69, which the authors of this piece believe is overgraded by up to one point.
Nice MS-68 examples (which the 69 is, in reality) are scarce and, in our opinion, undervalued.
Saturation point? Although the 1976-S Kennedy is not an easy pick at MS-67, there seem to be more than enough certified coins at this level to satisfy demand.
Again, when we look at the total grade dispersal of business strike coins struck at all three mints, we see a staggering discrepancy not only in the total number of submissions but also in the lack of prominence between grades. Submitters of the clad material cannot “see” coins that are MS-66 and above with any regularity. MS-67, on the other hand, is easy to spot in silver-clad, and likely accounts for so many coins because it’s the lowest grade where the submitter has a reasonable chance to turn a profit. For the time being.
The vanguard coin of the Nixon era: The Ike dollar’s grade distribution is heavily skewed by bulk submissions.
By the looks of the chart above, you’d think that MS-67 S-mint Eisenhower dollars are easy to come by in the wild. PCGS’ population reports show heavily oversampled MS-66 and MS-67 grades caused by minimum-grade bulk submissions. In actuality, most 1976-S Ikes come in grades MS-63 to MS-65. We know of at least one bulk submission that crashed the value of the 1976-S, which through February 2005 was trading around $700-$800. Today, the price of the coin has started to recover from a nadir when it was trading for about $300.
Still, the Ike dollar is a moneymaker at MS-66 or higher, which accounts for the voluminous total of submissions.
Silver-clad Ikes, with the exception of the 1971-S, routinely outperform their Cu-Ni counterparts. The 1976-S is the third hardest Eisenhower dollar silver-clad issue to find high-quality (MS-68) examples of.
The Certified Market Debunked
Now that we’ve established the commonality of the set in terms of availability, we turn our attention to the set as represented in the certified coin marketplace.
But first, let’s spend a moment discussing market exploitation. The 1976-S Bicentennial Set is a prime example of a set that can easily be exploited for financial gain. Consider the following table:
|Wholesale Cost||Retail Value Raw||Bulk Submission Cost||Retail Value @ MS-66||Retail Value @ MS-67||Retail Value @ MS-68|
In volume, sets can be had for $15.00 or less, depending on the spot price of silver. A submitter will then buy hundreds or thousands of sets, pick for quality, and submit coins for grading. If they can, a cherrypicker will try to acquire sets whose plastic packaging has a white stripe at the bottom. The coins in these sets were produced with the most care and these sets have yielded nearly all of this issue’s high-end coins.
If you consider MS-66 as the break-even point, the submitter nets a profit for every coin that hits MS-67. If all coins in the set grade MS-67, the submitter will realize a $90 profit. This profit margin escalates for every coin that grades MS-68. Three MS-68 coins net a total profit of $580.00. Sets that aren’t good enough to submit remain untouched and pass through the dealer chain. This process is likely to perpetuate until the marketplace is saturated with MS-67 or better products and the cost per acquisition of top pop coins is too high to justify submitting coins in bulk. When easy money can no longer be made here, bulk submitters will look elsewhere.
Condition-driven Modern Coin Marketplace Life Cycle
|Conditional Rarity $$$ →||Conditional Scarcity $$ →||Conditionally Common ↓|
|High prices realized at auction. Motivation to make coins in this grade to realize huge mark-ups.||Additional material enters marketplace, prices decline to allow for a wider range of collectors. Submissions continue.||Material floods market, published prices decline while actual prices fall lower. Coin not worth submitting. Pervasive perception of commonness.|
Because of this, collectors of certified examples of this issue need to ask themselves whether premium quality examples are worth the investment. The fact of the matter is, even though the 1976-S set does contain better coins on average than Philly and Denver circulation strikes, finding high-grade examples is a chance proposition and requires an excellent eye and access to hundreds of sets. Even then, finding MS-68 examples is by no means a sure thing (especially when it comes to the larger coins). The cost of acquisition of these coins through self-submission could end up being equivalent to the price these higher grade certified coins command.
For those willing to splurge and buy these issues at MS-68, be aware that every grade works on a continuum. There are premium quality MS-68 coins and technically adequate MS-68 coins. The best play is to know the difference and have an eye that discriminates toward coins of the highest quality.
* * *
FLIP OF A COIN: America’s Birthday Edition
George Washington, Second Stringer?: Of the two presidents represented on America’s Bicentennial coinage who were alive when the Declaration of Independence was written, only Thomas Jefferson signed it. George Washington was not a delegate to the Second Continental Congress since Jefferson represented Virginia.
Can You Spot the Changes?: The silver-clad Bicentennial Eisenhower dollar features the Type I obverse and reverse. Most specialists know that the Mint altered the reverse, but subtle changes were made to the lettering and relief on the obverse as well.
But Did They Spill onto the Tarmac?: The Bicentennial quarter has the largest mintage of any commemorative in U.S. history. The previous titleholder? The 1952 Carver Washington commemorative half dollar, with a mintage of over two million coins.
* * *
 The other was a three-coin silver-clad Proof Set.
 Figures based on survey of eBay sales figures from December 2012 – February 2013.
 Yeoman, R. S. A Guide Book of United States Coins 2013. Ed. Kenneth Bressett. Atlanta: Whitman Publishing, LLC., 2012. Print. 178.
 Breen, Walter. Walter Breen’s Complete Encyclopedia of U.S. and Colonial Coins. New York: Doubleday, 1988. Print. 372.
 Sales were suspended in 1979 due to the run-up of silver prices. When sales resumed in August 1980, the Uncirculated Set was priced at $15.
 Ibid. Accessed 2/12/2013.