Tuesday, November 22, 2011

Copper Coins with Problems Pose a Collecting Dilemma

Coins with problems can be a painful subject to discuss. Collectors generally seek problem-free coins for their collections. Most literature on the subject of coin collecting or investing in coins emphasizes the need to avoid coins with problems. However, in the "real world", it is inevitable that a collector will encounter coins that are desirable additions to the collection in spite of a problem. Another "real world" situation involves the uninformed acquisition of a problem coin - the problem is revealed by submission to a grading service, or exhibition to a more experienced coin collector. Such real world experiences force collectors to consider the nature of problems with early copper coins, and their own personal reaction to coins with problems.

What is the problem ?
With luck, this question can be asked and answered before the coin has been acquired. This is because a problem will impact the value of any coin. Therefore, it is critical to understand the nature and the severity of the problem to either avoid purchasing the problem coin (if that is the preferred solution), or negotiate a fair price for the coin with its problem. The list of problems that can impact early copper coins is long. A small sample includes: cleaning, scratches, surface damage, rim bumps, corrosion, tooling (and/or alteration), planchet flaws, and bends (or various combinations of these problems). Coins with counter-stamps might be considered problem coins by some collectors, but for others, the counter-stamp is the object of their pursuit.

What is the impact of the problem ?
Generally speaking, the impact of any problem depends on both the severity of the problem and the sharpness grade of the coin. Lower grade coins are expected to have more issues, like rim bumps or scratches, due to the amount of time they spent in circulation. Conversely, higher grade coins are expected to have more eye appeal, so problems that might seem minor on low-grade coins become major issues on high-grade coins.
For many collectors, the discovery of any problem is the "end of the discussion" for that coin - They simply do not want a problem coin. There is nothing wrong with this attitude. This approach will result in a collection of high-quality coins, regardless of their technical grade. However, it requires patience and discipline, in order to wait for just the "right" coin for the date or variety that is being sought. In the meantime, prices can go up dramatically.
For other collectors, a coin with a problem represents an "opportunity" to negotiate a better price, and/or a chance to acquire a specimen with good sharpness (ie. little actual wear), but with impairments. I call this strategy "bargain hunting". The problem with this approach becomes evident when the coin is sold, or as the collector "matures" in his or her area of focus. Once the same variety has been seen in "choice" (problem-free) condition, it can be difficult to live with the problem coin (at least, that has been my experience). The problem will not magically "go away", and when it is time to sell, potential buyers expect to get a bargain price for the coin. This will limit the potential financial gain from ownership. Naturally, not all collectors insist on making a profit from their hobby.
I now believe a pragmatic approach is the best way to consider coins with problems. I still advocate the acquisition of problem-free coins whenever possible. However, for truly rare coins or hard-to-find varieties, this can involve such a long wait or large expenditure that it makes sense to consider a "problem" coin. Every collector must know enough about his/her personal preferences to know what kinds of problems are tolerable. It is also important to recognize the personal reasons for collecting coins: What defines completion for the collection? Is the collection also an investment? What aspect of a coin provides the most pleasure - its rarity, its beauty, the knowledge of past ownership (ie. provenance), or the unique attributes of the die variety (or die state)? How does a problem impact the enjoyment of the coin? For me personally, the potential financial impact of the problem is a factor in my decision to acquire a problem coin.

My Personal Journey
During my early days of copper collecting, I was a "bargain hunter". I practiced the art of deal making, and soon found that I could negotiate a deeper discount for coins that had problems. My collecting goal was fairly clear - I wanted a complete date set of large cents. However, my copper grading skills were those of a novice, and virtually all of the coins I wanted to buy were "raw" coins (ie. not graded & encapsulated by any grading service). The entire concept of "slabbing" (grading & encapsulation) was in its infancy at the time.
After a few years of pursuing early copper, my understanding and appreciation of the large cent series had grown to the point where many of my earlier acquisitions were no longer satisfying to own. I began to develop a preference for "choice" copper. I also got a sense for the problems that I could live with (cleaned & nicely retoned coins, short scratches) vs. the problems that drove me crazy (rim bumps, uneven corrosion). Having achieved my early goal of a large cent date set, I expanded my goal to include major large cent die varieties (ie. Red Book varieties).
I eventually reached the point where I decided that bargain hunting was futile. I became a "condition fanatic", who avoided anything with a hint of a problem. However, two interesting complications arose from this approach: 1. I could not acquire coins for my collection at the desired rate (at least one coin a month). 2. The competition for "choice" copper was fierce, and the prices were always higher than the guide (often a lot higher). I have now softened my stance a little on condition, in search of the "balance" I need to be a happy collector. I have decided happiness is my ultimate goal!
There have been times in my numismatic career when the value represented by a coin with a problem is too compelling for me to resist. To cite one example, I recently saw an 1803 S265 (Large Date, Large Fraction) in an auction. The coin had very nice sharpness, smooth hard surfaces, and original chocolate brown color, but a few obvious scratches on the obverse (see photo).

This coin represented a variety on my "wish list" for over 3 years. After carefully studying the images of this coin, I concluded that I could live with the problem, if I could get the right price. A coin in this sharpness grade with minimal problems would cost from $2000 to $3000. When I got this coin for under $700, I was very satisfied. I still own the coin, and I plan to hold it for a long time. I know it is not a coin that everyone can love, but it works for me!
Happy Hunting!

Tuesday, September 6, 2011

The Whister & Davy Half Cent auctions - reflections

The Whister Collection of half cents (aka Bob Yuell), together with the remaining half cents from the Davy collection were sold by Ira & Larry Goldberg on Sunday, Sept. 4th at their new office in west L.A. A total of 458 lots were dispatched over about 5 hours of bidding.
Attendance at the sale was moderate - about what one might expect, given the narrow focus of the collections, and the state of the overall economy. However, the copper "faithful" were rewarded with the chance to add some truly rare and magnificent pieces to their collections. There were a few surprises in this sale, but few bargains. When I attend these sales, I like to highlight the "unusual" occurrences. These anomalies, whether they are coins that exceed their pre-sale estimate by a wide margin, or coins that sell for surprisingly low prices, add some zest to an otherwise mundane day in the coin business.
With that introduction, let me offer up some of the "surprises" that occurred during this sale:
● Lot 9 (Whister) was a choice (CC#4) 1794 C3a (R5) with an impressive provenance that included Willard Blaisdell and Ted Naftzger (normally associated with high-grade large cents). The pre-sale estimate was $9000-up, but the bidding soared to $31,000 for this beauty.
● Lot 63 (Whister) was the well-known 1808/7 overdate (C2/R3) in PCGS AU53. This coin had once been part of the famous Charles Dupont collection, and also belonged to Herbert Oechsner (collection sold by Stacks in 1988). Spirited bidding took this coin to $21,000 vs. an estimate of $6000-up.
● Lot 83 (Whister) was a high-grade example (MS63) of a fairly common variety, 1832 C2 (R2). In spite of a modest estimate of $1000-up, the bidding went all the way to $6500 for this wonder-coin!
● Lot 85 (Whister) provided a surprise of a different kind. This rare coin (1833 C1 in PCGS PF63 RB, R5 as a proof) was estimated at $6000-up, but it sold for a winning bid of just $6000. The coin's provenance included T. Harrison Garrett and Ted Naftzger. Perhaps the fact that the variety is also available as a business-strike made some potential buyer's hesitant.
● Lot 183 (Davy) was the high-water mark for this sale in terms of riveting bidding action. This humble, yet rare coin (1797 C3c, low-head with Gripped edge, R7) was graded G6 by PCGS (CC#3). Two determined bidders carried this coin to $170,000 vs. its pre-sale estimate of $30,000-up! Electrifying moments like these help keep the spark alive for all but the most jaded collectors or dealers.
● Lot 251 (Davy) was a spectacular mint error - an 1804 C8 (spiked chin) obverse brockage. The coin featured a beautiful incuse image of the obverse on the reverse, and the coin was also in superb condition (PCGS AU50, EAC V35+). This exquisite coin was hammered for $25,000 vs. an estimate of $10,000-up.
● Lot 344 (Davy) featured another unusual piece of Americana, masquerading as a half cent. A low-grade 1807 C1 (R1) was counterstamped with the busts of Washington and Lafayette (Brunk L-46). This fascinating and historic coin sold for a high bid of $2000 (vs. an estimate of just $400-up).
● Lot 395 (Davy) was the exceedingly scarce 2-star break die state of the 1811 C1 (R4). In spite of this coin's poor condition (VG7, but net AG3 due to pitting, cleaning, and a bend), it was estimated at $4,000-up. However, some satisfied bidder was able to acquire this piece for a bid of just $3000.
● Lot 396 (Davy), the very next lot, was a choice 1811 C2 (R3) graded AU50 by PCGS (and EAC EF40). This rare & beautiful coin brought a winning bid of $25,000 vs. an estimate of $6000-up.
The bid total for the Whister Collection (lots 1-98) was $557,780. This amounted to $641,447 with the buyer's fee (15%) added. All in all, pretty good for 49 cent's worth of change!
I personally had a very fine day, enjoying all the copper camaraderie that an event like this can offer. I met Bob Yuell (the Whister consignor) for the first time, and added four nice old half cents to my own set. There is something special about an event that brings a group of EAC people together.

Sunday, May 15, 2011

EAC 2011 Auction Highlights

This year's EAC sale, held in conjunction with the annual EAC convention in Portland, OR had a good balance of auction lots from each specialty area (colonials, half cents, early-date cents, middle dates, and late dates). The quality of lots in this year's sale was a little lower than past EAC auctions, but overall there were still some really nice pieces available, including a few unique and/or unusual coins.
A total of 581 lots were sold in a little over 4 hours, and the auctioneer (Brad Karoleff) maintained a brisk pace. Some of the highlights are as follows:
LOT 10 was a 1787 Fugio Copper (Newman 11-X) graded MS63 by PCGS which brought a winning bid of $2900.
LOT 60 was a really nice MS60 1809 C5 half cent (9/6) that was hammered down to the winning bidder for $1800.
LOT 133 was a choice F15 1794 Sheldon-58 large cent, with a provenance that included William Sheldon, Dorothy Paschal, Denis Loring, Del Bland, and Jack Robinson. Enthusiastic bidding took this one to a hammer price of $4750 (more than double "book value").
LOT 366 was an attractive EF40 1813 S-293 cent which garnered a high bid of $3200.
LOT 528 was a spectacular mint error - an 1847 N34 (a R-5 variety to begin with) which featured a clear date, but a capped die error where the majority of the obverse was struck by an inverted image of the reverse design! This strange & wonderful error coin impressed a lot of bidders, and was ultimately won by a $6250 bid.
The bid total for the sale was over $264,000 and both bidders and consignors had a great time.

Saturday, March 12, 2011

Dan Holmes part-4 A Few Notes

Another encore performance for the Dan Holmes large cent collection was held on Jan. 30, 2011 by Ira & Larry Goldberg, with cataloguing assistance from M&G Copper Auctions.
Dan Holmes part-4 featured the late-date large cents from Dan's legendary collection (1840-1857). 689 lots were hammered down during a marathon auction session that stretched to about nine hours.
Live attendance at this sale was a little above average, but not door-busting. I do not think this indicates any lack of interest in these coins. Rather, the high costs associated with travel to the L.A. area, and the continued improvements that have been made in on-line bidding software made it realistic for early copper nuts to participate in the sale in the comfort of their own home, and many decided to do that. On-line bidding was a bigger factor in this sale than any other recent Goldberg auction that I can recall. In fact, many lots came down to an on-line bidding war, while the floor bidders became spectators. The increase in on-line participation is a boon to consignors, because it can improve the hammer price for lots that are not valuable enough to get a photo in the printed catalogue, and would likely sell at a discount to a floor bidder.
The sale contained many finest-known and condition-census-level (cc) coins, and yet there were not a lot of upside break-out bids to report. The average hammer price was about double the estimate (consistent with past copper auctions by the firm), and there were even a few coins that went for less than their pre-sale estimates!
With that brief introduction, I will describe a few of the lots that surprised me during this sale:

LOT 104 was an 1845 N9 (R2) graded MS64 RED by PCGS. The full red color and intense luster proved irresistible, and this coin soared to a winning bid of $11,500 vs. the pre-sale estimate of $2000-UP!

LOT 115 was an 1846 N1 (R1) graded MS64 BN by PCGS. However, the coin exhibited impressive proof-like surfaces (medium mirrors), and was even called PROOF-50 by Denis Loring. The hammer price was $2900 vs. estimate of $500-UP.

LOT 142 was a scarce variety (1846 N10, R5-) in a rare die-state (LDS, with rim cud break at 9:00 on the obverse. Though graded just VF20, this coin brought a winning bid of $390 (vs. est. of $50-UP).

This theme of strong bids for rare die-states continued through the entire sale. Other examples include: LOT 155 (1846 N15), LOT 164 (1846 N19), LOT 227 (1847 N26), LOT 302 (1848 N27), LOT410 (1850 N17), and LOT 521 (1852 N20).

LOT 179 was a beautiful mint-state 1847 N2 (a very popular 7-over-small-7 variety), with a provenance that included Robbie Brown. The winning bid of $6000 was 6x the estimate of $1000-UP!

LOT 244 was an 1847 N34 (R5+) graded AU50 (cc#3). The coin also had once been owned by Ted Naftzger. However, the top bid of $2600 was only half the pre-sale estimate of $5000-UP. The winning bidder must be very happy with that result!

Just a few lots later, LOT 256, the only-known 1847 N43 (R8+) was bid up to $12,500 (vs. est. of $5000-UP). For a unique variety, this does not seem like too much to pay (in my humble opinion).

LOT 531 provided another highlight. The coin was an 1852 N24 (R8- proof-only variety) graded PROOF-64 by PCGS. The high bid was $41,000 vs. an estimate of $20,000-UP.

I really enjoyed attending this sale, and getting a chance to chat briefly with Dan and his wife. At the end of the night, I had snagged 6 of Dan’s coins to add to my own modest late-date collection. Most important, a good time was had by all!