Is the phrase "condition rarity" appropriate for pre-modern coins?

[Bruceswar]

Mark my words on this. If a 1955 D Quarter ever gets Slabbed MS 67 from PCGS it will bring $10,000 plus and the buyer will not regret it at all. I will even up the anti to say that anybody on this board could not show me a coin that would grade MS 67 at PCGS. I do not collect plastic as all my coins are raw, but as we know many people love PCGS coins only. $1200.00 for an NGC 67 is perfectly fine. Take this into account. If you wanted a 1945 S in MS 67 NGC coins run from $140.00 to $400.00 The PCGS Counterparts run $1600.00 and this is a fairly easy coin to find nice. To get a MS 67 at PCGS is hard not because they want to play games with the pop reports, but because they are that hard on the series. I have my own grading standards which are very close to what PCGS uses. I am sure TomnB can comment more on the Difficulty of finding a 1955 D that is worthy of MS 66 at PCGS, much less the daunting task of an MS 67. The 1955 D has to the worst striking job in recent history from the mint bar none! An MS 67 coin is sush a rare coin you will see bidders flying all over the place. Not because they want to blow money vs an MS 66 piece, but for the fact they want quality! With the 1955 D trying to match one up for a high grade set is a very hard task. Just some thoughts on the 1955 D Washington Quarter. Oh and the price guide now for this coin makes it very underrated. If you see a nice one grab it now before it goes thru the roof.

 

Edited to add.. When a PCGS MS 67 does get slabbed(O now) it will raise the whole market on the 1955 D's as a whole.

[al_e_gator]

When a PCGS MS 67 does get slabbed(O now) it will raise the whole market on the 1955 D's as a whole.

I find this statement difficult to swallow. The more higher grades added to a population almost always results in a decline in pricing at lower grades.

[Bruceswar]

When a PCGS MS 67 does get slabbed(O now) it will raise the whole market on the 1955 D's as a whole.

I find this statement difficult to swallow. The more higher grades added to a population almost always results in a decline in pricing at lower grades.

 

This coin right now is harshly undervalued. Thus when they see the big bucks an MS 67 brings the prices for MS 66 and MS 65 will go up accordingly. Remember we are only talking a few hundred quarters here out of just about 4 million total. Once people figure out how hard these are to find in GEM the prices will really start to go up on this date / mint mark. There will only be one MS 67 and it will bring HUGE money thus attractive more people to this date / mint mark. That is where the prices drive up. It will be alooooooooong time before a 2nd is found if ever. Common MS 63 and below will stay about the same. Even MS 64 will make a jump in prices. FAR too cheap right now. I buy every nice 1955 D I can get my hands on. Which is not many.

[World Colonial]

I just took a look at recent prices realized on Heritage. I will agree with you that 1955-D quarters in MS-65s are reasonable based upon what is included in these posts.

 

As for any hypothetical PCGS MS-67, the buyer may not regret it from the standpoint of their collection but I will stick to my statement on the financial side. So what if PCGS has never graded this date in MS-67? There is not that much difference between a 66 and a 67 if the coins are accurately graded.

 

I'm not even picking on this particular date or even series. My coments on the financial aspects of buying conditional rarities at huge multiples to a grade one or two points lower on the scale apply to any coin. Now whether they will actually turn out that way is a different issue. But conditional rarities along with any other coin that has a particular eye appeal (primarily toned or rainbow toned coins) that is in fashion at the moment are the most relatively overpriced coins on the market now.

 

The concept to keep in mind is that there is no such thing as "overvalued" or "undervalued" in absolute terms because all values are relative and psychologically determined in the mind of the buyer and seller. In today's market, both are able to rationalize that this or any other coin is worth current prices even though by traditional collector preferences these high prices would have been considered insane. The same thing applied to the NASDAQ stocks in 2000 and tulips in 1636 Holland. So someone who is a collector of this date and series (or any other) can make this coin (or any other) worth $10,000 if they want to pay that much for it. And just like NASDAQ stocks and tulips were caught up in manias then, conditional rarities are experiencing one now.

 

When the coin market turns down though, the buyer of conditional rarities will find that there are likely to be no takers at anywhere near the current price level. That is exactly what happened to coins such as generic Morgans and classic commemoratives (and many others) in 1987-1990. This time, the prices are even more extreme and the potential downside is that much greater.

 

I do not buy coins to make money but I am definitely not in it to lose it either. If someone is rich enough so that they do not care if they buy a coin with the potential to lose 80%, 90% or more of what they paid, go ahead and buy it. If they can afford to buy it and absolutely have to have the best specimen available when another that is just slightly inferior costs 1/10 or 1/20 of that one, I also say, go ahead and buy it.

[DonHeath]

When the coin market turns down though, the buyer of conditional rarities will find that there are likely to be no takers at anywhere near the current price level. That is exactly what happened to coins such as generic Morgans and classic commemoratives (and many others) in 1987-1990. This time, the prices are even more extreme and the potential downside is that much greater.

 

Seems as though MANY coins haven't recovered to full 1989 price yet, and it isn't just Morgans and Commems, so I think the likelihood the current price is "even more extreme" might be overstated. Personally, I'm pretty confident my conditionally rare 82-P Washington will be in demand 20 years from now, and that the pops aren't likely to explode, although demand might. It's a PCGS MS66 that I stole in the current holder for $75.

 

BTW - The guy I bought it from thought it was pocket change.

[al_e_gator]

Personally, I'm pretty confident my conditionally rare 82-P Washington will be in demand 20 years from now, and that the pops aren't likely to explode, although demand might. It's a PCGS MS66 that I stole in the current holder for $75.

 

Condition rarity for the 82P would be at MS67, however, you have a visual rarity from what I see. $75 is a good fair price for it without the toning, that just adds to the value of your coin greatly. Put your coin @$140 (almost double the fair market price) verses a bright 67 at $600 (a bargain). I'd pick yours everytime (assuming I was interested in clad).

[World Colonial]

No, obviously the prices on coins that are still lower such as Morgans and classic commemoratives are not more extreme by definition since they are still lower. But that does not also mean that they are not still overpriced relative to other material. And no, even if a coin valued at $75 (or most coins valued at a few hundred)ultimately falls in price, I would not say that such a coin was extremely priced either.

 

But any other coin that sells for 10, 20, 50 times or even more than the same coin that is one or two grades lower or that has a four figure (or more) price tag that has appreciated substantially in the current cycle could be described as extremenly overpriced.

 

Is it possible that the current market structure pricing is permanent? Yes, it is possible even though these prices will fall (and maybe a lot) in the next down cycle. The coin hobby could have permanently changed to where collectors will always be willing to pay these premiums though the actual values will change over time. But from a financial standpoint, that is not the way to place your bets (so to speak).

 

As you might gather from my user name and prior posts (if you read them), I do not collect US coins. I used to when I was younger (I'm 42 now) though and though the regular contributers to this forum know a lot more about US coins than I do (or ever will), my collecting experience goes further back than many of you and I have also read about prior pricing from the periods before I collected. So I have some recollection of what happened to prices first hand such as after the 1979/1980 metals boom.

 

What I would say about the pricing of conditional rarities is that it is my guess (and that is all it is) that most of the buyers are younger. Not all, but most. Older collectors who were around before slabbing would never have paid these premiums before the grading services existed and I believe that they are still less likely to do so now.

 

For the moment anyway, existing older collectors on average spend most of the real money on coins because they have the means to do so. This means that the market for most conditional rarities, especially more recent ones, does not have as much support as classics or lower mint state or average circulated specimens.

 

And besides, with some of the small populations, it does not take much to move prices in either direction. If there is a coin that has a POP of one such as the hypothetical PCGS MS-67 1955-D quarter, it could be priced at $10,000 if only a handful of buyers are willing to support it. And so yes, it will be worth that much regardless of whether collectors such as myself think it makes sense or not.

 

As I said before, if financial considerations are not an issue, then go ahead and buy these coins if you can afford it. But if they are as they have to be for most of us, then there just might be better places for your money.

 

Nice buy on your piece of "pocket" chnage.

[DonHeath]

What I would say about the pricing of conditional rarities is that it is my guess (and that is all it is) that most of the buyers are younger. Not all, but most. Older collectors who were around before slabbing would never have paid these premiums before the grading services existed and I believe that they are still less likely to do so now.

 

World Coin, most of the modern collectors I know from the boards are in their 50's, as am I, Russ, MadMarty, Keets, FC57, LucyBop, etc, etc. I've tried to tell them all how crazy they are, but they just won't listen. Most of us were collecting when we spent Franklins to buy Lincolns, so we're used to paying a premium for "pocket change".

 

Best of Luck,

Don

[cladking]

It's easy to miss the point with condition rarity. Obviously not everyone cares whether his 1881-S Morgan is choice gem or mere gem. Many people don't care about a one point grade difference whether it's in a slab or not. They might not care whether it's PL or not and some will actually prefer a coin that isn't PL. Not everyone will even care about the mintmark so an 1881-P might be just as good.

 

The same will apply to the 1982-P quarter. Some collectors will just want a nice attractive coin with some mint luster left on it.

 

If you want a nice attractive '82-P quarter with very light marking and a strong strike from good dies then you have a big job to find it. Very few people collect South African silver or American large cents like this because the availability of the coins is exceedingly poor. Ten years ago the finest 1894 SA shilling would have had small premium because the demand was virtually nonexistent and the availability was also very poor. But people do collect coins by condition now. This is especially true for moderns. Many people desire a nice gem set of attractive coins and when they look for someting like an '82 quarter they won't find it. There are perhaps (at most) a couple hundred of these coins in existence and the bulk of them are tied up in collections that aren't going to be sold anytime soon.

 

Now consider if this coin were a classic with a total population of a few hundred, what would it be worth? Now the demand for the modern is still low. Most collectors of clad quarters are neophytes who are still learning the hobby. Many are collecting only the states coins still.

 

You say that the high grade moderns are overpriced but neglect the fact that a comparably rare classic would sell for a far higher price. You are also neglecting the fact that that the demand for the modern is growing at a far higher rate and that unless the states collectors start expanding their collecting the demand for classics is likely to wane in the coming years. Ask yourself this; what is the most likely route for states collectors to get to the high priced classics? I believe that if the demand for moderns doesn't continue to soar that it's the classics in jeopardy, not the moderns. And, yes, this means all the classics from the date scarce to the condition scarce. The truly rare coins will always have a market but what about the huge numbers of $10,000 and less classics?

[World Colonial]

You make some good points and actually, I think we are closer to agreement than you think.

 

The points you make about classics are correct. What you are basically describing is exactly what has happened to most of the world coins out there. I am building a type set of 1790 Austrian Netherlands Insurrection issues which has eight coins plus possibly some patterns that I have never seen and are not listed in the Krause manual. These coins are actually more popular than most other Austrian or other contemporary European coinage but they are still dirt cheap. I bought the Type 2 florin (the scarcer variety) raw for $465 which later graded NGC MS-65. (It is a half dollar sized coin.) I've seen other high grade coins of this issue and series (maybe not MS-65) but there cannot be many. Why was this coin so cheap? The answer is that it is "lost in space" where basically most of today's collectors have no interest in it or are not even aware of its existence. And what has happened to these coins could happen to many or most US classics too.

 

As for your comments on SA silver, I am aware of that to my sorrow. I wish the coins were as available as US coins. The coins have started to move recently (some of the moves big moves) but they are dirt cheap compared to US coins because the demand is much lower even though there is absolutely no comparison in the rarity or availability. As you say, I do not bother about whether a coin is MS-65 or MS-66. Heck, hardly any coins are available in any uncirculated or even decent grade at all.

 

The comments I made on the pricing of conditional rarities are not limited to moderns even though I used the 1955D quarter from the prior response as an example. But I will say that two coins, one a classic and another a modern, should generally not sell for the same price when they are equally rare. Why? Because of my subjective preference and the perception of most collectors on the merits of the two.

 

Think of it this way. Is there any reason why most gold coins sell for more than most others when they are equally rare? No, not unless the numismatic premium is low. Same thing for large silver coins like crowns and dollars versus minors. Collectors prefer the larger coin. That's one (or the primary) reason why an 1893-S silver dollar, which I would classify as a moderately scarce coin in most grades and a conditional rarity in high grades, sells for more than the 1802 half dime which probably does not even exist in mint state at all. Not in the same grade mind you, but to me it is ridiculous that it sells for more period.

 

There is also no disagreement between us on those $10,000 classics you mention. In my opinion, most of those coins are overpriced also. Most of them are common, available and expensive at the same time. And as I have said in a prior post, I also agree with you that the source of "new blood" for classics will have to come from the modern collectors if this is going to happen at all.

 

But if the demand for the classics does decrease for the reason you state, that in itself will not make some of these prices for moderns reasonable. And while you know more about the demand for these coins than I do, that does not decrease the price risk that exists TODAY for any (modern or classic) conditional rarity. You could still be right about the future trends over the longer term while prices decline significantly (or crash) in the next market downturn.

 

Thanks for your comments.

[cladking]

The biggest danger to condition rarities is that the trends will reverse and fewer people will be willing to pay more for quality. There's a good chance that there actually will be some reversal of this trend but so long as the grading companies and the internet exists there will not be a complete reversal.

 

I also agree about the "natural" tendency of some coins to be priced more highly than others. Small recent date base metal coins will always be on the bottom of the food chain probably, but this can reverse in whole or in part as well. Just as people tend to seek quality, they also tend to look first toward large, or gold, or old.

 

Collectors, though, have another quirk which can override all others; they desire rarity. They seek completeness however it is defined. Any coin which catches collectors imaginations can experience hot demand even if it's bottom of the barrrel plate.

 

I really have a great deal of optimism about the future of the hobby. There is likely to be widespread interest and demand across the hobby. There will be an explosion of new information and research which will open doors to more and more people. There should also be collectors of more general items (like civil war memorabilia) taking an interest in coins, tokens, and medals as this information becomes more widely available and more people come to see coins as cool as well as important artifacts. The internet will bring all this right to peoples' homes and the opportunity to own such treasures will be just a mouseclick (and paypal) away.

 

The changes coming will be broad and sweeping because to a large extent there will be near total demographic change in collector populations over the next fifteen or twenty years.

[Zoins]

I really have a great deal of optimism about the future of the hobby. There is likely to be widespread interest and demand across the hobby. There will be an explosion of new information and research which will open doors to more and more people. There should also be collectors of more general items (like civil war memorabilia) taking an interest in coins, tokens, and medals as this information becomes more widely available and more people come to see coins as cool as well as important artifacts. The internet will bring all this right to peoples' homes and the opportunity to own such treasures will be just a mouseclick (and paypal) away.

 

The changes coming will be broad and sweeping because to a large extent there will be near total demographic change in collector populations over the next fifteen or twenty years.

One of the things I find very interesting is trying to figure out what categories are the big sleepers of today that will do exceedingly well once these sea changes have taken place.

[World Colonial]

The biggest danger to condition rarities is that the trends will reverse and fewer people will be willing to pay more for quality. There's a good chance that there actually will be some reversal of this trend but so long as the grading companies and the internet exists there will not be a complete reversal.

 

I really have a great deal of optimism about the future of the hobby. There is likely to be widespread interest and demand across the hobby. There will be an explosion of new information and research which will open doors to more and more people. There should also be collectors of more general items (like civil war memorabilia) taking an interest in coins, tokens, and medals as this information becomes more widely available and more people come to see coins as cool as well as important artifacts. The internet will bring all this right to peoples' homes and the opportunity to own such treasures will be just a mouseclick (and paypal) away.

 

The changes coming will be broad and sweeping because to a large extent there will be near total demographic change in collector populations over the next fifteen or twenty years.

 

I have included some extracts from your last post because I believe you make some excellent points about the current structure of the coin hobby/market.

 

Today, I see three primary differences (not all differ in every case) between US coins and world coins plus the exonumia you mentioned. These are the 1) TPG 2) an "investor" market 3) Registry sets. There may be more but I consider these the three big ones.

 

Most of my comments on this subject have been on the financial side and while I do think that the market is due for a correction (and a substantial one for the issues I have described), that does not mean that I am pessimistic about the future of coins or their pricing. I am just cautioning that today's prices after 15 years of a bull market pose a substantial risk in some cases.

 

For future appreciation, I believe the areas you mentioned such as civil war tokens to be "sleepers" comparitively. I do not know anything about them but I've seen some of the prices on Heritage and compared to US coins, they are downright cheap and probably much scarcer. (I've never seen a red one.)

 

Your comment on demographics is also dead on. I do not collect my Latin coinage because I am trying to make money, but I believe that the long-term trends both in and out of the US bode very well for these coins if you are selective in both the quality and price. Some of them such as the pillar dollar are one of the few coins that have real international demand and I could also see coins such as this one become more popular with US collectors because they were legal tender until 1857 and I believe actually functioned as the primary currency in the colonies..

 

Outside the US, most collectors do not collect slabs (many I think have contempt for them) and are usually satisfied with lower quality coins or if they are not, are not willing to pay US type premiums for conditional rarities. I see that starting to change though at least on a small scale.

 

Going back to South Africa since I follow it, there is one firm that pushes ZAR coins as an investment. Because the market is small, someone like this has the potential ability to move prices on their own which I think they have to some extent. There is also another dealer who says he is going to lauch a TPG locally. If that happens and it works, there could be a substantial movement in that market because it will create a level of confidence as it did in the US for new and non-collectors. (I hope this only happens after I have completed my collection.)

 

What I just described is only one example but there are other areas such as China, India and the middle east that could also experience significant growth.