Encased Collectors International

The coin market has been and remains to a degree one of the brightest areas of the current economy, which is experiencing great difficulty.

The most active area of the coin and bullion market is the precious metals segment. Heavy demand for the bullion coins has created a two-tier price level for precious metals.

For example, at this writing the spot price of silver on the exchanges is a little below $10 per ounce. However, if a customer wants to purchase American Eagle silver coins for their bullion content, the cost can be expected to be about double the spot price or more. If a buyer gets lucky by buying from an uninformed dealer, or buying from other private individuals who want to sell, a lower premium may be possible.

The price differential shows the impact of the extraordinary demand for bullion coins. On the other hand, precious metals exchange prices may be artificially low, because many of the largest players in the bullion market have been under duress to sell, forcing exchange prices to remain low.

On the grander stage, central banks of various countries buy and sell gold in huge quantities, which very often impacts the price one way or the other.

The market has definitely slowed for collector coins, but a safe assumption could be made that much of the capital collectors have available to purchase numismatic coins has gone into purchasing precious metals instead. Also, collectors have obviously been hit with the same higher living expenses as most Americans are experiencing � higher food and gasoline prices in addition to other higher living expenses.

So while dealers are having a slow time selling collector coins and many other buyers are temporarily out of the market, this is a great time to negotiate more favorable prices on the numismatic coins one wants to purchase. But keep in mind that this won't work for every purchase.

Numerous well-heeled collectors are still in the market and will jump at the chance to buy particular coins they have been seeking.

Many collectors have spent years hunting difficult-to-find pieces. When such become available, often dealers have multiple collector clients ready to buy.

From the classic 1794 Flowing Hair silver dollar through the Peace dollar series of 1921 to 1935, collectors are busy assembling collections of these large coins in various forms.

Some people collect by design type, others by complete date and Mint mark issues, others by varieties and still others by eye appeal, especially of colorful toning. These collectors provide a foundation of strong support for demand in silver dollars and other coins, for that matter.

But collectors are not isolated. It is difficult to avoid being shaken by the bad economic news bombarding us daily during the past few months. While the coin market has been remarkably resilient during this time, many are wondering if values will continue to hold.

Greater weakness has occurred for off-quality coins, but coins that are solid for the grade are generally holding their own.

Up to this point we've seen no crash in the coin market, but could we? Yes, of course. Markets move both ways � up and down. However, tremendous support continues for collector coins.

Silver dollars comprise a market segment that always seems to show good trading activity in some area of the denomination. Lately the low-end circulated Morgan and Peace silver dollars have been in the demand spotlight because these coins provide a way to purchase silver bullion and they have an added value play in that their collector premiums may increase.

Demand has also been strong for the early silver dollars, dating from 1794 through 1803 (and including the 1804 coins). In fact, during the past five years or so, values have risen so high for these dollars that some collectors have sold those collections, unable to afford the higher prices for coins they still need.

More recently we've seen values increase rather substantially through all grades of Seated Liberty dollars. Trade dollars are following this trend, although with less vigor.

Interest continues for Morgan and Peace dollars. Many high-end Mint State Morgan dollars are posting strong prices. The recent million-dollar-plus, record-setting sale of an 1893-S Morgan dollar, graded Mint State-67 by Professional Coin Grading Service, is a great example.

There is no doubt the financial world is in big trouble and yet the coin market keeps trucking along. Let me repeat that coins are real money that cannot be controlled by governments and their bureaucrats. Yes, they can attempt to confiscate or manipulate the market, but it will never work. People from before ancient Rome have been burying, hiding and stashing value in coins just like the Roman soldiers who often buried their pay in leather pouches.

On Sept. 17 gold had its biggest one-day move ever and silver was up over 10 percent and there is a strong demand for silver and gold such that silver Eagles are purportedly trading at a $5 premium over spot when about a $2 premium is more normal.

All the premiums are up on one-ounce gold or silver bullion items because there is a definite shortage of physical material. This has had little positive effect on the rarest silver American Eagle (1995-W), which is down nearly $500 in value. The most recent rarity, the 2008 with reverse of 2007, has increased nearly 20 percent since last month. I believe that these have dried up and we are finding that fewer exist than was thought.

Seated Liberty dollars have been ignored for many years. There are many dramatic increases.

Lincoln cents continue strong in circulated grades with many price increases from the lowly 1923-S to the very popular 1909-S V.D.B. Nice original uncirculated Lincolns prior to 1935 are nearly impossible to find and often bring very hefty premiums.

Barber material is very active where available. The 1913-S dime seems to be on most want lists and the 1896-S quarter along with the 1901-S and 1913-S are moving up in price. Many believe that the 1913-S is underrated as compared to the 1901-S at two to three times the price.

And the best just goes on and on with early U.S. type issues prior to 1840. I recently had a very nice early quarter in Extremely Fine-45 that was not yet priced and I was thinking it was worth about $12,000. I showed it to a dealer friend in a kind of show-and-tell game. He asked, "How much are you going to list it for?" I said in jest, $16,000! He said, "Will you take $15k?" I now miss my coin.

Modern mint and proof sets are in the doldrums. There should be some increased activity with the Christmas season

Coin buying continues and there is no en masse panic selling, although there are individual quick sellers. Long want lists are still in collectors' and dealers' hands still going unfulfilled for months and sometimes years.

Pent up demand continues for certain scarce coins and is found for some very common coins. Although many circulated coins retail for $5 or $10, dealers don't have large inventories of such coins. In particular, problem-free examples of many of these coins are difficult to find.

Dealers can't just place an order for the coins many collectors want on the electronic trading networks, although those networks may be a good source to help find such coins over time. Nor can dealers spend valuable time at coin shows scouring the bourse floors for nice but inexpensive coins. Dealers must use their time expeditiously at these expensive shows.

Many want lists for collectible coins are for "lifetime" collections. For many people, their coin collections make up a significant portion of their retirement funds. That's the kind of investment they understand.

This trend of using coin collections as investments means many collectors have not been seriously hurt by the calamitous stock market and credit market events of the past few months. In addition, lots of coin buyers are still earning money from their jobs or businesses, or have a steady retirement income.

In the marketplace, some rarities are still setting price records.

Prices for off-quality U.S. coins � those perceived as overgraded or just barely making a grade, or that have a problem like light cleaning � are being discounted (rather than falling).

Market prices for problem-free coins are holding up pretty well, and their prices that are being used as benchmarks for discounting for the off-quality examples.

Discounts ranged from about 10 to 20 percent for off-quality coins just weeks ago. But in this area, economic problems have caught up with the coin market. Now it's not atypical to see discounts of 25 to 35 percent or more.

Here it pays to know how to identify cleaned coins and to understand coin grading, so you can be confident the coins you're buying are strong for the grade.

While major economic fluctuations continue to take center stage, NumisMedia reports that this all could be playing right into the hands of the coin market and the future growth of numismatics.

The current economy continues to be the main focus for most Americans. Bank failures and bailouts, an underachieving stock market with growing fears of total crash, talks of recession and a political race in the foreground has most of us struggling to maintain a balance in this current financial atmosphere. Yet, this all may be playing right into the hands of the coin market; the potential for future growth in numismatics could be unparalleled.

This past week has seen a major increase in the amount of coins sold by dealers across the country. Many Americans have lost much of their trust in banks and the stock market, so many are buying the only thing they believe will retain value — gold and silver. Whether they are buying rare coins or bullion, there is a tremendous amount of money coming into our industry. Premiums have increased on gold and silver bullion because of this current demand. The quantity of coins coming into most coin shops has dwindled to but a small percentage of what dealers need for their customers, forcing many to venture into the open market to fill these needs. With demand, these strong premiums may continue to rise.

Collectors were out in force at the just-completed Long Beach Expo, and whether they were buying bullion coins or nice collector coins, they were spending money. Dealers were satisfied with the amount of show activity; however, like most concerned Americans, they are not sure what will happen next. Coin dealers may be in the enviable position of “being in the right place at the right time.” Dealers must realize that large inventories will attract collectors and investors as they scramble to numismatics.

Besides bullion coins, demand remains very solid for Early Bust coins. Collectors are focusing on quality for the grade and the number of coins within a specific grade. It boils down to how many coins are available and what the future holds for increased demand and potential growth. When you take a coin like a 1796 Draped Bust Half Dollar with 15 Stars, which has a mintage of only 3,918 coins, it does not take a lot of demand to spur a price increase. There have been approximately 72 coins certified by NGC and PCGS in all grades. Since the beginning of 2008, this coin has increased from $59,380 FMV to $84,380 in Very Fine 20. In Extra Fine, it has jumped from $91,880 to $118,130. The grading services have only certified four coins in Very Fine and five in Extra Fine. There are only 20 coins graded higher and most numismatists assume there is some overlap because of resubmissions. The worst-case scenario is that there are only 29 coins graded in Very Fine and higher. This is truly a rare coin and the potential for growth is outstanding. Add to this the fact that many of these coins are in strong collector hands and are not available.

Not all coins can have this kind of potential. Yet, this is the typical strategy that many astute numismatists use in today’s market. Seated coins are on the radar and you might be surprised by how many coins have high original mintages, yet there are very low populations of certified coins. The 1857-O Seated Quarter has an original mintage of 1,180,000, yet only 110 coins have been certified in all grades. Twelve have been graded MS 63 and there are only six coins in higher grades. The FMV was $3,690 in MS 63 in January of this year and it is now $4,470; the MS 64 had an FMV of $7,060 in January and now enjoys an FMV of $7,410. Not much of an increase for a coin with fewer than six certified. We would seriously doubt that more than one or two coins have traded hands since the first of this year in MS 63 and higher. What do you think would happen if someone wanted to purchase all 18 coins in MS 63 and higher grades? What do you think the FMV will be a year from now if someone aggressively pursued these coins? This is the type of strategy that has been used by dealers for many years. Only in the last five years or so have collectors and investors adopted this strategy.

The Heritage Galleries Auction was a tremendous success; with more than $35 million in prices realized from all of its sessions, it was their best Long Beach ever. There were so many important highlights that it was difficult to choose a few select examples. There was a pair of 1915-S Panama Pacific $50 Gold coins graded by NGC; both were MS 64. The Round brought $103,500 and the Octagonal realized $92,000. A 1796 Draped Bust Half Dollar 15 Stars sold for $86,250 in PCGS VF 25, while an extremely rare 1839 O Bust Half Dollar in NGC PR 63 realized $149,500. The following highlights are significant results showing how aggressive buyers are in today’s market. For complete prices realized, please visit the Heritage Web site.

Denomination Grade Price Realized
1849 Seated Half Dollar NGC PR 66 $86,250
1879 $4 Flowing Hair NGC PR65 Cam $204,125
1796 $10 Gold NGC AU 55 $80,500
1907 $10 Gold Wire Rim PCGS MS 65 $80,500
1871 CC $20 Gold NGC AU 58 $65,600
1875 CC $20 Gold NGC MS 62 $10,350
1877 CC $20 Gold NGC AU 58 $11,500
1927-S $20 Saint PCGS MS 65 $161,000
1929 $20 Saint PCGS MS 66 $184,000

Over the past several years, one of the strongest segments of the coin market has been Twenty Dollar Liberty Gold coins. Although, this is truer for the TI and TII issues than the TIII coins. With gold making such an impact on the coin market, collectors have the opportunity to gain profits not only from the collector side of the coin but also from the value of the bullion. Five years ago, an 1852 $20 Gold had an FMV of $840 in AU 50; today that same coin lists FMV at $1,310. This is a fairly common date in the AU grades but begins to get expensive in MS 62 and higher. Many of the TI and TII coins fall into the same category. That is, they are somewhat common up to a specific grade and then the populations in the next higher grades fall off precipitously. Again, these higher-grade, low-population coins are the types that astute collectors have been putting away for several years. That is also why many of these coins have enjoyed such an increase in values over this five-year period. Demand is strong and supplies have dwindled.

The past year has seen a further rise in demand for Carson City coins, especially $20 Gold. They are large coins and the Carson City Mint mark has a certain mystic about it that attracts collectors of Western memorabilia along with the typical coin collector. The rise in demand has brought some dynamic FMV increases for many dates in nearly all grades. The 1870 CC is the rarest with a mintage of only 3,789; there are only 56 coins certified by NGC and PCGS. The highest grade is an NGC AU 55 that currently has an FMV of $546,000. Five years ago, we only reported an FMV for the XF grade at $115,690. Today the XF is $306,250 and there are just 12 coins reported. Not everyone can afford this coin; however, many collectors are sure pursuing all the other CCs. The 1872 CC was listed at $43,690 in MS 61 five years ago; today it is $60,080 and this is the highest reported grade by NGC. The difference between today and five years ago is that many collectors are now willing to pay multiples of the reported FMV when one of these highest-graded coins comes onto the market.

Quality has always been the name of the numismatic game; however, today, there are thousands of numismatists willing to place large amounts of money on the finest known coins along with other low-population coins because they believe in the future of numismatics. Add to that the many investor types entering our market because of their lack of trust in the other markets, which leads them to choose gold and silver over other investment opportunities, and there is an abundance of money available for purchasing coins. The spending and attendance at the Long Beach Expo and other recent shows is also a strong indicator of the strength of our current and future market. This could make for a very prosperous last quarter of 2008.

With all the turmoil in the financial markets you would think the rare coin market would be on its death bed. NOT! Without a doubt, even though we have been harping the coin market has been going through what we will call a “quality correction” of 10-20% (probably more like 30-40% now), nice, fresh, original, and truly rare coins have NOT decreased in value by any noticeable measure. Do note: you MUST have FULL quality and TRUE rarity to be safe. People do still need to sell and raise money, but for every person who had to sell, we seem to have found a buyer.

While we have had millions of dollars worth of surprisingly great coins sold to us in the past 30 days, we have also SOLD millions of dollars as well. The 1893S PCGS MS67 Veremule piece came to us not out of financial desperation, but because the owner had personal issues. We wired the money. The coin was sold instantly to the first collector we mentioned it to. He had no fear of spending over $1,000,000.00 and fully understood that he had the opportunity of a life time to acquire the piece. In fact he did not understand why a person that has “passion” and money why they wouldn’t be aggressive buyers today.

We told everyone in our last report to watch the Heritage Auction results. With one day to go, we thought things were going to be very bleak (the sell through at that point looked very weak). However, sitting in the office watching the bidding live and coin by coin being outbid, we saw strong signs of stability. From what we understand, the sell through was over 80%. Many coins that did not sell were (of course) over reserved dealer retreads or, they were “off” quality pieces.

For a better understanding, lets compare two coins from that sale. Lot 256. 1864 Small Motto PCGS MS65RD CAC. Sold: $21,850.00. Lot: 1197 1880S $1 PCGS MS68 CAC. Not sold. The 1864 was a monster. Its reserve was either low or none. The coin blew away ALL records for an MS65 RD when bidding closed! We also believe there was highly aggressive multiple bidders. The 1880S was a monster also. BUT, it had a reserve of $6,000.00 (or a total price of $6,900.00). You can buy a VERY nice high end GEM MS68 for $4,500-$5,000.00 these days. Plus, even in high grade, its still a widget. Did these come down? Yes and no. The reserve probably was based on people spending freely in a rising market. Now that the music has slowed, people demand value for their dollar. They do not seem to be paying multiples for commoner coins either. However, when a coin like the 1864 pops up, their is still a frenzy of bidding. If the market were truly declining, the 1864 would not have sold for what it did.

The bottom can definitely still drop out. Every major dealer we have spoken to does admit some of their better customers are on the sidelines. Several of our better customers have requested that unless something is like the 93S (a once in a life time purchase), that we wait until FUN before offering them coins. ALL of them still have money-but they have indicated they do not “feel flush” because of stock market hits. We believe many of the weaker or scared players have sold out already. Although we know of several people who are racing the train to the crossing by trying to hold out from selling. We also know of several collectors making a huge mistake by gambling that some of their gold holdings will rise if gold goes back up soon. This market is too volatile to play that kind of game. We had 3 people get quotes from us on various gold coins they sent us. All three felt the prices were too low (we made offers based upon the prices we knew we could replace the coins at). In a week gold dropped. Of course they come back knocking. The premiums and prices had dropped even more!

Quality is, has been, and always will be what is a major issue in determining a coins value. When bull markets cool, the coins of lesser quality always take a hit. In fact, “off quality” coins always take by far the worst price drops. Here is a hypothetical example based on something that we witnessed recently: You buy a washed out 1858 PR66 25C (pick a service) out of a major auction. You pay $10,000.00 two months ago at ANA in the heat of the major sale. Today you need to sell it. The coin is starting to turn a little. You call us, you call dealer X, Y, Z. No one wants to make an offer anywhere near what you paid. It’s a tough call, put it back in auction and wait 2 1/2 months for the sale, or take the top offer which our guess would be $6,500.00-$7,500.00 if even. Since you need money today, you end up losing $3,500.00. This is NOT an isolated event recently.

Had the 1858 25C been a true GEM with gorgeous eye appeal, even in this rugged market, your loss would be slight. The days of it being a sellers market are done for now. Accept that. So you MUST be clear that what you own or what you are now buying is of TRUE quality for the grade.

If you have “off” quality or boring duplicates, you are far better off getting out of those now and sitting on cash to buy anything good that might pop up. Also keep this in mind, because so much “stuff’ is coming out now (weak gold, junkie type, low grade low end coins, etc) dealers will pick and choose what they will pay. In a crazy market like this the saying goes: “sometimes buying cheap, may not be cheap enough”.

Also, if you think you are going to need money in the upcoming few months or year, SELL NOW! Do not take for granted that because coins are some what stable they will remain that way until you need to sell.

OUR EXPECTATIONS

We were totally surprised we had record October numbers (both buying and selling). It is our opinion, that due to the extreme crisis Wall Street is having the rare coin market WILL indeed feel some pain shortly. So far, we have had just the fringes suffer real weakness: “off quality” coins have dropped like rocks in demand and value. We can NOT predict if there will be a deep or just a short term hiccup in the market. Position yourself so you can take advantage of it-rather than have any possible down turn take advantage of you! Our gut feeling is unless the world really stops totally from all this (in that case EVERYTHING will be gone), coins WILL emerge as one of the surprise financial winners of 2008. People still go to work every day, houses are still being built, filling up the car is more affordable again, and life does go on beyond the stock market and banking messes.

COINFEST (Legend is a partner in it) should be a good barometer. The show is November 7th-9th. We consider it a major regional show. It is in the heart of probably the largest collector bases in the US (and is loaded with Wall St types). Who shows up and what they spend will definitely be critical to judging which direction our market is going. Keep in mind, the financial services people of that area, for as much as they have huge pay checks, also are now among the hardest hit with firm closings, layoffs, etc.

We expect COINFEST to be a decent show with a ton of traffic (we spent a fortune promoting it).

The Baltimore Show which follows it in two weeks will be good-but probably not as strong as usual. We do think the economy will keep a few people home. Also some of the major GOLD dealers who will be there could be having some cash flow issues (these guys couldn’t catch a break-gold went up they all got hit with margin calls, gold shot back down, now they have the coins at losses)!

Sorry we had to put a little gloom and doom into our report. We feel it would be irresponsible not to tell you that even though things seem good, there is a dark underbelly that could possibly burst through and make prices and demand weak. We hope it does not happen. Remember though, its a buyers market-take advantage of it! Do NOT be afraid to indulge your passion especially on the “right” coins!

We spoke to the chief buyers for two of the biggest telemarketers in the business. They said last week they sold record amounts of gold bullion. What is truly amazing is that there is ZERO gold to be had. It’s at least a 3 week wait for Maples or K Rands. The premiums for these coins range from $75.00-$100.00 per coin! Remarkably, people are still willing to buy all they can get.

In a few months this should lead to more generic gold being sold and people coming in and buying rare coins. We are experiencing the push to generics now as people want gold and can’t get any bullion. Over time, you know the brokers will push these people into buying a rare coin or two. The “bull” market will be back. It will just take some time. Knowing this, do not be afraid to take advantage of opportunities that exist today!

Gold is down again and is now in the lower $700.00 range (around $715.00). We do think it IS a VERY GOOD time to buy generic gold. Saints are off their highs and the best buys are in coins that never moved up and actually lumbered down-Indian Gold. Better semi-generic gold had quieted as well. As the wave grows from people seeking bullion and are denied due to supply, they will move into these areas and drive up the prices. There is plenty of opportunity if you buy gold now.

Coin dealers are lousy economists so I don’t want to waste your time discussing the economic background of the last few days. What I would like to share with you is my take on how it’s impacted my business and what I see are the short term effects of the credit crunch, liquidity crisis, Dow meltdown, etc. on the coin business.

My business was screamingly active in July and August. It slowed down considerably in September and it has been extremely slow in October. I have read on a few dealers’ websites that they are still selling lots of rare coins and that they have people calling from out of the blue purchasing items from their inventory. I think this is a crock. Unless you are a dealer selling bullion right now, you probably (there are exceptions…) are not doing much coin business. You might be purchasing coins from clients who bought them a year or two ago but selling your existing inventory right now? I doubt it.

That’s not to say that the coin business has shut down entirely. It definitely has not. I’ve sold some nice collector grade coins in the past week and my wholesale business is actually a bit better than I would have expected. But my regular clients are taking a wait and see attitude towards the coin market, as am I. With the Dow dropping hundreds of points every day, it’s hard to be excited about the coin market right now.

As recently as a few weeks ago, I commented that the generic gold market was very weak and that premiums for $20 Libs and Saints were as low as at any time I could remember. You literally could not give away double eagles. Three weeks later and the world of generics is a very, very different place. As I write this, gold has a spot price of around $863 but Brilliant Uncirculated (MS60 to MS61) double eagles are worth between $1250 and $1300 each.

I actually recommended in one my recent blogs that it might be a good idea to stock up on gold as the premiums got so low and, for once (!) I was right. I think the moral of the story is that it’s a good idea to have a small position in double eagles for your personal protection and to move in and out of as premiums ebb and flow. My guess is that the premiums will stay very high for a while.

Here are some more thoughts and suggestions for rare coin collectors in these uncertain economic times:

1. If you are looking to time the market perfectly and sell at the height, you are probably too late. It looks like the peak for certain series may have been the spring of 2008. While I think it’s safe to say that faux rarities, widgets and low end “stuff” have seen their best days, I don’t necessarily think that the good times are over for really neat coins or really popular coins or coins that seemed undervalued as recently as thirty days ago.

2. If you were smart enough to buy double eagles at last month’s low premium, pat yourself on the back and start selling into the market. Yes, there is a good chance that gold will continue its upward climb but once the panic buyers have established their positions I would think that the currently high premiums will erode. I would certainly keep some of your position but I would strongly consider selling some of what you have at a nice profit and to maybe even considering putting the profit into rare coins.

3. Clearly, there will be new price levels soon for many series. If you collect early gold or Type Two double eagles or even modern Proof gold, the chances are pretty good that what you were buying on September 14 probably isn’t worth what it is on October 7th. No one—not even a connected expert like myself—is exactly certain what the new levels will be. Part of this depends on the willingness of dealers to sell coins for losses. I expect that the smart dealers out there will take the losses that make sense to them while the not-so-smart dealers will be stubborn and refuse, at least for now, to sell anything for a loss. I would think we’ll really start seeing what the new levels are at the 2009 FUN show and at the auctions surrounding this convention.

4. Whatever you do, don’t be a panic seller. Hopefully you bought coins with discretionary income and you made the decision to be a long-term collector who would stick with their coins through thick and thin. The last year or two was a good time to prune your collection and to get rid of mistakes, duplicates, widgets, etc. Hopefully you listened to my advice and did this. Hopefully you’ll also listen to me when I tell you that selling anything now that isn’t totally top quality might not be the best idea.

5. The “wild card” effect of the current economic chaos is that we may see a dramatic upward movement in gold, a wild run away from anything resembling stocks or bonds and even the return of rampant inflation. Any of these factors would have a significant impact on the rare coin market.

6. If prices do begin to drop and you have the assets available to allocate on coins, it might be a great time to buy. I heard lots of collectors complain that they’ve been priced out of their end of the market in the last few years by Nouveau Riche Accumulators. What if the majority of these NRA’s go away and you can suddenly afford to collect nice coins again?

In step with the five-year-long expansion of the collector base for coins, creating higher demand, the values for circulated Barber silver coinage are creeping higher. For many issues of all three denominations dimes, quarter dollars and half dollars wholesale prices dealers pay for inventory are slowly rising.

In most cases these higher values have not risen high enough to justify a comprehensive raising of retail values. However, collectors should be prepared to pay a few dollars more for many of these issues, especially for pleasing, problem-free coins.

Those coins that have problems, such as spots, rim dings and small scratches, should still be available at appropriate discounts, depending on the severity of the problems.

On the other end of the grading scale gem Mint State and Proof examples there's no telling what many of these coins will bring at auctions and in private sales. These prices are dependent on who is competing among buyers and on each coin's attributes.

Mint State and Proof coins with mind-blowing original toning and surfaces are likely to bring spectacular prices. This reflects the reduced number of outstanding quality coins showing up on the market for sale. But examples that are a little off-quality or lacking in pizzazz are selling for softer or even discounted prices.

The mind-sets of buyers at both grade ranges differ. Registry collecting has influenced buying habits, and people who can afford great coins normally want the best of the best. Collectors of circulated coins usually have much more limited budgets and are more cost-conscious.

A comprehensive raising of values for circulated coins in Coin Values took place earlier this year, in step with the market, so across-the-boards increases aren't necessary again soon.

Still, wholesale market prices for these coins are gradually rising, so buyers may be asked to pay a few dollars more than listed values to purchase some circulated Barber coin issues.

A few small value increases are scattered within the three Barber silver coinage denominations in the Coin Values pricing section. A few scarce issues, as well as several common coins, are affected.

For those of us who experienced the coin market’s ups and downs in the 1980’s and 1990’s, perhaps the biggest surprise has been the relatively quiet Proof gold market of the past few years. While prices for Proof gold have certainly risen since the beginning of this decade, new collectors don’t seem to regard these coins with the same degree of awe that was seen in the recent past.

If you are a Proof gold collector, please do not misinterpret the introductory paragraph I just wrote. I personally love Proof gold and there is no arguing the fact that a $25,000 purchase made in this area in, say, 2001 isn’t worth considerably more today. What makes me sit back and scratch my head a little is the fact that Proof gold just doesn’t seem to be as active a market right now as early gold or key dates from the 20th century. Why?

I have a few theories. The first is the fact that a huge number of Proof gold coins quietly went off the market between 2000 to 2006 to a specific overseas buyer. Today, the supply of interesting Proof gold is the lowest I can remember. If you look at the typical major auction, there are just a few pieces of Proof gold for sale and they tend to be coins struck after 1890 and, more often than not, smaller denominations. When years go by between appearances for rare Proof gold issues, it is difficult for there to be an active two-way market which then results in a lack of pricing information or stimulus for new collectors.

This brings me to theory #2. This lack of material has meant relatively little promotion of Proof gold in the past five years or so. A dealer like me can write articles about how great Proof gold is, how rare Proof gold is and what an excellent value Proof gold is, but if I don’t have any coins available to sell to potential new collectors or investors, what’s the point? If you look back over time, various dealers were always promoting Proof gold. I think the relative lack of supply has caused marketers, retail dealers and other traditional advocates of Proof gold to search elsewhere for trophy coins to sell to new clients.

Something odd that happened in the Proof gold market was an oversupply in the late 1990’s/early 2000’s. The coin market was not especially strong back then and within a few years you had at least four huge collections of Proof gold come on the market at once (Pittman, Reed, Childs and Bass). Proof gold issues that seemed incredibly rare in 1995 all of a sudden seemed kind of common in 2002. As an example, I can remember owning no less than three Proof 1869 quarter eagles at the same time in 2002. This is an issue with an original mintage of 25 and an estimated nine or ten examples known. How was I going to convince a collector that this issue was rare when I owned three of the darn things? Needless to say, I wound-up losing money on two of them.

Another thing that hasn’t helped the Proof gold market is the lack of original coins. I think this is especially true with 20th century issues. I know that I personally pretty much quit buying coins like Proof Indian Head quarter eagles, half eagles and eagles as well as Proof Saints a few years ago because it was so incredibly hard to find coins that hadn?t either been doctored or over-conserved. And it’s often hard for me to pay $25,000, $50,000 or more for a 19th century Proof gold coin that looks like the Gallery Mint produced it last month. I can’t imagine that I’m the only dealer (or collector) who feels that way.

I think what would really give the Proof gold market the shot-in-the-arm that it needs is if a fresh, interesting collection were to come onto the market. It would be especially interesting if this were an out-of-the-woodwork collection where the coins had been bought in the 1950’s and 1960’s; before the era of dipping and conserving (and more) became so prevalent in this area.

For every person who is a seller, we have found a buyer who thinks now is a good time and coins are cheap. The reasons are varied as to why people are selling. Very few have said to us they needed the money to live off of. We think the weakest players dropped out last year. Right now we see significant asset management occurring. The collectors we deal with want to move into the better material and are pretty much cleaning out their closets. One or two have also told us they want to be in cash positions in case opportunities come up (in either coins or real estate). It is a pure fact though, in August, we saw a substantial amount of ‘net” sellers.

Every major customer we have seems to be aggressive buyers right now. However, they don’t want widgets or inferior gradeflation ravaged pieces. They will pay what it takes to buy the “right” coin. Also lurking heavily are investors. In our opinion they actually make up 40% or so of the market today. That is a VERY dangerous sign to us the market may be topping out (we do think overall its off 10-20%). Not just the big players are buying. Its really a matter of what coins you have to offer and at what level. Big money is not stupid money. They sense the market is off and try harder to buy when they sense a little desperation.

Interestingly, many of the long time smaller players who still want to play feel “priced out” right now. The bad news is, if you stand back and look at things, coins really have been too cheap overall for the past few years. Granted the “ubber players” maybe dominating a bit more now, but the average collectors need to readjust their thinking. Coins maybe taking a brief hic-up, but they aren’t going to stay down for long at all!

Always remember, coins are a LONG TERM buy. Yes, there can be short term gains, but there also can be short term losses. Coins are NOT like stocks. If you crave action, go buy stocks then! The BEST returns we have ever witnessed come from people who buy the best and hold (look at Pittman, Norweb, or any great long time collector). Getting in and out because you completed a registry set most likely will NOT yield you substantial profits-especially now with the market topping and even correcting.

A CORRECTION?

We strongly believe we are in the middle of a correction. The current market is bigger, smarter, diverse, and more stable than at any other time in its existence. So this correction is different. The players are now International and since the advent of of the Internet, a huge wave of money (far larger than we have ever dreamed about) has come into coins. It has become impossible to know who is building what anymore. Now that a huge portion of middle America is spent out, the other side (investors and very wealthy collectors) are stepping up and pretty much filling the gap. However, we do believe the market overall is OFF 10-20%. And, the biggest area of correction is with the coins themselves. If you don’t have nice and accurately graded coins, no matter how cheap you paid, you will learn cheap is not cheap enough. In the past 6 months, we have seen the spread between nice coins and junk grow huge. We predict in the next six months, that gap will grow even larger. We think the “stuff”, widgets, and/or junk problem coins make up as much as 50% of the overall coin market. That’s a huge bite to clean up-and it will cost a lot of people money, thus a correction must occur.

If you follow auctions, watch as prices don’t go for Godzilla way too stupid moon money anymore for just any coin-especially the non quality pieces. Sure, a fresh collection will bring zany prices, but it won’t be as stratospheric as before. Also, you’ll see the % of dealer retreads grow significantly in the auctions too (a sign that stuff just isn’t moving). This is why we believe the craziness and advancement of the market for now is over to a degree.

Are we at the very top? If we knew the exact answer, we’d be on a beach in Hawaii. However, if you are smart, you’ll play it safe and assume we are near the top (as many people are). As we said before, we think the market is actually quietly correcting by 10-20%. Buy ONLY the coins you need for your set. Sell off your inferior coins no matter how much of a hit you’ll take (your first loss is your best loss), buy ONLY true quality pieces. Do not sit on duplicates-when a great coin comes up for sale, dealers frown on trade-ins when they know they can get immediate cash for their piece (you get better deals as a cash buyer).

IN OTHER WORLDS

The rare collector car universe sort of parallels the coin market. At the recent Pebble Beach Concourse in August, a record $130,000,000.00 worth of cars SOLD. Here is a quote from an MSN article: Twelve cars did top the $1 million mark, with two above $2 million. The chart-topper was a 1961 Ferrari 250 GT SWB Berlinetta that sold for $4.51 million.

Its not just cars, we drive around the Jersey Shore and still plenty of mansions selling-including many that are $3,000,000.00+ tear downs. Our partners in the auction business-Morphys tell us they are still getting record prices for things like Toy Banks and anything GEM original fresh Tiffany.

For the “right” items, there is still plenty of money out there buying.

Someone recently asked me a question that I thought was interesting and that merited a detailed response. To paraphrase this question, they basically asked me this: can you tell me some ways that I can improve my collection while spending little or no money?

Are there any actual ways that you can make your collection better without dropping a lot of coin (bad pun intended)? I believe that there are and here are a few that came to mind:

1. Bring Out Your Dead. Every collector has them. Duds. Bad deals. Low end duplicates. You know what I’m talking about: the Dead Zone of your collection. These coins may represent more value than you realize. As an example, I recently had a relatively expensive double eagle in stock that a collector wanted for his set but he had no extra money at the time. I had him send me a list of the dead coins he owned; bullion, generic Saints, Morgan dollar rolls, etc. The value of his “stuff” was considerably more than he realized and he was actually in a nice profit position on his bullion. The choice to trade spillage for one nice, rare coin was easy for him to make. And the good news was that he had enough money left over so that he can actively pursue another neat coin or two.

2. Attribute Your Coins. If you collect series like Bust half dollars or large cents you are probably already a die variety collector and all of your coins are properly attributed. But what if you are a collector of early half eagles and you have never bothered to attribute your coins to Bass-Dannreuther variety numbers? And what if one of your supposedly common half eagles turns out to be a very rare die variety that is worth a 30-50% premium? Seems like a no brainer to me. Even if you collect a series for which there is no standard reference work, it makes sense to examine your coins with a 10x glass and see if anything interesting is happening. Who knows, maybe you’ll discover a previously unknown mispunched date or a cool double date that has not been recorded.

3. Invest $500 to $1000 in improving your library. If you collect early gold coins you probably own the Bass Dannreuther book and a few other standard references. But do you own pertinent auction catalogs? It has long been my belief that one of the best uses of your money is a good library. You’ll get more enjoyment out of your coins if you know more about them and there is no better way to learn about a series, especially one that is somewhat obscure, than reading books and catalogs. If you don’t know which books or catalogs to pursue, ask a specialist dealer which ones he refers to or, better yet, contact a numismatic literature dealer and ask for some suggestions.

4. Improve your peripherals. If you are using an old, slow computer you are missing out on the “full experience” when it comes to coins. Not everyone has the luxury of owning a sporty, brand-new computer but with the price of monitors having dropped so considerably in the last few years treat yourself to a 16 inch or 18 inch flat screen monitor. It’s just a few hundred bucks and it sure beats viewing coin images on an old, low resolution screen. Spend some money on a good quality new magnifying glass and a high quality lamp to view your coins as well. You’re looking at $50-100 for a world-class loupe and around $100-150 for a professional quality halogen coin lamp.

5. Research the pedigrees of your coins. This area is not relevant if you a collect fairly common series. If you are working on a set of business strike Indian Head quarter eagles in MS60 to MS62, it will be virtually impossible to determine the pedigree of these coins. But if you specialize in an area like Dahlonega quarter eagles or Fat Head half eagles, it is quite possible that some of the coins in your collection come from famous collections. Not everyone reading this will agree with me, but I believe that the “right” pedigree adds value and collectability to a coin and to discover that your 1847-D quarter eagle is from the Norweb collection or the Green Pond sale is pretty darn exciting. And if you collect Colonials or early cents, there is a possibility that a coin you own could have a pedigree that goes back over 100 years.

6. Start a cheap secondary collection. I’ve mentioned before that there is nothing more frustrating than being a collector who is either cash-strapped or at a point in his collection where there are no easily available holes to fill. In a scenario such as this, I always recommend having a cheap but interesting secondary collection to fulfill your “need” to buy something and to keep out of trouble. How about 18th century British Condor tokens? They are fascinating, well-designed and you can buy lovely examples for less than $100. Start a “one country one coin” collection where you purchase one coin from every country that currently makes coins. Or, focus on a certain year (say 1899), figure out every country that existed at the time and buy one copper or silver coin from each of these nations.

7. Immortalize your collection. Let’s say you’ve worked on a neat specialized collection for a number of years but you are currently “out of gas” due to finances or unavailability of stopper dates in the series. Why not create a website that focuses on your coins and/or the series you collect. As an example, say that you are working on a set of No Motto Liberty Head eagles. There’s never been a book that has specifically focused on these coins; just works such as my New Orleans reference that has included them as specific issues within a larger context. You could buy the URL nomottoeagles.com and create a research site that lists the finest known pieces, varieties for each year, auction records, etc and which had photos of each of your coins. I have seen this done for a few specific types (as an example, a collector has done this for Trade and Seated Dollars and the results are extremely impressive). Doing this is a win-win for everyone involved. It gets people more interested in the series you already collect and it gets potential buyers more interested in your coins when you are ready to sell. Plus, it seems like a fun thing to do in your free time.

July 17 (Bloomberg) -- Gold, little changed in London, may gain as higher U.S. consumer prices and a declining dollar buoy the appeal of the metal as a hedge against inflation and further weakness in the global economy.

The metal may gain before U.S. reports today that will probably show housing starts fell to a 17-year low last month and manufacturing shrank for an eighth month. Prices paid by consumers in June gained the most since 2005 on higher costs for fuel and food, the U.S. Labor Department said yesterday.

``The elevated credit risk and heightened inflation awareness should ensure good support for gold and silver,'' Walter de Wet, head of commodities research at Standard Bank Group Ltd. in Johannesburg, wrote in a report today.

Gold for immediate delivery fell $1.42, or 0.2 percent, to $958.53 an ounce as of 11:54 a.m. in London, after rising as much as 0.7 percent in earlier trading. Futures for August delivery dropped $3.30, or 0.3 percent, to $959.40 an ounce on the Comex division of the New York Mercantile Exchange.

The dollar fell against the euro and neared a two-month low against the yen on speculation credit-market losses in the U.S. will deepen, undermining the case for the Federal Reserve to raise interest rates.

The parity between ``the euro and the dollar is stabilizing gold,'' said Wolfgang Wrzesniok-Rossbach, head of marketing and sales at refiner Heraeus Holding GmbH in Hanau, Germany.

Bear Market

The MSCI World index entered a bear market last week as oil rose to a record and the U.S. Treasury moved to shore up Fannie Mae and Freddie Mac. More than $14 trillion has been wiped off the value of equities since October as $423 billion in credit- related losses prolong the global economy's slump and rising commodity prices stoke inflation. Margin calls are prompting some investors to sell their gold holdings.

``The funds got out yesterday, so you've seen a lot of gold liquidation,'' said Emanuel Georgouras, a precious metals trader at Marex Financial Ltd. in London.

Growth and inflation risks are increasing and the housing market is the ``central element,'' Federal Reserve Chairman Ben S. Bernanke said yesterday.

``Given the backdrop of rising inflation and recessionary pressures and increased financial market jitters, we anticipate investors will view dips favorably,'' James Moore, an analyst at TheBullionDesk.com in London, wrote in a report today. He expects the metal to test $1,000 an ounce.

Russia's international gold and currency reserves, the world's third largest, grew to a record $578.3 billion last week, the central bank said today.

The value of the reserves increased by $3.9 billion in the week ended July 11 from a revised figure of $574.4, Moscow-based Bank Rossii, the central bank, said in an e-mailed statement.

Fixing Price

Gold fell to $964.50 an ounce in the morning ``fixing'' in London from $977.50 at the previous afternoon fixing. The fixing is conducted by telephone twice a day by five banks: Deutsche Bank AG, HSBC Holdings Ltd., Bank of Nova Scotia, Societe Generale SA and Barclays Plc.

Among other metals for immediate delivery, platinum dropped $1.50, or 0.8 percent, to $1,927.50 an ounce. Palladium advanced $2.75, or 0.6 percent, to $431.75 an ounce and silver rose 1.5 cents to $18.79.

A global economic slowdown is likely to damp demand for precious metals such as platinum and silver, notably through a reduction in car sales, Wrzesniok-Rossbach said.

``Demand is lower and we've seen a lot of recycling material coming onto the market, which looks like a recipe'' for prices to decline, he said. It will affect ``mainly platinum, silver and to some extent also palladium,'' he said.

Car and light-truck manufacturers worldwide account for more than 60 percent of platinum demand, according to Johnson Matthey Plc, which makes about one-third of the world's auto catalysts.

Platinum fell to $1,948 an ounce in the morning ``fixing'' in London from $1,951 at the previous afternoon fixing. Palladium declined to $432.00 an ounce, from $438.00.

Nobody can predict the future of the coin market with absolute certainty. We’re still in a 5-year-old bull market trend, which is very lengthy in terms of past coin market cycles. And as we all know, the general world-wide economic climate is dismal.

Certain areas of the coin market are feeling the pinch, but overall the market still has solid support from eager buyers. As reported in the June 23 issue, collectors of average means are left with less disposable income to use for purchasing coins because they’re having to struggle with much higher living costs. This reality has slowed business in some areas, but has generally not affected values in the overall coin market.

Few market bubbles are apparent that could burst, taking values down. A possible exception could be in the registry market for modern coins (those struck since the 1960s).

Coins graded as perfect Mint State and Proof 70 lack dealer buyback support, and the supply grows as more are graded as such, which could lead to a correction in market values for particular coins that have advanced to levels beyond ridiculousness, according to many seasoned collectors and dealers.

One example of this excess is a 2003 Lincoln cent, graded MS-70 by Professional Coin Grading Service, which sold in September 2006 in a Teletrade auction for $15,120. The mintage for this coin issue is a huge 3.3 billion.

While most people call $15,120 a “ridiculous” price to pay for a modern cent, we don’t know the motives of the buyer, nor his or her financial position. However, it’s quite likely that this price is very small in relation to the buyer’s net worth.

The market for legitimately rare coins, such as rare gold that sells for hundreds of thousands of dollars and more, is supported by numerous well-to-do buyers. As the general sentiment among those involved in the current coin market is an expectation of high inflation, which helps values rise, the coin market probably has an excellent near-term future.

At this point, only a catastrophic economic reversal would appear to threaten the health of the coin market. With the ability of the Federal Reserve System and the federal government to stimulate the economy, it’s more likely that most people will remain employed and the population will adjust to economic challenges we face these days.

Silver Institute Urges U.S. Mint to Stabilize American Eagle Silver Bullion Coinage Program

Unprecedented investor demand has caused a market shortage for American Eagle Silver Bullion Coins, and the Silver Institute has called on the U.S. Mint to take immediate steps to increase production of this popular physical precious metal investment vehicle.

Today, the Silver Institute has written to the Director of the U.S. Mint expressing its concern over published reports that the coins are essentially being rationed to thirteen authorized dealers, reflecting a major kink in the supply chain, thereby making it difficult in many cases for consumers to purchase them. Silver Institute Executive Director Michael DiRienzo said, “It’s clear that the Mint misjudged the strength of the current silver market, and we are encouraging the Mint to take immediate steps to increase its production of these popular investment coins and plan accordingly for the balance of 2008 and for 2009. The trend line is clear, silver investment is on the rise, so the Mint should position itself to take advantage of this market momentum.”

Congressionally authorized American Eagle Silver Bullion Coins provide investors with a convenient and cost-effective way to add physical silver to their investment portfolios. Since their launch in 1986, American Eagles have become a leading silver bullion coin investment product and have produced over 165 million one-ounce coins, with 9.8 million sold in 2007, and already over 7.2 million have been sold in just the first 5 months of 2008.

Understanding that demand for the extremely popular coins is strong, the Silver Institute is urging the Director of the U.S. Mint to consider methods for streamlining the silver Eagles’ production process.

“We are very concerned about interruptions in this market and have requested a meeting with the Mint Director to seek stability for this important silver coinage program,” DiRienzo added.

A copy of the letter from the Silver Institute to the U.S. Mint can be viewed at http://www.silverinstitute.org/news/DirectorMoyMay29.pdf.

The Silver Institute is a nonprofit international industry association headquartered in Washington, D.C. Established in 1971, the Institute serves as the industry’s voice in increasing public understanding of the value and many uses of silver.

As the year races towards its half way mark, let’s step back and take a quick overview of what’s happened in the rare gold coin market so far in 2008 and what’s on tap in the coming months.

Last year saw an almost unparalleled upwards spike in gold prices and, as a result, we saw levels for many generics that were hard to imagine. I remember wholesaling some very low end AU Saints at over $1,000 each and thinking “Jeez, this is a lot of money for junky Saints.”

Despite huge increases in commodities in 2008, the gold market has been weaker than what we saw in 2007. My guess is that we’ll see gold continue to hold in the $850-950 range but I wouldn’t be surprised if we saw some price increases as the election draws nearer.

The generic gold market is as weak right now as at any time I can recall. There is a lot of supply on the market and very little demand. There are exceptions to this rule, of course. CAC approved common date Saints in MS65 and better are very easy to sell and smaller denomination issues in MS63 and up have pockets of demand. But it appears to me that generics will stay weak for the immediate future.

The market for very rare United States gold coins has never been better. If you follow the top end of the market, you’ve probably noticed a scenario in which there are very few great coins available and lots of demand. Many of the really great six and seven figure rarities don’t trade at auction and are quietly placed by specialized dealers who have multiple collectors anxiously waiting to buy really great one-of-a-kind coins.

The market for “collector quality” gold coins is excellent as well. There is still plenty of demand for key date issues and coins in the $1,000-5,000 with good eye appeal and some “sizzle.”

The area of the market that I do see weakness in is the so-called “middle market.” By this, I mean coins in the $7,500-15,000 price range that do not have something special going for them. (In this case “special” has a lot of potential meanings: low mintage or low population, excellent eye appeal, interesting background history, etc.)

Some of the specific areas in the market that appear to be strong right now include the following

Early Gold: The market for pre-1834 U.S. gold coins remains extremely strong. Buyers are more selective in mid-2008, however, than they were a year ago. Coins that have problems have to be sold at a discount in order to attract buyers. In 2007 many rare date early gold coins were impossible to locate at any price. An important collection became available at the Central States show and if any of the rarities from this set become available for resale it will be interesting to see what prices the coins bring. Additionally, Stack’s will be selling a major collection of early gold in June and many rare date pre-1834 issues will be available for the first time in a number of years.

Carson City Gold: Without much fanfare, this has been one of the strongest areas in the market in 2008. Collectors are actively seeking high quality Carson City gold issues in all denominations. Coins that appear to be in most demand are PCGS graded examples that rank either as Finest Known or solidly in the Condition Census.

Rare Date St. Gaudens Double Eagles: This was one of the least hot areas in the market during much of 2007 but it appears that the entrance of a few new collectors into this arena has turned the Saint market around. Fewer nice coins are being offered for sale as most of the excess material from the Morse collection has finally found new homes. As I’ve said many times before, all it takes to drive a market like this is two or three aggressive new buyers and I think you’ll see some strong activity in the rare date Saint market during the rest of 2008 and beyond.

CAC Approved Gold: Due to the fact that a number of retailers are now exclusively selling CAC approved coins, it goes without saying that the demand level for such coins is reasonably strong. Just because a coin has a CAC sticker does not automatically make it worth significantly more than when it was non-stickered. But the CAC sticker does appear to increase the liquidity of the coin and this is going to prove interesting in some areas of the market that were formerly slow. Another thing I like about CAC is that it motivates dealers to buy coins that might have previously been out of their comfort range. As an example, I recently sold a small group of New Orleans eagles to a well-known retailer who, as far as I know, had never handled these items before. Increased liquidity is something that I think is good for everyone.

Rarities and Trophy Coins: If you happened to see the prices realized for Contemporary Art at the recent Christie’s and Sotheby’s sales you’ve probably guessed that the extremely wealthy appear to be doing just fine in this precarious economy. This doesn’t really have a direct correlation to the coin market as the major art buyers at the contemporary sales probably don’t have a clue what a 1796 quarter eagle is. But, it does show that in nearly all collectibles markets right now there are very elite buyers who can afford the best and who are willing to pay seemingly out-of-sight levels for items that are truly exceptional.

There are two significant coin shows on the horizon (Long Beach and Baltimore) as well as a group of auctions (Superior, Goldberg and Heritage before or during Long Beach; Bowers and Merena at Baltimore and Stack’s a few weeks later) with some fresh, interesting material. I anticipate that these shows will be a bit stronger than usual and that some of the prices at these auctions will be stratospheric. After these two shows, we will probably see a bit of a lull in the market until ANA in late July/early August. This is typical and is mostly a result of people forgetting about coins for a month or two while they enjoy the summer.

Investment money flooding into silver has overwhelmed poor fundamentals and helped it to outperform gold, but the tide could be turning for precious metals and the probability of large losses is rising.

Silver's price declines in percentage terms is likely to dwarf those seen in gold, which some fund managers say has stronger supply-demand fundamentals.

"History shows that when you get a substantial correction in precious metals, silver falls more than gold," said Stephen Briggs, an analyst at Société Générale. "It's a more volatile market and smaller in value terms."

One big reason behind soaring metals prices has been the tumbling dollar, making commodities priced in dollars less expensive for holders of other currencies. The weak dollar also prompts producers to raise prices to protect profit margins.

Last week the dollar fell to a record low against the euro - with the euro rising beyond $1.60, an event that has caused many investors to question whether the dollar's declines will continue, or if it has reached a bottom.

"The dollar is not going to keep on depreciating forever," Briggs said. He said he expected gold prices to average around $900 an ounce next year compared with $1,025 this year, and silver to average $15.50 next year compared with $19.20 this year.

Financial uncertainty, which has underpinned precious metals since August, is to some extent becoming less important to investors seeking the higher returns that stocks and bonds offer.

With a weakened case for holding precious metals, prices have started to slip. The spot gold price is now about $893 an ounce compared with a record high of $1,030.80 on March 17, while silver is trading at $17 after recently hitting a 27-year high of $21.24.

Analysts at Goldman Sachs said recently that they expected gold prices to be about $835 an ounce in 12 months and silver at around $15.50.

From the end of last year to March 17, silver prices soared by more than 40 percent, while gold was up more than 20 percent. The heftier gains for silver were built on heavy investor flows.

Barclays iShares silver trust, the biggest U.S. silver exchange-traded fund, now holds more than 5,770 tons of silver, a rise of about 10 percent since the end of last year.

Gold holdings by StreetTracks Gold Shares, the world's biggest gold exchange-traded fund, which is listed in New York, stand at 591 tons, down about 5 percent since the end of December.

"Silver is probably going to fall more than gold in percentage terms," said Wolfgang Wrzesniok-Rossbach, head of sales at Heraeus, a German metals trading group. "From an industrial and jewelry point of view, there has clearly been a decline in demand. There has been a lot of additional material coming to the market in the form of scrap."

More than 20,000 tons of silver were produced globally last year, compared with around 2,500 tons of gold.

The physical surplus in the silver market is expected by some analysts to rise to around 2,500 tons from a surplus of around 900 tons in 2007. The gold market could see a surplus this year of 600 tons from 500 tons last year.

"Fundamentals come into play when prices are coming down," said John Reade, an analyst at UBS. "Silver doesn't have gold's fundamentals."

Silver is often a byproduct of mining for other metals like lead, zinc and copper, and many mining companies are trying to ramp up production of those metals with some success.

That means more silver on the market. Together with scrap recycling, supplies are set to jump this year, while overall demand, including from exchange-traded funds, is expected to fall.

"Silver is very dependent on one source of demand - ETFs," Briggs said. "You can't get excited about silver in the same way as gold. Silver doesn't really have the same cachet."

"Demand from the photographic sector has been falling fast," he said, as consumers switch to digital photography from traditional cameras.

For gold, the picture is somewhat different. Mine production is expected to hold steady this year, but analysts expect output in South Africa, a major producer, to fall over the coming years because the ore that remains is deep in the ground and expensive to access.

Fabrication demand - for making jewelry and coins - is expected to continue unabated as rising incomes in emerging markets like China and India allow people to choose gold over silver.

Which are the best markets today? With all the touting that goes on, it’s important to always keep in mind that no one knows which coins will perform best. Based on the history of the certified rare coin market, however, some areas appear more promising than others.

You probably already know which coins have been doing exceptionally well over the past five to ten years but lets take a look at them again. These are series that are widely collected by date or have such a strong collector or numismatic appeal that they have risen repeatedly over the past decade and still seem to be a good value today.

1. Key Date Coins; XF to MS65.
The best performing area of the rare coin market for the past nine years running. Think maybe they are topping out? Prices seem a bit silly relative to other coins? Acquisition cost relative to bids are too high? Well it doesn’t matter. These coins are the best, rarest, most known and most sought after, and they are being bought up by coin buyers with the deepest of deep pockets. They are desirable, rare, and not often seen for years at a time. They rarely go down and if they do it’s proportionally less to the rest of the market. This all translates to plenty of upside.

2. Early Walking Liberty Halves, MS64 and higher.
Rare date Walkers prior to 1929 have seen modest price increases over the last three years, but have done very well over the last ten. Rare dates from 1916 to 1928-S in gradesMS64 and higher are constantly in demand and are always on dealers want lists. Among the earlier dates, 1917-D , 1917-S , 1918-S, 1919-D, 1919-S, 1920-D, 1920-S, 1921-P, D and S, 1923-S and 1928-S are dates that inMS63 and higher grades have seen the strongest demand and the biggest price jumps in the series over the last nine years. A 1921-D in MS65 now trades for two half times more than it did in 2002

3. Lincoln Cents MS64RD and higher.
Seems anything even close to low pop, prior to 1950, has skyrocketed in demand and price. 200% gains or more over the last five to ten years.

4. Morgan Dollars; Key and Semi-key dates.
Low pop keys and semi-key dates in this series have doubled, but they are so sought after by date, they may double again. These rare dates in MS60 to MS65 continue to offer an explosive combination of rarity and popularity like no other date collected series with the possible exception of twenty dollar Saint Gaudens.

5. Early 18th and 19th century silver and gold type.
This includes Flowing Hair (1794 and 1795) and Draped Bust (1796 - 1807) half dimes, dimes, quarters, halves, dollars, $2 1/2, $5, and $10 gold pieces. Hard to find issues that were apparently way to cheap seven to ten years ago. Remember when a 1799 $10 in AU was a popular coin available for $5,500? They were rare and we all knew it, but they were over looked because of the grade. Today the same coin runs about $22,000.What happened? First and most important is that they are rare. They just did not survive 200 plus years in good condition. They were melted at various times as gold prices rose and because of their high face value not as many people could afford to save them as they did with cents and nickels. Today collectors and investors recognize this, along with the stunning beauty of the coin, and have taken them off the market. Expect the trend to continue and with so few coins around, today’s prices will seem low in five to ten years.

6.Twenty Dollar Saint Gaudens.
As I have mentioned before, better rare date $20 St. Gaudens have done exceptionally well over last decade. The rarest dates are up as much as 300% and in some cases 400%. Why have they done so well? Continued strong date demand for the most sought after dates by collectors, investors and set builders. Also, because of their beauty, size, and metal – they’re very popular! I think over the next decade or so some of the Key dates and Semi-key dates will out perform the general market five to ten times over. The great thing is you can buy many dates in grades that are still affordable. Thirteen dates to watch are the 1908-S, 1909-D, 1920-S, 1921-P, 1925-S, 1926-D, 1927-D, 1927-S, 1929-P, 1930-S, 1931-P, 1931-D and 1932.

The Best Coins from Undervalued Issues
The rare coins above have certainly done well but what about the rest of the market? One area that I think will be tomorrows winners are better dates from mint state and proof type series.

There is a free lunch of sorts in buying better-than-routine dates from good Type coin series if you can acquire them at or near relatively small premiums to the Type level.

Braided Hair Large Cents. Though all large cents are scarce coins and cheap right now, the MS65RD braided hair cents (the last variety issued 1839-1857) go for only $4,500, which is very little when you consider that PCGS has certified only 205 large cents as MS65RD and the NGC population is only 131. They are too scarce to be marketed commercially. Since no one dealer can acquire any significant quantity of them, they are not promoted. Their cost comes solely from rarity, so you get a lot of coin for the money. Braided hair large cents such as 1850, 1851, 1852, 1854, and 1856 can be had for almost Type money, yet each has an MS65RD combined PCGS and NGC population of 22 pieces or less, making them five times rarer than Type dates. Any date prior to 1850 seems like a great buy in MS65 regardless of color. The trouble is finding them. PCGS and NGC combined have graded less than 450 coins MS65 in all colors: brown, red/brown and red. Prior to 1850 there are only 16 coins graded MS65RD and 108 MS65RB’s by both services combined. If you can find an MS65RD or MS65RB at a reasonable level, which most are, buy it.

Capped Bust Halves. I love these in MS63 or higher because they offer the same opportunity all better date type coins do, plus they are becoming more widely collected by date. Minted from 1807 to 1839 these coins are quietly disappearing off the market. Two distinctly different types exist, lettered edge minted from 1807 to1836 and reeded edge from1836 to1839.Within the reeded edge varieties two types exist, those with ‘50 cents’ stamped on the edge and those with ‘half dol.’ on the edge. PCGS and NGC also grades over 50 varieties within the lettered edge dates, mostly over dates and large and small numbers.

Because of all the varieties and the fact that PCGS and NGC have graded enough coins in grades AU toMS64, they are becoming strongly date collected. Yet the premiums for better dates are still small compared to other date collected series. It’s a great time to be picking these up. The dates from 1807 to 1821 have an average MS63 population of just 17 pieces per year, as opposed to an average of 63 pieces per year for the years from 1822 to 1839. There is a premium for the earlier dates. Eleven of these dates run under $3,500 in MS63 condition, most are less then $600 dollars more then later dates in the same grade - for over six times the rarity.

Seated Quarters No Motto. Minted from 1840 to1865.I recommend them in all gradesMS64 or higher, but if you can find dates other than 1857, 1858, or 1861, you’re getting a bonus. Those three make up nearly half of the series population, that’s 101MS65’s out of the 230 for the series. These “common” dates run about $4,000 each in MS65. 53 different dates make up the other 129 MS65’s. In the early dates I like all dates from 1840 to 1853 in MS63 and higher grades.

Prices for these vary with MS64’s running about $2,850 and up. Among the proof no motto quarters, they all offer great value. Dates prior to 1858 are pricey because of their low mintages – 5 to 40 pieces made for each year. From 1858 to 1865 they struck between 100 and 1,000 each year. These later dates run about $5,650 each in PR65 and they have PCGS and NGC combined populations of 40 coins or less per date.

Seated Halves No Motto. All MS65 no motto halves are rare in MS65 and higher grades. Most have single digit populations inMS65 by either PCGS or NGC. Any date from1839 to 1853 in the early dates are great value in MS64 and higher grades. The 1853-P and O Arrows and Rays half can be bought in MS63 or higher. In the early Arrows halves (1854-55), the O mints are most common but are still great coins in MS64 and higher. I like these arrows halves inMS64 and higher. Expect to pay $3,300 to $3,500 for any date in MS64 and $2,500 more for the 1855/54. Like the No Motto quarters there are good dates in the series with low populations that won’t break the bank. Any date will cost you about $2,350 in MS64 and $5,800 in MS65. Try locating some early dates inMS64 for $3,000 to $4,500. Some neat dates are the 1840-P Rev. of 1839, 1843-P, 1847-P 1850-O and 1851-O. They all have combined PCGS and NGC populations inMS64 of 27 or less and PCGS and NGC see these dates once every couple years at best and that’s in any grade!

In MS65 some better latter dates that cost right at Type price are the 1856-P,1859-P, 1860-P, 1862-P, and the 1864-P. Don’t be afraid to pay an extra 15-25% for these dates if you have to, they are good deals and are worth even more than that.

Like the Proof no motto quarters, all the dates are excellent low mintage pieces. Prices are the same for dates 1859 to 1865 at about $2,750 for PR64’s and $6,400 for PR65’s. These are really good deals today when you consider they have mintages of just 460 to 1,000 pieces. That’s the total made, not the PCGS and NGC populations. The 1858, with just 100minted,would be a great find in any grade PR63 and higher. As a date it will run around 50% more than the other proof dates above.

Seated Dollar series. (both varieties, no motto and with motto). The 44 date series runs from1840 to 1873 and starting in 1866 the motto, “In God We Trust”, was added to the reverse. All gem MS65s from this series are quite rare with just single digit populations on many of the dates. The three most plentiful dates are 1860, 1871, and 1873.There are an additional 21 dates in the series with MS63 populations of 15 or more. Look for business strike samples of these dates in all gradesMS63 or higher and all other dates in any BU grades. Prices start at $4,500 forMS63’s and move higher for rarer dates. Proof no motto dollars are very tough to find in any dates other than 1862, 1863, 1864 or 1865. In PR65, for example, those 4 dates make up half the population of the series. Try to get these dates in PR64 or higher and any of the other dates in PR63 or higher. Good thing is you won’t have to pay any big premiums for the rarer dates after 1859, except for the 1866 no motto as there are only two known. The no motto’s in PR63 will cost you about $5,300 and with motto’s in PR63 are around $3,900.

Trade Dollars. Like the Capped Bust half series they are becoming very popular to collect by date. The most common mint state dates are 1875-S, 1876-S, 1877-S and 1878-S. All are recommended inMS64 or higher, though you’re getting a bonus if you can buy a date other than these four at 10%to 50%above the Type price. The four dates above will run about $4,650 inMS64. But some dates like the 1873-P and S, 1874- P and S in MS64, offer great value. I also like the 1874-CC and 1875- CC in MS63 or higher. They are popular mint mark dates that the grading services rarely see anymore. Proof trade dollars have something in common with proof three cent nickels. In both series, the early dates are rarest. Proof trade dollars dated 1873 to 1878 have lower populations than the 1879 to1883 issues yet they all trade for about the same price.

Look for earlier dates in PR63 and higher and the latter dates in PR64 and higher. PR63’s will cost approximately $3,200 and PR64’s around $5,500. Any date trade dollar in PR65 is a good value coin and are available for about $10,750 to $11,500

Will these Type coin series ever develop a strong date following? Impossible to say. But my money is on them becoming collected by date more and more over the next decade. You can see the trend beginning as buyers look for undervalued areas of the market. Rarity information is more available and buyers like getting extra value for their money.

Perhaps, a few years from now, when you put your “Type” coin in an auction, someone wanting or needing the date will attach a 50% to 200% premium to it that you never had to pay. Or better yet, maybe several bidders will.

It used to be that an IRA could be funded with only cash, stocks or bonds, but Congress has expanded the rules governing individual retirement accounts to include gold and silver bars and coins.

And more investors who are concerned about turbulence in the U.S. and global economies are taking advantage of that option.

"When you get into very volatile markets and people are afraid of stocks and bonds, they look for safe havens, and gold has always been a safe haven," said Nadav Baum, managing director of investments at BPU Investment Group in Pittsburgh.

Transactions for precious metals IRAs have increased 523 percent in the past eight months at GoldStar Trust Co., a leading custodian for self-directed IRA accounts, based in Canyon, Texas, said Trey Hightower, a precious metals specialist.

GoldStar's IRAs allow investments in gold, silver, platinum and palladium bullion bars and coins. Its precious metal assets under management were valued at $312 million as of last Dec. 31.

"The economy and the weak dollar is driving a lot of people into precious metals," Hightower said.

Traditional and Roth IRAs that contain precious metals operate under the same rules as conventional retirement accounts. The metals cannot be withdrawn from the account without penalty until the investor reaches 59 1/2 years old and withdrawals are required starting at age 70 1/2.

But the roundabout process of setting up a precious metals IRA is where the similarities end.

Investors must contact a self-directed IRA custodian who handles precious metals accounts. Once that account is open and funded with cash, the customer then contacts a coin dealer and locks in a price for the metals.

The IRA custodian issues a purchase order to the coin dealer and then the metals are shipped to a depository, such as HSBC Bank in New York. Once the custodian gets confirmation from the depository that the metals have arrived, the custodian documents it into the IRA account and pays the coin dealer.

"The customer never holds the metals while they're in the IRA," Hightower said. "But they can sell the metals within the IRA and take a cash distribution or take the metals out as a distribution."

The combination of dollar weakness, falling interest rates and rising inflation has created an ideal environment for rising precious metals prices. Gold, which recently traded above $1,000 a troy ounce, is known as a crisis commodity. It tends to appreciate in value under the worst economic conditions.

In 1997, gold and silver bullion were approved for IRAs. But only gold coins having a purity of 24 karat are allowed in the retirement accounts, with the exception of the 22 karat U.S. Gold Eagle. The South African Krugerrand is not permitted in an IRA because it is a 22 karat bullion coin.

David Morgan, a world renowned silver expert and founder of silver-investor.com in Spokane, Wash., said he was familiar with the handful of IRA custodians who handle precious metals and was not aware of problems with any of them.

"I'm not advocating you put all your IRA money into gold and silver," Morgan said. "There are a lot of people whose main savings is an IRA account, and therefore they should put at least 10 percent in precious metals."

One of the most innovative ways to buy and sell precious metals in an IRA was recently introduced by the Entrust Group, based in Reno, Nev. Through its partnership with GoldMoney.com, investors can buy and sell digital gold, which allows the movement of physical gold bullion in their IRAs from one account to another online.

The downside of holding precious metals in an IRA is the account owner must pay storage fees to the depository where the metals are held. And there are often big spreads in the buying and selling exchange rates.

Those fees can make bars and coins an expensive way to diversify a low-balance portfolio, which is why many financial advisers prefer to put clients into gold and silver exchange traded funds, which are traded on the stock market.

"There's not much advantage and a lot of disadvantages in having physical bullion," said Bruce Fenton, president of Atlantic Financial in Boston. "What happens if it's stolen or it melts? You don't have to worry about that if it's electronically protected."

Hi-o Silver! After years of being thought of as a backwater of precious metals, and even threatened with demotion to an industrial metal, silver is back in the spotlight. The effect on common date silver coins couldn’t be more welcome to collectors and investors, and is helping the market as a whole.

Up more than 29 percent over last year’s $13.38 average, silver has increased almost four times its 2003 average of $4.87 a troy ounce and three times its 1998 price average of $5.54 an ounce.

Here’s how the difference plays out on a common circulated Morgan dollar that contains .7734 troy ounces of metal. At $5.54 an ounce, a silver dollar has about $4.42 worth of bullion. A quarter has .18084 troy ounces worth of precious metal, worth just about a dollar. At the current $17.38 average, the silver dollar’s metal reserve is $13.44 and the quarter is about $3.15.

As gold crossed $1,000 and platinum $2,175, silver went over the important psychological barrier of $20 an ounce before retreating to profit takers. That approaches the 1979 average of $21.79, which is otherwise understood only in the context of the Hunt Brothers run on the silver market.

Some 22 years ago, in 1986, gold was at $368 an ounce, platinum was at $466, and silver was quoted at $5.36 average for the year. A fair question to ask is how did things turn out? The surprising result: gold rose 158 per cent, platinum 335 percent and silver weighed in with an impressive 224 per cent – not bad for an historic also-ran. At its interday high on March 6, 2008, of $20.80, the return is over 288 percent.

Gold’s historic breakthrough at $1,000 an ounce is noteworthy; silver’s meteoric rise has barely made the news.

Platinum’s excuse for popularity, the Chinese market, is inapplicable to silver. Gold’s gains as an historic asset of last resort also doesn’t apply, since silver is an everyman’s metal that is relatively precious, but not scarce.
Instead, it appears to be old-fashioned economics that is driving the price of the metal: modest supply, fixed reserves, and increased industrial and photographic use in the U.S. and jewelry use in India and the Far East.

A couple of years ago, two of America’s wealthiest men became players in the silver market, and it is apparent with hindsight that the way that investors (and collectors) look at the greyish colored precious metal may never be the same. In 1998, Warren Buffett, whose net worth Forbes has estimated in the billions of dollars, took a 130 million ounce position, according to documents filed with the Securities and Exchange Commission.

He was joined by William Gates III – that’s Bill Gates of Microsoft – who on Sept. 28, 1999, bought a 10.3 percent position in Pan American Silver Corporation.

Buffett’s position amounted to about a fifth of the world’s available supply and constituted an investment of about $900 million. The tiny silver mining company based in Vancouver, British Columbia, cost Gates an estimated $15-million for his 10 percent stakehold. This is a fraction of the fortune of Gates, whose net worth also has been estimated in billions of dollars.

Both are evidently out of the silver market, but what appears wrong is only their sense of timing. From an average price of $5.54 in 1998, the average price declined in 1999 to $5.21. Like 1979 (average price $21.79) when the Hunt Brothers tried to corner the market, the succeeding year (1980, $16.39 average) the price went down.

The price in 2001 averaged $4.37, but the upward trend then began as it steadily increased to $4.59 (2002), $4.87 (2003), $6.67 (2004), and $7.31 (2005) – a net change over the five-year period of 65 percent (or about 13 percent annually on average). Then it jumped to$11.54 (2006), $13.38 (2007 average) and $17.38 in the first three months of 2008 – a 136 percent change from 2005 (or about 34 percent annually).

In 2006, the latest available from The Silver Institute, 626 million troy ounces were mined from the following
20 countries:

One of the reasons that silver has had such intense activity over the last several years – after a hiatus in the early 1980s – is that industrial demand has outstripped supply in virtually every year since 1990. In 2005, the Silver Institute reported that demand for silver had grown by more than 5 percent and that over 1.5 billion ounces were utilized but not replaced.

Mine production had hovered at between 300 to 400 million ounces per year – but now is on the rise. One reason is the little known fact that except for the company that Gates bought into, nearly all silver production is done ancillary to other mining, that is as a byproduct of mining some other metal that incidentally yields silver.

With this as a supply factor, demand has exceeded 500 million ounces every year since 1990, and in several years in the mid-1990s went over 600 million troy ounces to fuel the industrial economy. Silver Institute stats show it even higher in the past few years: 848.7(2002), 873.4 (2003), 875.2 (2004), 925.6 (2005), and 911 (2006). Silver is used in making jewelry, silverware, as a brazing alloy for mirrors, in electronics, photography and as batteries. Coinage and medals account for about five percent (40 million ounces annually).

Photography remains a key element of silver’s overall demand. According to the CPM Group, a widely respected industry analyst, there “are no economical substitutes for silver-halide technology,” and the higher quality and faster-speed films that consumers seek require more silver.

Digital photography may eventually compete strongly with this, but in the early 1990s, more than 90 million ounces of silver went to the photography sector each year.

Issues concerning photography and industrial use for silver have existed for many years – and are likely to continue. But silver’s price in the future is deeply tied to its past, when it was a major political issue that was addressed by both the Democratic and Republican political parties, and played a dominant role in presidential politics.

At its beginning, silver and gold as coinage metals were rooted to the federal Constitution, which required that coinage be composed of both of those metals. Alexander Hamilton suggested that a ratio of 15:1 be utilized for valuation purposes. The debate was a considerable one, and the Annals of Congress recite it movingly. (Today, the ratio is about 58:1).

Hamilton may have been correct in his economic analysis, but by the time that the legislation was enacted, the ratio of world price had slipped to about 15.5:1, and as a result, silver was too inexpensive. Coins that were produced promptly left circulation. Until the early 1830s, the imbalance was not corrected, accounting for modest availability of gold coinage from that era.

Neil Carothers, whose book Fractional Money remains a classic nearly 80 years after it was published, calls the original coinage system (1792-1828) “a discreditable failure.” The Spanish pillar dollar remained the principal unit of value (that remained true until the late 1850s), and as Carothers succinctly put it, “Spanish coin could not be driven out until the mint provided domestic coins in abundance.”

Numerous bills were introduced to abolish the Mint outright. The mint’s presence in Philadelphia was extended every two years, long after the Capital moved to Washington. Out of caution, Congress refused to eliminate the Mint – but neither did it outlaw foreign coinage.

Significantly, the ability to deposit gold and silver into the Mint and receive coinage in return remained – a problem that would come back to haunt the mint decades later. The bullion was deposited, the mint refined it for modest charge, and turned it into coin.

The Coinage Act of 1837 attempted to re-balanced the appropriate ratio, and priced gold at $20.67 an ounce (or equivalent) and made silver worth $1.29 an ounce. Gold remained at the fixed number for nearly a century (it would be re-valued in 1933 by FDR). Silver was less lucky.

By the late 1860s, a mint had already been authorized in Carson City, Nev., its first coinage coming in 1870. The original intent may have been to exploit the Comstock Lode, discovered in 1859, and to produce gold coins from metal mined in the region, but by the early 1860’s, Carothers claims, that Mint (and indeed, the others) were functioning for the benefit of bullion dealers, because their coinage simply disappeared as soon as it was coined.

For the two years prior to the Civil War (1859-1860), silver was priced at $1.21 an ounce, and the Mint freely accepted silver at that rate which it turned into coin. A decade later, one of the bullion dealers testified before Congress than in 1863, he had $2 million in U.S. coin sales abroad and made a profit of over $100,000.

The Coinage Act of 1873 eliminated the ability to freely deposit silver into the Mint and receive coin in return. (It also removed the half of 1 percent seigniorage charge to convert gold bullion into coin of the realm). As a practical matter, it demonetized silver and created a de facto gold standard.

Also resulting was a political crisis of significant proportion, mainly because silver now began to slip in value as the Comstock Lode and other western silver mines began to fully exploit their significant contents. The price of silver moved toward free-fall.

Through the years, there have been spikes. The Silver Purchase Acts of 1890 (Sherman Act), the post-World War I silver melts and sales to India, the 1980 Hunt Brothers “run” to attempt to corner the market – and even the 1998 Buffett move and the Gates purchase of 1999 are part of the legend of silver’s pricing.

If Buffett’s entry raised the market significantly, so did Gates’s relatively minor purchase. Both in each case the market reacted because of belief that both men have strong financial positions and are, or could be, significant players in any long term for silver’s economic future.

Looking at silver’s long term price prospects, it is still along way from the $48 an ounce that it obtained as a metal when the Hunt Brothers attempted to squeeze the market in 1980. Gold, now around $1,000 an ounce, was then in the $800 an ounce range, and silver coins of every description were being melted.

One of the intervening sources has been the U.S. Mint’s own silver eagle program, a one ounce round nominal legal tender coin designed to hit the investor market. Over 150 million have been sold since 1986; since 2000, sales have averaged nine million uncirculated coins each year.

The demand was so substantial that it drained out the last of America’s once great silver reserves – the legislative source for the silver eagle program. By early 2002, it was apparent that demand would end the supply by mid-year. In a concentrated study of brinkmanship, the Senate and House acted quickly to assure that there would be a continued supply of the world’s most popular silver bullion coin, the American Eagle, by agreeing to allow the Treasury Secretary to go into the commodity market to obtain metal to strike the coins.

On June 28, the House of Representatives initialed its approval stamp on S. 2594, the Support of American Eagle Silver Bullion Program Act, in a unanimous consent vote, just a day after the House voted 417 to 1 in favor of H.R. 4846, entitled the “Silver Eagle Coin Continuation Act of 2002.”

Both measures addressed the same problem: after selling millions of ounces of one-ounce coins that have generated more than $264 million in profits over the previous seven years – and lots more since its initiation in 1986 – the nation’s silver stockpile, its source for precious metal, was all but depleted.

Where silver goes from here is anyone’s end game, but the trend line is clear: it’s out of the backwater, and “Hi-o silver, away!”

One of the most frequent questions we’re asked is which series present the best values. There has been plenty written on those sectors of the market on the rise…seemingly most right now. We can, however, list quite a few which are excellent bargains. For the most part, these are coins that have not seen much, if any, price appreciation in the past two decades. Acquire a single coin, or collect an entire series. High quality, attractive coins from these areas should outperform the general market.

Red-Brown Indian Cents: We see many coins certified Red by PCGS or NGC that we believe are actually a Red-Brown. Buy those coins, instead, that are certified Red-Brown, which are near Red, and pay a fraction of the price.

Three Cent Nickels: This is a modest 23 coin series that has only a few stoppers (1883, 84, 85). The Proof series is only a bit longer (26 coins) but is easier to complete. Most proofs are available in cameo for a reasonable premium.

Seated Liberty Half Dimes: Capped Bust half dimes have charted nice gains, but this series is still asleep. The business strikes present a challenge to complete, with several exceptionally difficult dates. Legend Obverse Proofs (1860-73) present a much more collectible endeavor.

Seated Liberty Dimes: Seated Quarters and Half Dollars have gotten quite a boost in the past 6 months. It shouldn’t be long before Dimes follow suit. This is an extremely difficult series to complete as nearly all of the San Francisco dates are elusive. There are many scarce dates, however, that can be purchased for reasonable sums even in gem to superb grades.

Barber Dimes, Quarters, and Halves: These sectors are showing some increased interest, particularly in auction, but with a bit of effort there are plenty of bargains to be found. There are 74 coins in each of the regular issue series, but only 24 in the proof series. Of course, you don’t have to complete a series to pick up some good values.

Peace Dollars: There are just 24 dates to this highly collectible issue. Nice coins can be somewhat of a challenge to locate, but the beauty of this great Art Deco design and there reasonable levels make this a worthwhile endeavor.

Classic Silver Commemoratives: This area of the market has actually fallen substantially over the past 5 years. The 50 unique designs (144 issues if you collect each date within those designs), each with an individual history behind production, form a unique niche in numismatics. Easily obtained fully brilliant or with gorgeous toning, depending on your preference. At the current valuations, what’s not to love?

Demand is pushing up values for circulated coins virtually across the board. Exceptions include circulated early commemoratives, those minted between 1892 and 1954, and, of course, coins struck after the silver era ended in 1964.

The market price of silver bullion has pushed up values for silver coins such as dimes, quarter dollars, half dollar and dollars. But in addition to climbing silver values, real demand from collectors is being experienced for these relatively inexpensive coins.

The grades of Extremely Fine and About Uncirculated are most popular because these coins show almost all of the original details of the coins. About Uncirculated coins should show minimal friction on their high points, but no flattening wear.

Coins grading Extremely Fine should show a little bit of flattening from wear on their high points.

However, coins with weak strikes are often mistaken by some collectors as having wear. Examples that come to mind are the 1923-S Lincoln cent, which has a normally weak reverse, especially in the wheat ears.

1940-S and 1941-S Walking Liberty half dollars are often very weak in the center on both sides. Liberty’s left arm often appears flattened, as do the skirt lines. And on the reverse of these coins there’s usually a flat spot on the bottom half of the eagle’s breast.

Similarly, many Morgan dollars, especially those struck at the New Orleans Mint, have weakness on the eagle’s breast, obscuring the feathers. Many people confuse this weakness with wear.

Such weakness is most often reflected in the prices for such coins. Those same issues that are unusually strongly struck sell for premiums over listed values, whether they’re in Mint State condition or slightly circulated.

It is also important to note that circulated coins with contact marks that stand out, or that bear other blemishes – like spots – that distract from the overall look of the coins, sell for discounts below listed values.

Great rewards can be achieved by buying circulated coins in bulk and searching them. Examples include buying bulk circulated 90 percent silver coins or bulk groups of Indian and “Wheat” cents. Rewards also await those searching through containers full of circulated coins at coin shops and shows.

The Silver Lining in every cloud” is the symbol of optimism. It is right up there along with gold and platinum for jewelry or wedding rings. Silver has been by far the most commonly-used monetary metal; silver coins are far more common than gold in much smaller denominations. It is the most common coinage used as money (the British pound sterling?); Silver coins have been standard currency in many nations in all ages of time, much more even than gold. It has been used more often than gold for coins because many silver deposits are much shallower than gold, so they have been easier and cheaper to mine, even by primitive methods.

Silver is used in more applications than any other commodity (aside from petroleum).

Those are the words of a well-known independent silver analyst. I agree with him that, despite the insanely profitable gold bull market, silver may not be just twice as profitable as gold in the next few years, but even more than that. Why?

He also says, “silver is in huge short supply, and the shortage is getting worse by the day; the silver inventories which depressed the price for more than sixty years are gone!” He’s certainly right if you are talking about silver at today’s price!

Unlike gold in the 70’s when Jimmy Carter decided that rising gold was an embarrassment to the dollar and announced gold sales from Fort Knox to depress the price, government can’t decide to dump their silver onto the market to artificially suppress the price – because they no longer have any! Silver is still the poor-man’s gold, and the time is not far away when the investment world finally wakes up to the shortages, and soaring demand will make it difficult to find any investment silver at any price this side of $100 an ounce.

In the inexorable law of supply/demand, price is the great equalizer. There is plenty of silver available – at the right price – and $14 to $17 is not the right price. At increasingly higher prices, silver jewelry and sterling silver will come out of the wood work. I remember back in the ‘80s when I put out my famous silver sell signal, my only recommended bullion dealer, made millions buying down and melting and salvaging all kinds of silver – sterling silver and bags of coins – as investors who believed me that the silver bull market was over, were melting down even heirloom sterling silver. The same thing will happen again, but at much higher prices. And silver will come out of India and China in the form of jewelry to be melted down, but again, at much higher prices. At these prices, with their economic boom over the last decade, the newly created middle-class Indians and Chinese are buying gold and silver jewelry.

Says the same analyst, “If you could find a commodity which was considered a precious metal and was far more rare than gold, wouldn’t today’s crazy price discrepancy ($12.50 silver and $700 gold at the time he said it seem utterly ridiculous?” I agree, but not necessarily for the same reasons.

When the world discovers the supply-and-demand fundamentals, silver will be the star for investors. The safest money will be made in physical silver held in your possession. Someday soon, the users who need it may not be able to buy physical silver at anywhere near today’s price because there won’t be any available in the empty warehouses. If they need or want some, they may have to buy yours or metals from India or China – at a much higher price!

You have a lot of choices here, some better than others, some good and some just plain bad. Let me count the ways:

This form of paper silver will boom price-wise as long as bullion does, but in the long run, by far the most safety will be with physical silver, especially if there isn’t enough inventory left for silver-users to get delivery settlement on their futures contracts to meet their commercial needs, and they will be forced to raise their bids so they can get you to sell them yours.

A lot of the world’s underground silver deposits were laid down very shallow when God created the Earth, so it has been easily mined over the years, even by primitive methods, and most of the world’s easy, cheap silver has been dug up. The world is now dependant on increasingly hard-to-find-and-mine deposits. There is continuing production of by-product silver found along with copper, lead and other minerals. The old, shallow pure silver mines have been depleted or are getting harder and more expensive to mine. Much of the cheap, easy, underground silver is exhausted.

The world’s biggest supply of above-ground silver is in India, but it’s not in ware-houses owned by the government. It is in the form of jewelry. It is a form of wealth worn by millions of Indians. No one person or government can decide to sell some reserves for any reason. It will take mass psychology, and that will take a lot higher prices.

With the price of gold at record highs and the U.S. economy on the downslide, it’s no wonder that many investors are setting their sights on gold to hedge against the falling dollar. Many investors think gold bars are the most reliable and cost effective approach to buying gold, but gold coins offer benefits that bars do not because of their smaller denominations and viability as currency.

The first gold coins were made by King Croesus of Lydia in approximately 560 B.C. These coins were not pure gold, but were made from electrum, a natural alloy of silver and gold.

When the process later became more refined, coins of pure gold and silver were created. The use of these coins spread to many civilizations, including the Greek and Roman Empires and, later, throughout European countries.

Gold coins typically cost slightly more than their gold content is worth, because a 4 to 8 percent premium is added for minting and distribution. However, coins may make up for this added cost because they are easier to sell and manage and are more widely collected than gold bars. While minted gold bars typically come in weights between 1/10 of an ounce and 20 ounces, coins range from 1/20 of an ounce to one ounce. The smaller size and more manageable shape of coins can be a strong asset if an investor wishes to sell a small portion of gold, or to use it as currency in the event of a breakdown of the U.S. monetary system.

Bank safe deposit boxes are recommended for keeping gold secure, but it is also possible for investors to keep some of their coins at home. Floor safes are a good choice, as an aboveground safe may announce the location of valuables and be stolen, according to OnlyGold.com.

“If it is not in a safe, spread [gold] around in many small caches. Some of the places suggested by our customers include under floorboards, in lofts [and] buried in the garden. Although these may sound rather facile, they probably work well in practice, especially if others do not know they are there,” according to TaxFreeGold.co.uk.

Gold does not tarnish like silver does; however, gold is a soft metal that can be scratched or dented. This can lower the resale value of collectible coins, so gold coins should be protected from rough handling.

There are two main types of gold coins: bullion coins and collectible coins.

Bullion coins

The term “bullion” refers to a form of metal in which its value comes primarily from the worth of the metal itself rather than from an artificial currency value. Bullion coins are priced and sold according to the weight of gold within the coin, plus the additional premium mentioned earlier.

Bullion coins are available in many different weights with the most common being 1/20, 1/10, 1/4, 1/2 and 1 ounce. Many countries make some type of bullion coin. Though the designs vary from country to country, and sometimes from year to year, gold coins are sellable in all countries. Different countries may also produce coins of varying purities, which affects prices.

The U.S. Eagle coin is named for the image of a bald eagle it bears on its surface. They are available in platinum, gold and silver. Golden Eagles are 91.67 percent pure. According to GoldPrices.com, this makes the coins harder and more difficult to scratch. The Canadian Maple Leaf bullion coin is 99.99 percent pure. The South African Krugerrand, the first national bullion coin ever released, is a 22 karat coin alloyed with a small amount of copper for durability. Many other nations, including Australia and China, also offer their own national gold bullion coins.

Collectible coins

Numismatic—or collectible—gold coins are not priced based on their weight in gold. Rather, their selling prices are based primarily on their rarity, age and condition. “Numismatic coins are cherished for their beauty, historical significance, and their potential investment value. Hence, numismatic coins sell at a significant premium over their intrinsic gold content,” according to AmeriGold.

Modern gold bullion coins are not minted in limited numbers, so they are not likely to gain as much value as rare, collectible gold coins when gold is in a bull market, according to the American Gold Exchange.

Although condition, or grade, does not particularly matter when buying and selling bullion coins, these things are important when dealing with collectible coins. Coins in Mint State will be worth more than coins that have been scratched or otherwise damaged.

“In most cases, collectors should look for coins in the highest grades they can afford. However, many of the sharpest collectors and investors will seek out the key rare dates of a series, which can be astronomically expensive in Mint State, in one of the lower grades—provided that they can find a coin with exceptionally high quality for the grade and excellent eye appeal,” according to the American Gold Exchange. “These high quality, lower grade coins are often a better value and far more affordable than the higher grades.” This premium above the coin’s actual gold value varies widely from coin to coin depending on demand, according to American Eagle Exchange.

For investors buying coins, here’s something to consider: Gold is classified as a collectible, which means that profits are not taxed as capital gains but as ordinary income, according to BankRate.com. Long-term capital gains are taxed at a 15 percent rate for those in the 15 percent tax bracket, but gold investments can be taxed at rates of up to 39.6 percent. Those considering putting their money into gold coins should consider what these rates might do to their returns.

"Recession!"

That's the hot topic in the news these days. Some economists say we're in one, some say we're just close.

I often get asked what the coin market in general does when stock prices go higher or lower, when interest rates are high or low, and what coins do when the economy is good or bad, for example.

The most important thing to keep in mind is that there are no rules.

I am not an economist, but speaking as a numismatist I can point out what's happened to the coin market during modern times.

We used to see coin prices rise and then plateau, rise again and plateau again. However, in early 1980 after gold hit the then record high of $850 most "investment grade" coins, namely Mint State 65 pieces, continued to rise and then promptly proceeded to fall by about 50 percent, beginning around income tax time in early April that year.

Prior to that time dealers reaped huge, easy profits from buying and selling bullion products during 1979 and early 1980 and they plowed these profits into what they knew – rare coins.

This is similar to what we've seen during recent years in the housing market – builders put their profits into apartments and commercial buildings, because that's what they know. Now many of them are having a tough time of it.

However, in today's coin market many dealers are heavy on cash and low on inventory. This is because the coins they'd like to own have been picked over and are in collectors' hands rather than floating around coin shows and auctions.

In observing what's going on in the coin market and in talking with dealers and collectors, the anecdotal indicators show that today's coin market is sound.

Demand in general is still very strong and coins on want lists and sought to satisfy many dealers' appetites are difficult to locate.

Some people think gold should be priced, not near $900 per ounce, like it is now, but around $2,000 per ounce, when adjusted for inflation.

That's probably the only rule that is constant – rare coins and precious metals' prices do well during times of inflation.

Other than that, there are no "rules" as to how the coin market is affected by the general economy.

After the dust settles from a major coin show and a major auction, there are always a number of things that can be learned. I learned a lot from the 2008 FUN show and, more specifically, from the Heritage FUN auction.

1. If someone is wealthy and they really want a coin, price no longer appears to be an object. Case in point: the 1805 quarter that was sold as Lot 2775 in the Platinum Night 2008 session. It was graded MS66 by NGC and it brought an absolutely incredible $402,500. What is even more incredible is the fact that this exact coin sold for $74,750 one year ago (almost to the day) in Heritage’s 2007 Platinum Night session. With the click of a mouse, even the most inexperienced collector could have determined this, thanks to Heritage’s unparalleled degree of transparency. Clearly the coin market is strong right now but a nearly-six times increase in the price of a neat but not world-class coin? Gulp. And you want to know something even more amazing about this sale? The two collectors battling it out for the 1805 quarter were bidding on line and, in all probability, never saw the coin in person or had an independent dealer look at it for them. In fact, they may not have even had a bidding strategy other than: “I want this coin and must have it no matter what it sells for.” And this was just one of many prices in this sale that I regard as absolutely amazing.

2. The last time that coins sold for numbers like this at auction may well have been at the 1979 and 1980 Garrett sales. There is one HUGE difference between those numbers and today’s seemingly crazy auction prices. In 1979 and 1980 the end users for most of the six and seven figure coins that were selling at auction were dealers. Today it is virtually all collectors. That makes me think that the coin market of 2008 is a lot healthier than the admittedly twisted market of 1979 and 1980.

3. Heritage has created a model that rich new collectors trust and that they obviously find entertaining to use. Collectors can bid live on their computers even if they are in a hotel room in Kuala Lampur and they know the reserve and/or opening bid level for every coin in the auction. Unlike at most other coin auctions, these collectors know they aren’t going to get jerked around at a Heritage sale and that’s why we are seeing something unparalleled in numismatic history beginning to emerge in 2007 and 2008: exceedingly wealthy people who will never set foot in a coin show and whose identity will never be known to more than a small group of industry insiders are quietly dominating the high end of the market like never before.

4. Previously dormant areas of the market can turn around very quickly. As an example, Proof silver coins from the 1840’s and the 1850’s were extremely tough sales for many years. In fact, I can remember dark, overgraded coins from the Starr sale in 1992 languishing in the market for at least five to eight years and some of the less attractive coins from the Pittman sales taking years to find homes. Out of the blue, these early Proofs are now selling for huge prices. In the Platinum Night session, a group of four very rare Proof quarters (1841, 1844, 1845 and 1850) brought a remarkable $1,322,500 including $460,000 for the 1850 in NGC PR68. Before the auction I would have guessed that these four coins would have brought in the area of $750,000 collectively. From what I hear, there are now two or three deep-pocketed collectors who have suddenly started to put together date sets of business strike and Proof Seated coins. That fact, plus the availability of some very rare and really exceptional issues in the FUN sale created a Perfect Storm scenario and ignited a formerly-dead series. Which formerly dead series will be next?

5. In the area of branch mint gold, it was interesting to see the very strong performance of many issues. The strongest prices realized were for the key date or one-year type issues that have been in great demand for the last few years. In the gold dollar series, a very nice PCGS AU58 1855-D sold for $37,375 (Trends for this issue in this grade is $35,000). The fact that this piece was choice, original and well struck helped propel it to what has to be a record price for an 1855-D dollar in this grade. There were some very attractive 1861-D half eagles in the sale and this is an issue that has shown great demand in the last few years but very few pieces have been available. A PCGS AU58 sold for $43,125 (Trends is just $35,000) and a spectacular PCGS MS63 brought $207,000 which is a record auction price for any Dahlonega gold coin.

6. When I was discussing the “how to” details about the Carolina Circle collection with its owner, one of the most important decisions to make was whether to regrade the pieces that had been slabbed years ago or to leave them as is. Given how hard it is to find a fresh deal these days, I made the decision to keep them in their original holders. Was my choice right? At this early point, it’s hard to say with certainty as you can rest assured that virtually every one of the old holder coins will be broken out of the original holder and sent to PCGS or NGC to be regraded. But given the prices that many of these coins brought, I’d have to say that people are going to have to hit some pretty major Grading Home Runs. Here are just a few examples. An 1841-C $5.00 in an old PCGS AU53 holder sold for $13,800. With AU58 Trends at $12,000 this means the coin will have to grade at least MS61 to be a decent deal. An 1846-C in PCGS AU53 brought $12,650. With AU58 Trends at $14,000 this coin will need to grade at least AU58 and even at that level the dealer who purchased it won’t make any money. A very attractive PCGS AU50 1851-C sold for $12,650 which is considerably more than AU58 Trends. To be even a marginal deal for the buyer this coin will have to grade at least MS60 to MS61. One final half eagle of interest was a lovely PCGS AU58 that brought a rousing $17,250. With MS62 Trends at $15,000 this coin will have to grade at least MS63 to be a good deal. From AU58 to MS63 seems pretty optimistic to me…

7. The appearance of CAC coins in the FUN sale was of great interest to many market observers, myself included. I am planning to write an in-depth analysis of their performance in my next blog but the early results seem pretty strong with premiums ranging from a low of 10% to a high of well over 50%.

For the last few years, I have been asked by Maurice Rosen, publisher of the excellent Rosen Numismatic Advisory newsletter, to be a contributor to his annual Crystal Ball survey. This feature, which generally has the participation of a half dozen or so very knowledgeable dealers, is an excellent way for me to analyze the coin market and the questions asked by Maurice are diverse and interesting. Here are my answers to the 2008/2009 RNA Crystal Ball Survey. Please note that due to the length of this article it will appear in two parts.

1. What’s your outlook for the coin market in 2008/2009?

I think the market will be mostly strong in 2008 although I think we will see continued bifurcation as we have the last few years. By this I mean I think there will be great strength at the absolute upper end of the market and we will also see good demand for interesting lower priced coins but the middle market will continue to be weak; possibly more so than in 2007. I foresee some weakness in the economy in 2008 and I would imagine that because of the housing slowdown we will see fewer people throwing sizable amount of disposable income at things like coins. Really good coins, though, are going to do awfully well in the coming years. There just aren’t many of them around.

2. What areas of the market look to be the best performers in 2008/2009? Please state your reasons.

I think type coins will be a very strong performer in 2008, especially Seated and Barber coins in MS64 to MS67 and PR64 to PR67. Coins like this have been too cheap for too long and people have finally gotten wise to this. Early coins have gotten too expensive for most people (in higher grades) and the grading standards tend to be pretty atrocious in this area. I think a number of collectors are realizing that a smart place to be is in the Seated and Barber arena. You can still buy really nice coins that are 100+ years old for less than $5,000.

I expect that rarities and trophy coins will be extremely strong this year. I find it amazing that an 1804 $10 sold for $5 million dollars recently and I’ve got to think that $1 million dollar sales are going to be reasonably routine in 2008 and 2009.

I would expect that Proof Gold will do nicely in 2008 as will better date $5 Indians and $10 Indians.

In rare date and early gold, I think anything that is choice and original will be in demand this year. I am already noticing a large price spread between crusty coins and scrubbed coins and I think this will continue as originality becomes more and more in vogue in 2008. Here’s my advice for collectors and investors in 2008, 2009 and beyond. Buy coins that are interesting and which have good aesthetic appeal.

3. What areas look to be the weakest? Again, please state why.

I would expect that silver commemoratives are going to stay very weak in 2008 unless some large marketing firm decides to promote them. They seem like great values right now but there are just too many of the little buggers around and unless you can count on selling thousands and thousands of coins, you can’t control the promotion.

I would have to think we will see some weakness in Registry Set coins that are perceived to be overvalued.

I also think that, with the exception of gold dollars, small-sized coins are not going to do well. As collectors get older and older, few people are able to see coins like Three Cent silvers and half dimes.

This is going to sound a little bit general but coins that are ugly are going to do poorly in 2008. No matter what the plastic says, if a coin is off quality, it will be hard to sell.

4. Since the 2001 lows, coin prices by some averages are up 20-50% but gold is up about 200%.

A) Have your clients expressed concerns about this?

How could they not express concern? While some areas of the market have done fabulously since 2001 (early type, early gold, rarities) many other areas have been extremely flat. In some cases, truly rare coins in relatively popular series are actually down in value since 2001, especially if you take out the gradeflation factor(s).

B) What do you tell them?

The truth. Which is, in my opinion, that as much as I love coins and the coin market in general, there are some problems that need to be cleaned up. These include accurate price reporting and the need for greater consistency among the grading services.

C) How do you see coins and gold performing from here on?

I think we’ll see gold break through the $1000 barrier but I’m not really sure where the short-term and medium-term caps are going to be. Perhaps $1250-1500– after that, who really knows? I think price performance in the coin market is going to be selective. As I mentioned above, the market is becoming more and more bifurcated. I think there are going to be fewer collectors in the future but there will be more extremely rich people dabbling. If you buy the right coins and hold them long enough, you should do well. If you buy so-so or average quality coins you won’t do as well. Investors should learn to think like collectors and buy the sort of collector-quality coins (and, no, the expression “collector quality” does not mean 1901-S quarters in Fine) that have traditionally appreciated well over the course of time.

5. The U.S. Mint is the biggest coin dealer. Are they helping or hurting the coin market? Please explain in detail.

I can’t possibly imagine that it’s helping the coin market that hundreds and hundreds of millions of dollars are being spent on modern products that might (or might not…) be spent on rare coins. At least the Mint is now far more receptive to collectors than in the past and they seem to have extended the olive branch to the collecting community after years and years of disliking us.

6. Coin grading has come a long way since PCGS started in 1986. A) What further advances are needed? B) How would they impact the market?

I’ve spoken with clients of mine who are involved in hedge funds or private equity groups and most of them won’t do a coin deal because the numbers are just too small. These guys are looking at doing $250 million+ deals (in many cases more than this) and a little $25 million to $50 million coin deal is just too small for them. That said, there is always the chance that a hedge fund guy who loves coins might do a fund as sort of a lark. But every time we’ve seen large funds in the coin market, the results have not been good.

If a fund were to be established, it needs to be run by someone like John Albanese who is very smart and very ethical. I assume that a fund run by someone like John would focus on really rare coins like Proof gold, early type (silver and gold), classic rarities and popular individual issues like High Reliefs, Pan-Pac Octagonal and Round $50’s, etc. This is essentially what the Ohio Fund was focusing on and I think they did a very good job in terms of buying coins and focusing on specific market areas.

7. A) How do you feel about the concept of “seals of approval” on graded coins?

I wish they weren’t needed but I think at this point in time they are a good idea—provided, of course, that the people involved with them are doing it for the right reasons.

B) What will the effects be of such slab labeling?

I think we are already seeing an effect. At least one of the services has become considerably more conservative in their grading in the past six to nine months.

8.Coin auctions:
A) What’s your best advice to consignors?

1. Don’t assume that auctions are always the best way to sell all coins.

2. Learn which firms sell which types of coins for the most money. As an example, I use one auction firm exclusively for any very low population 20th century coin I own as they get much better prices for these coins than anyone else. Conversely, I use another firm exclusively for more “sophisticated” coins as they do a better job describing them and their audience seems to be a bit more dialed in to these sorts of coins.

3. Don’t choose an auction firm solely based on their consignment rate. You get what you pay for.

4. The best times of the year to sell coins at auction are at FUN in January and at the ANA in July or August.

5. Hire an advisor to help you decide how to best market and sell your collection even if you think you know what you are doing. If you do it totally on your own the chances are good that you will leave money on the table.

B) What’s your best advice to bidders?

1. Hire a well-qualified representative to bid for you at auction. It is the best 5% you will ever spend.

2. Never bid sight unseen on any coin at auction worth more than $1,000. And, no, you can’t accurately grade a coin based on images!

3. If you attend an auction in person, come prepared. Know what you what to bid on, what you want to spend and how much you are willing to stretch on any coin.

4. Sometimes the best auctions are the ones you don’t buy out of but which you learn from.

9. Two sophisticated investors come to you to provide them a portfolio for a 5 to 10 year hold, one investing $25,000, the other $250,000.

A) How would you construct the portfolios?

$25,000 portfolio, as follows:

1. Stars Obverse Liberty Seated Dime, PCGS or NGC MS66, cost $4,000-5,000+. I think this has the potential to be a $7,500 coin.

2. No Motto Liberty Seated Quarter, PCGS or NGC MS65, cost $5,000-7,000+. If possible I would try to find a coin dated in the 1840’s and pay a premium of 20-40% for it. This could easily become a $10,000++ coin.

3. Barber Half Dollar, PCGS MS66, cost $4,000-5,000. I can see this coin becoming worth $7,500-10,000.

4. Liberty Quarter Eagle, PCGS or NGC PR65 Cameo, cost $12,500-15,000. I think this has the potential to become a $20,000 coin.

For the silver coins, I would try to buy very pretty originally toned pieces and for the Proof gold coin I’d try to find a coin that was not over-conserved.

$250,000 portfolio as follows:

1. A neat early copper coin, such as a 1793 half cent in AU or a nice Wreath cent or a pretty 1794 Cent with a good pedigree. I would avoid a Chain Cent as I think these are currently overpriced. I’d spend around $25,000 on this coin and I think it has the potential to double in the next five years.

2. A cool $25,000 early silver coin. It might be a really nice AU 1795 half dollar or a very pretty early dollar (preferably a 1796, 1797 or 1798).

3. A Large Size Bust Quarter in PCGS or NGC MS65. I’d be very selective when buying this coin and would hold out for a coin that had great original color, minimal friction on Liberty’s cheek and a good strike. I’d be willing to spend up to $25,000 on the right coin. This type could be worth $35,000-45,000 in a really hot market.

4. A great looking piece of early gold in the $25,000-35,000 range. I might look for a nice MS63 to MS64 Capped Bust Right half eagle or a Fat Head half eagle (1813, 1814, 1818 or 1820) in MS63. Again, I’d be ultra-selective and avoid a piece that has been processed. Although early gold has gone up a lot in price in the last five years, nice coins still have upside potential.

5. A small group (four to six coins) of Colonials priced in the $2,500-5,000 per coin range. I would use an expert in this area to be my guide and would shoot for coins that he thought were accurately graded and really attractive for the issue. This is a $10,000-20,000 investment that could double in the next decade.

6. A really neat New Orleans half eagle or eagle from the 1840’s worth $20,000-25,000 would be my next purchase. Having focused a significant amount of attention on these coins in the last few years, I know how incredibly rare they are and I think they are still wildly undervalued.

7. I’d finish the portfolio off with one or more of the following: a great piece of Proof gold from the 19th century, preferably in PR65 or higher and preferably with an original mintage figure of less than 50 coins; a few great No Motto Liberty Seated silver coins, preferably No Motto mint marked coins in MS63 to MS65 with pleasing original color and a few neat collector coins—things like perfect EF Carson City half dollars or lovely original AU Bust halves. All of these areas still seem like good values to me and have excellent upside.