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It wasn't a banner year for the coin market, but 1996 did witness some banner headlines in hobby periodicals. Above all, it will be long remembered as the year when--for the very first time--a single coin changed hands for more than a million dollars at public auction.

The big event took place on May 22, when Q. David Bowers gaveled down the Louis Eliasberg specimen of the 1913 Liberty Head nickel for an astounding $1.35 million at the St. Moritz Hotel in New York City. With the addition of the 10-percent buyer's fee, the purchaser--Jay Parrino, proprietor of The Mint in Kansas City, Missouri--ended up paying $1.485 for the privilege of owning this great rarity, one of only five examples known.

The Eliasberg Sale and a handful of other memorable auctions gave the hobby a lift during 1996. Unfortunately, however, day-to-day activity was generally more forgettable as the 1990s continued to be a decade of malaise in the rare- coin marketplace.

On a positive note, seeds were planted for a harvest of future growth with the publication of important new coin books and--most significantly--the introduction of the exciting new Coin Collector's Starter Kit by the House of Collectibles, part of the powerhouse Random House publishing family.

As its name suggests, the Starter Kit contains information and materials that provide a firm footing for someone just entering numismatics. Its centerpiece is the newly published second edition of my award-winning book "One- Minute Coin Expert," which tells the uninitiated how to find valuable coins in their pocket change and old accumulations.

It also contains a magnifying glass, a certified Lincoln cent minted before 1930 and $75 worth of special offers-- including a free video from the American Numismatic Association, free or discount subscriptions to COINage and other hobby periodicals, plus a free web site on the Internet.

More than 100,000 starter kits were scheduled for distribution to retail outlets beginning late in the year, and it was expected that many would sell them for less than $10 apiece. This could easily translate into thousands of new collectors not far down the road, and that would be a bonanza for the hobby.

The starter kit signals a major entry by Random House into the numismatic field. The company also has plans for a series of new coin-related books--a program kicked off in 1996 by the publication of my newest book, "How to Make Money in Coins Right Now," which shows people how to capitalize on idiosyncrasies in the marketplace.

The coin market started 1996 on a rather cautious note as the year's first big convention, the Florida United Numismatists (FUN) show in the first week of January, witnessed selective demand and what might be described as finicky trading.

As January progressed, however, gold showed signs of life in the bullion market, breaking through the key psychological barrier of $400 an ounce--and that triggered price gains and stimulated excitement in the rare-coin market, too. Nothing gets coin dealers (and investors and collectors) more excited than a rise in the price of the yellow metal.

By the beginning of February, mint-state U.S. gold coins were caught up in the excitement as enthusiastic market- makers pushed prices higher. We saw tremendous numbers of price increases, especially in the Mint State-62 columns. There would have been an even bigger and wider increase in numismatic activity if gold had continued its climb.

At the very time mint-state gold coins were going up, silver U.S. commemoratives were going down. At that point, however, gold--not silver--was the focus of attention, and optimism was high that the boomlet might be the start of something even bigger.

Gold was still over $400 an ounce in early February, and the fallout remained favorable in the coin market. At the big Long Beach (California) coin show, certified gold coins were extremely strong. Analysts seemed to agree that spot gold was rising due to the buying of gold mining stocks by the mutual funds, combined with the fact that the mining companies had cut back on production.

The Certified Coin Dealer Newsletter (or Bluesheet) observed in its Feb. 9 issue that if the underlying supply and demand forces continued, we could find ourselves experiencing a coin rally inspired by Wall Street--an echo, in a sense, of what took place in the late 1980s.

In addition to the excitement over gold, the Long Beach show also basked in the glow of birthday candles: The Professional Coin Grading Service (PCGS), first and biggest of the independent third-party certification services, used the occasion to mark its 10th anniversary. During its first decade, PCGS graded more than 4.2 million coins with a total declared value of close to $6 billion, according to David Hall, its founder and president.

I am pleased to have been involved with PCGS in perhaps the most significant grading project in history: the preparation of its soon-to-be-published official guide to coin grading and counterfeit detection. This project is a joint venture between PCGS and Random House, with Q. David Bowers writing the introduction of the book. Though scheduled to appear in 1997, the book was written in 1996.

By the beginning of March 1996, gold bullion had slipped below $400 and mint-state gold type coins had fallen back, as well. However, new stars had emerged in the coin market: Morgan and Peace dollars were surging, as were silver commemoratives. Silver had supplanted gold as the market's fair-haired metal, though some gold coins--notably proof gold type coins--were still doing nicely. Buffalo nickels and Mercury dimes made strong advances, too.

The plus signs in the Certified Coin Dealer Newsletter were so numerous, so welcome--and so unusual--that the editors placed these signs in bold face in its March 1 issue and added exclamation points after them!

Regrettably, the rally was as short as it was sweet. The market held steady for the most part during March, but as the month wore on there were signs of slippage. These began to appear in mid-March at the early spring convention of the American Numismatic Association in Tucson, Arizona. The level of activity at the bourse was disappointing--and while the show was interesting, attendance was less than dealers had hoped and expected.

By the end of March, demand had become very selective. People were insisting upon premium-quality coins--those that are very close to the next-higher grade. And they were able to get them for relatively small premiums because of the soft conditions in the market. In fact, the prices of PQ coins were at an all-time low. In 1988, such coins would have cost about 40 percent more than their standard-quality counterparts. In April 1996, instead of having to pay 40 percent more, you would have had to pay just $40 more.

The sight-seen market strengthened toward the end of April, following the annual convention of the Central States Numismatic Society. By then, anticipation was starting to fill the air as dealers and collectors began getting ready for the landmark Eliasberg Sale.

The glittering ballroom of the St. Moritz Hotel was electric with excitement when the opening gavel fell at the big sale. There were unmistakable parallels with earlier auction extravaganzas such as the Garrett, Brand and Norweb sales: The setting was the same ... Q. David Bowers' auction firm was involved ... and the coins were from a fabulous old collection.

Auctions by Bowers and Merena of Wolfeboro, New Hampshire, which staged the Eliasberg Sale in conjunction with Stack's of New York, gave this latest super-sale its lavish full treatment--including a magnificent catalog and a book about Louis Eliasberg written by Dave Bowers which subsequently received the highly prized Book of the Year Award from the Numismatic Literary Guild.

The 1913 nickel was clearly the star of the show, but it had an impressive supporting cast. Consider these other highlights:

  • The 1873-CC Seated Liberty dime without arrows, a coin believed to be unique, went for $550,000. The catalog described it as Mint State-65.

  • A 1796 no-pole half cent likewise brought more than half a million dollars. This, too, was graded MS-65.

  • An 1894-S Barber dime cataloged as Proof-64 went for more than $400,000.

  • A 1855 Kellogg & Co. $50 gold piece, a coin known as the "King of Territorial Gold," brought $220,000.

  • A 1793 Chain cent graded MS-64 Brown realized $132,000.

  • An 1856 Flying Eagle cent graded Proof-65 brought $15,400.

In all, prices totaled more than $11.5 million, demonstrating dramatically that when high-quality coins come to the auction block, they bring very strong prices--no matter how weak the market may be, no matter how much inactivity we may see and no matter how lackluster gold is at the time.

People bid liberally because these were original coins-- coins that hadn't been doctored. Buyers were assured of the purity of the coins, the pristine nature of the surfaces, because these were all Eliasberg coins with no other consignments mixed in. Thus, they could be reasonably certain that when they sent these coins to a grading service, they would all be graded.

Close on the heels of the Eliasberg Sale, Superior Galleries of Beverly Hills, California, conducted an auction featuring the Irving Goodman Collection, and yet another record fell when a 1943-D bronze Lincoln cent--the only known Denver Mint example of this off-metal rarity--changed hands for $82,500. That's the highest price ever paid for any Lincoln cent at public auction.

Heritage Rare Coin Galleries of Dallas held a major auction in conjunction with the year's second Long Beach show in early June, and prices totaled more than $3.5 million. The market quietly absorbed all these purchases, as it had done with the coins from the earlier sales, thereby showing signs of underlying strength and stability.

The market's longer-term picture wasn't a pretty one, though. In its June 14 issue, the Certified Coin Dealer Newsletter published a graph showing that during the three preceding years, sight-unseen coins had done absolutely nothing. The headline read: "Sight-Unseen Coins Nearly Steady Last Three Years." But the graph told the real story: It showed a line that was perfectly straight, suggesting not so much steadiness as persistent inactivity.

The new second edition of "One-Minute Coin Expert" hit the market in June, setting the stage for its inclusion in the Random House starter kit.

The market was even more inactive than usual in July-- and again the Certified Coin Dealer Newsletter tried to put a smiling face on the situation. The headline in its July 12 edition proclaimed: "Certified Market May Be Stronger Than It Appears."

Things took a turn for the better in August, when bourse and auction activity picked up considerably at the ANA's annual summer convention. The ANA show in Denver was widely considered to be one of the best in years--a tribute to the officers and staff of the national coin club--and it served as an ideal setting for busy buying and selling.

The bourse was busy throughout the Denver show, and Heritage conducted a large and successful auction where bidding was often feverish. The Heritage sale realized more than $10 million--an all-time record for any official ANA convention auction.

During the convention, Random House unveiled the starter kit and sponsored a forum on expansion of the hobby. There also were numerous educational sessions, including a warmly received program on coins and the Internet, which I had the privilege and pleasure of moderating.

The seesaw pattern of ups and downs which characterized the coin market in 1996 showed itself again following the ANA convention. September saw the pendulum swing back toward another period of lackluster activity--or, more precisely, inactivity.

The year's third Long Beach show had the misfortune to take place in the midst of this sluggish stretch, and many dealers found themselves doing little business at the show.

Things took a turn for the better in October, when important consignments from the Byron Reed Collection came under the gavel at an auction in New York conducted by Spink/Christie's. The two-day sale, Oct. 8 and 9, realized approximately $5 million--nearly half the presale estimate of $2.6 million.

Among the highlights were a choice uncirculated 1829 Capped Head half eagle, which brought $350,000 ... an uncirculated 1828/7 half eagle, which went for $159,000 ... and an about uncirculated 1797 half eagle with 16 stars, which realized $137,500.

The marketplace absorbed all these rarities--and besides bringing welcome revenue to the city of Omaha, Nebraska, which consigned the Reed coins for sale, the auction also helped point the coin market as a whole in a favorable direction as 1996 neared an end.

What will be its direction in 1997?

Predicting the coin market over an entire year is like guessing what the weather will be in the 12 months ahead.

There's reason for optimism, though. For one thing, 1997 will witness Part II of the Eliasberg Sale, with still more rarities to spark the overall market. What's more, it will bring Part I of yet another blockbuster auction, this time featuring the incredible collection of John Jay Pittman, a former ANA president and consummate collector who died during 1996.

Will the ups outnumber the downs in the marketplace of 1997?

Let's all sit back and watch.

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