Archive for October, 2010

PCGS…It Really Did Start As A Book…A Look Back and a Look to the Future

Posted on October 31, 2010 by 4 Comments

PCGS is about to celebrate its 25 anniversary! We opened for business in February, 1986.

The story about how PCGS came to be tells a lot about the coin market and what happened. And it also tells a lot about what will most likely happen in the future. I was obviously there, so I’ll give you my insider’s view of what happened 25 years ago, and I’ll also give you my feelings about where all of this is going.

We were show dealers…John Dannreuther, Gordon Wrubel, Bruce Amspacher and I. We traveled the coin show circuit and from about 1971 to 1990 or so, in the pre-Internet, pre-online auction days, the coin show circuit was the center of the coin universe. It was where all the action was…and where the smartest dealers in the world met every two weeks or so to buy and sell coins with one another.

I’m going to talk about four “eras.” The 1946-1970 (approximate dates on all the eras) “Post War coin collecting boom,” the 1971-1990 gold and silver “investment” era, the 1986-2010 graded coins era, and the 2010 on “information” era.

Before 1971, we had the “post War coin boom” and the period from roughly 1946 to 1970 was all about proof sets, BU rolls, and finding coins in circulation to put in your coin collection. Collectors would go to the bank, get rolls of pennies or nickels or dimes or quarters or even rolls of Morgan and Peace dollars and search thru them to find better coins. When I was in the eighth grade coin club (1959-60) I remember that one of the fathers actually cashed his pay check every Friday at the bank in silver dollars. He took the dates he needed for his collection and paid his bills with the rest. And of course everybody bought proof sets from the Mint and many “put away” BU rolls “for the future.” The post War coin collecting boom “ended” with the “coin shortage” of 1964/65. What really happened was that the price of silver rose to the level that silver dimes, quarters, halves, and dollars were worth more than face value. The coins disappeared from circulation. The government responded by minting clad coins in place of the silver ones and all of the sudden you really couldn’t find much in circulation. BU rolls and proof set prices topped out and the market was pretty quiet during the 1965-1970 time period. In terms of grading, it wasn’t the issue that it is today. Most of us just didn’t look at coins that closely.

Gold and silver prices were quite active during the late 60’s but things got really interesting in 1971 when Nixon “shut the gold window” and the U.S. stopped redeeming U.S. dollars internationally with our gold reserves. Prior to 1971, if a foreign government had excess dollars they just sent them to us and we gave them gold. That was stopped in 1971 and the gold market started to rise dramatically. Several things happened in the coin market. Gold coins, common and rare, became high demand items. All rare coins in general experienced a boom. And we started looking at coins much more critically as quality became a big factor.Coin shops had been the center of the coin universe during the 1946-1970 era. Shops were still a factor in the 1970’s and 1980’S, but the action shifted to the coin show circuit. It was pretty hard to take proofs sets and BU rolls to coin shows in the 1950’s and 1960’s, but once rare and/or super high quality coins took the spotlight, the coin shows became much more important.

I went to my first coin show in 1966…the Long Beach Coin Show! At that time, I hung out at coin shops, hung coins on bid boards,etc….yes, it’s true, I was a teenage coin hustler. But I really didn’t go to many coin shows. As the market changed, my focus changed. I started paying attention to rarity and quality and in 1972 I started traveling the coin show circuit. Between 1972 and about 1985 I attended 20 to 25 coin shows a year.

The coin shows were a big proving ground. You could own a coin shop and buy and sell with the public. You could have a mail order business and sell to the public…using whatever grading standards you wanted. You could have an “investment company” and sell gold and silver coins (and rare coins) to “investors.” You could have an auction company and sell on a relatively no risk consignment basis. But at the coin shows, it was dealer-to-dealer and you really had to know what you were doing or you had your butt handed to you. The dealers were smart, the price of everything was negotiable, and of course there was the coin show 30-30-30 guarantee…30 seconds, 30 steps, or 30%. If you could buy a coin from Fred Sweeney and sell it to Joe Flynn, you really had accomplished something. The margin for error was thin and BS got you nowhere.

So I was a show dealer and in the early 1970’s, I met and hung out with three other like-minded show dealers, Gordon Wrubel, John Dannreuther, and Bruce Amspacher. We were young, we knew our coins, we had good grading eyes (not all dealers do, you know), and we liked the same kind of coins…Gem quality coins and/or rarities. And we liked to talk about coins. So we’d get together at nights during the coin shows and talk about coins (I know…get a life!)

John Dannreuther says PCGS started as a book and it really did. At some point in time John, Gordy, Bruce and I decided we were going to do the ultimate coin encyclopedia…a page or two for every coin with survival estimates, rarity comparisons, and condition census lists. If that sounds familiar, it is of course what PCGS CoinFacts is doing now. I have somewhere in my desk, the original table of contents from 1981 or so for our multi-volume ultimate coin encyclopedia…Volume One was half cents and large cents, Volume Two was going to be small cents, etc. As for condition census, I took the line drawings from the Brown and Dunn grading book and printed up index cards for each type. Then Gordon and I would fill in the cards for important coins we saw at shows and auctions, noting identifying marks on each coin. This condition census project using hand-written index cards was of course an impossible task. I don’t know what I was thinking, but it just seemed like something that needed to be done.

As we keep talking about our book project two things happened. First, we keep running into the “grading problem.” How could you have a condition census if there was no real grading standard. You couldn’t research auctions and fix price offerings because there was no telling the “real grade” of the coins offered. The other thing that happened was we were all selling coins to investors. Bruce had a newsletter and investor clients. And I was really hot. I was going to the “hard money” shows, writing a newsletter, and I had people lined up waiting to buy coins. The big question was, “who guarantees the grade?” “What happens if you die…will others buy the coins at the same grade?”

At some point in time it became obvious that the coin market needed a universally accepted grading standard. Truthfully, it wasn’t really that far-sighted by us. It was actually obvious to us that what we needed was a universal grading standard and we thought a few other dealers would also be interested in something like that. So we decided to launch a third party grading service using world class graders…us…and sealing the coins and guaranteeing the grade. We pitched a few other dealers about the idea and it gathered momentum way beyond our expectations. We really thought we’d just do 3000 or so coins a month. The first month we did 18,000 coins, the second month we did 30,000 coins, and it took off from there. And so began the “graded coins era.” And then came Population Reports, sight-unseen bidding, Pop-Tops, and Set Registries.

As for the future, the real key to everything is the information. Coins…all collectibles really…are about the information. It’s a story…and it’s a good story. The more you know about coins, the more you usually want to be involved. Coins are a big beneficiary of the information age. And I believe the next era will be all about the information. And technology is really helping us. No more hand-written index cards to keep track of the condition census for coins.

As for the ultimate encyclopedia, that idea never died. It just got postponed while we launched a grading revolution and waited for the technology to catch up with our grand vision. Now we have PCGS CoinFacts, the online version of the book JD, Gordy, Bruce and I wanted to write before we started PCGS. I have three artifacts that trace the development of the PCGS CoinFacts push for information. There’s the 1981 table of contents for our ultimate coin encyclopedia and the condition census index cards. And there’s also something interesting I saved from 1999. That year I had our internet team design the page format for the online version of the ultimate encyclopedia (I used an 1889-CC dollar as the model coin.) And I have to tell you, the format is almost identical to what you see on PCGS CoinFacts today. It’s the basic idea we had 30 years ago. And of course we have combined forces with the like-minded coin information producer extraordinaire Ron Guth.

For the future, the coin market is subject to many outside forces…the price of gold, the rate of inflation, government regulations, etc., so there are some unknowns. But what I do know is that the information about coins is going to expand geometrically. And I can tell you with absolute certainty that PCGS, though PCGS CoinFacts, will create a condition census for every U.S. coin, online images for every U.S. coin and every coin in the condition census, survival estimates for every U.S. coin, deep historical auction prices realized data, expert commentaries on every coin, details about every great collection, and deep and detailed price histories for every coin in every grade. It’s a humongous task. Fortunately we don’t have to do it on hand-written index cards.

The expansion of numismatic information benefits us all. It’s great time to be involved with rare coins. We’re having fun with coins and we hope you’re having fun with coins too!

PS…There are of course still grading issues to deal with…and we spend a lot of time and money on the grading issues. The grading job is far from “done” and as I always say to our graders, “Nothing we do…CoinFacts, Set Registries, Price Guides, etc…is possible without what you do in the grading room.” So rest assured we still consider grading the coins right to be Job One. And from that base we create the information we can all use to make the coin market an even better place.

Filed Under: News

Should the U.S. Produce Colorized Coins like World Mints?

Posted on October 29, 2010 by 9 Comments

Some World Mints (outside the U.S.) produce colorized coins or coins with colored ornaments and even with 3D designs.  I have to admit, I actually like some of the coins, like the 2010 Canadian Snowflake coins imaged here.

 Should the U.S. Mint Produce Colorized Coins like other World Mints? To answer click on COMMENTS  above this post.

1c 2010 Canada

Filed Under: News

Generic Gold Premiums Collapsed

Posted on October 23, 2010 by 1 Comment

Generic gold coins, i.e. MS61 to MS64 examples of the most common dates of $2.5, $5 & $10 Liberties and Indians, and $20 Liberites & St. Gaudens, trade on the basis of the premium of their price over their bullion content. This premium can expand and conract due to various factors including buyer demand, dealer inventory levels, and, since a lot generic U.S. gold is imported from Europe each year, the value of the dollar versus gold and the Euro.

Recently, premiums have shrunk dramatically. They are as low as I’ve ever seen them, almost as low as they were in the 1969-1971 era just before the price of gold took off from $35 an ounce. Gold bullion prices have increased tremendously in the past few years. And when gold bullion runs up a lot, premiums tend to come down and generic gold coin prices tend to lag the moves in bullion and then “catch up” later. But premiums are really low now.

Smart generic gold buyers, both dealers and the public buyers, pay close attention to the generic gold coin premium. Obviously, the best time to buy is when premiums are low. And that’s the exact situation we have right now.

I’m not neccessarily recommending generic gold coins. Hey, I’m a rarity and quality guy. I’m a MS65 or better Gem quality chauvinist and have been my whole career. But premiums are so low now that if you like these coins for your gold portfolio, now is definitely the time to take a look. I’m even thinking about myself!

It will be interesting to see if premiums expand assuming gold bullion prices will stabilize and establish a trading range. Then again, gold looks pretty strong and could keep running for a while. If gold goes down, I would assume that premiums would go up a little. There are a lot of things that could happen and this is obviously something to watch.

Filed Under: News

Will the 5 Ounce – 2010 Silver Quarters sell out?

Posted on October 22, 2010 by 20 Comments

 The 2010 America the Beautiful 5 Ounce Silver Quarters are HUGE!!

 These are the largest coins ever struck or issued by the U.S. Mint. The largest coins the Mint had ever struck before these 3 inch America the Beautiful Bullion Silver coins, were the $50 Half Union Patterns struck back in 1877.

25c Grand Canyon Dime Compsrison

 

I placed a Roosevelt Dime next to a regular 2010 America the Beautiful Quarter based off their actual size, so our readers can get an idea on how big the coins really are. The U.S. Mint had to use a special German made Schuler Press to strike these enormous coins. It will also strike up to 100,000 of each of the five different designs.

 The 2010 America the Beautiful 5 Ounce Silver Bullion coins pricing has not been announced yet and they will only be distributed through the Mints’ Authorized Dealer Network. So, collectors will need to purchase the coins in the secondary market. Since the coins contain 5 ounces of silver, my guess is that the coins will sell anywhere from $150 to $180. 

 At PCGS we will be grading the coins and it will also be the largest holder we have ever used for any coins. I’m excited about the coins and I’m excited about the PCGS holders. I know many others are also excited about the coins.  

 Other recent modern coins have sold out in the past such as the 2009 Lincoln Commemorative Silver Dollars with a mintage of 500,000. And remember, the Mint will only produce up to 100,000 for each design of the 5 different 2010 America the Beautiful designs.

 Do you think that all 500,000 of the 2010 America the Beautiful 5 Ounce Bullion coins will eventually sell out? To answer click on, “Comments” above this post.

Filed Under: News

Coins Are Everywhere!

Posted on October 17, 2010 by No Comments

Coins are everywhere!  They’re in your pockets, they’re on your dresser, they’re in your piggy bank…and now, they’re in your hotel.

Mayo photo

This is an image of a cement sculpture that my wife and I just ran across on a trip to Tulsa, Oklahoma.  We were staying in the Mayo Hotel, a grand hotel that was once one of the largest in the country, where oil tycoons entertained guests and celebrities.  For some years, it lay empty and abandoned, but recently underwent a major renovation.   The redo looks great and the rooms are stunning.  We knew we were staying in a special property, but the coolness factor ratcheted up significantly when we came in through the Cheyenne Street entrance and ran across this wonderful sculpture.  It’s massive (at least seven feet tall) and looks just like the obverse of a Buffalo Nickel (although facing in a different direction).  We have no clue as to who made it or when, and its in an inconspicuous place, so few people will ever see it.  We asked our friend Jason Carter (who is a coin dealer headquartered in Tulsa) about the sculpture and he had never heard of it.

Coins are everywhere…even in places where you least expect them!

Filed Under: News

What else Do You Collect?

Posted on October 13, 2010 by 10 Comments

The collectibles hobby is definitely huge and for every year that goes by, more and more people begin collecting coins or just about anything else.

I really enjoy collecting coins myself, but I also like to collect other things. For instance, I collect some currency, stamps but to a much lesser degree. I use to collect old comic books, classic cars, antique furniture and other random items.

Collectibles 2

Besides coins, I know there are many other things other people collect out there. For instance, my 10 year old son collects Legos, my 8 year old son collects cards, my 6 year old daughter collects rocks and my three year old, well, he collects just about anything that fits in his pockets.

 I know others who collect paintings, rugs, firearms, bicycles and the list goes on and on.

 So, what other things do you collect besides coins? We would love to hear what else you collect.  To answer, click on the Comments link above this post. 

Filed Under: News

A Trip To Dahlonega

Posted on October 11, 2010 by No Comments

Yesterday, I got to enjoy a little numismatic “dream come true.”

Dahlonega

My wife and I were in Clayton, Georgia attending a nephew’s wedding.  Clayton is north and east of Atlanta, nestled in the foothills of the Great Smoky Mountains.  The wedding and reception were a lovely affair on Saturday night, but by early Sunday morning, most of the family and friends had already cleared out.  Our flight wasn’t until late in the evening, so we decided to explore a little.  Our first visit was to the Tallulah Gorge just south of Clayton, a dramatic canyon with beautiful waterfalls and a forest of trees just beginning to show their fall colors.  Next was a side trip to Dahlonega, Georgia, just north of Lake Lanier and home to a former branch mint.  The original Dahlonega Mint burnt to the foundation in 1878, but some of the artifacts and history have been preserved in the Dahlonega Gold Museum.  This museum is housed in the old Lumpkin County Courthouse, where the first floor is dedicated to the Dahlonega Mint and the second floor is dedicated to the history of law and justice in a remote city in Georgia.  It’s a small museum, but for a coin nerd, it’s nirvana.  The highlight is “The Vault,” a small safe around the back of the visitor’s desk, where a complete set of Dahlonega gold coins is on display.  Other highlights include the assayer’s gold pocket watch, the cased box of weights used in the mints, and an original stamping machine used to crush rock as an early step in the gold extraction process.

No visit to Dahlonega is complete without a meal at the Smith House, where guests are seated together at long tables for a family-style offering of heaping  bowls of fried chicken, sliced ham, beef, mashed potatoes, fried okra, and way too much more.  We almost missed it, but there’s an actual gold mine shaft inside the Smith House that was discovered in 2006 during a renovation.

After lunch, we took a trip just outside of town to the Consolidated Gold Mine, formerly the largest and most productive gold mine east of the Mississippi.  We donned our hard hats and went underground for a tour of the original mine, where we saw some of the quartz veins that held the gold and little brown bats that clung to the walls.  I asked the tour guide if there was any chance that the mine might reopen now that gold has hit record highs, but he said that the mine had been converted to a historic site and that mining was prohibited there.  After the tour, we panned for gold and “grubbed” for gems, a touristy but surprisingly fun time, plus now I have a small vial containing the tiny flecks of gold I found.

On the way out of town, we stopped at a roadside stand and bought a bag of boiled peanuts, a popular treat in Georgia, but alien to California.  If you’ve never had them, you don’t know what you’re missing!

Our next stop was Stone Mountain, a massive granite outcropping where Gutzon Borglum carved the Confederate Mermorial into the side of the mountain.  We’ve all seen it on the Stone Mountain Half Dollar, but viewing it in person really conveyed its grandeur and magnitude.

We had 45 minutes remaining before we had to leave for the airport, so we decided to hike the walking trail up the mountain.  We didn’t have enough time to make it to the top, but we came close, and we were certainly high enough to enjoy the incredible views.

Being a numismatist gives us a special connection to these places, something ordinary visitors will never “get” or understand.  If you’re ever in the Atlanta area and have a day to kill, be sure to visit Dahlonega and Stone Mountain.  You may not strike gold, but you’ll be the richer for it.

Filed Under: News

PCGS President

Posted on October 10, 2010 by 3 Comments

I remember seeing a thread on the PCGS message boards years ago which asked the hypothetical question, “what would you do if you were asked to be president of PCGS?” What followed were the expected responses and wish lists from a cast of characters who never seriously expected to be in that position. I always thought that it was an interesting thread especially after I was asked to be president of PCGS!

I think I first met David Hall at a Long Beach show. My table, Premium Numismatics, was setup not too far from DHRC and David would pass by frequently. Occasionally he would sit down and look at my inventory (mostly pre-1840 Bust material for those who don’t know). We would always have a pleasant exchange and David would make a few gracious compliments about my coins. This got to be a regular thing and David started calling me “Coin Stud” (of course it probably helped that almost all of my coins back then were in PCGS holders). We obviously shared a love and appreciation for coins.

As a local dealer I would occasionally visit the PCGS offices to drop off or pick up coins. I even had a couple of instances where I asked PCGS to review coins based on their turning in the holder (an artificially toned 1914-D 1c as well as a matte proof 1908 $20). These occasions were additional opportunities for David and I to get to know each other. [btw, both coins were bought back by PCGS.]

Most of you probably don’t know that I spent almost 30 years in Information Technology. The first 20+ working for large corporations where I ended up as a Senior Vice President running a very large organization, followed by 7 years where I founded and ran an Internet based software company. Some of the disciplines learned through those years will stick with me forever, for example recognizing the power of information. After selling my software company I founded Premium Numismatics in 2002.

David and I had several lengthy conversations about coin related information and how much of that PCGS had generated in over 20 years of business. We agreed that information actually makes coin grades more meaningful and that the more people knew about their coins the more they would enjoy their hobby. We discussed many other aspects of the coin business as well.

One night my wife and I attended a high school musical performance that our daughter was part of. When we returned home I had a message from David asking me to call him. So I called his number and after saying hello, David said “We’ve got a bomb to drop on you”….”What’s that?”…..”We would like you to come on board as President of PCGS”….”Well, that is a bomb!” You could say it was! Over the next few days we met several times and worked out the details. One very important issue for me was Ron Guth who was the current president and who I have known for years and always admired and respected. Well, David’s master plan called for Ron to head up the new information initiative which was going to be called PCGS CoinFacts. Ron is a fabulous researcher and author and I thought this was a fantastic opportunity for him, if he was interested, which he was. So over a two or three week period everything was worked out and I was introduced to the staff and the rest of the world as the new President of PCGS!

I am reflecting on all this because last week marked my second anniversary at PCGS. It’s hard to believe that two years have gone by already. There is so much going on at PCGS these days that time seems to fly by. Hopefully a few years from now we’ll be able to look back and see that what we are doing today made a real and positive difference in the coin hobby.

Filed Under: News

Poll: Will You be buying the 2010 Proof Silver Eagles?

Posted on October 8, 2010 by 13 Comments

The U.S. Mint did not produce any 2009 Proof Silver Eagles as it could not keep up with the demand for silver bullion related products.

This year, the production of 2010 Proof Silver Eagles was also highly in doubt. Surprisingly, the Mint recently announced that it will begin offering the 2010 Proof Silver Eagles on November 19th. However, each coin will be priced at $45.95 each, that’s a $14 increase from the previous issue!

Poll: Will you be buying the 2010 Proof Silver Eagles?$1 2010 Proof Silver Eagle

To answer – click on “Commentsright above this post.

Filed Under: News

Commems on CoinFacts

Posted on October 7, 2010 by No Comments

I do a lot of narratives for PCGS Coinfacts. But there are lot of coins to do, to say the least, so the question is…which coin should I do? I’ve been a major dealer in silver commems (the 1892 to 1954 issues) since 1974 and they are very popular with a lot of people so I’ve started to do that series for PCGS Coinfacts. I do at least one per day and I’m currently at the 1935-D Arkansas so I have about 135 issues to go.

For the PCGS CoinFacts narratives on silver commems I present some of the original issue and distribution facts, I go over the current rarity and relative rarity relationships, I describe what the luster and strike generally look like for the issue, and I tell any interesting stories I might know about the issue. So if you like silver commems and want this “old timer’s” view on the individual coins, then check the silver commem section out on PCGS CoinFacts, or just click on the “most recent narratives” section of the home page to see what I’ve written in the past few days.

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