Rare American Coins in a Rarity Driven Market
By Paul St. Julien
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The Future is Binary – The rare American coin market is only partially driven by the coin rarity – the supply. The other side of the equation is demand or popularity of the rare coin.
I own many quite rare newer (post 1900) and old (minted in the 1600′s) coins whose value isn’t commensurate with their age or rarity. I have coins whose total mintage ranged from 300-3000 and aren’t terribly valuable.
I figure not a lot of coin collectors are interested in, or possibly even know about these coins. I also own 350+ year old British or Mexican/Spanish coins that I pick up for 1/10th the price of a comparable though not as old, rare American coin.
Other things beside mintage influence coin value. One top influencer is the number of coins in a certain grade. This, in combination with the number of coins in the next grade below will drive the market for that issue of rare American coin.
For example, if a buyer is unable to locate a coin in MS-65, many buyers will opt for the less expensive MS-64, therefore increasing the demand for the MS-64.
Popularity alone determines demand. In the Morgan Dollar series, CC’s are by far the most popular and drives their prices higher than for any other mint. CC’s are followed by S-mints, then 0-minted coins, with P-mints being the least favored.
In popular coin issues such as the Morgan dollar, the more scarce the coin, the more popular it becomes. The least popular Morgan’s are the common dates in common grades
The most sought after grade for Morgan dollars is the lowest grade at which the buyer perceives them to be rare. For common dates that would be MS66 or 67. For better dates in the Morgan series MS65 and MS66 are most popular. For the really rare dates, the most sought after grades are MS63 and MS64.
The rare date Morgan’s have had the best long term performance with the better dates close behind, while common date Morgan’s have done the worst. Common date Morgan’s are moneymakers, if you buy them during market slumps and sell during the cyclical crest.
The better date and rare date Morgan’s have the advantage of attracting both the serious collector and the investor. So, demand for these dates can increase from both outside and within the rare American coin market.
Common date Morgan’s have lots of buyers and sellers, so their short term prices tend to be fairly stable. Therefore, common date Morgan’s are good for short term investments and rare date for long term performance.
Better date Morgans perform well for middle length investing movements. Their price fluctuations are more extreme than common date Morgans. Prices can seem to take radical drops or spikes because the market is so much thinner.
Common date coins trade like commodities. Rare date coins are few in number with few buyers who can afford them. Auction prices represent what might be closer to their real value. Better date Morgans have a fairly broad base of buyers and a well-defined market.
So, what does all this mean to you? My past advice remains the same. Buy the best coins you can afford. If you can afford common American coins, get the best you can. The same goes for better and rare date coins. Whatever category you buy in, get the best you can afford.
To discover more about coins: collecting issues, money management, investing in the rare and bullion coin market, and much more, I invite you to visit http://www.heritagecoingallery.com for videos and free tips on buying coins at the best prices.