From the September 2003 issue of ACCent, the newsletter of the Anchorage Coin Club:
Coins, Small Mintages, Not So Small Prices
Have you ever considered putting together a complete set of Liberty head quarter eagles (Coronet $2 1/2 gold pieces)? Probably not. Very few people ever seriously consider trying it, far fewer actually get started on the task, and very, very few collectors ever actually complete a set. Why is that? Are they exceedingly ugly? No, actually they are exceedingly scarce in many cases. And the amount of money required to build a set is enormous – in Extra Fine it is similar in expense to buying a nice house, at about $200,000. Needless to say, that simple statistic takes a lot of us out of the running for a complete set.
Lets take a look at the Coronet quarter eagles and see what kind of task you will be facing in case you happen to win a sweepstakes sponsored by a large magazine publisher. The set is truly large, as this design was in use for over fifteen years longer than even the long lived seated Liberty design heavily used on silver coinage of the nineteenth century. This design was first used on the quarter eagle denomination in 1840, and continued on for a whopping 68 years with no major changes at all, to finally be replaced in 1908 by Bela Lyon Pratt’s Indian Head design. During that time, these coins were struck at a total of five minting facilities, including the southern mints of Charlotte and Dahlonega, which have a well deserved reputation for producing scarce coins.
The complete set consists of 135 essential coins and at least eleven optional coins. The optional coins generally involve examples illustrating variations in the size of the date on the obverse, variations in the size of the lettering on the reverse, overdates and other varieties. Three of the optional coins are only optional due to extreme rarity combined with extreme value. They are the two Proof only issues of 1841 (known as the ‘Little Orphan’) and 1863, and the legendary business strike rarity of 1854-S. Adding these three coins doubles the cost of building the complete set, moving it out of the reach of even more collectors.
Now, lets take a bit of a closer look at those 135 coins needed to build the complete set. Only four of those 135 issues has a mintage of over 1 million coins, and all four of those issues are reasonably common and readily available. The Coronet quarter eagle set is one of those cases in which the highest mintage coin, in this case the 1853 with a mintage of 1.4 million, is truly the most common coin in the series. Now, here comes the amazing part about this series. Only 20 of the issues has a mintage between 100,000 and 1 million. This means that a whopping 111 out of the 135 coins needed for the set have a mintage of under 100,000 pieces, which is far less than some popular key dates such as the 1877 and 1909-S VDB cents and the 1916-D dime.
Only 28 coins have mintages between 25,000 and 100,000, meaning that over half of the set has a mintage under 25,000 pieces. Now, remember that the very expensive 1893-S Morgan dollar has a mintage of 100,000 coins! The next group, with mintages between 10,000 and 25,000 pieces contains 34 separate issues. Believe it or not, the largest number of issues, 45, fall in the mintage range of 1,000 to 10,000 pieces, with the remaining four coins having mintages of under 1,000 pieces.
So here we are, starting out with very low mintages and going down from there. A large percentage of the coins originally minted exist no more. Meltings played the biggest part in reducing the available supply. Our government melted excess supplies of gold coins from time to time. Other governments often melted US gold coins that they received in payment, for bullion which would the be minted into their own gold coins. However, the physical attributes of these coins led a lot of them to their numismatic demise, to become a piece of jewelry. These dime size gold coins with a cute design lend themselves very well to use in rings, earrings, and bracelets. When you look through advertisements featuring $2 1/2 gold coins, you will see quite a number of them listed with the notation ‘jewelry piece’, meaning that the coin probably suffers from excessive wear on one side, quite a few nicks on that same side, and a good, stiff buffing to make it nice and shiny. These coins sell for just a small premium above their melt value unless they are one of the really rare dates.
Cleaning is a problem with all coins, and gold coins are certainly not immune. Gold is a soft metal, and therefore gets hairlined easily when it is cleaned. Cleaned gold coins also tend to get a readily noticeable unnatural brightness that does not ever seem to go away. Be careful that the Liberty head $2 1/2 that you are buying has not been cleaned, unless you are buying it priced as a cleaned coin.
Now, back to building our Liberty $2 1/2 gold set. We have established that these are scarce coins with more than half of the set having an original mintage that would fit in a briefcase. How do prices look, and are these coins worth buying at current levels? I think they represent a decent value at current prices, though underpriced coins will take a bit of research to discover. The higher denomination gold coins underwent a major modification in 1866, when the motto ‘In God We Trust’ was added to the reverse of these coins. The $2.50 denomination did not follow suit, but the year 1866 still makes a good dividing line between the earlier dates and the later dates.
The first 27 years of the Liberty head $2 1/2 pieces, 1840 through 1866, actually comprise two thirds of the set because these coins were struck at all five mints during these years. By 1867, only Philadelphia and San Francisco were left, and San Francisco quit striking them after 1879. There is another fundamental, historic, and important reason for using 1866 as a division: In the early years, these gold coins circulated quite heavily, and few (or none) were saved. Good money (i.e. silver and gold coins) was heavily hoarded during the civil war, and gold coins just never saw the same level o fuse ever again after the war. This has major implications for a person building a Coronet $2 1/2 set.
The early years, because they circulated heavily, increase dramatically in price as the condition of the coin improves. Look at the 1856-O as a typical example, with a mintage of 21,000 pieces. In Very Fine condition, this coin has a trends value of $350. Going to Extra Fine nearly doubles the value to $675. Going up to Almost Uncirculated (AU-50) doubles the value again to $1350, and again going to AU-55 at $2950, and yet again going to MS-60 at a whopping $7500. This is typical price performance for the early issues, and shows how important condition is on these early coins. I believe that for the early dates, Extra Fine condition represents the best value for the money. You still have all of the major details visible, an attractive coin, for a fraction of the price of an Almost Uncirculated or Mint State coin. Even with unlimited funds, some dates simply do not exist in Uncirculated condition as none were saved.
For the later dates, Almost Uncirculated (AU-50) coins are the best overall value for the money when building this portion of the set. AUs are typically only around 20% more expensive than Extra Fines, which is a small enough difference to make it worthwhile. Mintages of these later dates are still very low for the most part, but limited meltings and a large number of survivors make these pieces much more affordable. Many of these later coins were apparently used as gifts or for other special purposes, which is why the survival rate is quite high, and most of the survivors are Uncirculated, or possibly worn down to AU-55 by mishandling.
Bargain hunting $2 1/2 Libertys. It can be done. No guarantee that your bargain coins won’t remain as bargains long into the future, but it is worth a try. At least you end up with a coin plus a good story to tell. Concentrate on mintmarked issues as they tend to be scarcer and have lower survival rates. If you are willing to settle for a somewhat low grade piece, you can find some really scarce coins for under $1000. For instance, the 1846-C (Charlotte), with a mintage of only 4,800 pieces, a low survival rate, and incredible popularity due to it’s southern branch mint origin, has a trends value of only $950 in Very Fine. A lot of money, but it sure seems cheap for a coin that numismatic researcher Douglas Winter estimates is represented by only 65 to 75 coins surviving in all grades combined.
Bargains are available in the later dates, too. Look at the 1884, with a mintage of a scant 2000 pieces, which has a Trends value of only $385 in Extra Fine. For somebody with a few more dollars to spare, the 1885 looks compelling with a mintage of 800, count them, 800 pieces, for only $1500 in the same condition. I know these two coins likely have a high survival rate, but when you are starting with so few coins, these will always be scarce.
Which coins in this series are fully valued? The higher mintage (250,000+) coins are generally readily available, and present little upside appreciation potential, in my opinion. Worst of all are the dates from 1877 through 1907 that have mintages over 10,000 pieces, especially the coins from 1900 – 1907. These are all readily available, and should remain thusly well into the future.
While few people have ever (or will ever) seriously considered building a complete set of Coronet $2 1/2 gold pieces, it is still interesting to see how scarce and overlooked this series really is. And do yourself a little favor if you are building a type set: do some bargain hunting! You can get a super scarce coin for only a small premium over a super common one. Do not buy a pre-made gold type set! Pick out your type coins one by one, and pay a little bit more (about 25%) for a set containing very scarce semi-key coins that have true appreciation potential in the years ahead.
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