Part One: 1962 to 1979

There has been an active rare coin market in the US since just before the Civil War. Before 1962, rare coins were traded in basically the same manner for nearly 100 years. There were coin shows, auctions, and publications with articles and dealer ads. But in the 1950s the coin business was growing, and two events of the 1960s would start what we might call the "modern" coin market.

In the 1950s and early 1960s, the coin market was growing due to Post-War prosperity and the increase in leisure time and discretionary income that the prosperity brought. By the early 1960s, it seemed like there was a coin shop or two in every city in America. The 1950s and 1960s saw a real coin collecting boom. Many people were collecting coins. And you could still get a lot of coins just by going through circulating change.

Collectors would look through change and find the coins they needed to fill the holes in their Whitman blue coin albums. Whatever key dates were too rare to find in circulation could be bought at the local coin shop. Also very popular at the time were the new Proof Sets issued by the US Mint from 1936 to 1942 and from 1950 to present. You could order Proof Sets directly from the Mint and buy older Sets from your local coin shop.

Most people were collecting the coins that were currently in circulation or their immediate predecessors. So it was Lincoln Cents, Buffalo and Jefferson Nickels, Mercury and Roosevelt Dimes, Standing Liberty and Washington Quarters, Walking Liberty and Franklin Half Dollars, and (still in circulation at that time) Morgan and Peace Dollars. Very few people were interested in the older classic rarities, and those coins had to be purchased at coin shows or auctions. There was also very little demand for Gold coins (Gold bullion ownership was illegal in the US at the time, but vintage Gold coins were legal to own). That would soon change.

As for grading, things were quite a bit different than they are today, to say the least. Since most people collected coins from circulation, the Circulated grades did make a difference. But it was just the major Circulated grade categories such as Fine, Very Fine, Extremely Fine, in other words, there was just one VF grade, as op¬posed to today's four VF grades of VF20, VF25, VF30, and VF35. The term Almost Uncirculated (AU) was not used. Uncirculated coins were called "BU", for Brilliant Uncirculated. Numerical grading was not used for Uncirculated or Proof coins. Basically, a coin was either Uncirculated or it wasn't, same with Proofs. Occasionally, a few sophisticated buyers would pay a little extra for super Gems at auction. But grading too would soon change. Let's take a decade by decade look at the rare coin market's evolution, begin¬ning with the two major changes of the 1960s.

The 1960s...a new way of buying and selling coins

The first truly defining change for the rare coin market was the rise in Silver bullion prices. When I started collecting coins in 1959 (as a 12-year-old 8th grader), you could still go to the bank and get Morgan and Peace Dollars for face value. The father of one of my coin collecting friends used to cash his weekly paycheck at the bank for Silver Dollars. He would take the Silver Dollars home, pull the ones he needed for his collection, and pay his bills with the rest! I remember seeing Uncirculated Morgan and Peace Dollars in the bank teller change trays as late as 1962. And then the price of Silver bullion started to rise on the world markets, approaching the level at which the Silver in US Dimes, Quarters, Half Dollars, and Dollars would be worth more than the face value of the coins. As Silver prices rose, the first thing that happened was that there was a run on the Federal Reserve stock of Silver Dollars. Really, Silver Dollars should have never been made. They were large and clunky, and quite cumbersome. Who wanted those big Dollars clanging around in their pockets when a one Dollar Silver Certificate Note was just as good and so much more convenient? The mintage of millions of Dollars' worth of Silver Dollars was actually a political payoff to Western mining interests. Remarkably, even though there was little public demand or commercial use for Silver Dollars, the Bland-Allison Act of 1878 actually required the government to purchase two to four million ounces of Silver per month and coin them into Dollars. And Silver Dollars were minted, literally hundreds of millions of them. These Dollars sat unused in Treasury vaults for decades.

In the early 1960s, rising Silver bullion prices stirred buyer demand, and many dealers started making trips to the Treasury Department in Washington and various Federal Reserve depositories to trade paper Dollars for Silver Dollars. In late 1962, many 1,000 coin bags of previously rare New Orleans Mint Silver Dollars were released from the Treasury. The rarest of these Dollars, the 1903-O, had a catalog value in Uncirculated condition of $ 1,500 in 1962 and a catalog value of $ 15 in 1963! But the release of these previously rare coins stirred quite of bit of public interest in coin collecting. And there was certainly an "investment" component to the rising Silver prices. In 1963, people lined up around the block at the US Treasury to get a turn at buying Silver Dollars. It was literally a bank run on Silver Dollars, and millions of coins were disbursed. The Treasury eventually only had three million Silver Dollars left in its vaults, and since they were all scarce Carson City issues, the government wisely decided not to sell those coins. The run on the Treasury Silver Dollars was over, but thousands of new coin collectors/investors were born.

The great surge in interest in Silver Dollars, coupled with the increasing demand and prices for Uncirculated (BU) rolls and Proof Sets caused a coin collecting/investing boom in the early 1960s, and gave rise to the next defining piece of coin market evolution. In 1962, the first coin dealer electronic trading network was launched. The network used rebuilt/surplus Western Union Teletype machines to connect dealers across the country. Dealers posted buy and sell prices for BU rolls, Proof Sets, and Uncirculated Silver Dollars. These Bid/Ask prices were an entirely new way to trade coins. Coin prices were soaring, and the coin market was touted as being "just like the stock market." Soon there were many coin investment books and newsletters offering advice on how to profit in the coin market. And of course there were scams and concerns, even some government investigations. In fact, I have a front page of the coin newspaper, PACE...Numismatic Financial News Weekly framed and hanging on my wall. The headline is, "Fate of Coin Investing in S.E.C. Hands". The date of the publication is February 20, 1964!

The new way of trading coins, i.e. dealer Bid/Ask prices on an electronic trading network, was exciting and certainly increased demand and market participation. Not sure which came first, the chicken or the egg, but the market and the dealer network were both growing rapidly. The new way of trading coins needed a price reporting mechanism. For the previous 30 or 40 years, price reporting was done with annual price guides. But now prices were changing much more rapidly, literally by the day for many issues. A more timely price reporting publication was needed, and the first issue of the Coin Dealer Newsletter was published in July, 1963. Its publication was a direct outgrowth of the action on the dealer Teletype system and the tremendous (for the time) trading volume in Uncirculated rolls (BU rolls) of 1934 to 1963 Cents, Nickels, Dimes, Quarters, and Half Dollars; and also 1936 to 1963 Proof Sets, Uncirculated Morgan and Peace Dollars. Interestingly, when launched, the CDN was intended to be a dealer-only publication. The first time I ever saw a CDN was in 1966. There were four coin shops in downtown Santa Ana (now there are only four coin shops in Orange County). I used to hang out, buy coins on the Bid board...sell on the other Bid boards, etc. One day, one of the shop owners "covertly" took a CDN out from under the counter, showed it to me with great fanfare and said, "This publication is for dealers only. The public is not supposed to see this." But the CDN was valuable information, and within a few years, there were as many non-dealer subscribers as dealers.

The coin collecting boom peaked in 1964. In 1965, the government replaced 90% Silver Dimes, Quarters and Half Dollars with Copper-Nickel "clad" coins, and Proof Sets were not minted between 1965 and 1967. But the interest in BU rolls and Proof Sets was replaced by even greater interest in Silver coins, especially Silver Dollars, and a sudden interest in Gold coins. The CDN added Bid and Ask prices for Gold coins in the late 1960s. As for grading, things were pretty much the same as they had always been. The 1960s saw the coming of a new way to buy and sell coins. A new way to grade coins would be just around the corner in the 1970s.

The 1970s...a new way of grading coins

The 1960s saw a new way of trading coins with the arrival of a national Teletype trading network for dealers and the weekly price reporting of dealer Bid/Ask prices via the Coin Dealer Newsletter. But in the 1960s, coins were still graded as they had been for the previous 100 years. Uncirculated coins basically were one category with one price. An example of this grading structure could be seen in the weekly CDN listings for Morgan and Peace Dollars. In the 1960s, the Silver Dollar prices listed in the CDN were in two categories: "BU singles" and "BU rolls." A Silver Dollar was either Uncirculated or it wasn't. And they traded for one price, with the exception of the occasional sophisticated buyer who would pay a premium for a Very Choice specimen. The grading structure for Uncirculated coins would change dramatically in the 1970s.

Once again, rising bullion prices would play a part in changing the way coins were graded and traded. Though it had been illegal for US citizens to own Gold bullion since 1933, Gold bullion traded on the world's markets, and US Dollars could be redeemed by foreign banks for Gold at a price of $38 per ounce. That price stayed basically the same through 1971. But the US Government's deficit financing of Lyndon Johnson's "guns and butter" policy, i.e., the Vietnam War and a dramatic increase in social welfare programs, was putting tremendous pressure on the value of the US Dollar. By 1970, there was a run on US Gold reserves. In 1971, President Richard Nixon closed the international Gold "window" and the US would no longer redeem Dollars in Gold bullion internationally. The Gold bullion market responded immediately, and Gold prices soared, taking Silver bullion prices with them.

The dramatic rise in Gold bullion prices was a huge shot in the arm for the coin market. There was great interest in Gold and Silver coins from those collectors and investors and much of the interest was focused on the high-end of the grading scale. As coin prices rose, the difference in the quality of Uncirculated coins became much more important. Buyers began to pay attention to the fact that not all Uncirculated coins are equal in terms of grading criteria such as bag marks, strike, luster, and eye appeal. Three basic levels for Uncirculated (and Proof for that matter) coins developed: "UNC", "Choice BU" and "Gem BU."

In 1972, the Coin Dealer Newsletter began listing three grade levels for Gold Type coins, which were XF/AU, Unc, and Gem BU. At about the same time, Paramount International Coin Corporation, one of the largest coin retailers of the time, began using numerical grading for Morgan and Peace Dollars. Numerical grading had been used by Large Cent and Half Cent collectors for about 20 years. The scale used by the Early Copper collectors was the so-called Sheldon 1 to 70 scale, where 1 was the lowest possible grade and 70 was the highest possible grade. For Uncirculated Early Copper, a Brown coin was called MS60, a Red and Brown coin was called MS65 and a Red coin was called MS70. Paramount modified the 70 point scale for Silver Dollars and called Average Uncirculated specimens MS60, Choice BU specimens MS65, and virtually perfect Gem BU specimens MS70. In 1974, the Coin Dealer Newsletter started using some numerical grades and changed the description of its three Gold grades to XF/AU, MS60, and Choice BU MS65 +. In 1975, the CDN slightly changed the Gold descriptions to XF/AU, UNC MS60, and Gem BU MS65-70. In 1977, the grading descriptions for the top Gold grades for the CDN was changed to Gem MS65 +. Uncircu¬lated Silver Dollar prices were divided into two categories by the CDN in 1975, and its Silver Dollar listing became MS60 singles, MS65 singles, and BU rolls.

By the late 1970s, numerical grading (at least for Uncirculated and Proof coins) was all the rage. Dealers had begun using the "in-between" grades of MS63 and MS67, and one dealer (Jim Halperin at New England Rare Coin Galleries) was even using MS64 and MS66. At the time, Gold and Silver prices were soaring; the rare coin market was on fire, and grading was getting much more pre¬cise. Dealers were trading coins at coin shows, buying and selling daily on the FACTS Teletype Network. The weekly Com Dealer Newsletter was the pricing Bible of the rare coin market. But the real revolution in trading would occur in the 1980s. We'll examine that in part two of this article.

Part Two: 1980 to date

The 1960s and 1970s saw major changes in grading and trading in the rare coin market. In 1962, the first national electronic trading system for dealers was launched. In 1963, the Coin Dealer Newsletter began publishing weekly Bid/Ask prices for the most frequently traded coin issues. In 1964, Silver was removed from US coins, altering forever the way people collected coins. In 1971, the US government suspended redemption of US currency for Gold internationally, sparking a dramatic increase in Gold (and Silver) prices. In the 1970s, the coin market adopted a much more precise grading standard, using the Sheldon 1 to 70 quality scale. But as dramatic as those changes were, the 1980s and 1990s would see even bigger changes and an even greater expansion of the coin market.

The 1980s.. .a new way of grading and trading coins

In the 1980s, there were four monumental events that changed the coin market forever, and most would argue for the better. The first event was the continuation of the more precise approach to coin grading. When the Sheldon grading scale was first adopted for all coins in the 1970s, there were three Mint State grades used: MS60, MS65, and MS70. In 1981, responding to market pricing, the Coin Dealer Newsletter began publishing the Bid/Ask prices for the "in-between" grade of MS63 for Type coins and Gold. In the coin market, the adjective descriptions had evolved to be "Average Unc" for MS60, "Choice Unc" for MS63, and "Gem Unc" for MS65. In 1985, the CDN added the grade MS64 for Silver Dollars and Gold coins. This further refinement was again market driven. The spreads between MS63 and MS65 prices had become so big (especially for the rare date Silver Dollars) that there were clearly coins that were too nice to be MS63 and not nice enough to be MS65, and those coins were traded at fairly specific "in-between" prices. In 1987, the CDN added the MS64 grade for Type coins. Finally, in 1990, the CDN added the MS67 grade for Silver Dollars and Gold coins that were extra nice "Superb" Gem quality.

The second major development of the 1980s was the tremendous increase in investor participation in the rare coin market. The coin market has always had a degree of investor participation. Indeed, during the BU roll/Proof Set boom of the early 1960s, there were many investors and investor publications. But the number of investor participants in the coin market in the 1960s paled when compared to the tremendous amount of investors attracted to the coin market during the Gold and Silver bull market of the 1970s. The 1980s saw this investor participation increase even more. There were many large firms that sold exclusively to investors. Some did a relatively good job of supplying buyers with decent coins at fair prices, but some were nothing more than telemarketing bucket shops. Prices for coins had soared in the 1970s, and the case for coin investing was easy to make. The investor participation drove demand and was a major factor in several market segments. But the telemarketing abuse was a black eye for the coin market. The "bad guys" basically misrepresented the quality of coins they were selling, claiming they were higher quality than they actually were. This set the stage for the third major event of the 1980s, the industry's answer to the "misrepresentation of quality" problem...third-party grading.

Third-party grading, the third market development of the 1980s, was nothing short of revolutionary. The leader of the third-party grading revolution was the Professional Coin Grading Service (PCGS). PCGS was not the first third-party grading service, but PCGS institutionalized third-party grading by using the world's top professional graders, sealing coins in tamper-evident holders, and guaranteeing the grades it gave coins. PCGS was launched in February, 1986, and within months, they were receiving over 100,000 coins a month for grading. It was obviously an idea whose time had come. The demand for PCGS graded coins was huge, and prices soared. The success of PCGS spurred many others to enter the grading business. At one time, there were at least two dozen firms offering third-party grading. Some of the firms were quite legitimate and offered similar services to PCGS. But some of the firms were scams, supposed third-party services that were nothing more than sellers grading their own coins. As a side story, I remember receiving a brochure for a new grading service at that time, and their pricing structure was quite interesting: They charged $12 a coin if they graded the coins, but only $8 if the sub-mitter graded his own coins!

Third-party grading had a huge effect on the coin market. Within a decade, nearly every coin sold at auction was graded by one of the third-party grading services. For dealers, it became almost impossible to sell an expensive coin to a retail buyer unless it had been graded by a third-party service. Besides PCGS, one other third-party grading service gained significant market acceptance, the Numismatic Guaranty Corporation (NGC), which was launched a year after PCGS. Both PCGS and NGC also used more precise numerical grading, with all eleven grades from 60 to 70 designated. Today, PCGS and NGC remain market leaders in third-party grading, and both firms have now graded over 20 million coins each!

The fourth major development of the 1980s was the process of "sight-unseen" dealer trading. When PCGS was launched in 1986, the 32 original major dealers who were the first PCGS authorized dealers agreed to accept PCGS grading and buy PCGS coins on a "sight-unseen" basis. This was quite different from the way coins were traded up until that time. Before sight-unseen Bidding, a dealer could say he was buying at a certain price even if he really didn't want to buy any more coins. With third-party grading and sight-unseen Bidding, buy prices became much more transparent and, frankly, more real. For dealers, third-party grading did two significant things. First, volume went way up. Demand was huge, and the market was much more efficient. Sales increased by many multiples. Second, third-party grading took the wiggle room out of coin trading and margins decreased. For the coin buying public, third-party grading did two very positive things. First, problems with misrepresentation of quality basically became a thing of the past. Second, dealer buy/sell spreads decreased. For the coin buying public, third-party grading made it easier to get what they paid for and to pay a price that was much closer to dealer buy prices.

The sight-unseen buying and selling of third-party graded coins between dealers was made possible by the launch of electronic trading systems for these coins and this type of transaction. The first electronic system for third-party graded coins was the American Numismatic Information Exchange (ANIE), a company started in a partnership of the 32 original PCGS authorized dealers. ANIE was soon replaced by the Certified Coin Exchange (CCE), an offshoot of the original coin dealer national teletype system, and today, CCE remains the electronic trading system of choice for US rare coin dealers. The Coin Dealer Newsletter, as always, responded to market changes and launched a separate publication, the Certified Coin Dealer Newsletter (CCDN), or "Bluesheet" to list weekly dealer sight-unseen Bid prices for third-party graded coins.

1990s...an information revolution

The 1990s saw two huge developments that fundamentally changed the rare coin market. The first development of the 1990s was the internet, and it didn't just change the coin market, it changed the world. The internet worked quite well for the coin market, and really, all collectibles. The collectibles markets are information driven, and there is certainly no better way to disseminate a tremendous amount of information than through the internet. The internet made a revolution in coin information possible, and that's what we have now, nothing short of an information revolution. This is great for coins, as coins are interesting, and the rare coin story can be quite compelling. The internet has also made both communication within our market and commerce much more efficient.

The internet also made the second revolutionary development of the 1990s in the coin market possible. In the late 1990s, PCGS launched the Set Registry concept. Someone at PCGS had the idea that with third-party grading it would be very easy for collectors to compare sets of coins to "see who had the best set". The internet made it easy for collectors to register their sets and compare them with other collectors. And coin collectors welcomed the Set Registry concept, particularly the competitive aspect, with open arms. Today, over ten thousand collectors have registered over 100,000 sets on the PCGS and NGC Set Registries. The Set Registries have had a dramatic impact on prices for coins on the high end of the grading scale, and those prices in many instances have increased by many multiples.

The coin market of the future

The coin market has definitely changed dramatically since the Coin Dealer Newsletter was launched in 1963. And the coin market seems to change in each decade, in my opinion, mostly for the better. The question of the future of the coin market is indeed quite interesting. First, you cannot ignore the outside influences on our market. Our market is not immune to general economic conditions, government regulations, and technology. The economic outlook, in this country at least, is certainly mixed. But general economic conditions and government regulations are beyond the scope of this article (and my expertise), and frankly, there's probably not a lot any of us in the coin market can do about whatever may happen in regards to outside influences. One outside influence that can be very bullish for the coin market is the price of Gold and Silver. In the last few years, the price of Gold and Silver has soared. This obviously puts upward pressure on prices for Gold and Silver coins and indeed, it actually forces up the price of the coins that sell for close to their bullion value, while also somewhat forcing up the price of the so-called semi-numismatic coins. But predicting the future price of Gold and Silver is not a game for the fainthearted. Let's just leave it at rising Gold and Silver prices will certainly have an impact on both coin prices and the number of people who will be interested in our market.

There are two conditions I see in the immediate future of the coin market. The first is a significant expansion of the use of information technology. We are in the midst of an information revolution in the coin market, and that revolution will most certainly con-tinue, just as certainly as the world's technological improvements in information exchange and utilization will obviously continue. The bottom line is that information technology works very well for the rare coin market. We are most likely going to see coins trade on cell phones (or whatever the mobile app will be called). We will see an explosion of information about specific coins and an explosion in pricing information, both current and historical. It's all very exciting.

The second condition that seems to be on tap for the coin market is international participation. The third-party grading "coins in the plastic holders" way of buying and selling coins has been very slow in gaining acceptance outside of the United States. But that is all changing now. European and Asian dealers and collectors are starting to participate in the third-party grading market in greater and greater numbers. And auction prices for PCGS and NGC graded world coins have been increasing significantly in the past year or two. I talk to a lot of dealers and collectors throughout the world, and I'm convinced that the enthusiasm is real, and the world market for third-party graded coins will expand dramatically. I see major sight-unseen markets developing in both Europe and Asia. This too is quite exciting.

This is my 50th year as a coin dealer, my 40th year as a major dealer. I have lived through the significant changes of the last 50 years. I'm convinced that the changes have been nearly all positive, and I'm also convinced that these positive changes have made the coin market an even better place for the coin buying public. The future of the coin market seems very positive indeed.