Coins Outpace Other Assets' Values By
David L. Ganz, Numismatic News
November 20, 2008
most catastrophic economic cataclysm since the Great Depression
still doesn't put the whole of events into perspective.
The Dow Jones Industrial Average, which was a record 14,000
plus in October 2007, has had a meltdown.
Back when I first started writing this column in 1965, if
the Dow moved 10 points in any direction, it became front
page news. In recent days, the Dow Jones Industrial Average
has gone down over 400 points in a single day and now hangs
above the 8,000 mark.
Gold, which this summer hovered on a breakthrough that some
thought would send it toward $1,500 and beyond, has steadily
declined - but not like platinum which all but collapsed from
its record breaking run to the $2,400 mountain - only to recede
below $800. Gold itself is now at $715 an ounce.
In the midst of this international calamity, Stack's 73rd
anniversary sale - its historic October sale that officially
opens the 2008-2009 auction season of the numismatic field
- put on a multi-million dollar display in New York City.
Years ago, I used to cover their sales as a news beat reporter,
writing in a reporting style that caught the roar of the crowd,
the smell of the auction room and the excitement of the moment.
From this perspective in time, I focus on one coin in the
sale - and not the gem that could easily be picked.
My way of measuring is a Professional Coin Grading Service
Very Fine-20 1794 silver dollar that has a long history -
and a major pedigree - that goes back at least 120 years.
That affords the opportunity to see how the coin has done
over an extended period of time, running through the Panic
of 1893, the passage of the Gold Standard Act of 1900, the
Great Depression of 1929 and the story of how we as a nation
pulled through it over the course of a decade. Then on through
Oct. 22, 2008.
The coin is one of my favorites for another reason: I made
it an important chapter of my new book Profitable Coin Collecting,
which Krause Publications issued in August, long before the
financial meltdown that no one - not even this writer - predicted
in the way that it became the equivalent of a financial tsunami.
What's particularly neat about this coin is that it has a
pedigree traceable through at least nine sales between 1888
and 2008, including the following: the Vicksburg Collection
(G.M. Klein), W. Elliot Woodward's 95th Sale, May 1888, Lot
1904, where it realized $85; a Chapman sale of the George
Earle Collection on June 25, 1912, Lot 2670, where it moved
up ever so slightly to $87.
Then to a Stack's sale of a half century ago, Anderson-Dupont
Collection, Part II, November 1954, Lot 2489, where it realized
$625. Then to another Stack's sale, Farish Baldenhofer Collection,
November 1955, Lot 964, and a price realized of $575. From
there the record goes to Mike Kolman's Federal Coin Exchange
sale of May 1959, Lot 1766, at $2,100.
Next is one that some catalogers incorrectly place in 1958;
it is Kagin's 338th sale of the Western Reserve Historical
Society Collection, March 1985, Lot 1356, where it realized
$12,100. This is followed by a dip in Bowers and Merena's
sale of the Ebenezer Milton Saunders Collection, November
1987, Lot 2056, where it garnered $11,500.
Finally comes Stacks 73rd anniversary Sale Oct. 22, 2008,
where it opened at $45,000 and popped to $97,750.
Best evidence is that all 1794 dollars were coined on Oct.
15, 1794, from silver bullion deposited by David Rittenhouse,
then director of the United States Mint and a prominent Philadelphia
scientist who was a friend of President George Washington.
All 1794 silver dollars coined on this date were delivered
to Rittenhouse. Thus, all 1794 silver dollars can trace their
pedigree to him. Rittenhouse passed them out to friends, many
of whom kept them, others were spent and circulated.
The silver bullion deposited by Rittenhouse varied greatly,
and there were many gas bubbles in the silver ingots, which
later caused laminations and planchet cracks, which plague
approximately 30 percent of the 1794 dollar population.
The 1794 silver dollar is an American classic. It is the
first year of issue of our monetary unit, was struck in extremely
limited quantities and the total known population is between
130 and 140 coins in all grades.
In my book, Profitable Collecting, I focus on the Lord St.
Oswald specimen, which is an uncirculated beaut of a coin
- one of about a dozen in the condition census that are still
The accompanying charts draw on prices of Iowa farmland,
the Dow Jones or equivalent, the price of gold and the Salomon
Brothers average price per coin (a conceit to have a lower
price to work with) that I have been writing about for the
past 20 or so years.
In 1978, R.S. Salomon of the white shoe investment banking
house of Salomon Brothers, published an investment analysis
model that he started two years earlier using a small number
of just 20 silver and copper American coins. Some were Proof-63,
an early copper was XF-40, but mostly chosen were choice uncirculated
(MS-63) specimens. (No gold was included because investment
was too new - not until Dec. 31, 1974, was private gold ownership
permitted in the U.S. after a shutdown of more than 40 years.
To Wall Street's surprise, when the portfolio of 20 coins
were factored together, it outpaced the equities market.
Using the same 1976 starting point, it would have cost about
$33,000 to assemble a holding of each of the coins. The following
year, 1977, showed a 5.61 percent gain. Not rocket gains,
but when measured against a flat market, impressive. The following
year, a 4.17 percent gain and in 1979, the portfolio acquisition
cost jumped to $43,000 and a gain of more than 19 percent.
Some of the other relevant numbers used as a comparison or
as a foil: farmland. According to Mike Duffy, the chief professor
who measures it at Iowa State University, farmland was going
for $3,500 an acre. A year later, on July 6, 2008, Duffy gave
me an estimated figure of $4,500 - showing an increase annualized
at 26 percent annually (2.2 percent monthly).
Gold was figured at $661.50 last year - it went over $1,000
earlier this year and has since retreated into the $700s.
The other big precious metal, platinum, was figured at $1,307
an ounce last fall - when I started charting this summer (of
2008), the figure was $2,001. It has since declined to about
10 percent above gold's price.
The CPI (Consumer Price Index) showed inflation averaging
about 3.43 percent annually in late fall of last year; it
was at about 208 on the 1982=100 scale. It was at 216 in May,
and on Sept. 16, 2008, edged still higher to 219.08, according
to the Bureau of Labor Statistics.
Given the rare opportunity of a coin with a 120-year old
pedigree history, my data still needed to be refreshed; My
book went back to 1928 - an 80-year overview - but there's
a need to find more, so off I went on a junket, exploring
the Internet and discovering that there was plenty of data
for 1912 - a pedigree auction sale stopping point that the
U.S. Department of Agriculture Web site helped - but 1888
was almost impossible.
I tried the New York Times Web site and found an amazing
article about what it cost to operate a farm in 1888 - and
that the farmers were looking for an 8 percent return on investment
- but then found an obscure advertisement offering to sell
land in Iowa. The ad did not give a price, but fostered an
Needed: advertisements for selling land in Iowa circa 1888.
A commercial (i.e., pay as you go) Web site offered the Cedar
Rapids Evening Gazette, and for the issue of Sept. 17, 1888,
lo and behold, a newspaper article offered up ads offering
to sell improved farmland at $25 an acre (more than my estimate
for the average coin cost in the assembled portfolio).
The portfolio value and average coin price in 1888 and 1912
had to be estimated because some of the coins included in
the Salomon portfolio are more modern.
As a treat, instead of offering the usual Salomon portfolio,
the auctioning by Stack's of a Very Fine-20 1794 dollar offered
a unique look back over a 120-year period instead of my usual
So for the time being, the rare coin market continues to
show strength even as other components of the financial system
are in disarray. Eventually, or sooner, it will affect the
coin market, too - nothing exists in a vacuum - but this is
a rare opportunity to see real time comparisons and to gain