Doug Winter Blog on the 1794 Dollar

Coinosaurus

Read it here.

Boosibri

Doug's blog is the best analysis I've read on the topic.

Sonorandesertrat

<< <i>Doug's blog is the best analysis I've read on the topic. >>

DaveG

His essay seems a little schizophrenic to me:

He's hoping the sale attracts the mega-millionaires of the world, but all the interested parties were known coin market participants.

It sounds like a great deal for Stack's-Bowers and the buyer (who owns a high-end coin dealer) and a fantastic deal for the seller.

I'm not so sure that it would have been a great deal had a collector bought that coin.

After all, the coin sold for $7.9 million a few years ago and DW says he thought the coin would bring $5 million to $6 million this time.

That wouldn't have been good.

Best line of the blog: But if you were at $8 million, why not pay $10 million?

I dunno - I'm not anywhere near that end of the market and maybe the art market works like this, too - but . . .

Senex

Interesting analysis but I seriously doubt I will ever be in the market for the coin!

RYK

<< <i>

<< <i>Doug's blog is the best analysis I've read on the topic. >>


>>

bidask

I am a little surprised he thought it was
going to go for considerably less.

How can so many great dealers be out of
touch with the true value of great coins
like this?

If anything it's a wake up call to the dealer
community.

SeattleSlammer

I wasn't wowed. He reports believing that the coin would sell for far less--then when it sells for far more he takes the easy position that it's a savvy buy--at any price as long as it's now THE most expensive coin. He adds that we should avoid Monday morning quarterbacking while evaluating the wisdom of the coin's giant leap from 5.5M to 8.5M yet I read the tone of the whole article to be just such quarterbacking...of course it's fair to also point out that such is the nature of almost all editorials. And by taking this mega price and trying to apply it to what the Childs dollar may now be worth (he casually speculates 15-20M) he generalizes those very special circumstances that must converge for a new mega price to be realized. But I do agree that some gem early type coins will likely see a bump in values from this result--at least a bump in asking prices.

fc

<< <i>His essay seems a little schizophrenic to me:

He's hoping the sale attracts the mega-millionaires of the world, but all the interested parties were known coin market participants.

It sounds like a great deal for Stack's-Bowers and the buyer (who owns a high-end coin dealer) and a fantastic deal for the seller.

I'm not so sure that it would have been a great deal had a collector bought that coin.

After all, the coin sold for $7.9 million a few years ago and DW says he thought the coin would bring $5 million to $6 million this time.

That wouldn't have been good.

Best line of the blog: But if you were at $8 million, why not pay $10 million?

I dunno - I'm not anywhere near that end of the market and maybe the art market works like this, too - but . . . >>



I think legend was thinking a high tide raises all boats. If this sale can spur more whales to buy the best of the best... Well they will come to legend for help and they get their cut. If this scenario plays out dozens of times over the next few years and the rarities keep selling for more and more... And legend is part of it... They will do fine and their dollar will have its price cemented in place if not higher. Getting over 10 million seems to have been the key idea behind this marketing purchase. Plus they get to own one of the top 10 us coins in existance.

JJSingleton

I always enjoy Doug's articles. There is always room for disagreement but I do believe he is one of the great minds in the business.

mr1931S

Winter's comments about mega rarities (such as the Childs 1804 dollar) now being valued at many millions more after the sale of the 1794 dollar would be more believable to me if the 1794 had been purchased by an anonymous collector with no connection to a numismatic firm.

In my way of thinking,such a wealthy collector truly does not care how much he or she pays to acquire an object of their desire.

If I were to win the lottery and was left with a few hundred million,after relatives and taxes,then spending $20 million for the Child's 1804 dollar (after the firms have dropped out at $16 million) wouldn't be all that big a deal to me.

It would be a big deal to me to be anonymous,however, since I wouldn't want to feel like I have to keep my prize coin,the centerpiece of my collection of early American dollars, in a safe deposit box 24-7.

I might even bust it out of its PCGS holder so I could put it in a display holder along with my other early silver dollars.Then I could tell anyone I show my set too that the 1804 they are looking at is just a well-made replica.

bidask

<< <i>Winter's comments about mega rarities (such as the Childs 1804 dollar) now being valued at many millions more after the sale of the 1794 dollar would be more believable to me if the 1794 had been purchased by an anonymous collector with no connection to a numismatic firm.

In my way of thinking,such a wealthy collector truly does not care how much he or she pays to acquire an object of their desire.

>>

What is believable is that the coin sold for over
$10,000,000. Real money.

Broadstruck

<< <i>Best line of the blog: But if you were at $8 million, why not pay $10 million?

I dunno - I'm not anywhere near that end of the market and maybe the art market works like this, too - but . . . >>



Well then you need to look at it as a Nillionare... As if your favorite $8 pizza pie your really craving just increased to $10 what's another $2

STEWARTBLAYNUMIS

Remember there are two other fabulous 1794 dollars graded PCGS MS 66 !

I have seen both of them or should I say all three of them.

Stewart Blay

DAVEatHLRC

<< <i>Remember there are two other fabulous 1794 dollars graded PCGS MS 66 !

I have seen both of them or should I say all three of them.

Stewart Blay >>




Stuart:


Those 2 coins are wonderful -- both of them. But they are completely different than the specimen just sold.

Or -- is a Proof 1909 VDB cent in PF66 the equivalent of an MS66 1909 VDB 1c?

-DW

STEWARTBLAYNUMIS

Dave - first you need to spell my name correctly. Comparing a 1909 VDB Lincoln cent to a 1794 dollar is absurd. Both of the MS 1794 dollars sold for almost a million dollars more than 15 years ago.

A ms 1909 VDB cent is about $200 in ms 66 and a 1909 VDB proof 66 red is well over $100,000

If you delve into the OPs analogy which I agree with then the other two ms 66 1794 dollars are probably worth in excess of $5,000,000 each.

Stewart Blay

tradedollarnut

<< <i>Dave - first you need to spell my name correctly. Comparing a 1909 VDB Lincoln cent to a 1794 dollar is absurd. Both of the MS 1794 dollars sold for almost a million dollars more than 15 years ago.

A ms 1909 VDB cent is about $200 in ms 66 and a 1909 VDB proof 66 red is well over $100,000

If you delve into the OPs analogy which I agree with then the other two ms 66 1794 dollars are probably worth in excess of $5,000,000 each.

Stewart Blay >>



Stewart is absolutely correct. I would have written a check for each in an instant at that level PRIOR to the record sale - they are probably worth even more now. However, I know that I would have been laughed out of the room by the owners because said coins are not for sale. The fact that Legend was summarily dismissed on an offer of $2.75M for the MS64 shows what strong values these coins command.

s4ny

The $10,000,000 number created a lot of excitement, but I don't agree that it was smart. This is not the
art world where ultra wealthy individuals have to have works like "Scream" and prices play leap-frog.

erickso1

Interesting read. Interesting analysis and forecasting.

Will it hold true? Only time will tell. Legend is venturing into uncharted territory (holding/paying the most for a coin ever). I hope it works out well for them and as Doug alludes to, their splash brings in more participants to the market and we can all enjoy a bit of a tailwind.

Broadstruck

<< <i>

<< <i>Dave - first you need to spell my name correctly. Comparing a 1909 VDB Lincoln cent to a 1794 dollar is absurd. Both of the MS 1794 dollars sold for almost a million dollars more than 15 years ago.

A ms 1909 VDB cent is about $200 in ms 66 and a 1909 VDB proof 66 red is well over $100,000

If you delve into the OPs analogy which I agree with then the other two ms 66 1794 dollars are probably worth in excess of $5,000,000 each.

Stewart Blay >>



Stewart is absolutely correct. I would have written a check for each in an instant at that level PRIOR to the record sale - they are probably worth even more now. However, I know that I would have been laughed out of the room by the owners because said coins are not for sale. The fact that Legend was summarily dismissed on an offer of $2.75M for the MS64 shows what strong values these coins command. >>



TDN, If the other two MS66's sold for under a million 15 years ago and today are worth over $5 million...

Do you feel the SP66 at $10 million will appreciate at the same value level yielding $50 million in 15 years

tradedollarnut

I think that the ultra rarities rise in concert with each other and over time do as well as the second most successful person interested in them - which is pretty darn good.

While on the subject - what would be worse than wanting a certain coin that is the best and paying a little too strong to get it? Trying and failing and thus driving up the price for your fallback coin. If you can even get a fallback coin.

MrEureka

While on the subject - what would be worse than wanting a certain coin that is the best and paying a little too strong to get it? Trying and failing and thus driving up the price for your fallback coin. If you can even get a fallback coin.


Excellent point! Although I must say, you're beginning to sound like a collector.

MrEureka

This is not the art world where ultra wealthy individuals have to have works like "Scream" and prices play leap-frog.

I fail to see any fundamental difference between the art and coin markets. Stuff is stuff, and people are people.

DeliaBug

I posted this to another thread too:

I look at the sale of this coin in two different ways. In one way, I'm glad that it went for strong money. I honestly didn't think it would. But if coins like these at the top start tanking, that's a really big problem. And in another way, the $10M mark is huge. If TDN and Legends intended to make a statement, they did. And if by this statement they bring some new faces and money to the coin market, we should all be thanking them.

tradedollarnut

Note that the above graph was created in 2010 for the private sale. I bet if you add the current auction sale it just further extends the straight line. And, if you put Contursi's purchase price in 2003 on there, it's also on the line

tradedollarnut

<< <i>While on the subject - what would be worse than wanting a certain coin that is the best and paying a little too strong to get it? Trying and failing and thus driving up the price for your fallback coin. If you can even get a fallback coin.


Excellent point! Although I must say, you're beginning to sound like a collector. >>



I *am* a collector. I just happen to be partners in a coin firm - and I use that fact to further my collecting goals

Bayard1908

<< <i>Note that the above graph was created in 2010 for the private sale. I bet if you add the current auction sale it just further extends the straight line >>



Why is the Y axis a log scale? The log scale crowds all the data points together and makes this graph essentially meaningless.

renomedphys

According to Doug's blog, the potential additional 2-3 million dollars paid for this coin, getting it over the $10M mark, was as much about marketing as it was about winning the coin.

This echoes my thoughts about the transaction as well.

And while you probably don't need to be a prefessor of economics to understand why they did it, you have to admit that it takes cojones and "outside of the box" thinking to recognize and act on that.

And from my perspective, we are all the beneficiaries.

So I say thank you Mr. Morelan, and

s4ny

<< <i> This is not the art world where ultra wealthy individuals have to have works like "Scream" and prices play leap-frog.

I fail to see any fundamental difference between the art and coin markets. Stuff is stuff, and people are people. >>



I see several differences:

1) Art is exhibited in museums, coins tend not to be publicly exhibited. Think of all the great art museums
just in NY City...Met, MOMA, Guggenheim, etc. Where are the coins?

2) Art appeals to women as much as it does to men. Women see it as a status symbol.
Coin collecting seems to be mostly a male hobby.

3) There are classes in all major universities about art appreciation and painting itself. This creates
the next generation of collectors. My daughter is taking an art class in 9th grade.

4) Artists become cult figures creating interest and driving up price of their works, e.g. Andy Warhol, who
is now honored with a metal statue just north of Union Sq in Manhattan.

5) Individuals with great fortunes are drawn to art for various reasons. They buy great paintings, enjoy them
on their walls, donate them to a museum and get a wonderful tax deduction, create museums and leave a lasting
legacy of giving for the betterment of society.

Don't get me wrong, I love and collect coins, but I do see a distinction.

ColonelJessup

At Auction '88 (?) Hugh Sconyers bought the Dunham-Dexter 1804 $1 for $990,000. Many busted his chops for not going the extra 10K to hit the magic number. I think KL scolded him and said he'd have put in the extra 10K. The new extra digit, all those impressive zeroes. 10,000 Dow, etc. The drama works! It registers with the target audience. It's an order of magnitude. Increases the heft and velocity of the beta wave. AKA rising tide.

But none of this would have happened if Bruce didn't have the Hunger activating his brains and his b@lls.

Speculation about any Pogue coins such as the PR68 1804 $1 coming to market ignore the stated purpose of the Pogue family's intentions. They are the curators of a trans-generational collection of the highest importance and quality.

It doesn't matter if you can name other "ultimate" coins.

You can Legend this or Laurie that (she's gonna have so much fun!). Good will accrued to the company is a secondary gain. Bruce, the avid collector, is toasting us with what some think is Kool-Aid. Likely he'll be quite copacetic for a long long time

Do you doubt for a moment that, later, we will be toasting him?

Think about Eric Newman's sublime collection.

Think about the core Bass Sylloge on loan to ANA.

tradedollarnut

I find it amazing that someone would claim a straight line on a log scale is meaningless. Lol

Baley

What do straight lines on log graphs look like when you graph them with a linear Y axis, what's the word... parabolic? asymtotal? something like that

Bayard1908

<< <i>I find it amazing that someone would claim a straight line on a log scale is meaningless. Lol >>



You have a straight line because you essentially have only two data points, plus an exponential extrapolation that you turned into a self fulfilling prophecy with your jump bid. Any two data points, even two chosen at random, will yield a straight line. As I said earlier, I believe this graph is essentially meaningless.

A log scale would not normally be used unless the data points differed by orders of magnitude. Your data points, several sales in the 1980s and 1990s do not differ by even one order of magnitude, although they do differ from the 1947 sale.

Why did the graph start at 1947 instead of the first 1980s sale? I presume it was for the purpose of exaggerating the potential for future price appreciation. Why was a log scale used on the Y axis? I presume it was for the same reason.

Extrapolating this chart further would turn $10 million into $100 million in 20 years. That's something on the order of a 12% compound annual return, faster than the rate of inflation, wage growth, GDP growth, etc. Unless we have high inflation or hyperinflation in this country, I don't see that rate of return being realized.

tradedollarnut

I see six data points, to which you can add two more as I discussed earlier. Why was 1947 chosen? Because it was the first known sale of the coin. Why was 2010 chosen? Because at the time the graph was published, it was the last known sale of the coin. In your zeal to prove me wrong, you failed to notice the date the line ended on. I didn't create this graph, a coin researcher did. Does it substantiate what we chose to bid on the coin? Absolutely - it falls on an extended version of the line perfectly.

As far as orders of magnitude, well I kinda think 1,000 and 10,000,000 qualify

tradedollarnut

<< <i>What do straight lines on log graphs look like when you graph them with a linear Y axis, what's the word... parabolic? asymtotal? something like that >>



Ahhh, the miracle of compound interest.

Elcontador

To me, this is an intelligent marketing move. Every so often, at a large show, I see a dealer with what for me is a truly exceptional coin in his / her case which draws me to his / her table. I look at said coin, and one way or other, the dealer lets me know it's not for sale (either I'll be told such straight away, or else the price being asked tells me so).

As this coin has drawn me to his / her case, I will look at some of the other coins for sale. I may not have looked at anything in the case if it wasn't for this particular coin. This is what I think Legend has done, but add a number of zeros to the prices being discussed.

SeattleSlammer

<< <i>...plus an exponential extrapolation that you turned into a self fulfilling prophecy with your jump bid. >>





This nugget hits the nail on the head.

tradedollarnut

<< <i>

<< <i>...plus an exponential extrapolation that you turned into a self fulfilling prophecy with your jump bid. >>





This nugget hits the nail on the head. >>



No, it does not. Kindly stick to the FACTS. The fact is that this graph was prepared in 2010 by an independent numismatic researcher after the Cardinal PURCHASE. There is no exponential extrapolation self fulfilling prophecy - unless you are implying that Cardinal's purchase doesn't count as well as his sale?

L1ncolnF4n

<< <i>What do straight lines on log graphs look like when you graph them with a linear Y axis, what's the word... parabolic? asymtotal? something like that >>



They look logarithmic...seriously though, that's what it would look like. A curve which gradually approaches infinity though bounded by an upper linear asymptote.

PerryHall

<< <i>

<< <i>What do straight lines on log graphs look like when you graph them with a linear Y axis, what's the word... parabolic? asymtotal? something like that >>



Ahhh, the miracle of compound interest. >>



Since when do coins pay compound interest? Agree that using a logarithmic scale is bit misleading. Let's see this same data plotted on a regular non-logarithmic scale.

tradedollarnut

<< <i>Since when do coins pay compound interest? >>



Since when did I make that silly claim? If you look at a compound interest graph, it will look like what he was suggesting.




<< <i>Agree that using a logarithmic scale is bit misleading. Let's see this same data plotted on a regular non-logarithmic scale. >>



Go for it. Try to fit 1,000 and 10,000,000 onto a meaningful scaled chart that we can all look at.


Logarithmic scale is not misleading at all - you just have to know how to read it. And a straight line on a logarithmic graph is not meaningless.

tradedollarnut

<< <i>

<< <i>Since when do coins pay compound interest? >>



Since when did I make that silly claim? If you look at a compound interest graph, it will look like what he was suggesting. >>

Nysoto

SeattleSlammer

<< <i>

<< <i>

<< <i>...plus an exponential extrapolation that you turned into a self fulfilling prophecy with your jump bid. >>





This nugget hits the nail on the head. >>



No, it does not. Kindly stick to the FACTS. The fact is that this graph was prepared in 2010 by an independent numismatic researcher after the Cardinal PURCHASE. There is no exponential extrapolation self fulfilling prophecy - unless you are implying that Cardinal's purchase doesn't count as well as his sale? >>





TDN, without arguing the merits of the graph--which I understand ends with the 2010 sale...even though it appears to show that the 2010 sale was for 10M thus adding some confusion here!--the extrapolation/self-fulfilling prophecy occurred when the bid was jumped from 5.5M to 8.5M. Would the coin eventually have sold for the same amount without that bid jump? Maybe. Maybe not. It may have sold for quite a bit less thereby flattening out the graph line or even making the line dip. That's the point we're trying to make here.

pennyannie

<< <i>At Auction '88 (?) Hugh Sconyers bought the Dunham-Dexter 1804 $1 for $990,000. Many busted his chops for not going the extra 10K to hit the magic number. I think KL scolded him and said he'd have put in the extra 10K. The new extra digit, all those impressive zeroes. 10,000 Dow, etc. The drama works! It registers with the target audience. It's an order of magnitude. Increases the heft and velocity of the beta wave. AKA rising tide.

10k to break a million is a little different than adding possibly 2.5 million to break 10 million. It does make a statement for sure, some will think it is a great move and others will place an * by the sales price. Kind of like the steriod baseball players records.

Biggest check i ever wrote was a little over 200k and i screwed it up the first time and then did not want to let it go after i did it right.

One thing can be said, Legend bought a coin for 10 million and the sun came up somewhere the following day. That is a lot of scratch for something that small and weighs an ounce. You could show it to 10,000 people and the vast majority would not have a clue what it is or what it is worth. You could show it to the few hundred active posters on this site and 99.999 would be impressed.

roadrunner

<< <i>I find it amazing that someone would claim a straight line on a log scale is meaningless. Lol >>




It more than likely means they don't understand basic mathematics. Straight line on log chart = parabolic action on non-log chart.
What would be really meaningless is trying to put 65 years of price data with a gain of 10,000X times onto a non-log chart. It would be a flat line for most of the
chart and then straight up like an "L."

It matters little that the bid was jumped to $10 MILL. There are probably buyers in the wings as we speak that would support more than $10 MILL. We already know
via TDN that there were other potential buyers at around $8-$9 MILL all in. The more important fact is that they felt it was worth more and were willing to go higher.
I've often won coins at auction 10-20% under my max bids. My best one ever was one at $9600 when I was willing to go to $14,000. The day after the sale you couldn't
have bought that coin from me for $12K or even $14K. I held on to the coin for 18 yrs. And when I bought it I knew it was soon to be worth $50K imo (it only took 3-4 years
to get there too). That coin was irreplaceable and is still the finest known today some 27 yrs later. I suspect TDN and Legend have similar feelings about the 1794 $.

MsMorrisine

semi-log chart

not parabolic, not even asymptotic, but exponential.



it would be interesting to see the new chart with the 2013 data point on it. I'll leave that exercise to someone else.

roadrunner

We can all agree that a parabolic or exponential chart normally gets real steep at some point.

EVillageProwler

I'm oddly amused that folks here would try to explain advanced HS-level mathematics to folks who hasn't had that kind academic or professional training. It's just too hard to do in this type of forum. It's not because folks are bad communicators or bad learners. It's really that this forum is not conducive to that kind of non-linear thinking.

EVP

PerryHall

<< <i>We can all agree that a parabolic or exponential chart normally gets real steep at some point. >>



Yup. And what does it tell you when it gets near vertical?

tradedollarnut

<< <i>

<< <i>We can all agree that a parabolic or exponential chart normally gets real steep at some point. >>



Yup. And what does it tell you when it gets near vertical? >>



That the Fed is printing dollars!