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How does Doug Winter’s Numismatic Double Play Strategy™ interact with the Plus system, or does it fa
Longacre
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As I write these words, I am enjoying a fine cup of cheddar and ale soup from The Man’s cafeteria. Needing a respite from reading the Internal Revenue Code, I figured I would surf over to Doug Winter’s site and enjoy a light and airy numismatic blog. It was not to be.
I posted his entire blog below, which describes the exclusive Doug Winter Numismatic Double Play Strategy™. After reading it (and yearning to go back to reading the IRC, which is much easier to understand), I had one observation—
Does the Numismatic Double Play Strategy™ still hold true under the new Plus system, or does it fall apart? Has the Plus system been designed to kill off the Double Play™, or does the Plus system not look to this aspect of the numismatic market?
************
The Numismatic Double Play
Say the words “double play” and most people think of Jeter to Cano to Texeira. But in the world of gold coins, the concept of the double play has another meaning altogether.
Back in the 1980’s and the 1990’s it was common to see large-sized U.S. gold coins marketed with the “double play” strategy. What this meant was that these coins had two inherent factors that contributed to their price structure: their intrinsic gold value and their numismatic value.
The double play concept became stale over the course of time and marketers moved on to find other way to peddle their product. But I believe that this is an idea with merit and one that should be revisited in today’s value-conscious market.
People who buy U.S. gold coins typically fall into two camps: those who are investors and those who are collectors. What if a third category became a factor in the market; an investor-collector hybrid who focused on semi-scarce to scarce issues that sold for relatively small premiums above their basal value(s)?
There are basically two denominations that are perfect for the investor-collector hybrid: the ten dollar gold piece (or “eagle”) and the twenty dollar gold piece (or “double eagle”). If you’re with me so far, I’m going to suggest that we narrow our focus to two specific issues: the With Motto Liberty Head eagle (produced from 1866 through 1907) and the Type Two Liberty Head double eagle (produced from 1866 through 1876).
Here are some basic facts about these issues. The With Motto Liberty Head eagle weighs 16.718 grams and it contains 90% gold. As I write this article (in mid-April 2010) gold is trading for a touch above $1156 per ounce. The trading levels for eagles are as follows:
MS60: $700
MS62: $740
MS63: $1,210
It doesn’t take a numismatic genius to immediately note that MS62 appears to be the best value grade for this type. At just a $40 premium above MS60 coins, you are talking around a 5% increase for what is generally going to be a much nicer coin. So for the sake of convenience, let’s stick with the MS62 grade for this denomination.
The “base line” date for Liberty Head with motto eagles is the 1894 as it has the highest PCGS population in Uncirculated and in MS62. There have been 18,116 examples graded by PCGS or which 6,013 are in MS62. These numbers are, of course, swollen by resubmissions but the ratio of around one-third of all 1894’s graded being in MS62 seems correct based on my experience.
There are a host of dates that we can compare with the 1894 but, again for the sake of brevity, let’s focus on three of them. The first is the 1883. This issue has an original mintage figure of 208,700 (compared to 2,470,735 for the 1894). It isn’t a remarkably interesting date but it is extremely rare in higher grades (PCGS has never graded an MS65 and only four have been graded MS64 by this service; in MS62 they have graded 261) and there is a big price jump between MS62 (current Trends is $865) and MS63 (current Trends is $2,500). Given the fact that the 1883 is, in theory, around twenty to thirty times rarer than the base line 1894 in MS62, it seems that its current $100-150 premium in this grade is pretty reasonable.
Let’s look at another date, the 1900-S. I have always liked this date and think its a real “sleeper” in higher grades. PCGS has a current population of 31 in MS62 with just 16 better than this including a single coin above MS64. Given this coin’s relative scarcity in Uncirculated, you’d figure it would have a pretty decent premium above the 1894, right? In MS62, current Trends is $1,100 (it jumps to a comparatively high $5,650 in MS63) and I have purchased examples in the last year for around $1,000. Now I understand that an MS62 1900-S eagle isn’t going to be the Poster Child for U.S. gold coins anytime soon but it seems like awfully good value to me, given that a common, boring old 1894 in MS62 is worth around $750.
How about a date that actually has a degree of collector demand? Let’s take a quick look at the 1901-O. It is one of the more available New Orleans eagles in higher grades but it has the appeal of being from a popular southern branch mint. The current PCGS population is 103 in MS62 with 61 better including just a single coin above MS64. I doubt if more than 125-150 properly graded MS62 examples exist yet current Trends is just $865 in MS62 (it jumps to $2,750 in MS63). Given the fact that a 1901-O eagle in MS62 is popular, reasonably scarce in this grade and is probably not a bad looking coin at this grade level, its very small premium above the common 1894 is fairly baffling to me.
What if someone were to promote the 1901-O in MS62? Given the fact that a year’s worth of quiet, under-the-radar buying would probably only produce 40-50 coins, it hardly seems worth the effort. That said, it seems like an easy coin to promote up to the $1,250-1,500 level in MS62.
What are some of the MS62 Liberty Head eagles that I would recommend as good double-play issues? Some of the dates I like include the 1879, 1882-S, 1884, 1884-S, 1886, 1890, 1893-O, 1894-O, 1895-O, 1897-O, 1899-O, 1900-S, 1906-O, 1906-S and 1907-S.
The second type of U.S. gold coin that offers double play potential is the Type Two double eagle. But this series is different than the With Motto eagles that we discussed above. Type Two double eagles are more popular with collectors and they tend to be be rare to very rare in Uncirculated grades.
The base line issue for this type is the 1873 Open 3. It has an original mintage figure of over 1,000,000 and a high survival rate with probably more than 10,000 coins known in all grades. PCGS shows a current overall population of 4,027 of which 1,356 have been graded from AU50 to AU58.
The trading levels for AU55 to MS60 1873 Open 3 double eagles are as follows:
AU55: 1400-1500
AU58: 1500-1600
MS60: 1650-1750+
Let’s look at two slightly better dates and see if the double play concept makes sense. The first is the 1867. This is a relatively popular issue with collectors that has an original mintage of just over 250,000. PCGS has graded 304 in all grades of which 131 are in the various AU grades and another 24 are in MS60. In grades above MS61 to MS62, the 1867 is extremely scarce, so nice AU’s tend to be popular with specialists in the series.
The current Trends levels for the 1867 are $2,000 in AU55, $2,500 in AU58 and $4,000 in MS60. The premium in MS60 is high enough that it is not a good double-play issue. But in AU55, the premium is fairly low over the base line 1873 Open 3. My conclusion is that a nice AU55 to AU58 1867 double eagle in the $2,000-2,250 range is a great value for the double play investor-collector.
The second date is the 1872-S. This is a date that is regarded as semi-common; not quite at the level of the base line of the 1873 Open 3 but certainly nowhere as scarce as such earlier San Francisco issues as the 1866-S, 1867-S, 1869-S or 1870-S.
The mintage figure for the 1872-S is 720,000. The survival rate is quite low as most were melted over the years and I doubt if more than 2,500 pieces exist. PCGS has graded 551 in all grades including 343 in About Uncirculated. To give you an idea of this coin’s rarity in higher grades, of the 52 that PCGS has graded in Uncirculated, only four are better than MS61 and none are higher than MS62.
You can buy a nice 1872-S in AU58 for around $2,000-2,250. As I mentioned above the base line for an AU58 Type Two double eagle is in the $1,500-1,600 range.
The Type Two double eagles in AU grades that I feel are good double play issues include the 1867, 1868-S, 1869, 1869-S, 1870-S, 1871, 1871-S, 1872, 1872-S and 1873-S Open 3.
The double play strategy may or may not prove to be fruitful for the hyrbrid investor-collector. But with the premiums for genuinely scarce issues like the ones mentioned above at very low levels (some of the lowest premiums that I can remeber, in fact) I think it is a strategy with minimal downside.
I posted his entire blog below, which describes the exclusive Doug Winter Numismatic Double Play Strategy™. After reading it (and yearning to go back to reading the IRC, which is much easier to understand), I had one observation—
Does the Numismatic Double Play Strategy™ still hold true under the new Plus system, or does it fall apart? Has the Plus system been designed to kill off the Double Play™, or does the Plus system not look to this aspect of the numismatic market?
************
The Numismatic Double Play
Say the words “double play” and most people think of Jeter to Cano to Texeira. But in the world of gold coins, the concept of the double play has another meaning altogether.
Back in the 1980’s and the 1990’s it was common to see large-sized U.S. gold coins marketed with the “double play” strategy. What this meant was that these coins had two inherent factors that contributed to their price structure: their intrinsic gold value and their numismatic value.
The double play concept became stale over the course of time and marketers moved on to find other way to peddle their product. But I believe that this is an idea with merit and one that should be revisited in today’s value-conscious market.
People who buy U.S. gold coins typically fall into two camps: those who are investors and those who are collectors. What if a third category became a factor in the market; an investor-collector hybrid who focused on semi-scarce to scarce issues that sold for relatively small premiums above their basal value(s)?
There are basically two denominations that are perfect for the investor-collector hybrid: the ten dollar gold piece (or “eagle”) and the twenty dollar gold piece (or “double eagle”). If you’re with me so far, I’m going to suggest that we narrow our focus to two specific issues: the With Motto Liberty Head eagle (produced from 1866 through 1907) and the Type Two Liberty Head double eagle (produced from 1866 through 1876).
Here are some basic facts about these issues. The With Motto Liberty Head eagle weighs 16.718 grams and it contains 90% gold. As I write this article (in mid-April 2010) gold is trading for a touch above $1156 per ounce. The trading levels for eagles are as follows:
MS60: $700
MS62: $740
MS63: $1,210
It doesn’t take a numismatic genius to immediately note that MS62 appears to be the best value grade for this type. At just a $40 premium above MS60 coins, you are talking around a 5% increase for what is generally going to be a much nicer coin. So for the sake of convenience, let’s stick with the MS62 grade for this denomination.
The “base line” date for Liberty Head with motto eagles is the 1894 as it has the highest PCGS population in Uncirculated and in MS62. There have been 18,116 examples graded by PCGS or which 6,013 are in MS62. These numbers are, of course, swollen by resubmissions but the ratio of around one-third of all 1894’s graded being in MS62 seems correct based on my experience.
There are a host of dates that we can compare with the 1894 but, again for the sake of brevity, let’s focus on three of them. The first is the 1883. This issue has an original mintage figure of 208,700 (compared to 2,470,735 for the 1894). It isn’t a remarkably interesting date but it is extremely rare in higher grades (PCGS has never graded an MS65 and only four have been graded MS64 by this service; in MS62 they have graded 261) and there is a big price jump between MS62 (current Trends is $865) and MS63 (current Trends is $2,500). Given the fact that the 1883 is, in theory, around twenty to thirty times rarer than the base line 1894 in MS62, it seems that its current $100-150 premium in this grade is pretty reasonable.
Let’s look at another date, the 1900-S. I have always liked this date and think its a real “sleeper” in higher grades. PCGS has a current population of 31 in MS62 with just 16 better than this including a single coin above MS64. Given this coin’s relative scarcity in Uncirculated, you’d figure it would have a pretty decent premium above the 1894, right? In MS62, current Trends is $1,100 (it jumps to a comparatively high $5,650 in MS63) and I have purchased examples in the last year for around $1,000. Now I understand that an MS62 1900-S eagle isn’t going to be the Poster Child for U.S. gold coins anytime soon but it seems like awfully good value to me, given that a common, boring old 1894 in MS62 is worth around $750.
How about a date that actually has a degree of collector demand? Let’s take a quick look at the 1901-O. It is one of the more available New Orleans eagles in higher grades but it has the appeal of being from a popular southern branch mint. The current PCGS population is 103 in MS62 with 61 better including just a single coin above MS64. I doubt if more than 125-150 properly graded MS62 examples exist yet current Trends is just $865 in MS62 (it jumps to $2,750 in MS63). Given the fact that a 1901-O eagle in MS62 is popular, reasonably scarce in this grade and is probably not a bad looking coin at this grade level, its very small premium above the common 1894 is fairly baffling to me.
What if someone were to promote the 1901-O in MS62? Given the fact that a year’s worth of quiet, under-the-radar buying would probably only produce 40-50 coins, it hardly seems worth the effort. That said, it seems like an easy coin to promote up to the $1,250-1,500 level in MS62.
What are some of the MS62 Liberty Head eagles that I would recommend as good double-play issues? Some of the dates I like include the 1879, 1882-S, 1884, 1884-S, 1886, 1890, 1893-O, 1894-O, 1895-O, 1897-O, 1899-O, 1900-S, 1906-O, 1906-S and 1907-S.
The second type of U.S. gold coin that offers double play potential is the Type Two double eagle. But this series is different than the With Motto eagles that we discussed above. Type Two double eagles are more popular with collectors and they tend to be be rare to very rare in Uncirculated grades.
The base line issue for this type is the 1873 Open 3. It has an original mintage figure of over 1,000,000 and a high survival rate with probably more than 10,000 coins known in all grades. PCGS shows a current overall population of 4,027 of which 1,356 have been graded from AU50 to AU58.
The trading levels for AU55 to MS60 1873 Open 3 double eagles are as follows:
AU55: 1400-1500
AU58: 1500-1600
MS60: 1650-1750+
Let’s look at two slightly better dates and see if the double play concept makes sense. The first is the 1867. This is a relatively popular issue with collectors that has an original mintage of just over 250,000. PCGS has graded 304 in all grades of which 131 are in the various AU grades and another 24 are in MS60. In grades above MS61 to MS62, the 1867 is extremely scarce, so nice AU’s tend to be popular with specialists in the series.
The current Trends levels for the 1867 are $2,000 in AU55, $2,500 in AU58 and $4,000 in MS60. The premium in MS60 is high enough that it is not a good double-play issue. But in AU55, the premium is fairly low over the base line 1873 Open 3. My conclusion is that a nice AU55 to AU58 1867 double eagle in the $2,000-2,250 range is a great value for the double play investor-collector.
The second date is the 1872-S. This is a date that is regarded as semi-common; not quite at the level of the base line of the 1873 Open 3 but certainly nowhere as scarce as such earlier San Francisco issues as the 1866-S, 1867-S, 1869-S or 1870-S.
The mintage figure for the 1872-S is 720,000. The survival rate is quite low as most were melted over the years and I doubt if more than 2,500 pieces exist. PCGS has graded 551 in all grades including 343 in About Uncirculated. To give you an idea of this coin’s rarity in higher grades, of the 52 that PCGS has graded in Uncirculated, only four are better than MS61 and none are higher than MS62.
You can buy a nice 1872-S in AU58 for around $2,000-2,250. As I mentioned above the base line for an AU58 Type Two double eagle is in the $1,500-1,600 range.
The Type Two double eagles in AU grades that I feel are good double play issues include the 1867, 1868-S, 1869, 1869-S, 1870-S, 1871, 1871-S, 1872, 1872-S and 1873-S Open 3.
The double play strategy may or may not prove to be fruitful for the hyrbrid investor-collector. But with the premiums for genuinely scarce issues like the ones mentioned above at very low levels (some of the lowest premiums that I can remeber, in fact) I think it is a strategy with minimal downside.
Always took candy from strangers
Didn't wanna get me no trade
Never want to be like papa
Working for the boss every night and day
--"Happy", by the Rolling Stones (1972)
Didn't wanna get me no trade
Never want to be like papa
Working for the boss every night and day
--"Happy", by the Rolling Stones (1972)
0
Comments
It all comes down to buying a coin that has good eye appeal for the grade and not buying a coin that "just made it" into the current holder.
That said, I believe the Double Play strategy has merit, especially if you like to collect gold and most importantly, expect the price of gold to at least hold its own and perhaps move higher.
What is even more important in my mind is that if you expect gold to go lower at some point, you need a reverse strategy where you only buy gold coins where the numismatic component is high with relation to the cost of generic gold. MS66 Saints come to mind. Again, the quality of the coin for the grade is the key when buying. You want to have at least a good for the grade coin, if not a potential plus coin.
I am one of those double play investors. I think you are better off buying the double eagles vs the eagles. Everyone understands and oz of gold and the eagles just are not as popular. I think at this time I am more of a seller at this point though, then a buyer. The premium to melt for double eagles at ms62 grade is about $500. I was buying double eagles for $500 in total just a few years back when the premium was under $100. I think MS63 and MS64 grades are a better value now.
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
I tripled my money in MS62 gold over 5 years.
Did stocks go up that much in 5 years? no
Did coins? no. Real Estate? no
Did gold itself? Almost but not as much.
And I got to learn about the coin market. Figure out what I liked, how to grade a little, what was junk, what wasn't. It's a great starting point. If I had to point a newbie in one direction, that would be it.
are there sleepers? (coins that should be going for more because of lower mintages and lower survivals)
of course there are.
If everybody started collecting the same series then those slightly better dates would move up quicker, (as with morgan dollars)
but the fact is that most people DONT collect that series. (putting together an entire set would easily run you in the tens of thousands of dollars)(which is why less people collect the series)
therefore there is less of a premium.
<< <i>With minimal downside comes minimal upside -- who wants to collect MS 62 gold?
I tripled my money in MS62 gold over 5 years.
Did stocks go up that much in 5 years? no
Did coins? no. Real Estate? no
Did gold itself? Almost but not as much.
And I got to learn about the coin market. Figure out what I liked, how to grade a little, what was junk, what wasn't. It's a great starting point. If I had to point a newbie in one direction, that would be it. >>
Precisely my point -- newbies who don't know better but like the bullion/investment play. Not exactly the sweet spot of the collecting world, IMO, but neither can I downplay the need for all new collectors to cut their teeth on something (and like you, I cut my (second set of) collecting teeth on generic gold in the 2003-2005 timeframe and realized nice gains as a result).
The point I was trying to make (and was made by other posters and acknowledged by DW) is that 62 gold generally isn't attractive and as such has a limited collector base (and therefore a limited upside compared to bullion). Sure the bullion content buoys their value in a bear gold market, but there's little collecting interest and this is unlikely to change due to the factors outlined above and the sheer number of coins we're talking about, IMO.
Respectfully...Mike
I am going to have to call personal foul on that last remark.
There are nice and nasty coins at every grade level. Some of my nicest and most interesting coins were MS-62's. One of the nicest Dahlonega quarter eagles known is an MS-60. My favorite coin in the Pinnacle Collection of NO gold was in the 55-O $5 in a 61 holder.
I agree too that small gold can look wonderful at 61 or 62
<< <i>I think hes specifically talking about low MS double eagles. "baggy"
I agree too that small gold can look wonderful at 61 or 62 >>
I have owned some very nice big gold in MS-62 holders, too.
<< <i>Im pretty sure thats how most values are already calculated. Based on survivals in each grade and scarcity in each series.
are there sleepers? (coins that should be going for more because of lower mintages and lower survivals)
of course there are.
If everybody started collecting the same series then those slightly better dates would move up quicker, (as with morgan dollars)
but the fact is that most people DONT collect that series. (putting together an entire set would easily run you in the tens of thousands of dollars)(which is why less people collect the series)
therefore there is less of a premium. >>
I can't think of any Liberty Head gold series that one could complete for tens of thousands....
I would agree with Winter in that the DPS has "minimal" downside (ie the premium one pays over common dates).....but would also add that it likely has no upside. One only has to look at the better date Saints being swallowed up by the gold price. Within a few years there will be some scarce lower grade mint state Saints such as 1913-s, 22-s, 26-s bringing little more than common date money.
roadrunner
Experience the World through Numismatics...it's more than you can imagine.