| Vol. X Issue 4 October 1, 2006 STAND ALONE COINS The term “Stand Alone Coin”, in the numismatic context, refers to a coin that is generally free from market swings resulting from economic, political or promotional occurrences. To be sure, this is the environment in which we live these days! This makes “Stand Alone Coins” an ideal investment vehicle, however, the projected rate of return is difficult to ascertain and actually, the best information on the potential return is gathered by looking at historical data to get a glimmer of future performance. However, as a warning up front, past performance does not necessarily guarantee future performance, and this statement should be taken very seriously by all interested in investing in rare coins. There is a certain segment in the rare coin market that is often overlooked by most collectors, and to a lesser extent investors, that has often provided those who pursue it tremendous rates-of-return on their investment. We are talking about a segment consisting of coins that are critically important to the field of numismatics. These coins are pivotal within the denominational series they represent. We are talking about "Key Date" coins, a term every collector and investor alike is familiar with in numismatics. These “Key Date” coins are in fact, for the most part, “Stand Alone Coins” as well. Why are these coins so critical to the numismatic market? It is a simple matter of supply and demand. Stand Alone Coins have never existed in great quantities and the demand for them has always been intense since the earliest days of numismatics. Furthermore, astute collectors and investors are more than willing to pay record prices for these rare coins because they establish the price by which all other similar coins are valued. If purchased at competitive market price, "Stand Alone Coins" will meet the following criteria and have the corresponding advantages:
The greatest disadvantage of Stand Alone Coins: A lack of supply: There aren't enough coins to accommodate every collector and investor. What other characteristics do these Stand Alone Coins possess? Well, a coin could be in above-average condition, appealing not only to collectors of the series (or Type Collectors) but also to quality conscious investors. Another example would be a coin that has either the lowest population (in terms of grade) or lowest mintage for a series. Each of these additional characteristics can be used to establish whether a coin might be a Stand Alone Coin or not. The idea is to buy quality and not to be concerned with quantity. The following is an analysis of five coins in the Standing Liberty Quarter series that might be considered Stand Alone Coins. This is not intended to be a quantitative analysis but rather a qualitative analysis, illustrating important trends that might require additional research and consideration. This analysis gives you an idea of the research required, on your behalf, to make the wisest purchase with the potential best return. If done properly, this can be a very rewarding exercise. In this issue, we will not cover the SLEEPERS in a series. This will have to be a topic for another newsletter. STANDING LIBERTY QUARTERS A Brief Overview of Standing Liberty Quarters: There are many beautiful coins in the MacNeil series of Standing Liberty Quarters (SLQs). Liberty is standing in a frontal position, reminiscent of ancient Greek sculptures. Her left arm is raised bearing a shield in a posture of protection. Being drawn from the shield by her right hand is a drapery, while this same hand offers up an olive branch. This was certainly a deliberate message to our European neighbors that we were ready for war or peace. The inscription LIBERTY is at the top of the obverse with the date below. The motto IN GOD WE TRUST flanks the figure of Liberty. The reverse of this beautiful coin, as mandated by law, depicts an American Eagle shown in full flight. The legend UNITED STATES OF AMERICA and motto E PLURIBUS UNUM are above, while the denomination “QUARTER DOLLAR” is beneath the eagle. The final product reflects the influence of Augustus Saint-Gaudens, one of the most famous sculptors of the time and, one of MacNeil’s mentors. This coins grades VF-20. There are two major types of the Standing Liberty Quarters, Type I and Type II. Type I was issued for only two years, 1916-1917, as there was some concern over Liberty’s bared right breast. In 1917, the design was modified, and the bare breast was covered with chain mail to give the Type II issue. The new Type II was substantially reworked with another evident change in the introduction of three stars beneath the eagle on the reverse. Both Type I and Type II quarters were produced by all three mints during 1917 and both types are usually found in US Type Sets. Standing Liberty Quarters in the higher grades with “Full Heads” are the most desirable for collector and investor alike. Thus, they are the most expensive and difficult to find. The classification, “’Full Head” has more to do with the quality of the strike than with grade. To qualify for this designation, the coin must exhibit the following three features: for the TYPE I: there must be a definite line separating Miss Liberty’s hair from her temple, her cheekbone, and her throat. For the TYPE II Full Head: the three leaves in Liberty’s hair must be totally visible, the hairline along Liberty’s brow must be complete and the ear indentation must be evident. Collectors and investors, correspondingly, will pay substantially more for these fully struck specimens. The 1916 SLQ is one of the most famous US coins, as well as in this series. With a mintage of only 52,000, the 1916 issue can certainly be considered rare and history has shown it to be a highly sought after and treasured coin by those fortunate enough to own one. Does the 1916 issue qualify as a “Stand Alone Coin”? We have looked back at prices over the last 25 years to see how the 1916 issue, as well as, several other SLQs have faired in the marketplace to answer this question. It should come as no surprise that such a treasured key as the 1916 issue has appreciated considerably over the years. Today it is priced around $5,000 in VG, $12,000 in AU 50, $15,000 in MS 60, $28,000 in MS 65 and $30,000 in MS 65 Full Head (FH). While this particular coin has at times been difficult to find, in the present bull market prices climbing, a number of 1916’s, in all grades, have come into the marketplace. It has not been uncommon throughout the last few years to find more 1916 issues on the bourse floor than the 1919 D, 1921 , 1923 S, or 1927 S SLQs in grades of EF and up. Thus, while the 1916 is rare based on mintage, due to a strong market (which tends to bring the rarities into the market), it is readily available in a number of grades with a few high end “Full Head” GEMS appearing in auctions, including MS-66 FH and MS-67 FH. In looking at the 1916 quarter over the last 25 years, we found that it appreciated the most in the grade of Very Good (VG) where it appreciated 710%, realizing an annual return of 16.2%. Not bad for an initial investment of $700. In AU the appreciation was 7.4% per year, in MS-60 it went up 6.9%, in MS-65 it gained 620% or an annual yearly gain of 7.8% and finally in MS 65 FH, the gain was 450% or an annual rate of return of 6.3%. If you had purchased a MS-65 FH in 1980 for $6,500 you would find that in today’s market, its value would be somewhere in the neighborhood of $30,000. If you had purchased the condition-rarity, your annual rate of return would have been 11.1% over the 25 year time period. Most recent auction results from the American Numismatic Association convention in Denver this August, Bowers and Merena sold a MS 67 FH 1916 Standing Liberty Quarter for $143,750. Also in August, Heritage sold a MS 66 FH at auction for $44,850. In that same auction, a MS 65 FH went across the block for $29,900. The MS 67 FH quarter also represents one of the condition-rarity coins in the series. The above analysis illustrates that you must understand the grade distribution of the individual coins, as well as a consideration of market price. There was more interest in the grade of VG, which pushed the market up in that grade substantially percentage wise compared to the other grades. This reflects the greater affordability of the VG grade (i.e. more people competing for that grade) than the higher grades. The 1916 SLQ was a winner for both collector and investor alike over the last 25 years. So, how have the 1918/7 S overdate, 1921, 1923 S, and 1927 S performed over the last 25 years? Go To Page 3 |
