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Going for the Keys
By Mike Thorne

Are you familiar with the saying, "Do as I say, not as I do"? In other words, don't use my behavior as your guide, use my words instead. Listen to the advice I give you and ignore my actions.

Coin collectors are often advised to buy the key coins in a series first, as these are the coins most likely to appreciate. Yet, despite the wisdom of this advice, few collectors actually follow it.

Before I get into the psychology behind this failure, let me define what I mean by a key coin.

A key coin is just what the name implies: It's the key that unlocks the door leading to set completion. Without this coin or coins, you'll never fill all the holes in the album.

Of course, that's also true of the most common coin in the set, but the difference is that the common piece is nearly always attainable, in any condition you desire. The key coin, on the other hand, is often simply not available when you want it, or it may not be readily available in the grade you want.

Key coins are often obvious because of their mintage, which is generally the lowest in the series. Notice that I said "generally the lowest." There are many exceptions, coins with super-low mintages that are not nearly as scarce as other, higher-mintage coins in the same series. The reason for this lack of scarcity of some low-mintage pieces is that their low mintage was recognized at the time they were issued, and they were differentially retained as a result.

One classic example of this phenomenon is the 1931-S Lincoln cent. Its mintage of just 866,000 pieces was known at the time, and many uncirculated examples were put away by people. As a result, the 1931-S is a nice coin to have, but relative to several other dates in the series with higher mintages (e.g., 1914-D, 1909-S), the 1931-S is less expensive, particularly in higher grades.

As another example, the 1927-S Standing Liberty quarter has a mintage of just 396,000 pieces, which gives it the second lowest mintage in the series, behind only the 1916. Yet the 1923-S, with a mintage of 1,360,000, is much scarcer and more expensive in all grades below About Uncirculated.

Here, it is time to throw in another wrinkle: mintage rarity vs. condition rarity. There are many coins in popularly collected series that are relatively common in lower grades and are valued accordingly, that are quite scarce in high grades. In other words, they are rare only in superb condition. Other coins were minted in limited quantities and are scarce and high valued throughout the condition spectrum.

So this gives us coins that are keys in any grade vs. coins that are keys only if you're putting together a high-grade set. As an example of the former, we have the 1893-S Morgan dollar, which had a mintage of just 100,000 pieces and is worth a lot in any grade. Looking at the 2009 U.S. Coin Digest, the 1893-S is valued at $3,750 in Very Good-8.

By contrast, the 1892-S Morgan, with a mintage of 1,200,000 pieces, is a prime example of a condition rarity. It's worth just $26 in VG-8, whereas in Mint State-65, it's valued at a whopping $175,000.

Still, for most collectors the key coins are the mintage rarities, as many people are satisfied to obtain a decent specimen of each date/mintmark combination. Thus, most collectors would be happy with a nice Extremely Fine-40 1892-S dollar, which lists for $365. They wouldn't feel the need to have an uncirculated specimen of the date, when such a coin has a five-figure value (e.g., $34,500 in MS-60).

Summarizing, rarity keys are the coins in a series that are typically expensive in any grade, all the way from About Good-3 to MS-65 and beyond. They are the pieces that anyone attempting to put together a date/mintmark run of the series must have for completion. If the series is popular enough, there may well be more collectors than there are specimens of the key available.

Worse, there are often hoarders of the keys, people who are not content to have just one 1909-S V.D.B. cent, for example, but who want to have as many as they can afford. This, of course, means that there are even fewer of the keys to meet the demand of collectors wishing to complete their sets. All of this translates into higher and higher values of the recognized rarity keys.

I think you can see from what I've said so far that the demand for the key coins in popular series puts continuous upward pressure on the value of these coins. In other words, if there's any upward price movement at all in a particular series, it's going to affect the key dates differentially. Also, they're likely to move upward even when no other date does.

OK, let's assume that you've bought my argument about the reason for price increases in the key coins in a series, that they're always in demand, and no more are being created. Why is there such a tendency on the part of collectors to work around the keys, to buy the non-keys first and save the big keys untill last?

The answer, of course, is price. The rarity keys cost a lot in any grade because they're scarce in any grade. And this high price in any grade deters the typical collector from buying the keys first.

Let's take a specific example. Suppose you're starting to put together a set of Lincoln cents from 1909-1958, the wheat-back cents, in other words. You're advised to buy the keys first, which means that you look at the dates with the lowest mintages: in order, the 1909-S V.D.B., 1931-S, 1914-D, and 1909-S.

You focus on the 1909-S V.D.B. and see that in any grade beginning with Very Fine-20, it lists for more than $1,000. Actually, lower values are given for this date in grades Good-4 ($750) through Fine-12 ($900), but these lower grades are likely to be harder to find than higher grades simply because people began taking this date out of circulation long before it could circulate long enough to attain a low grade.

At any rate, no matter what grade you want for your set, the 1909-S V.D.B. is likely to cost you close to $1,000. And what other early Lincolns can you buy for that $1,000?

Let's say you want to buy coins in VF-20. For the $1,000 the 1909-S V.D.B. would cost you, you could buy a VF-20 1909-S ($165), a VF-20 1910-S ($25), a VF-20 1911-S ($38), a VF-20 1912-S ($34), a VF-20 1914-D ($440), a VF-20 1931-S ($125), and still have enough left to buy the rest of the semi-keys. Of course, if you opted to buy only common dates, you could get all of them in nice grades for less than the price of the 1909-S V.D.B.

In other words, if you bypass the big key or keys at the outset, you can get a whole lot more "bang for your buck" buying common or relatively common dates. If you think about it in terms of reinforcement theory, you'll get a lot more reward from your multiple purchases than from the single purchase of the big key.

However, and it's a big "however," you bypass the keys at your peril. By the time you get to the point where a major key is all you have left to finish your set, the value of this coin may have risen so much that you can't afford it.

Here's an example from my collecting history: Many years ago I set out to complete sets of all the Barber silver coins minted from 1892-1916. Putting together the dimes and halves was no problem, as the holes in my albums filled quickly and relatively inexpensively. Remember, this was years ago, and coins like the 1895-O Barber dime and the 1892-O Barber half dollar were priced well below $100 in G-VG condition.

My Barber quarter album filled quickly, also, and even the 1896-S and 1913-S quarters were under $100 apiece in G-VG. As I recall, I paid $90 for my first 1913-S in G-6.

Early in the process of putting together the Barber sets, I agonized over the purchase of the 1901-S 25 cent in a low grade. The seller described it as solid G on the obverse with some wear into the letters on the reverse. Today, it would probably grade AG-3 or maybe G-4 if you caught the graders at a certification service in a good mood. The price was $250.

The seller was someone I had done a lot of business with in the past, so I had no doubt that the coin was genuine and at least as good as he described it. Still, it was more than I had ever paid for a coin, so I hesitated and eventually passed. After all, I still had several more Barbers to buy.

Can you guess what happened when I got to the point where the 1901-S 25 cent was the only Barber left for me to buy? Well, that $250 price was now the better part of $1,000, which was definitely out of my league at the time.

And now, when I could afford to spend more and have bought coins that cost more than $1,000, the 1901-S lists for $7,000 in G-4 and $11,000 in VG-8. In other words, it's still out of my league.

Obviously, if I had bought the 1901-S early, I could have gotten a decent G-VG for less than $500. Had I done that, set completion would have been a reality.

I've done analyses in the past of how the key coins in popular series have fared pricewise relative to either relatively common dates or semi-keys. Can you guess what I've found? That's right, the keys almost invariably outperform the other dates in the series.

At this point, let me go through some popularly collected series and tell you which of the rarity keys I think you should purchase early if you want to put together a complete date/mintmark run.

In Indian Head cents, the first two dates that should be on your "must buy" list are the 1877 and the 1909-S. Obviously, these are the two dates with mintages below 1 million pieces, and even though the 1909-S has by far the lower mintage, the 1877 is the one to purchase first. The 1909-S will continue its upward trend, but being the last year of mintage, many were saved so it's more plentiful than the 1877. By the way, the first 1909-S I bought cost me $50 in Fine condition.

In Lincoln cents, the order in which you should purchase the key dates is as follows: 1909-S V.D.B., 1914-D, 1909-S, and 1931-S. Although the 1931-S has risen in value over the years, it has done so at a slower pace than the other keys because of its availability. Also, because there is little difference in value between most grades of the 1931-S, you should buy the best piece you can afford, preferably at least MS-63. In U.S. Coin Digest, values range from $110 in G-4 (hard to find because most were saved soon after minting) and $140 in MS-60. Obviously, a $30 dollar difference between the lowest collectible grade and an uncirculated coin is a paltry amount for a $100+ coin.

Although I haven't mentioned it, key coins in particular are likely to be faked by adding, altering, or occasionally subtracting a mintmark. Thus, my standard advice is to buy only coins that have been certified as authentic by one of the major certification services. If you do buy a "raw" piece, submit it as soon as possible to a certification service and be sure that you can return it to the seller for a refund if it's not genuine.

In Liberty Head nickels, the keys are traditionally the 1885, 1886, and the 1912-S. Of these three, the 1912-S has by far the lowest mintage (238,000), with the 1885 a distant second with a mintage of nearly 1.5 million. The 1886 is even farther back at 3,330,290. Again, the mintages are deceiving in terms of survival, as there were several reasons for differential retention of the 1912-S.

For one thing, it was the first nickel minted in San Francisco. Further, it came at the tail end of the series and was recognized early as having a low mintage.

For years, the 1912-S advanced slowly, if at all, in value, but in recent years it has really taken off. I paid about $50 for my first specimen, which graded F but had a planchet flaw. I bought one more recently from Tom Delorey at Harlem Berk in Chicago. It cost me $95 and was graded F by PCI. This was in May of 2001; the value of this coin in U.S. Coin Digest is $280, which should give you an idea of how the price has risen lately.

I paid $415 for a G-4 1885 in 2005 from a dealer in, of all places, New Zealand. How did that coin get so far from its place of origin? U.S. Coin Digest cites a value of $600 in that grade. The order in which I would buy the Liberty Head nickel keys is 1912-S, 1885, and 1886.

The key Mercury dime is the 1916-D, with the 1921 and 1921-D as distant semi-keys. If you want to complete a date-mint run of Mercury dimes, save your money and buy the 1916-D in as good a grade as you can afford. Be sure that it's certified.

I've talked a lot about the three big keys in the Barber quarter set, so I won't say much more about them. Don't be afraid to buy any of the three (1896-S, 1901-S, 1913-S) in AG-3 even though this grade is not considered collectible by many "experts." When the price for a G-4 rises well above $1,000 (or $6,000 in the case of the 1901-S), I can assure you that there will be a market for coins that grade less than G-4.

From my experience, there can be a world of difference between coins of the same date certified as AG-3 or even G-4. I've seen coins with either grade from the major services that I wouldn't want if you gave them to me, whereas I've seen other coins in really low grades that were quite nice for the grade. At the present time, I have two 1913-S Barber quarters that are certified by different services as AG-3 that are significantly better looking (correct color, amount of detail) than most of the G-4s I see pictured on the Internet.

If you're going to try to put together a set of Standing Liberty quarters, you're going to have to have the 1916 and the 1923-S. The 1916, of course, is the big key, with the 1923-S a distant second. I often disagree with the grades of certified examples of these dates (particularly the 1923-S) that I see pictured online. The problem with the 1923-S is that any coin less than about VF is likely to be missing one or more of the numbers in the date.

The 1916, on the other hand, tends to have the bottoms of all four digits even in grades as low as G and VG. All I can say about the 1916 is that you should buy it as quickly as you can if you're interested in set completion, as it will undoubtedly continue its ascent.

The rarity keys in the Washington quarter series are the 1932-D and 1932-S, with the 1932-D surpassing in value the slightly lower mintage 1932-S in higher grades. Both coins are readily available in virtually any grade you can afford. Although they've risen in value a great deal in the last decade or so, I've seen some resistance to higher prices recently. Thus, I'm not sure that you need to buy these quickly as a hedge against continuing price increases.

One thing I can say with certainty about the 1932-D and -S is that you should only purchase certified examples. I read years ago that there were more of these two in collections than were minted in 1932, which means that there are lots of fakes around.

Walking Liberty half dollars are nice coins to collect, and they form a series that can be assembled rather easily in circulated condition. Even so, I would advise you to buy the keys as soon as possible, as they tend to go up in value with regularity. The ones to look for, in order, are the 1921-D, 1921, and the 1916-S. Other dates, such as the 1916, 1917-S obverse, 1921-S, and 1938-D, are pretty easy to find in lower circulated grades. Just be sure you get an uncleaned coin with full date and rim and no damage.

Like lots of collectors, I love Morgan dollars. They are big, contain a lot of silver, and you can buy quite a few for rather nominal prices. Of course, there are also quite a few key dates, all of which seem to go up in value regularly. Again, if you're going to try to put together a complete date/mintmark collection, then you need to get the following as quickly as you can: 1893-S, 1889-CC, and 1894. Certification is a must.

In Peace dollars, there is really only one key date, not counting condition rarities, of course. This is the 1928, which is expensive in all grades. However, you'll find that there's only a gradual increase in prices until you get to MS-65, which means that there's little reason for buying a well-circulated piece. For example, the value of the date in EF-40 is $465, in AU-50 is $475, and in MS-60 is $525. It would make little sense to me to choose the AU-50 when for $50 more you could get an uncirculated specimen.

We could continue this exercise into U.S. gold pieces, but I think you get the picture: Determine the key dates in any series you want to collect, buy them as soon as you can if set completion is important to you, and be sure they're certified by one of the major services.

If you take my advice, I think you'll thank me when you insert the last common date into your album.


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