Rare Coins Outpace Other Assets
By David L. Ganz
The most catastrophic
economic cataclysm since the Great Depression
still doesn't put the whole of events into
The Dow Jones Industrial Average, which was a
record 14,000 plus in October 2007, has had a
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
Finally comes Stacks 73rd anniversary Sale Oct.
22, 2008, where it opened at $45,000 and popped
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
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
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
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
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 idea.
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 historic