World Record

THERE can be only one topic for this month’s “Comment”—our front cover story—the new World Record for a single coin, no less than $10,016,875 (nearly £6.5m) paid for the 1794 “flowing hair” US silver dollar. The coin, in simply superb condition (graded “Specimen-66”) is an American numismatic “landmark” as it was the first dollar coin produced in the fledgling independent country. It was sold in January by Stack’s Bowers Galleries in New York and the price achieved (along with $1.14m paid for a 1792 half-disme and $998,750 paid for a 1793 large cent) once again highlights the difference between the US and the British markets. In Britain the top price paid for a coin was £460,000, achieved back in 2006 for the Edward III “Double Leopard”. This American record is over 12 times that price—that is a big disparity. But what causes this gap? Why is the hobby in America so very different to the one here? They have the same types of dealers, the same collectors (an eclectic mix of the truly dedicated searching for that one variety or date they don’t have and the more generalist, those happy to pick up anything remotely connected to their theme that they like the look of), and so by rights the two markets should be similar and prices at auction should reflect that. True there may well be more money in America and the hobby is bigger in terms of the number of people involved (simply because the US is a bigger country) and that would account for some disparity in prices but is there more to it? Well yes I think there is. Any trip to an American fair will show you one very important difference between the US and the UK markets— “slabbing”. This practice, of encapsulating a coin in a permanent plastic holder, along with the associated grading system that is quite different from our standard “F, VF, EF” allows purchasers of coins to buy them knowing that their grade, and thus their value has been professionally appraised and, because of the slabbing process the coin will remain that way forever. This has, in turn allowed people to buy coins for investment, safe in the knowledge that they have bought coins that will not be affected by time, this has encouraged big money to come into the hobby and as a result coin prices have continued an upward trend—culminating in records such as this. Now I’m not suggesting that the only people who buy coins in America are investors, far from it, the country has some very avid and serious collectors—and their recent coin programmes from the Mints have meant that new collectors are coming through all the time; however, it cannot be denied that the security that has come from a professional grading system, as opposed to a subjective one, along with the slabbing process that keeps that grade intact, has led to people buying coins with the intention of keeping them for investment—people who might not otherwise have considered purchasing such items. In the UK we do things differently: slabbing is not the norm and grading is always a contentious issue—as a result a purchaser cannot always guarantee that what he bought from one source can be sold on later at the same grade. The new buyer could dispute the grade or of course external factors may well have affected it (drop a slabbed coin and you’re ok, drop a Gothic Florin on a stone floor and you’ll know about it…). This inevitably leads to uncertainty and uncertainty is not what sound investments are made of. Now the purists will say that that’s OK—we don’t collect for investment and as such the disadvantage of having a coin wrapped in plastic that cannot be handled and savoured greatly outweighs the advantage of keeping it in an undisputed condition. And they have a point—we always say that coins shouldn’t be about making a profit but rather should be all about the fun of collecting, the enjoyment of holding history in your hands. But then those who advocate a professional grading and slabbing system in the UK will simply point to the way the American market is booming and how record prices for coins are invariably set by those pieces minted in the States. The question for us is which way do we go—yes, we want to see our market expand, want to see new collectors, record prices and a hobby that is taking off, but in order to do that will we need to go down an American-style route by adopting their systems? It is a thorny issue and one without an answer—there are British companies extolling the virtues of the slab and American companies keen to encourage us to adopt that way of grading/valuing—only time will tell whether they succeed or not. As ever, the market will find its own level! STOP PRESS: As we go to press we learn of another potential “record breaker”—the Royal Mint Museum has decided to sell duplicates from a gift made in 1859 . . . a part set of US proof coins from the copper-nickel cent to the gold $10, all suitably slabbed by PCGS, is to be sold in a special auction by Morton & Eden on March 6. For details contact the auctioneers (see page 30) or visit their website at www.mortonandeden.com.