The Rainbow Toned Coin Market--Journey of an 1881-S Morgan Dollar

It is not often that you have the opportunity to track the provenance of a very common coin. In this case, I am speaking of a rainbow toned 1881-S Morgan Dollar PCGS MS65. This coin has a total population of 87124/29303, not rare by any means. As a previous owner of this coin I am able to track it's sales history since it was first offered at auction by Heritage in the 2007 St. Louis, MO (CSNS) Signature Coin Auction #434.

Here are the photos, description, and link to the auction lot from that sale.

Description 1881-S $1 MS65 PCGS. Aside from a blush of orange at the upper left, the reverse of this highly lustrous Gem is brilliant. On the obverse, violet patina dominates with a few splashes of olive-lime away from the boldly impressed portrait.



http://coins.ha.com/common/view_item.php?Sale_No=434&Lot_No=4592#photo

The coin sold for $253 with what I consider to be very substandard photos. I assume that it was purchased by Anaconda Rare coins who then sold the coin to me for $375 on 6/17/2007. Here are the Anaconda photos courtesy of Brandon Kelley.





As you can see, the Anaconda photos present this coin in an entirely different light. I was aware of the Heritage Sale price when I purchased the coin from Anaconda. In fact, I was a common under bidder on most of the toned Morgan Dollars that ended up on the Anaconda site. Unfortunately, I had only the Heritage photos from which to make my purchasing decisions whereas Anaconda had the opportunity to see the coins in hand. My general opinion of Anaconda was that they overpriced many of their toned coins, but if you were patient and made reasonable offers, it was pretty easy to obtain great toned coins at respectable retail prices. This coin was no different IMO. I paid roughly 3X wholesale price knowing they paid 2X and that it was listed at 4X on their site.

In April 2009, I sold the coin to a fellow CT member for $400. I was happy with the sale as I have moved away from collecting toned Morgans in recent years and the other CT member was very pleased after receiving the coin. To my surprise, this exact same coin just sold in an E-Bay auction by none other than Brandon Kelley at Polaris Numismatics. Here are the photos, description, and auction link.


This purple beast exhibits an INTENSELY lustrous obverse that is completely bathed in a blueberry wine (if you've ever had it, it's not blue *duh* or red but sort of like a reddish purple color) overall coloration intermingled with hints of vibrant emerald green, royal blue, and golden yellow that are peppered throughout the powerful color on the absolutely stunning obverse. The reverse is just as lustrous and extremely clean but come on, the party's in the front. You won't be disappointed with this beauty. PCGS graded this coin Gem MS65 and assigned it the certification number 04181763.




http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=260498451350&ssPageName=STRK:MEWAX:IT


The coin just sold for a whopping $510 on E-Bay. I find this very interesting. In a time when the economy is depressed, coin prices are falling, consumer spending is low, unemployment is high, this coin continues to show improving sales performance. In the last 30 months the coin has sold 4 times. Each time the price increased and the end sale price is double that of the initial sale price.

What does this coin tell us about the stability of the rainbow toned coin market? It seems clear that the current market is at the very least healthy and not near the impending collapse so often predicted by the anti-toning community. While it is impossible to summarize the market conditions from the performance of one coin, it is also undeniable that this coin offered two years apart by the same seller with almost identical photos performed better in the worsening economic conditions. Another undeniable truth is the importance of accurate photos. I firmly believe that if Heritage were to have offered this coin with photos of equal quality to Brandon's, that the Heritage price would have been much higher and on par with the successive sales prices.

What do you guys think of the performance of this coin and the condition of the rainbow toned coin market?

 

Log in or Sign up to hide this ad.

Just goes to show how popular toned coins have become and how much the price has gone up. Amazing!

 

Very interesting analysis, and thanks for presenting this journey.

 

Doug,

This post sounds like a typical anti-toning rhetoric and wreaks of someone who just can't admit even the possibility that they might be wrong. The value of a coin is determined by what people are willing to pay for that coin. You can't simply claim that they are and always have been overpaying because you disagree with the value of the coin. The market sets the price, not you.

You claim that the only reason that the coin increased in price was because it was auctioned on E-Bay. In April of this year, the coin was sold for $400 via a private sale. How do you explain that?

Furthermore, I owned the coin. If you honestly think that the Heritage photos are the most accurate after hearing my testimony that the Heritage photos were substandard and not an accurate representation of the actual appearance of the coin, then I truly don't know how to respond. Of the slab photos, the last one by Polaris is the most accurate. This is a Heritage photo from 2007. I even made a post on this forum about how much the Heritage photos have improved in 2009. Currently Heritage will offer the oversized photos in addition to slab photos for featured coins and some toned coins. I don't know the specific qualifications for getting the oversized photos, but I will state that if the coin sold on Heritage with the oversized photos, the price realized would be close to that seen on E-Bay.

While I don't consider the toning on this coin to be monster, it is certainly in the 4-5X wholesale range which is where the coin has sold with the exception of the Heritage Sale. Overall, I consider the performance of the toned coin market to mirror that of the entire coin market. Common material not in gem state with less than 3X wholesale toning is seeing a marked reduction in prices. However, the higher quality toned examples which drive the 5X+ premiums have not fallen off that much. I will be more than happy to provide other examples as I find them.

Paul

 

An attractively toned coin is a unique piece and as such it is worth more than a piece that is not unique. People have a need for beauty and we will pay for it. If you search older posts I have predicted a boom in toned coins based on these reasons. High prices for beautiful coins will continue even as that overall market tanks.

BTW, Lehigh I really enjoy posts like this. Keep us posted on the toned coin market. Thanks.

 

I enjoyed the provenance piece on this coin. Thanks for a great post!

 

I love you ability to track coins!
I really like that coin's newer photos, versus the Hertiage photos... (Which are never all that great!)

 

I've been watching toned coins at some local shops and places that have coins, and any toned coin is going for a minimum double the normal graded price for the coin. I really don't see that trend changing anytime in the near future, even in this economy.

 

Great post Paul,

as always :bow:

Josh

 

Very interesting write up, thanks Lehigh.

 

Well I do like looking at them and following one specific coin is cool. Having said that I would not pay a premium for these coins. Not knocking the toning, I do think they are cool (especially the penny lady's IHC's-beauties to the nth degree), but they are not to my taste. I will say that I agree with Paul that the buyers of these set the market price - plus what I posted from the grey sheet is in line with this, but I will refrain from buying one of these at that price. Just my opinion.

Of course if I did the market would fall out from under them.

 

Yeah I can believe the value people place in toned coins. Recently at the MSNS show A common date Morgan which was about $85 in MS 63 or MS 64 by the Greysheet was being offered for $400. It was toned nicely only on the obverse the reverse was a blast white. I declined to buy the coin. Although I do love toned coins and have purchased a few in the past I could not see 5X for that particular coin..Just my 2 cents on the subject... Jerry

 

Great post, Paul. I have a few coins that I have been able to trace back through multiple sales and find it interesting to see what the same coin has brought at various points in market.

I agree that each sale is somewhat indicative of the market. For a 500 dollar coin, I would probably put more stock in a single sale on Heritage or Bowers or Stack's than a single sale on the Bay. But each sale provides a data point.

By the way.are you getting out of Morgans altogether? To focus on your Jeffersons? Something else?

 

I wouldn't go so far as to say I am getting out of rainbow toned Morgan Dollars. I still own about 80 of which only 30 are for sale. However, I will not purchase a Morgan Dollar unless the coin is either phenomenally attractive or a really good deal. The last Morgan I bought was this MS68 back in July 2009. The purchase price was below Numismedia Wholesale.



It was a pretty good deal when I bought it, but with the rapidly dropping prices of the 1881-S MS68 Morgan, the deal is get worse every day.

 

Funny thing Paul, I haven't been on this site too much lately (into my other hobbies), but I was bored and got on here and saw Doug's response. My first thought before I read his response was, "Here we go on the negative train". I agree with your response Paul, and well said. I think the coin looks great and is worth whatever the market will pay. The CDN, Numismedia, Coin Values, PCGS price guide, etc.. are all based on what the "collective" paid on average. That's the bottom line. I have that year in that grade that I paid like $150 or so, but nothing like the toning on your coin which is very original, unique and extemely attractive. Many, many would pay that price for that coin.

 

I should have been more clear. I know you love toned coins, but you have never agreed with the premiums that they drive. You are amongst the group of people that consider toning premiums a fad. I don't want to get into an argument about when the prices for toned coins started to skyrocket, but I think we can both agree that it was the early part of this decade. Prior to that time period, toning only generated small premiums within 1-2X bid price but multiples of bid were rare. My point is that just because you remember how things used to be does not automatically mean they will return to that.

There were permanent changes in the market that have affected the market permanently. The most important aspect is online availability of coins and a phenomenal increase in digital photographic technology. It is rather easy to take an accurate photo of a coin an post it online. This puts toned coins center stage and creates a very competitive atmposhere to acquire these coins which are much more rare than their untoned counterparts. The internet isn't going anywhere, digital photographic technology will continue to improve, and I see no significant drop in the demand for toned coins. Your failure to recognize this permanent change in the market has you stuck in the 80's-90's (or even earlier) expecting the toned coin market to eventually settle back to the prices of those time periods. We have had this discussion before, but I insist that 7+ years is not a fad, it represents a stable market.

In fact, the only real danger to the toned coin market IMO relates to a loss in demand as a result in decreased confidence in the ability of the TPG's to weed out AT coins. As the coin doctors get better, the TPG's must react to preserve consumer confidence. Barring this, I see no reason for the toned coin market to collapse as many (including yourself) predict. The economy will depress prices slightly especially for the more common material but the truly superlative (monster) coins will not lose much value IMO. You know as well as I do that the ratio of the premium is inversely proportional to the bid price of the coin. The lower the bid price, the higher the toning premium will be. These coins will suffer the most. This means that MS63* Morgans will be affected much more than MS65/66* Morgans.

I can tell you Doug that I search the internet for hours every week looking for these coins and I do not see a dramatic reduction in prices. The whole purpose of this thread was to demonstrate that using an example that has sold 4 times in the last two years. It sold twice at auction and twice via private sale. Is it possible that the Heritage price with the substandard photo is the truest indicator of the value of the coin? Maybe, but I doubt it. You would have us believe that both I and another member of both this forum and the TCCS both overpaid for the coin and then the feeding frenzy on E-Bay further inflated value of the coin. It is true that I have overpaid for coins in the past and readily admit that. Buying toned coins that are obviously market graded and paying huge premiums is rather foolish, a lesson I learned the hard way. But this coin is not an MS63 in an MS65 holder, it has solid gem surfaces with a wholly unique toning pattern & color scheme. Isn't it more likely that with accurate photos, the true value of this coin is currently $350-$450.

Furthermore, your characterization of toned coin photos is not accurate no matter how many toned coins you have seen. Most toned proofs must be turned to just the right angle for the color to show. This also happens with many iridescent toned mint state coins which is why you must search for that word when scouring toned coin catalog descriptions. However, bag toned Morgans show the color quite readily from just about every angle except straight on. You would have us believe that there is this very small window of an angle that you must hold the coin just to see the elusive color on the majority of coins. That is just not correct. Almost every coin appears dark straight on, but the moment they are tilted to any angle the colors become very evident.

Now Doug, I know that you don't have an agenda. I also don't take personal offense to your opinion. However, many members of this forum hold your opinion in a higher regard than other opinions. Therefore, when I disagree with your opinion, I will disagree strenuously. Not to mention, this is the first real debate I have seen on this forum in a while and I love a good debate. Now feel free to let me have it.

 

A good conversation with merit on both sides. As we used to say on another BB service many years ago, time to get out the lawn chairs and just watch!!!

 

Yep - I think most people will find merit with both sides of the discussion.