Volume 9 Issue 11 Liberty Coin Service’s Monthly Review of Precious Metals and Numismatics November 5, 2003 Take Advantage Of The Boom: Today’s Best Opportunities In Rare Coins ! P.4 Platinum Continues To Rise, Hits 23-Year High! The gold and silver markets are 10-year program, The Track Record I advised you going through episodes of profit- January 1, 1999 to October 31, 2003 taking and retrenchments that are that this would be the spark to and January 1, 2003 to October 31, 2003 normal in a developing bull market. There’s not much fresh news. So I the next rare coin Percentage Change boom. 1/1/99-10/31/03 2003 YTD will take the opportunity to step back and take a longer view at what It is now al- Precious Metals is happening in the rare coin mar- most five years Platinum +102.5% +23.4% ket. since the Dela- Gold + 33.1% +10.6% Silver + 1.1% + 5.4% Like other markets, rare coins go ware quarters led through cycles. Each peak is typi- off the series of Numismatics US Proof Silver Eagles, 1986-1998 +101.3% + 1.9% cally higher than the previous peak; Statehood quar- ters. US Silver Proof Sets, 1950-1964 +93.1% +14.9% the following market bottom tends LCS US Collector Key-Date Coin Index +65.8% +25.8% to be at higher levels than the pre- An analysis of US Non-silver Proof Sets, 1968-1998 +48.0% + 7.6% ceding bottom. market trends LCS US Collector Generic Coin Index +30.2% + 4.9% The last major market peak hit in since the begin- LCS US Large Paper Money Index +23.8%* + 5.9% June 1989 amid expectations of ning of 1999 MS-63 $20.00 Liberty +20.5% +14.4% LCS US Investor Better Date Coins Index + 9.1% + 4.4% massive demand from the creation shows the impact of the huge num- LCS US Investor Blue Chip Coin Index + 4.3% + 5.4% of Wall Street funds specifically for MS-63 $20.00 St Gaudens - 1.7% + 9.5% coin investments. ber of new coin MS-65 Morgan Dollar - 7.4% +16.3% Many of the coins that peaked collectors (most *compared to August 1998

back then were those available in recently esti- US Dollar vs Foreign Currencies relatively large quantities in high mated at 140 Mexico Peso +10.1% + 5.3% grade—the so-called generic or million by the India Rupee + 6.2% - 5.9% “Blue Chip” coins. U.S. Mint). Euro + 1.3% -10.5% China Renminbi 0.0% 0.0% In the following downturn, the By referring to what has hap- Great Britain Pound -1.9% -5.3% Blue Chips suffered greater losses Switzerland Franc -2.4% -3.2% than the better-date coins being pened at other Japan Yen -2.9% -8.0% pushed as investments. times in the past Australia Dollar -15.6% -25.8% when there was a Canada Dollar -16.6% -19.8% The everyday, run-of-the-mill col- lector coins largely avoided this major change in Stock Markets hype. They didn’t soar along with U.S. circulating Russell 2000 +25.2% +37.9% “investor coins” and did not crash coinage, we can Dow Jones Industrial Average + 6.7% +17.5% afterwards. In fact, even as the forecast with a NASDAQ -11.9% +44.7% S&P 500 -14.5% +19.4% Blue Chips were declining, these high degree of confidence what Tokyo Nikkei 225 -23.7% +23.1% coins were continuing their steady Frankfurt Xetra Dax -26.9% +26.4% lies ahead as the rise—and continued to do so almost across the board for the past 14 rare coin boom continues. years! When Congress passed legislation Inside this issue: The Track Record page 1 in 1997 for a new series of quarters A New Lincoln Cent Coming In 2007? page 2 to honor each of the 50 States over a Time To Sell Platinum? page 4 (Continued from page 1) common-date Morgan and Peace Silver ter and to most coin collectors, the The Rare Coin Boom Takes Dollars and Saints as well as a wide as- general public is largely unaware of Root—1999-2003 sortment of “made-to-order Instant Rari- this impending change. Within a few months of the appear- ties” (remember seeing Sunday paper When the public has another op- ance of the first Statehood quarter, a ads and cable sales channel programs portunity to collect interesting coins number of purchasers started show- offering privately-colored Silver Eagle out of circulation, being nickels this ing up at coin shops across the na- Dollars at $40-$50 apiece?). Although time, that will further increase inter- tion. They were excited about a se- there are a number of such ongoing pro- est in the preceding Jefferson, Buf- ries of quarters honoring each of the motions, today’s market is being driven falo, Liberty, and Shield Nickel se- 50 states, but were too enthusiastic by the grassroots collectors, not by the ries in particular, and in all U.S. to look forward to only a single new marketers. coins in general. coin every ten weeks for the next ten In reaction to the increase in the num- If hoped-for plans for changed de- years. ber of coin collectors, existing experi- signs for the 2007-2009 Lincoln What else could they collect that enced collectors stepped up efforts to Cent (to honor the bicentennial of did not require long waits to get finish collections before rising demand his birth) come to pass, that will fur- product—and were also affordable pushed up prices. In the process, they ther fuel a warming market. and beautiful? have contributed to a strong rise in the Whether or not the Lincoln Cent The most obvious items that at- prices of key-date collector coins such changes, here are my projections for tracted them were the modern Proof as the 1909-S VDB Lincoln Cent in different numismatic segments: Sets and Proof Silver Eagles. Prices Very Fine condition, the 1916-D Mer- US Proof Silver Eagles, Silver quickly began rising as dealer inven- cury Dime in Good condition, the 1916 Commemoratives 1982 to date, tories were depleted. Standing Liberty Quarter in Fine condi- and Proof Sets issued since 1950. I As you can see on the table on the tion, and the like. Our index tracking think most of the price increases previous page, prices of the Proof these coins shows that they have jumped have already happened. However, I Silver Eagles and modern-era Silver over 65% since the beginning of 1998, think it is more likely that there will Proof Sets have roughly doubled including a more than 25% increase in continue to be slight increases in the since the beginning of 1999. Even the past ten months! next few years rather than any sig- the non-silver Proof Sets from 1968 So, solid groundwork has been set for nificant decline. to 1998 are up almost 50%. An a strong boom in the rare coin market— Collector Key-Date Coins. I ex- analysis of modern US Silver Com- large numbers of new collectors, rising pect strong demand for at least the memoratives would almost certainly gold and silver markets, existing collec- next six months, followed by a ta- show this same result. tors becoming more aggressive at add- pering off among the coins that have Such coins outperformed gold and ing to the collections, and new coins experienced the greatest percentage silver and the stock markets over the (and also paper money) coming out on a increases in recent years such as al- same period, a fact not lost on new regular basis. most all Carson City issues, 1877 In- Where are we likely to go from here? dian Cents, 1909-S VDB and 1922 and old collectors and also on some from outside the hobby. The Rare Coin Boom Takes Lincoln Cents, 1937-D 3-leg Buffalo Nickels, and 1916-D Mercury The new collectors have also con- Off—2003-200? tributed to a major expansion in the Dimes. I do not expect any general There are even more coming events to fall in their prices, but they are likely demand for certified super-high- spark higher interest among potential grade modern coins at prices that to under-perform compared to other coin collectors. coins. leave old-time collectors shaking First, the U.S. Mint will issue two dif- their heads in amazement. The less well known key-date ferent circulating nickels next year in- coins, especially those from the 19th As new collectors become more stead of another edition of the current sophisticated in their numismatic Century are likely to fare better. design. The first one will commemorate Collector and Investor Better- knowledge, many of them will ex- the 1803 Louisiana Purchase. Then will pand their collections to include Date Coins. There are many dates come the first commemorative for the of coins that are definitely not com- more earlier series and issues, such 1803-1805 Lewis & Clark Expedition. as Morgan and Peace Silver Dollars. mon, but they generally do not get In 2005, a second commemorative the respect in the current market to Coins such as common-date Gem nickel for the Lewis & Clark Expedition Mint State-65 Morgan Dollars and reflect their absolute rarity. Instead, will go into circulation. The 2006 collectors seem to be focused on the Choice Mint State-63 $20.00 St nickel is intended to have Jefferson on Gaudens have largely missed out on one or two scarcest issues of each the obverse and Monticello on the re- series. the rising market so far. That is be- verse again, but there is no assurance cause the boom is being driven by a Most Better-Date U.S. Gold coins that it will be the same design in current have not seen significant price in- groundswell of customer interest in use. inexpensive basic collectibles. creases—yet. That is starting to Although news of the new nickel is fa- change. I anticipate that they will In the past couple of decades, there miliar to regular readers of this newslet- have been widespread promotions of (Continued on page 3) (Continued from page 2) der. 3. If a rare coin is promoted because outperform common-dates over the Certified Super-High-Grade of supposedly advantageous special le- next few years. The same will likely Modern Coins. I consider this mar- gal treatment, watch out. Thousands occur with Better-Date Morgan and ket to be partly a passing fad. When of investors have lost millions of dol- Peace Dollars, Classic U.S. Silver collectors become sophisticated lars buying Proof Gold Eagles for their Commemoratives, and a wide swath enough to realize that you can acquire IRAs because it was the closest to a of 19th Century U.S. coins. Even an almost unlimited quantity of Proof- numismatic coin that could be put into though prices may be up 5-20% in the 69 Deep Cameo 2003-S Jefferson the IRA at the time. With the likeli- past year, many of these issues are Nickels simply by extracting coins hood that the laws will soon change to trading at huge discounts to their mid- from Proof Sets and sending them in permit a wide variety of rare coins in 1989 prices—up to 60%, 70% and for certification, they won’t be worth IRAs, the premium paid for the Proofs even 90% lower. Over the next few ten times the price of the coins in the will no longer be justified. years, I think a number of these coins Proof Set. 4. As always, remember that, even will surpass their peak 1989 prices. Here is an area where I do expect though rare coins can outperform bul- US Paper Money. Our recommen- some price declines, although it may lion prices and other markets as we dation of Large Size U.S. Paper take another year or so before we see think is likely in the next few years, Money in August 1988 struck gold. that happen. Knowledgeable collec- they also have a greater risk of loss. Every one of the 121 types and grades tors understand that there are hun- Buy/sell spreads are wider than for of notes we recommended then have dreds of different older U.S. coins in bullion. Rare coins are less liquid than increased in price. As a group, their the $50-300 price range that are so bullion and generally need a longer prices have tripled in the past 15 rare that they are almost impossible to term commitment for optimum results. years. find. They represent much better As a result, owning rare coins is not From here into the future, I expect value than modern super-high-grade suitable for everyone. Even if you are continued growth in this niche, coins that, truth be told, could be comfortable owning rare coins, we spurred partly by the latest series of available by the thousands if you conservatively recommend that it rep- new high-tech currency now being is- wanted to pay the certification fees. resent only a small percentage of your sued. Most of the major appreciation (Note: virtually proofs are stunning net worth. in Large Size Paper Money has al- and beautiful, with virtually all sur- We have generally observed over the ready occurred. I now think that viving in wonderful condition. The years that those who want to own rare Small Size U.S. Paper Money, of the same is not necessarily true for Mint coins strictly for potential financial size now in use, will perform better State issues, especially of coins struck gain, caring nothing for the history and from now on. for circulation.) beauty, almost always end up losing Investor Blue Chip Coins. This is For example, at a coin show this money. one area I expect to do well in the past weekend, a collector bought from Collecting rare coins can be a lot of next few years. They have pretty us an 1869 Indian Cent in Extremely fun. And it can make handsome prof- much been left behind as other coins Fine condition for $295. After exam- its, as I have personally enjoyed. Just appreciated, an anomaly that will cor- ining the coin, he pulled out his cash be sensible. rect in the near future. without quibbling about the price. In- Gold and Gold Coins For the past few months, we have stead, he expressed relief that his Gold finished today at $382.50, seen stronger demand from wholesal- multi-year search was over. The down $1.75 (0.5%) in the last month. ers trying to stockpile Common-Date buyer knows that when he wants to In any long-term bull market, there High Grade Morgan and Peace Silver sell this coin, it will still be just as will be periodic episodes of profit- Dollars to supply upcoming promo- rare as it is today. taking and short-selling. The latest re- tions. You can bet that they will be Summary. I haven’t covered all trenchment happened a month ago. offered at prices well above current that many market niches, but I think Professional paper contract traders levels—then rise again when supplies some general lessons can be drawn. have been watching for an opportunity prove tighter than expected. 1. Coins that collectors want to own, to profit by squeezing a falling market. For instance, a few years ago, we as opposed to those hyped as When some sales happened to hit close could have filled an order for 500 “investments” are less volatile and together, generating a slight drop, the Common-Date MS-65 Morgan Dol- have steadier appreciation. short-sellers piled on. The price of lars with just a few phone calls—and 2. Beware of passing fads. The 5- gold dropped $14.00 (3.7%) on Octo- not had an impact on the market ounce silver “Instant Rarities” mar- ber 3. The decline was arrested when price. keted in the 1980s at high prices are physical buyers from India and else- Today, I doubt we could immedi- now mostly destined to be sent back where jumped into the market. ately fill such an order. Instead, we to the refiners for melting. I would Demand at the $370 level was so could line up coins to be received as consider owning the modern super- strong that it now represents a near- they were returned from the grading high-grade certified U.S. coins only if term floor to the market. After the de- services. And prices would certainly they could be obtained at prices close rise in response to this size of an or- to what uncertified coins would cost. (Continued on page 4) (Continued from page 3) The Month $5.00 is now the trigger point for buy- cline, gold came all the way back to ers whereas it would more likely have have its highest close in years at Gold Range $19.75 5.1% triggered sellers in the past few years. $388.75 on October 24. Net Change -1.75 Silver premiums stayed fairly stable Fluctuating prices have spurred our Silver Range .37 7.3% in the past month, creeping upward customers to action. When gold Net Change -.11 when the spot price dipped. U.S. 90% dipped below $375, buyers magically Gold/Silver Ratio 76.7 Silver Coin (5.1%) is still the low price appeared. Then, when gold neared Net change +1.4 leader and is our top pick for acquiring $390, liquidation volume soared. Platinum Range 51.00 7.2% physical silver. In my judgment, gold is treading wa- Net Change +49.00 U.S. 40% Silver Coin (8.7%) has an ter, so to speak, until it can pass Platinum/Gold Ratio 1.98 advantage of selling relatively close to through $400. Physical demand is Date Gold Silver Platinum face value. But this limitation of Oct 01 384.25 5.10 709.00 strong. The world’s economies are in downside risk is offset by the large bulk such precarious condition that it is al- Oct 02 383.00 5.10 706.00 Oct 03 369.50 4.83 713.00 it takes to own silver in this form due to most scary to want to hold any paper its 60% copper content. currencies. Oct 06 372.75 4.81 707.00 The 1-100 Ounce Ingots (12.0-9.0%) The low-premium price leaders are Oct 07 377.00 4.88 717.00 are worth considering, especially if lim- still the U.S. American Arts Medal- Oct 08 375.25 4.87 723.00 ited space is a problem. Oct 09 369.00 4.84 716.00 lion (3.7%), Austria 100 Corona This past January we were fortunate (3.4%), and South Africa Krugerrand Oct 10 373.50 4.90 722.00 to offer a mini-hoard of Mint State (3.6%). Oct 13 375.25 4.97 720.00 Rolls of 1964 Kennedy Half Dollars. Demand for Better-Date U.S. Gold Oct 14 375.50 4.92 723.00 They sold out quickly and we had to Coins remains strong, with a surpris- Oct 15 372.50 4.94 719.00 turn down some sales. Good news—we ing number of coins being bought by Oct 16 372.50 4.92 720.00 just picked up another nice group and Oct 17 371.50 4.93 719.00 other dealers at what we thought were can again offer them near their lowest fair retail prices! As I said earlier, Oct 20 374.00 5.00 733.00 price in years. If you missed out ten prices are starting to rise. If you are Oct 21 381.50 5.06 732.00 months ago, you have another chance. fortunate enough to find nice coins at Oct 22 386.50 5.12 735.00 See our flyer. reasonable prices, do not hesitate to Oct 23 384.75 5.17 741.00 add them to your holdings. Oct 24 388.75 5.16 735.00 Store Remodeling Still In This month, we offer some Choice Process Mint State-63 1910 and 1910-D Oct 27 387.75 5.18 741.00 Many of you have already visited our Oct 28 383.00 5.09 743.00 $20.00 St Gaudens Double Eagles. Oct 29 386.75 5.14 754.00 store and complimented us on how In high grade, they are dozens of times Oct 30 384.00 5.13 752.00 much lighter, cleaner, and more spa- rarer than the 1924 issue, but cost little Oct 31 384.25 5.06 743.00 cious our showroom now appears after more. There are not enough coins to we closed for remodeling a few weeks satisfy everyone, so we recommend Nov 03 377.00 4.92 738.00 ago. It turns out that there are so many that you call soon. See our enclosed Nov 04 380.00 5.02 748.00 details and little things to get organized, Nov 05 382.50 4.99 758.00 offering. Please refer to our brochure. that we are not done yet. Give us an- London Silver Market Premium To New other month to fine tune our displays. Platinum Hits 23-Year High York Silver Market = 1¢ Our new computers are still being in- Platinum closed at $758.00 today, its Gold, silver and platinum quotes are work- stalled. We have not yet been able to highest close since 1980! ing spots at 2:45 EST/EDT each day, quoted update the Computer Quotes page on Rising industrial demand (some as a in U.S. dollars per troy ounce. our website, though we have been able substitute for palladium, which has able acquiring gold or silver for long-term to post the latest issue of this newslet- proved to have even more price vola- appreciation. As a matter of fact, as plati- ter. This task should also be resolved tility) and uncertainties about supply num is higher than I expected, I think this by the end of November. have contributed to strong prices. is an excellent opportunity to sell it. While going through changes such as Current supply levels are not enough computers being down and moving to meet current demand. Still the an- Silver and Silver Coins around so many things, some of our nual supply deficits for gold and for Silver closed today at $4.99, dropping customer shipments were delayed be- silver are much larger on a percentage eleven cents (2.2%) from five weeks ago. yond our usual prompt standards. This and a dollar value basis. When silver has dipped below $5.00, we has been resolved. Thank you for your Although platinum may continue to have seen a surge in demand. So have patience. be strong, I feel much more comfort- dealers across the country. It appears that

Liberty’s Outlook is published monthly by Liberty Coin Service, 300 Frandor Ave., Lansing, MI 48912. Telephone: National 800/527-2375 Fax: 517/351-3466 Website: www.libertycoinservice.com, E-mail: [email protected] Patrick A. Heller, Editor. Subscriptions are available at $79.00 per year (12 issues). Send subscription orders and changes of address to the above address. All information is derived from sources believed to be reliable, but accuracy cannot be guaranteed. No guarantee of profitability of any investment or recommendation contained herein is made or implied. Liberty Coin Service has been a dealer in rare coins and precious metals since 1971. The publisher, its principals and associates may, from time to time, have a position in items recommended here. Copyright 2003, all rights reserved.