Wednesday, July 2, 2014

Rick’s Pedigree Coins – Placing a Value on Pedigree Coins – 1878-CC Fitzgerald

There are a number of ways to place a value on a coin and it is further complicated when the coin is a Pedigree.  I am not going to review all the ways that there are, but I am going to tell you how I do it – and it works for me.

First, most Pedigrees are graded by NGC or PCGS so my discussion will revolve around Pedigrees graded by those companies.  ICG does authenticate/grade some Pedigrees as well but I will discuss how I evaluate their Pedigrees in a later blog.

First we start with all the relevant facts:

1.)    Pedigree name
2.)    Date of coin
3.)    Mintmark
4.)    Grade

From here, I use the following formula:

1.)    How has a similar coin with no Pedigree performed in recent auctions – what is the average selling price?  You can use any auction site, but I use Heritage Auctions.  For my selection, I enter the date, mintmark and grade.  I eliminate any chart busters like coins with exceptional toning, having Pedigrees or Proof like, etc.  I am using comparable coin in auction to comparable Pedigree coin except the Pedigree is not relevant at this point. 

2.)    What is the premium value of the Pedigree worth to me?  To help me with this decision, I look at the population (census) report for the Pedigree.  The Binion, Fitzgerald, GSA, Battle Creek and several others have this information available.  While the population reports do change over time, they are directionally correct and assist in determining rarity.  The more rare the coin in the Pedigree, the more it is worth to me. 

I know several less experience collectors use price guides for determining value.  If you are using this method, you are way (to the wall max) overpaying.  I am going to pick a couple examples to illustrate my point.  First let’s take the 1878-CC Morgan silver dollar in MS64 condition.  The NGC price guide for the coin is $625 (I used the NGC price guide because it is a common source for many buyers).  In Heritage’s most recent auction 5 coins with the same date/grade/mintmark coin sold for an average of $510 per coin.  On Ebay, under the same guidelines, 6 coins with the same date/grade/mintmark sold for an average of $545 each.

The NGC price guide says $625 and the market says $510 to $545?  Yep.  So, if you are basing your purchasing decisions on price guide data, you are considerably overpaying for your coins.   And yes, this over-valuation of coins consistently holds for other date/mintmarks/grades.

But I am a little off track, so getting back to my formula of:

Base Price of Coin + Premium for Pedigree = My Value

For the 1878-CC, my base price is $510. 

So what is the “Premium for the Pedigree” value?  Here I move to the Fitzgerald Population Report found in the number one book on Fitzgerald coins on the market – Fitzgerald Silver Dollar Collection – “The Purple Gang Set” and I consult the page covering the 1878-CC silver dollar.  After getting the general background information found in the book, I refer to the population report and see that there were 166 Fitzgerald’s in this date/mintmark range.  I further look at the population for other CC’s in the Fitzgerald collection and see that the 1878 date is not all that rare of a coin.  Based upon this information, I feel comfortable with a $25 to $50 premium for the coin.  So my calculation looks like:

$510 + $25 or $50 = My range value is $535 to $560

So this is how I determine a value for Pedigrees that I am either buying or selling.  It seems to work for me.  I have more examples, but will save them for future blogs because they bring in other parameters like rarity of the coin in the Pedigree versus common in the general population.  

One last comment and I will sign off.  I am frequently asked, what is my Pedigree coin worth?  My reply is, “Start it in an auction for 99 cents and the last bid you get is what it is worth.”

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