Zar coins shine on heritage auctions

[geejay50 10]

Hello all,

 

To-day's Heritage World Coin Auction held in Long Beach California can go a long way to give much needed confidence to our ZAR Market.

 

The Flag ship of the auction, an NGC 1892 Proof 65 Red-Brown Penny which I must add was immaculately photographed and professionally advertised , fetched $195,000 with 15% Buyers Premium - a cool R1,427,150 !!

 

In sympathy with this high price, an NGC MS65RB 1892 Penny fetched a decent $8050 with BP or R58,765.

 

If that doesnt impress you, a PCGS 1892 Proof 65 Cameo Two and a half Shilling fetched $69,000 or R503,700 . The pop report on this coin makes it one of three Cameo coins between NGC and PCGS. The two at NGC are Proof 64 Cameos so it is a Pop 1 and the only coin so graded by PCGS .

 

The Proof Penny is one of two Pf65 coins at NGC with 5 coins graded Pf Red Brown in total there and with 7 coins graded Pf Red Brown at PCGS. There are two coins that share the 65 grade at PCGS.So it is one of four Proof 65 Pennies between NGC and PCGS.

 

Thre are many other sales of high quality that did well in a market starved of such quality for so long.

 

The ZAR and Union era has been described recently as a 'twilight era' in numismatics with the more modern Mandela type coins coming to the fore. The Heritage Auction of to-day has certainly trashed such ideas for good.

 

Geejay

 

[jwither 11]

I too noticed those three coins and in my opinion, none of them deserved to sell for those prices.

 

On the 1892 proof penny, I think everyone needs to see what the specimen in the upcoming DNW sale realizes before drawing any more conclusions. I will add more comments once that sale is over.

 

On the other two you mentioned, there is no reason to wait to conclude. The 1892 proof 2/6 sold for vastly more than any other specimen before it and though I have not seen it or its counterparts in person, I consider it a vastly overpriced coin. Earlier this year, Heritage also sold a NGC PR-64 CAM for about $18,000. This price is at least somewhat consistent with the prices realized on prior sales and not just some of them, ALL of them. So the question I ask (once again) is whether this coin is that much better than the other which is one point lower on the grading scale to be worth almost four times as much? The answer is an absolute no.

 

Because the 1892 is the only proof ZAR set, I do believe that all of these coins deserves to sell for a premium versus most other proofs of comporable scarcity. For example, probably more than any Union proof though I am not sure the 2/6 would always sell for more than the 1926.

 

But to get some perspective on how "out of whack" this $69,000 is for this coin, I am going to compare it to the prices of the US capped bust half dollar proofs. Normally, I consider US coins exorbitantly overpriced versus any others and I have stated so many times.

 

I do not have access to the mintage records or the PCGS census, but NGC lists 66, including two CAM for ALL dates. This design was issued from 1807-1839 though not all years had proof issues. (Regular issuance of proofs in the US did not start until 1858.) Some of these coins have sold for more than this 1892 ZAR but not most of them. For example, Lot 5332 in the Heritage January 6 sale, an 1834 NGC PR-65, sold for about $49,000. Given that the coins are about the same size and metal content and the capped bust half is from the US, I consider all of these better values than this 1892 ZAR NGC PR-65 CAM. It is true that these coins are not collected in sets, but the 1892 ZAR 2/6 is not even a particularly "rare" coin for a proof. It is not common obviously, but it is not hard too find at all. The only thing really "rare" about this coin is that it is a CAM and it is a "conditional rarity" which normally does not bring much of a premium for a proof strike at all. I do not see much if any reason for a difference in premium between proofs and circulation strikes for a particular grade, but the market generally does.

 

On the 1892 1D, the NGC census lists 16 in this grade. (I did not bother to check PCGS just now.) Now even in grade, it is not "rare" at all. Given that this coin is not scarce at all in MS or in this grade, $8050 is an absurd price for such a common coin. And it is absurdly overpriced even versus prior sales of this same coin. An NGC MS-64 RD sold for $9200 in January on Heritage and another MS-65 RB sold for just $2530 only a few months ago, also on Hertage.

 

On these last two coins at least, I think the buyer vastly overpaid for them. If anyone wants to know which coins sold for reasonable prices, go check the prices on the ZAR MS 6D, the 1894 MS-61 2/6 and even the 1892 MS-65 2/6. Those coins will turn out to be vastly better values.

[colour02 10]

Hi Guys as we all know most of us are bargain hunters. Yes those prices will not realise those figures in the SA Market today. But I think it it is all great news to see prices as such being fetched over seas. Should one feel sorry for the bloke who bought them?, no way!!.

We all need the publicity (collectors or dealers). If one should think that those prices where over the value plus premium, then that sounds like sour grapes in the sense that it was not your coins. And there is no point in telling that if they were your coins, your reserve would have been less. A sale is a sale. Lets not become like a few Sprinboks supporters, by this I mean if We Win a game 15-13. we go out and complain how bad the springboks played, we should just celebrate the victory.

 

Lastly

I don't know when the last time a 1892 Proof penny was on the market.

 

Regards,

[jwither 11]

The reason I make these comments on this forum is because I am attempting to bring some objectivity to this discussion. Not specifically to Geejay's last post but to this subject in general. If you have read historical comments on market pricing of either Union or ZAR coins on the BobForum, I do not recall a single instance other than my posts where anyone has stated that a coin has sold for an excessive or exorbitant price, except for the Mandela coins and even then mostly after the prices of these coins crashed. Maybe there have been a few other instances but if so, I do not remember it.

 

The way I would describe many comments related to pricing on this forum is as "cheerleading". I am not a "cheeleader" at all, never have been and never will be. When I think a coin is overpriced, I will say so. If I think a coin represents a good value, I will say so. I say so here about South Africa coins and have equally done so many times about US coins (even more than here) on the NGC Message Boards. If someone disagrees with my opinion which I assume that most here do, then they can try to refute my comments or present their own evidence. Someone might have done so, but I do not recall anyone presenting any pricing data to explain why the coins in question represent even fair value, much less compellng value.

 

There is no absolute answer to what a coin should be worth and since there is not, we can only evaluate a coin's price based upon what it sells for versus others. That is what I have done and this is independent of whether the coin will sell for more or not in the future. The basis for comparisons are always one of these four:

 

1. The same coin across different grades, such as an MS-63 to an MS-65;

2. One coin within a series to others within the series, whether within a denomination (such as the 1892 to the 1894 ZAR pennies) or across denominations (such as the 1923 Union Sovereign to the 1925 Union florin);

3. Coins between two (or more) series, such as the 1893 ZAR 2/6 to the Union 1925 2/6 or 1949 2/6; and

4. Coins between different markets, such as the 1902 ZAR veldpond to the 1839 UK “Una & the Lion” 5 Pound, 1755 Chile pillar dollar and 1895 US proof Morgan dollar.

 

In the last post, I used items #1 and #4 from the above list. Most of my posts and commentary cover coins that I consider to be overpriced, not always but usually. I write more about these coins because someone else brings them up far more often than a coin I consider to be fairly or relatively underpriced. But it has nothing to do with whether I think someone should or should not buy the coin.

 

Now of course, coins can continue to sell for what I consider to be exorbitant or excessive prices. Some do permanently and those who buy them as a collectible probably do not mind nor should they. But for anyone who places a high consideration on the financial aspects, paying these types of prices is an excellent way long term to lose money most of the time, which is exactly why most people do so, whether with coins or anything else.

Edited September 11, 2011 by jwither

[geejay50 10]

Hello All,

 

I take your point Ernesto about the Proof Penny being overpriced but what constitutes a correct price will always be open to discussion.

 

The politico-economic background of our country is something all are not always aware when price surges like this happen. We have a very different situation here in this country compared to the USA and their more stable coin buyer seller price determinants. Our government has never yet been voted out of power by a strong opposition like in the USA.With this in mind,we have an ill considered 50 Billion Rand Arms deal that was fraught with kickbacks to politicians that no-one wants to face up to or vote the ruling party out of power at the ballot box. There are enough reasons to doubt the stability of our currency and cause capital flight into tangible assets to secure value in the long term.

 

High quality verified scarce coins along with other tangible assets could be the only safe investments of the future as there is increasing state plundering of easily taxable currency based assets in the future to buy over the masses to stay in power.

 

In view of what I have just said, we must not be surprised when certain exceptional coins find surprisingly high prices even if they dont look like they merit that at first glance.

 

Geejay

 

[jwither 11]

I do not know what the proof penny should sell for or what is a "reasonable" price. One of the posts here asks about the last or most recent sale. I do not recall one at all in my 13 years of collecting South Africa coins.

 

The other auction I referenced is not DNW, but St James on October 3rd. And it also includes a proof pond (estimate 220,000 GBP) and 1/2 Pond (estimate: 90,000 GBP), TWO 1874 Burgess ponds fine beard (estimate 130,000 and 50,000 GBP), an 1892 SS POND (estimate 25,000 GBP), 1893 1/2 pond (estimate: 35,000 GBP). The proof penny is a PCGS PR-64 BN with an estimate of 25,000 GBP. Given this last price, I expect it to realize more than this.

 

The proof penny is one of the most desirable bronze or copper proof coins in the world, no doubt about it. I believe this price places it second after the 1930 Australia penny for a bronze or copper proof. (There have been many US circulation strikes for copper that have sold for more but no proofs to my knowledge.) And yes, the 1892 proof set is also one of the most desirable.

 

But people just need to realize how much money this is and that for its price range, it is not that scarce versus other at least non-US coins. And viewed as an "investment", it is not that desirable versus many other alternatives given that it is from South Africa and not a larger market such as the United States where coins of comporable (or even less scarcity) sell for more or so much more. That is just a statement of fact and has nothing to do with its numismatic merits.

 

As I said above, it does have the benefit that it is the only ZAR proof penny and that every "big money" collector of ZAR is trying to complete an 1892 set as part of a full ZAR set. That is an advantage that most other expensive coins do not have and is the best explanation for its price and the prices of other ZAR coins that resemble it. I call this the principle of demand concentration.

 

Compare this coin to a US proof of even greater scarcity, the 1821 capped head gold quarter eagle ($2 1/2). Heritage last sold one in June, 2007 for $241,000, a PCGS PR-64 CAM. They claim that seven are known. The best explanation as to why this coin is so "cheap" (and yes, for this coin, IT IS CHEAP) is because there are few collectors of this type of coin. To say that this coin is very desirable is a big understatement. Maybe it would sell for more now, but there is no way to know that.

 

I also want to reply to your comments on political stability contributing to these prices. I would be interested to know what exactly you mean by that. And I say this because, if others like you are really that worried about it, how exactly is buying a tangible asset such as coins really going to mitigate this exposure?

 

True, the government cannot tax it if they do not know you own it and they cannot destroy its value through inflation. But if this is really going to be a huge problem, South Africans might find that this is not the biggest of their worries. I think you know what I mean.

 

Under the scenario I am talking about, the best option is not to buy collectibles or at least buy them in South Africa, but to get your money out of the country and possibly buy them elsewhere. I can absolutely tell you that I would not want to be trying to physically transport a really valuable collection out of South Africa (or any country for that matter) on short notice under adverse conditions.

Edited September 12, 2011 by jwither

[EWAAN Galleries 11]

Still A Big Demand For All ZAR Gold Coins....

 

Hi

 

We recently sold a 1895 1/2 Pond NGC MS63 on auction for R68701-00 (Gold Value Estimate R1300). See link below:

 

http://www.bidorbuy.co.za/item/45368622/1895_ZAR_Half_Pond_NGC_MS63_Best_We_Seen_PERFECT_Only_1_in_this_Grade_Rare_Treasure.html

 

Also Interesting that this 1898 Pond MS63 Has 37 Users Tracking This Coin.... WOW!!!

 

Interesting that ZAR Gold Coins still hold great value even in these times...

 

http://www.bidorbuy.co.za/jsp/item/Item.jsp?Trade_TradeId=46031598

Edited October 1, 2011 by EWAAN Galleries

[jwither 11]

Interesting that ZAR Gold Coins still hold great value even in these times...

 

 

In the context that I understand you to be making this comment, there is nothing particularly significant about these prices just as there is not for the 1892 proof penny that you and I commented upon before. And this is true whether the prices are going up, down or nowhere.

 

The fact of the matter is that ZAR coins, any other segment of the coin market or even entire coin markets such as the US which is at least 100 times bigger than this one, are pint sized in the context of total financial flows. In making this evaluation, I am referring to the total value of all collectible and "investment" coins (which is the closest equivalent to the market capitalization of another asset class such as the stock market) or annual turnover (which is the closest equivalent to trading volume in the stock market).

 

Even taking a market such as US coins which is the closest one in coins to an "invesment" market (not because of its performance but because of its overall liquidity), this market is composed of at least 100 submarkets. And the financial performance for each of these submarkets is in turn contingent upon the individual preferences and personal financial circumstances of anywhere from a handful (for the smallest) to maybe several thousand "investors" (in the largest).

 

Moreover, as I stated before, its not like there is any evidence that most (if any) of these buyers (or any others) are making a conscious evaluation between buying these (or any other) coins and the amount they pay versus other potential uses for the money. There is no evidence of that at all. Or if there is, I would like to see a study to substantiate this because I have never even seen it for US coins, much less for those from anywhere else.

 

I interprept the sentiments from comments like these to imply that people are buying coins and paying whatever price they have chosen to pay under the idea that somehow coins represent a hedge against econommic adversity, inflation or anything else.

 

Individuals certainly may do so using this thinking but there is little if any evidence that this idea has merit because correlation does not equal causation. The best explanation for the strong price performance of any coin, segment or market is that those who choose to participate have done so because they can and want to, but that is about it.

 

In the US, to my knowledge, the closest correlation to coin prices has been to silver. Yet despite silver price performance until recently, US coins have performed poorly anyway. It is only the segments or coins that are the most expensive that have either held up or improved which is the best comparison to ZAR coins preferred now by those in South Africa.

 

But what I am describing to you for US coins is due to the economic circumstances of these buyers. US buyers of expensive US coins are much better off than the typical US coin collector. So they can either pay more or at least are not forced sellers which has almost certainly happened to many US "collectible coins".

 

Based upon the anecdotal evidence available to me, what I am describing to you for US coins is exactly the same thing that is happening with South African coins. I see this on posts here and I have read similar sentiments from South African collectors in private communications. The demand for the more common material has or appears to be decreasing because many or most buyers either do no want to pay prior prices or more likely, they cannot afford to do so due to econmic adversity.

 

But I would hardly consider that a positive for the prices of more expensive coins, regardless of whether the coins in question are US or South African. To use a stock market analogy, a fractured market is a weak one. And weak market breadth is a precursor to price weakness in the market as a whole.

 

What happens in other markets is that volume dries up first (which is exactly what is occuring in other markets such as US stocks now) and then prices follow later. With coins in a weak market, there will be fewer buyers and many or even all of the remaining buyers will not pay prior prices. When this first happens, sellers will refuse to lower their prices (just as they have refused to do so in many real estate markets) and there will be few or even no sales.

 

Then eventually if the market weakness lasts long enough, one or more sellers will capitulate and accept the new market clearing price and the prices will "gap down" from where they were before. It is the opposite of what happened on the way up as prices were rising before in a strengthening market.

 

The difference between market segments such as Union, ZAR and say US Morgan dollars is liquidity. ZAR is to my knowledge far more liquid than Union and US Morgan dollars are vastly more liquid than both. And within these market segments, there will be various levels of liquidity for specific coins or even specific coins in a specific grade.

 

Because of these differing levels of liquidity, I expect South African coins to lose more value than many US coins (such as Morgan dollars) initially. I consider this true for both ZAR and Union but especially for Union which may literally have a handful of buyers for the more expensive coins at current or recent prices. So I expect them to lose more value in the weak market that I believe exists now and which I think is only going to get worse.

 

Longer terms, I think that many South Africa coins will ultimately lose less value than their US counterparts, but that is because they are better values or least less overvalued. The ones I expect to do the worst (both in the US and SA) are those which are the most relatively overpriced such as "conditional" rarities (which SA "investors" are defintely enamored with at this time), coins which are common for their current prices and MS with large multiples to high grade AU.

Edited October 2, 2011 by jwither