The Florida United Numismatists (FUN) show in Orlando (held from January 8 to 11) was exactly as expected: neither great nor bad; somewhere between "I'm sorry I came" and "I'm glad I came." Those were the general feelings of the many dealers who attended this annual "mega" event, including three major sales conducted prior to the convention followed by the official convention auction conducted by Heritage Auction Galleries. I, along with many market observers, was concerned about whether the market could absorb all the coins offered for sale – estimated at about $75 million worth before the auctions. The actual sales total was almost $69 million for coins and paper money sold by Heritage, Stack's, Bowers and Merena Auctions, and Superior Galleries. Although at first glance this appears to be a good result, the "high value" sell through reflects many lowered reserves and expectations. Some coins at auction sold at levels I would not have expected less than six months ago. A few good coins sold for 30% less than expected.

Without question, some prices for coins that sold in the auction were very strong, and it was obvious that many consignors had high reserves on some of their coins because many lots failed to sell. It was also apparent that some lots failed to open for sale even though the price was very low. This was more apparent at the Stack's, Bowers and Merena Auctions, and Superior Galleries sales. Later in the week, the Heritage auction seemed much stronger. With the Long Beach show and its attendant auctions just around the corner (February 4-7, 2009), the underlying support in the rare coin market will be tested to some degree.

A few notable coins that sold in auction include the famed 1793 Strawberry Leaf cent. This specimen, the Parmelee coin, is the finest of four known examples (there is reported a low grade fifth specimen) and was graded F-12 by NGC. This popular rarity realized $862,500. This coin was purchased earlier by a good friend sometime in 2003-4 for the then princely sum of $425,000. Another coin in the Stack's sale was an 1806, O-108, Knob 6, No Stem half dollar, the finest known, in PCGS EF-40 and it sold for $126,500. This is a major variety in a popular series. In 1979, the coin was sold for $375! As a side note, I recall back then searching the bourse floors of many coin shows looking for this elusive variety; I was never lucky enough to locate one.

At FUN, Heritage sold two of my favorite proof quarters. One was the 1841 PR-66 NGC graded quarter, ex: Pittman, of which only three or four are known to exist with this example being the finest known by far. This coin sold for $299,000. The same coin traded for $345,000 in January, 2008, exactly a year ago. The other quarter was a 1844 NGC PR-66, ex: Pittman, which also realized $299,000. This coin, which is the only one known outside of the Smithsonian, sold for $322,000 in January, 2008, one year ago. I like both coins for their pedigree, original toning and extreme rarity (2 to 4 known of each). When the Pittman collection sold back in 1997, the value placed on the 1844 quarter was no more than $30,000 as part of a complete proof set. A probable ten fold increase in value from 1997 to 2008! On the other hand, trying to time the market on a short term play can be costly indeed!

Another interesting thing happened at the Heritage sale when two different lots sold for the same amount one following the other. The first one was a 1893-S Morgan Dollar graded MS-64 by PCGS and it sold for $299,000. Then the following lot was another 1893-S $1 graded MS-65 by NGC and it sold for the same price of $299,000. The PCGS graded coin looked semi-proof like with some light golden toning around the peripheral. It had some light hairlines but otherwise was well struck and attractive for the grade. I personally did not think it was an upgrade. The wholesale bid for the coin is $295,000 and the coin sold for what seemed like a fair price. The big surprise came when the next lot sold for the same price. The NGC graded MS-65 dollar was a mostly white example. Arguably, the coin was an average MS-65 in terms of condition, but this is the key date to the most popular series and one of two graded this high by NGC. NGC has one graded higher in MS-67. The wholesale bid at the time was $600,000! Go figure. This seems to be the best deal of the new year so far! If nothing else, this is the kind of market where great bargains can be found.

Among many other highlights, an 1889-CC Dollar NGC MS-65 sold for $253,000 against a wholesale bid of $275,000 and a 1795 Flowing Hair Dollar, Three Leaves, PCGS MS-64 realized $218,500 against a bid of $250,000. At the higher price levels, six figures or more, the wholesale bids have less significance and recent sales records are better indicators of value.

What to take from all this. The market is still in a flux. As mentioned in my last report, there is a change in the market with investors coming into the market with fresh cash and the collectors, for the most part, reeling from the current economic crisis and selling to raise cash. If you believe like I do that the new president's economic team will at least attempt to inflate out of the current credit crisis, then coins will be the best inflation hedge available, especially if history serves us correctly. This current situation resembles the 1973-75 rare coin market. After a severe global energy shock due to OPEC and the oil embargo, we had the best coin market boom from 1976 until the beginning of 1980. This was the time when BU Morgans went from $3 to $1,000 or more! Gold went from $75 to $800, and Silver rose from $2 to $50. Although I can't foresee that happening again with BU Morgans, at least in real dollar terms, rare coins may very well see its high marks and move significantly beyond that in the coming years. If you have rare coins, I recommend that you hold for now. If you are not long on rare coins, I suggest taking a position at this time and maybe pick up some major bargains in the process. Let me know if we can be of any help.

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