Prooflikes Reflect Strong Demand

5^th National Silver Dollar Convention

St. Louis, Missouri

November 8 – 11, 1984

Prooflikes Reflect Strong Demand

By Randy Campbell

As this article is written, (mid-August, 1984), the overall mood of the dollar market is cautious and selective.  The MS-60 and 63 dollar charts have seen a few minus signs lately, as have the BU dollar rolls.

MS-65 dollar prices have held firm since the recently concluded ANA in Detroit.  But enthusiasm for the gem singles is somewhat diminished.  Barring an infusion of new investment money, it is my considered judgment that a small number of minus signs may hit the gem dollar charts in August or September.  One explanation for these predicted declines is the fact that “Auction ‘84” plus the ANA Convention resulted in tens of millions of investment dollars being spent…money that is temporarily unavailable to the dollar market.

But this decline will be temporary.  By late 1984 the gem singles will resume their upward climb to higher levels.

By comparison, no temporary decline will occur for the gem MS-65 prooflike Morgan Dollars.  In fact, I guarantee you will see some “plus” signs for the gem P-L’s before the end of this year.  What causes me to have this relatively optimistic view of MS-65 prooflike prices?

A little recent history is in order.  Since about 1981 ANACS grading has assumed an important role in the silver dollar market.  And ANACS’ perception of how good a dollar has to be to grade MS-65 had been in most cases, more conservative than was in the case in the pre-ANACS era.

Few, if any, of the 1981-84 ANACS graders were experienced, full-time silver dollar dealers.  None were, (or are), recognized dollar authorities.  Yet, with the prestige of the ANA behind them, ANACS graders were able to change the standards by which Morgan and Peace Dollars achieved the “65” status.  Although occasional overgrading at Colorado Spring has taken place, by and large, the superb gems of 1979 became the MS-65s of 1984, while the choice Bus of 1979 became the MS-63s of today.  In recognition of this trend, the Coin Dealer Newsletter changed the term for MS-65 from “choice” to “gem.”

Many investors in the 1978-79 era became outraged when they discovered that their MS-65s of the earlier era were today’s ANACS “63s.”  Was this a simple case of dealers overgrading?  (Remember, the grade MS-63 didn’t even exist in 1978-79.)  Was it a case of inexperienced ANACS staffers misgrading silver dollars or applying unrealistically high standards?  Was it a case of coin buyers reacting to a recessionary economy by demanding a “better coin”?  In truth, all three of these factors played a role in changing the perceptions of “MS-65.”

This change brought about a diminished supply of gem MS-65 dollars…a greatly diminished supply.  Meanwhile, the 1982 publication of Wayne Miller’s The Morgan and Peace Dollar Textbook and Les Fox’s Fight Inflation with Silver Dollars threw more fuel into the grading fire.  Combined with the clever promotion of ANACS’ graded dollars, gem silver dollar prices continued to rise, even as the overall coin market slumped in 1981-82.

The following statistics typify the massive rise in gem common date Morgan Dollars:

No coin series can experience such a meteoric rise in prices without suffering some profit taking.  Thus, the MS-60s, the MS-63s, and the more expensive MS-65s have already experienced a few corrections.

And while the common and semi-common date MS-65s have not yet suffered any losses, my best estimate is that some of them will suffer a few minor downward corrections in the coming months ahead (August and September).

Why then do I expect MS-65 prooflike prices to hold firm?  There are four major reasons.

First, the supply of gem deep mirrors at coin shows has shrunk to virtually nothing.  Most dates in the series are absolutely unavailable at anything near current price levels, whereas gem frosty specimens of common date “S” mints can be purchased at, or below “bid” prices on the coin show circuit.

Second, ANACS does not recognize prooflike dollars!  They make no determination as to whether or not a given dollar is prooflike.  Thus, the P-L market remains a dealer-investor dominated market, not an ANACS dominated market.  Therefore, a clever promotion of ANACS graded gem prooflikes to unrealistically high levels cannot possibly occur.

Third, the inherent beauty of MS-65 deep cameo prooflikes has always made them “hot” items, even when most areas of the coin market were doing poorly.  (This “pizzazz” factor should not be overlooked by investors who are worried about re-selling their investments some time in the future.)  The historic attraction of collectors and dealers to these amazing deep mirror beauties means that price slumps, especially for the common dates, are a virtual impossibility at current levels.

Fourth, the narrow spread between MS-65 frosty prices and MS-65 prooflike prices means that, at current prices, the P-L’s are a much better investment.  From a price/rarity perspective, if an MS-65 frosty 1878-P (7 TF) is worth the current “bid” of $500, then the P-L should be worth at least $1,500, (but it’s only $675).  If a gem frosty 1878-CC is worth $450, a gem P-L should be worth about $1,400 (but it’s only $600).  And if an MS-65 frosty 1883-O is “bid” $230, then a gem deep mirror should bring at least $1,200 (but it’s only $425).  It is an unquestioned fact that nearly all common and semi-common date Morgan Dollars are dozens to hundreds of times scarcer in gem P-L than they are in gem BU.  However, current teletype prices do not reflect this basic fact.  Therefore, the outlook for gem P-Ls, price wise, is rosy indeed!

The following dates, in particular, appear undervalued at current (August 17^th) prices:

1878-CC:  “Clean Cheek” gem P-L’s are greatly underpriced at the current quote of $675.

1878-S:  Two-sided gem cameos, when seen, bring well in excess of the teletype price, $445.  Most specimens offered as prooflike are actually P-L only on one side of the coin.

1880-CC:  Where are the gem P-Ls?  At today’s price of $1,100, “count me in”!

1881-CC:  Most extant prooflikes have shallow mirror surfaces.  The seldom-seen gem deep mirror is worth much more than the present quote of $850.

1879-S through 1881-S:  Two-sided deep cameos are eagerly sought after at the major conventions.  The hoard of deep cameo 1881-S dollar which recently hit the market have been “gobbled-up” by fanatic collectors and dealers.

1882-CC, 1883-CC, and 1884-CC:  Strictly speaking, these dates are not rare in gem deep mirror.  Indeed, these common CC’s are still available at the major conventions in eye-catching MS-65 prooflike condition.  They usually sell well above the current “bid” of $575, mainly because of the “flash” or “pizzazz” factor one associates with these gem, deep cameo beauties.

1885-CC:  Like the earlier CC’s, the 1885-CC is another date which frequently comes with great eye-appeal in prooflike condition.  Today’s quote of $850 will seem cheap two or three years from now.

At current price levels every common and semi-common date Morgan Dollar in gem prooflike condition is a terrific long term investment.  Profits of 50% or more over the next three to five year period are probable for those investors who seek out and buy the elusive gem P-Ls.  But, remember, no profits are possible unless you get out there and buy those gem deep mirrors!  He who hesitates has truly lost!