(1103) Untold Stories: Volume 3 Issue 11: Last Revision: 03/15/08
But wait, there really are two types of coin hoards— One is where a hoard of coins that has been secreted away by an “end user” is found. The second type of coin hoard occurs when a sharp eyed person (coin collector, coin dealer, antique dealer, or investor, etc.) stumbles on a group of coins where they are not normally found and puts them away for a “rainy day”. Both of these hoards are great finds for coin collectors when they finally hit the numismatic market because both are fresh material.
But let’s face it, coin hoards, especially Mexican coins hoards, are as rare as finding a parrot flying around the North Pole. So as much as the collector dreams of them, they don’t occur very often during one’s collecting life.
In the past public coin auctions generally gave us a snapshot of what the current market prices were at that time. Sometimes they also give us hints as to the rarity of coins years ago, when the collection was formed, if it truly is a collection being sold. Sometimes these auctions contained great rarities; other times only common coins. But each is important to collectors and dealers alike, because each one supplied heretofore-unknown information. Sometimes this information was priceless; other times it was only slightly useful. Once being present at public auctions was very important for dealers; they could discover which collectors were buying what series of coins. They could also discover new collectors whom may have been unknown to them. They could also see who should be upgraded on their “predator” lists because they were now bidding on better material at higher prices.
But things have changed! The Internet has made personal appearances at public auctions less valuable because many collectors now bid on coins via the Internet, in real time. Not so long ago collectors had only a couple of ways to bid on coins at public auctions:
The larger auction houses now make it easy for the collector to sit at home, or in his office and watch the auction on his or her computer; allowing the collector to bid against any and all others interested in acquiring a particular specimen. And they can do this in complete anonymity, which really screws up the works for dealers and collectors wishing to know whom they are bidding against.
This new procedure has had a great impact on public auctions; some good and some bad. I constantly hear complaints about the length of time it now takes to conduct these auctions since Internet buyers are involved. In the old days auctions traveled at high speed; sometimes a hundred or more items crossed the auction block every hour. Today’s big public auctions have slowed way down. This is because it takes a certain amount of time for the Internet buyers to enter their bids that have to travel long distances across electric LaLa land to the auction house’s computer. Then one of the auction house’s employees must make a floor bid. Next the latest bid must be posted to the Internet where it again has to travel long distances to be posted on our bidder’s computer. In a perfect world this should take only nanoseconds, in reality it takes minutes to do each and every bid. Meanwhile the people on the floor are going crazy waiting to see what happens.
Bidding on the Internet may not be the best thing since sliced bread, but it is definitely the future for the serous collector. Just think about the hassles this type of bidding eliminates. No more costly airline tickets, no more hotel rooms that aren’t clean. You no longer have to plan a trip weeks in advance in order to secure the best prices for a plane ticket or hotel room. You save a bundle of money on rental cars or taxi fares. You don’t have to spend hours in an airport waiting in line for security checks, or your boarding pass. In fact, you now don’t have to fight the traffic either going to or from two airports four times. You can now even eat a home-cooked meal while you are bidding; no more late night meals at Denney’s because that’s the only place open after the auction. Yea, sign me up as an Internet bidder anytime.
But there are also some downsides to bidding on the Internet that need to be addressed. In most cases you don’t get to personally see the coins you are bidding on. You don’t get to meet your old collector friends at the auction “hash out” your stories with them in person. You also miss the shock on other collectors, or dealers faces when you outbid them for that prime specimen everybody else wanted. And you loose a lot of information about who is buying what.
One thing you do get, just like the floor bidders, are prices currently being paid for the coins in the auction. Many times, as an Internet bidder, you get the prices realized even before the floor bidders, unless of course they have written down the hammer price on each and every coin as the auction moves forward. Most big auction houses now post the prices realized for sales within hours after the auction is completed because it is part of a computer program. Sometimes an hour, or day’s advance notice on this sales data can and will help you greatly.
Now let’s try to determine which knowledge is priceless and which is not. Current market prices might seem to be priceless to some, but only if you are in the market to sell, or buy a particular coin. One of our frequent Mexican Coin Magic contributors has a unique theory about coin prices. His theory states; “Once a particular coin has sold in a public auction it will seldom go down in value.” This is only one person’s idea, but there is some truth in it.
However, I personally believe this theorem shouldn’t be chiseled in stone for a number of reasons. Remember what my coin dealer said at the beginning of this article, “Second, auction fever sometimes consumes people and they bid way too much for coins!” Beyond any doubt this statement is true.
A big factor in the prices realized, for coins sold in public auctions, has to be the number of people who are vying to purchase a particular coin and how deep their pocketbooks are at that moment. Of course another important factor is the overall rarity of the individual coin and its rarity by grade when it is being offered. And just how many people really know this important information?
The Mexican coin market is becoming crazy; we are beginning to see coin holders being purchased rather than the coins they contain. This rankles my neck hairs, standing them on end like an electrical shock. I quit collecting US coins for this very reason way back in the 1980s, when third party grading was just getting started. I still can’t grasp the idea that a grade point, or two, can be worth thousands, or even hundreds of thousands of dollars more, or less, based on someone else’s opinion. But then I guess I’m now an antique too, being over 50 years old.
Personally, I find other data elements from auctions and hoards just as important as the prices realized in a public auction. The most telling of those has to be the availability of any coin. Coin prices go in cycles; prices go up, and prices go down, no matter what my friend thinks. But availability is generally stable until a new hoard or an old collection comes on the market. I know you find this statement kinda wacky, but here is my reasoning.
But more importantly to us is the data giving us an estimated annual coinage output of 7,659,000 coins for a single year’s production at the Guanajuato Mint during this time period. Is there any wonder why the output of minors wasn’t high a high priority during the time the M&M Guys controlled this mint? Be sure to check the “Official Mint Records” for the reported silver production records we published in Issue 8, Volume II (808) Mexican Coin Facts & Figures: Mexican Republican Silver Production: 1823 to 1888. If you check these official records you will find that this level of anticipated production wasn’t achieved until 1848 or 1849. Now one must ask, “Did the M&M Guys miss their projections by this much? Or did they fudge on their production output reporting?”
We will probably never know the correct answer to either of these questions, but we now know they expected to be able to produce slightly over 20,000 coins per day. It’s also interesting to know the expected to have 300 working, or coin production days, per year. But I’m sure you are asking, “Why are these figures important to collectors today?”
First, one must know, and fully understand that the Guanajuato Mint was one of the greatest and most prolific mints during the entire Republic Period of Mexico. It sometimes made more coins in a single year than some of the other mints did during their entire life. But now we have a “base line” of estimated production from one the greatest Mexican mints, and that all of the other mints except the Mexico City and Zacatecas Mint, that was also controlled by the M&M Guys, produced less coins on an annual basis ... no matter what they reported.
This “base line” gives us a “beginning rarity” factor, even if the mint lessees fudged on their output numbers. Therefore we can theorize that most mints were unable to make 20,000 coins daily except the Guanajuato, Mexico City, and Zacatecas mints.
Next we have to wonder at “the survival rate” of any Mexican coin. Is it possible to come up with a statistically sound number that is a good “guesstimate”? I seriously doubt it, but let’s make a stab at it.
Beyond any doubt after 1838 most of the large silver Mexican Republic coins produced in the eastern Mexican mints left Mexico and were transshipped almost immediately to New Orleans where they were used to make US coinage. I also theorize this was true for most of the gold produced in these eastern Mexican mints. Here is my reasoning for this.
The US Mint at New Orleans came on line in 1838, and at that time the US had no sources for natural silver and only two sources for natural gold. The natural gold found in the US was being minted in Georgia and North Carolina at the two new US mints located in these two states. Therefore all of the silver minted at the US mints in New Orleans and Philadelphia was from outside sources. This simply means that millions of Mexican 8 Reales and 8 Escudos were disappearing into the melting pots of the US Mints until at least 1850 when the gold and silver flowing from the western United States started the long journey to Philadelphia.
Notice I said only Philadelphia. This is because we know that very little of the Western US gold and silver was shipped to New Orleans even after 1850. Most of the gold and silver used to make US coinage in the New Orleans Mint continued to come from Mexico, Central America, and a dribble from South America. We can actually see this from J.L. Riddell’s book Monograph of the Silver Dollar published in 1854. Riddell pictured the many silver coins that entered the New Orleans melting pots, including contemporary counterfeits. Over 300 different genuine and counterfeit 8 Reales are pictured in this book, including many extreme rarities, some of which have never again been seen. One of these, the Ho 1835 PP Hermosillo 8 Reales, Riddell surmised was rare because he had seen only a single specimen. It is rather amazing that the chef melter at the New Orleans Mint was actually inspecting the foreign coins before they were melted and making notes on them before 1854. It is also amazing that he found the Hermosillo 8 Reales to be the proper weight and that it was of a higher fineness than was required by Mexican Law.
We have now established several interesting items that can help us begin to understand why the survival rate was so low for some of the Mexican Republic coins, but so what? Remember we are trying to establish a method whereby we can come up with the availability of Mexican Republic coins in today’s numismatic market.
It’s now time to go back to Doty’s book and look at an order that was placed for the equipment to update the Guanajuato Mint. The original order sent to the Soho Mint for new equipment included: Coining Presses (4), Planchet Cutting Machines (6), Milling Machines (3), Die Multiplying Press (1), Rennie Rolling Mill (1), Steam Engines (2) and finally some lathes, assorted tools and supplies that would be needed for using the new equipment. The equipment to be furnished by the Soho Mint totaled 4,478 British Pounds, or Pesos, but the final order also including the Rennie rolling mill and the two steam engines that brought the final total to 8,281 British Pounds. It came as a shock to these English gentlemen that it was going to cost them more money to ship this equipment to Guanajuato than the original cost of the equipment.
However, many other problems surfaced and finally after much dickering and infighting Soho delivered: (2) Coining Presses, (3) Planchet Cutting Machines, (1) Milling Machine, and (1) Die multiplying press to Guanajuato to update the mint. However, all of this equipment used human power, not steam power, as was the original intention because of the lack of fuel and water near their chosen location for the mint.
Notice the Guanajuato Mint received only two new coining presses, this seems to mean they kept, and used the old presses already in service. Let’s assume that this new equipment went into service sometime during the production year of 1829 because of the large spike in output reported during this year.
We find additional spikes in production in 1839, 1844, 1847, and again in the 1848 to 1849 period when the peak “reported” production for the Guanajuato Mint was reached. After 1863 the “bloom was off the lily” because production dropped to around to around 3 to 4 million Pesos, except for 1896 when the reported total silver production was 5,229,000 Pesos.
But what information can we gather from all of this “hog-wash”? Ask yourself, “Are there any really rare Guanajuato 8 Reales, other than the earliest ones and the Go 1870 YF?” While there are a few rare varieties, the overall answer is a resounding No! Now ask yourself another question, “How many of these coins are available in today’s numismatic market by DAM?”
One thing is for sure; there aren’t hundreds of thousands of them like there are US Silver Dollars. So make a guess. Do you think there are 20,000? No, how about 10,000? Think this is still high? Me too. I would venture a guess that you can’t find more than a handful of Mexican Republic 8 Reales that have at least 2,000 surviving specimens, except for a couple of late-date Mexico City DAMs.
I know this is difficult to grasp, but this means that if there were 2,000 plus collectors of Mexican Republic 8 Reales in the world today, most of them would never own many coins! Today, what seems to be common could be tomorrow’s great rarities … if collecting 8 Reales becomes even slightly popular.
Simply stated; there won’t be enough coins to go around, if the popularity of collecting Mexican coins doubles over the next twenty years. The population studies of Mexican Coin Availability now being executed by multiple individuals will become “priceless” information, if these “population studies” are properly done. While I have worked primarily with studies about Mexican Republic Gold and 8 Reales, other people are doing the same thing for Colonial coins, the minor reales, and the decimal minors.
Now ask yourself one last question, “Where is the data coming from for these population studies?”
You can bet your last peso it isn’t coming from the dealer’s private treaty sales … no it is being compiled from public auction sales records and fixed price lists. Is it 100% accurate, hell no, but it will be the best information available for many years to come. Why? I personally believe it is because more Mexican Coins are now being sold in public auctions than ever before!
Don’t believe me? Track the offerings on eBay for a month or two, and then add this year’s public auctions to that total and you will discover my theory is probably correct.
One last thought, “Isn’t time for you start collecting old and new auction catalogs in order to be a serous collector in the future?”
Sources and Footnotes
1Doty, Richard; The Soho Mint & the Industrialization of Money (1998) London SPINK and the British Numismatic Society, pp. 229-256
2Riddell, J.L.; Monograph of the Silver Dollar, (1845) New Orleans; 550 copies Reprinted by the Sociedad Numismatica de Mexico in 1969
3Pradeau, Dr. A.J.; Historia Numismatica de Mexico from 1823 to 1950, Volume 3, (1961) Sociedad Numismatica de Mexico