Oct. 29 – Nov. 1, 1987
St. Louis, Missouri
A Few Thoughts on Peace Dollars
By Daniel Kihlstadius
The Peace dollar series probably has the greatest potential for long term price growth of any silver coin. It has four areas of potential going for it: eye appeal, marketability, demand, and rarity.
Many Peace dollars do lack eye appeal. They usually come basically dull, weakly struck, or full of hairlines, and/or bag marks. The low relief design is especially susceptible to those kinds of marks and they seem to show up much more noticeably than the same marks do on a Morgan silver dollar. However, a small percentage of Peace dollars do come with either a beautiful white frosty luster or a smooth satiny luster that has a very subtle gorgeous sheen to it. These two varieties have incredible eye appeal and are in great demand by knowledgeable dealers and collectors.
As with any investment, price is based on a balance between supply and demand. Two different coins with the exact same rarity may be worth $100 for one and $1000 for the other. This demand factor is based on two primary variables: true collector demand and demand due to “promoting” by one or more major coin dealers. When a dealer “promotes” a specific type of coin, he buys up as many as he can, creating a shortage in supply, and thus creating an increase in price. Often collectors, investors, and other dealers will follow his example. This in turn multiplies the promoter’s effect. Under these conditions it is not unusual to see a series of coins go up in price every week until the price rises anywhere from 20% to 100% in less than six months. In such a price increase frenzy, dealers will sometimes pay ridiculous prices to get the coins they need to fill customers’ want lists. Also, under these conditions, it is not uncommon for coins of extraordinary condition to trade at three, four, and even five times their normal price. It was such conditions that drove the price of gem uncirculated common date Morgan dollars to almost $1000 each for a short period of time in the first half of 1986. The price for such coins has now leveled off in the $300-$400 range. The Peace dollar series is very ripe for an even greater price explosion under a similar promotion.
In the past, Peace dollars have always stayed in the shadows and never really shared the limelight of the Morgan dollar series. They have gone up in value, but mainly as a side effect of Morgan dollars going up in value. Not until the last few months have they gone up in value on their own merit (independent of Morgans) due to collector/investor demand or a marketing promotion. On the other hand, Morgans have been promoted and promoted and promoted. When a similar “promotion” is carried out on Peace dollars, the resulting surge in demand could make the prices double, triple, or even quadruple very easily due to the true scarcity of high quality Peace dollars.
The timing for such a promotion to take place is extremely ripe for the very near future. Most major series of coins have already been promoted in the last couple of years, and promoters will soon be looking for any new, different, unpromoted series. As an example of the marketeers’ desperate attempts to find coins to promote, they have gone so far as to promote even a common, modern, mass produced coin such as proof Franklin half dollars from the 1950s and 1960s!
A third area of investment potential is collector demand. The prices of many coins in the Morgan silver dollar series have gotten too expensive for most collectors to even hope to finish a complete set. With this becoming financially impossible, collectors have been turning their interests to other areas. Peace dollars an obvious second choice because there are only 24 coins in the complete series. A nice complete set can be put together much cheaper than almost any other series of coins.
In theory, price is based on a balance between supply and demand. This holds true with coins of the Morgan and Peace dollar series. In the spring of 1986 (when the prices of Morgan dollars peaked at record highs) uncirculated MS-60 coins sold for $20 to $30 on average for both Peace and Morgan dollars. MS-64 coins sold for $300-$400 for a common date Morgan. The same condition Peace dollar sold for an average of $100 less. Most common date, Gem BU MS-65 silver dollars of either series sold around $800. Even though there is far less demand for MS-65 Peace dollars, the price was slightly higher. Compare those figures to the current prices. MS-60 coins are basically unchanged. MS-64 Morgans are selling for a little less than half of their peak prices a year ago, yet Peace dollars are trading for more than they did last spring! (Now in the $300 to $350 price range for the most common Morgan silver dollars can be bought for $300-$400 – about one third to one half of their peak levels, while MS-65 Peace dollars are trading about the same as last year – $800 to $900.
Why the higher price for a coin of lesser demand? This is where the true rarity of high grade Peace dollars start to show. Most collectors and coin dealers know that high grade Peace dollars are very scarce, but until PCGS (Professional Coin Grading Service) released its “grading census” of how many coins they’ve graded for each date and grade, very few people (myself included in those very few – I’ve been strongly recommending Peace dollars for over eight months – long before numismatic investments guru David Hall!) realized just how extremely rare they are in high grade. As of the first of the year, PCGS graded more MS-64 1881-S Morgan silver dollars (4,873 coins) in 1986 than they graded MS-64 coins for the entire Peace dollar series (1,928 coins)! That is nearly three MS-64 1881-S Morgans for every one MS-64 Peace dollar of any date! As the grade gets higher, so does the ratio. PCGS graded 2,304 1881-S Morgans in MS-65 compared to only 473 MS-65 Peace dollars in the complete series. Almost a 5 to 1 ratio! This ratio is even wider for the “wonder coin” grade of MS-66; 279 1881-S vs. only 24 MS-66 Peace dollars of any date – 11 to 1 ratio! PCGS graded thirteen MS-67 1881-S Morgans, but as of this writing I have not heard of even one Peace dollar being graded MS-67. I imagine the difference in numbers available comparing the entire series of Morgan versus Peace dollars in grades of MS-64, 65, and 66! These figures should give you a better idea of just how rare nice, high grade Peace dollars really are.
In addition to being more rare than Morgan silver dollars in the higher grade levels. Peace dollars are graded much tougher and more conservatively than a similar condition Morgan dollar. As previously mentioned, because of the low relief and overall design, bag marks, scuffs, hairlines, and all other abrasions are much more noticeable on a Peace dollar than the same marks on a Morgan dollar. This is one of the factors that has caused stricter grading standards (by both dealers and the grading services) for Peace dollars than for Morgans. Condition wise, most MS-64 Pace dollars are actually as nice as most MS-65 Morgans; if not even nicer. Many MS-65+ Peace dollars and (most MS-66 pieces) would easily pass for MS-67 if they were Morgans. Because of this “ultra-fussiness” of the Peace dollar series, I strongly feel that most coins that are currently MS-64 will be graded as MS-65 when demand really heats up for the series. And the same for MS-65s – they will become MS-66 or 67 in a hot market. This is an area that there is a great deal of investment potential. Not only in the prices escalating, but also in the grades of extra nice coins shifting up to the next higher grade.
With all that in mind, I feel that Peace dollars have not just the same investment potential as Morgan silver dollars, as they have shown in the past, but much, much more. I really believe that someday soon, a lot of collectors, investors, and dealers will be shaking their heads, wondering, “Why in the world didn’t I buy Peace dollars when they were so underpriced?!!”