Oct. 29 – Nov. 1, 1987
St. Louis, Missouri
Prooflike Morgan Dollars
By Mike DeFalco
The fall of common date Morgan dollars led the rare coin market into its first correction in over three years. Oddly enough, one area of the Morgans experienced no downside whatsoever. The area is prooflike dollars, and their history is pointing to some exciting potential for the future.
Twenty years ago, P/L dollars were considered “premium” Gems. Ten years ago, P/L dollars were beginning to be traded separately, and a whole new area of study was pursued by Morgan dollar experts. Today, P/L dollars are a recognized group of distinction. Price distinction has followed, even though the Greysheet did not even list P/L dollars until January of 1979. Prior, the P/L’s were an extra nice dollar for the grade that would bring a healthy premium over bid. Today, P/L dollar bids are approximately three times MS bid. As the popularity of the Morgan series has grown, P/L’s greater beauty has elevated them to a high popularity and demand position.
But why all the hullabaloo? What makes a P/L dollar worth three times the bid of a regular dollar? What will sustain that premium and even take it higher?
What is a Prooflike?
When a Morgan dollar (or any coin, actually) is referred to as a “prooflike” by your numismatist, he is talking about a coin struck from a die with highly polished fields. The polished surfaces produce a reflective, mirror effect in the fields of the coin, leaving the devices to appear almost frosty in comparison.
So, what’s the difference between a proof and a prooflike? P/L’s were struck only once on a business die, while proofs were struck twice, on brand new dies. Because P/L’s were business strikes (intended for circulation), it’s the rare piece that isn’t covered with abrasions. Once stamped, they were unceremoniously slid down a metal slide, dropped into a pile and then shoveled into bags. In short, they were not treated like a proof, which went from the dies straight into a felt or paper holder.
Although most are well struck, characteristics differ date to date, requiring special grading skills to determine genuine P/L surfaces. Wayne Miller, in his definitive book on Morgan dollars, explains that P/L dollars are a product of the Cameo surfaces of the original master die made by George Morgan. This die has Cameo surfaces (reflective fields, frosty devices) and when the working hubs were made off of the master die, the Cameo effect was transferred onto them, and hence transferred onto the working dies when were then used to strike coins destined for circulation.
According to Miller, the Cameo surfaces would be apparent on the first 500-2,000 coins struck before the effect weakened and disappeared. Because the Cameo effect eventually wore off the working hubs, progressive working dies lost their Cameo surfaces before any coins were struck. So, the later date coins exhibit no Cameo surfaces. Cameo P/L dollars are most common in the earliest years of the Morgan series, and almost unknown after 1900, a direct cause of hub deterioration.
There are varying degrees of “prooflikeness” in an MS-65 Morgan dollar. These degrees are effected by
- the depth of the reflection in the coin’s fields;
- the degree of contrast between the field and the raised devices; and
- surface imperfections such as bagmarks and dull luster which can be caused from exposure to salt water, temperature, and humidity.
Because P/L’s come in varying degrees, according to date and mintmark, there are established categories used to classify individual characteristics. They are Cameo Prooflike, Brilliant Prooflike, and Gray Brilliant Prooflike.
Cameo prooflike dollars display a highly-reflective finish in fields of a coin, with the devices contrasting starkly in the natural frost of silver. The mirror-to-frost effect is one of the most dramatic in all of numismatics, and makes the Cameo Morgan the easiest of the P/L dollars to distinguish.
The reflective fields were the product of highly polished dies, which would impart the Cameo effect to the first several hundred coins. Silver is a very reflective metal and the devices of the die, because they were not polished, retained the surface roughness that causes the frosty appearance…hence the Cameo effect.
All Cameo P/L’s, by definition, must exhibit contrast between field and devices but the degree may vary considerably from one coin to another due to duration of the die polishing, deterioration of the field due to repeated striking, variations in planchet luster, fineness of the die polishing process, and surface imperfections.
Since no coin is the same, the deeply mirrored, striking Cameo P/L’s bring substantial premiums over bid.
The most frequently Cameo P/L dates are the 1879 S, 1880 S, 1882 CC, 1884 CC, 1885 CC, 1885 P, 1888 O, 1890 CC, 1898 O, and the 1899 O.
Brilliant prooflikes have reflective surfaces in both the fields and devices. Not all portions of the coin will be prooflike, however, as the recessed parts of the die such as the date, lettering, and mintmark will not exhibit the reflective flow.
Although usually deep-mirrored, brilliant P/L’s will not appear as deeply reflective as Cameo pieces because the fields and devices do not contrast. The most common brilliant P/L dates are the 1878 S, 1881 S, 1882 S, 1887 P, 1888 P, 1895 S, 1897 P and 1904 O.
Gray Brilliant Prooflike
A very subdued luster marks the gray brilliant P/L dollars. Even though reflective, gray brilliant coins will not distinguish themselves like the brilliant or Cameo pieces, simply because there is no contrast between the field and devices and the luster is muted. These coins are not damaged – their appearance is a result of the minting process, not mistreatment after the coins left the mint.
Because they lack eye appeal gray brilliant P/L dollars, not as desirable as Cameo or brilliant pieces, occupy the later date portion of the Morgan dollar series, specifically the 1902 P, 1903 P, 1903 S, and 1904 P, which come only gray brilliant.
Other dates that occasionally show up gray are the 1900 P, 1902 O, 1878 P, 1889 P, 1890 P, 1896 P, 1901 O, 1903 S, 1901 S, and 1902 S.
Prooflikeness is a matter of degree, but also of individual date characteristics. As the popularity and price of Morgan dollars has grown, the ability of collectors to buy high grade sets has been effectively extinguished. Not ones to let price get them down, collectors have turned to assembling partial sets based upon the wonder coins of specific dates. For that reason, prooflike Morgan dollars have become a highly desired series, and have skyrocketed in price.
What Price Excellence?
Since the early 1960’s when Dean Tavenner was the first coin dealer to publish a price listing for “prooflike” dollars, the price for P/L’s has risen to approximately three times the common date price for the same grade coin.
This rapid rise is not just a factor of demand, but of relative rarity. Because they were regular issue coins, P/L dollars were meant for circulation and treated as such. Of the small number struck in prooflike condition, those actually existing in MS-64 or better grade is extremely low! This rarity has been duly reflected in price performance, where common date P/L’s have risen almost 3,000% in eight years!
Up front, this may seem like quite a bit of appreciation (375% annualized) over eight years. It is. And, take into consideration that P/L dollars did not decrease with the rest of the market over the last year. You’re probably wondering why these might even remotely be a good buy.
The answer is relative rarity. P/L dollars are so scarce, that even a market-wide correction couldn’t touch them. Collector and consumer support is so strong for these very rare coins that it was not possible for their price to drop. Now, this is not to guarantee that their price will not drop in the future, because every coin has its day in the sun. But, P/L dollar still have some strength and potential left. Here’s why.
As I mentioned, P/L prices are currently about 3X the common MS price. A quick look at the PCGS census report shows us that the ratio between graded MS and MS/PL dollars is far, far greater than current price spreads.
The ratios are, of course, for reasons of comparison and do not represent that an 1885 O MS-64 P/L dollar should be worth $6,000. But, could an MS-64 coin priced at $400, that is 30 times rare than its MS counterpart, be worth $1,000? I think it’s altogether quite possible, and not out of reach in the next year to two years.
If there is such potential in these dollars why isn’t everyone buying them? More to the point, why aren’t prices rapidly moving?
First, in order for price to move, there has to be a supply to trade at higher levels. At this time, there is not much of a supply. And, because supply is low, not many dollars will recommend to their clients that they get involved.
Second, the extreme rarity makes each owner of a P/L dollar a “strong hands” holder. By this I mean each owner is loath is give up such a prize specimen. Another big drag on supply.
Third, the kinks within the PCGS grading system are still being worked out within the P/L dollar area. A disclaimer in the CCDN points out that “Prooflike Morgan dollar bids in the CDN represent full, deep mirror prooflike dollars. Bids in the CCDN may be for one-sided or semi-P/L dollars.”
At this time the market is discounting the grading of PCGS Morgan dollars on a sight-unseen basis. Because the PCGS holder obscures some of the reflective depth of a P/L dollar, dealers now want to see the coin to be sure of its surfaces, before paying full P/L price. Current CCDN P/L bids are in the neighborhood of MS prices. This market discount is holding up the P/L dollar march, but I think only temporarily.
A Prooflike Strategy
With an established upside potential (relative rarity far above the 3x current pricing) and the resurgence of the mint state Morgan series, prooflike dollars could be a valuable addition to a client’s holdings.
At today’s prices, downside is limited. One thing to remember is that no matter what, P/L dollars will always be at least a wonder coin in whatever grade designation, simply by virtue of its strong strike, mirror fields or Cameo surfaces.
Inside the dealer buying network, there also seem to be rumblings of a shift towards steady P/L demand, at far greater levels than today’s market. Optimism surrounding the Morgan series is at a recent high, and the P/L dollars are set to experience more of the same enthusiasm. If you’re considering a purchase of P/L dollars, it’s advisable to keep two major factors in mind:
1. Although many P/L dollars have the appeal of superb rarity, their market demand will be limited by their availability. Because of the supply shortage and prohibitive price of these rarer dates, they are going to be much tougher to obtain…and to liquidate. Until the savvy investor becomes a savvy collector, a good strategy is to limit purchases to the more common date and lower priced P/L perform and present a much larger market of buyers in liquidation.
2. Establish a liquidation strategy prior to purchasing these coins. Because they are rare, the best liquidation price will be found by either shopping around or waiting for auction. Do not put yourself in the position where you have to sell in order to raise money. Timing a liquidation must be at an advantageous point for your profit potential. Possibly, down the road some way. Be prepared to hold until you think the time is right to sell. Like any rare coin, a controlled liquidation far outperforms the hurried sale.
In summary, look at a few P/L dollars to establish your own likes and dislikes. If you prefer Cameos over brilliant prooflikes, then buy only Cameos, but be ready to pay a premium in most cases! If you absolutely don’t like the looks of a P/L, don’t buy it! Buy only coins you like to look at, because eye appeal counts for a lot in the premium buying market.
P/L dollars are an exciting series for both collectors and investors. Owning the finest of all intended-for-circulation dollars is a magnificent addition to any personal holdings, and a wise choice for long-term price appreciation.