"IF this coin were "raw", would I still buy it?"

[Doogy]

There has been a good deal of talk about the TPGs, CAC and Ms. Sperber lately.

I've stepped away from the drama a bit lately, to think about where things presently are, where they have been, and where it is going in regards to our hobby. Some of you may know that much of my expertise lies in world coins, more specifically, better British issues (Crowns, Double-Florins, Shillings, just to name a couple denominations I collect with a passion)

 

In talking to some of my British friends that are collectors, I have learned a great deal about how they see the market, as well as how they currently see our somewhat of a mess that has been created with micro-grading, problem/doctored coins, and a sliding Sheldon scale over time. One thing that struck me was a simple adage; "would you still buy the slabbed coin in your hand, were it a "raw" example?"

 

One can read the statement a couple of different ways, but the gist of it is truly seeing a coin for what it is, not what someone says it is. Is it attractive to you, does it truly deserve a lofty grade, or will a grader merely give it a "market" or "net" grading after the quick cursory examination of it's surfaces? Does it deserve to be in a holder of a certain grade and possibly trade sight unseen, and lastly, does it deserve to be in my collection no matter what grade the experts assign it?

 

So often, we hear (for good reason!) "buy the coin, not the holder" to mean just exactly that......but often, this merely means to accept PCGS/NGC at face value the majority of the time, but to scrutinize ANACS-ICG-SEGS and possibly PCI for hidden gems residing in their holders and to actually "read" the coin inside these slabs. I would argue that the latter needs to be done with slabs of ALL of the TPGs, if one is truly interested in protecting yourself and the hobby.

 

I think the whole point of collecting these days is to kind of revert back to pre-1987, and assess each and every individual coin as if it were raw; and only then maybe we should consider the final judgement that the TPG made clear on the front of the slab. We put a lot of trust in the judgement of others, but they are merely providing a service and assiging a grade; you're the one that has to physically pay for the coin and live with the decision to have it reside within your collection.

 

Doug

[James_OldeTowne]

Wait a minute - are you saying "buy the coin, not the holder"?

 

[DC Dawg]

Wait a minute - are you saying "buy the coin, not the holder"?

 

Hey... we can't do that! What will the TPGs do?!

 

Scott

[rons]

Doug, a very thoughtful and thought provoking post on an issue we all take to heart. Thanks for your insightful comments.

[jesbroken]

Great post, Doogy. Its been a while since such provocative thoughts regarding slabs has been posted. I would suggest that everyone collecting take this to heart, even dealers. Take a look at your slabbed coins and see if they would pass the raw test. I would assume that the collectors who had their coins slabbed would be the most likely to pass the test as compared to those that purchased them pre-slabbed. JMO.

[okbustchaser]

Of course I would buy any of the coins I currently own or will in the future buy even if they were raw. Why wouldn't I? They are going to be raw as soon as I own them anyway.

[Bruceswar]

Of course I would buy any of the coins I currently own or will in the future buy even if they were raw. Why wouldn't I? They are going to be raw as soon as I own them anyway.

 

I agree here althought not all of mine will be raw right away. Raw or slabbed does not bother me. I buy it all.

[World Colonial]

In talking to some of my British friends that are collectors, I have learned a great deal about how they see the market, as well as how they currently see our somewhat of a mess that has been created with micro-grading, problem/doctored coins, and a sliding Sheldon scale over time.]

 

I exclusively collect world coins but obviously have a different perspective since I live in the US like most of the posters on this board. I'm aware of the sentiments you share by foreign collectors. That is probably one of the primary differences which accounts for why the US is the only "investor" market and all the others are not though there are those in other countries who do buy coins for investment purposes.

 

British grading is stricter from what I can tell but I do not believe there is necessarily any more consistency or accuracy in it either. I just bought a three coin world lot at a public auction for about $270 from a UK auction. I then sent in the coins to get graded and based upon these grades, I can probably sell them for about $2,000. The GEF graded AU-55, the EF graded MS-61 and the NEF graded AU-58 and I just sold this last "throw away" coin on eBay for $150. Was the consigner better or worse off because they were raw?

 

[so often, we hear (for good reason!) "buy the coin, not the holder" to mean just exactly that......but often, this merely means to accept PCGS/NGC at face value the majority of the time, but to scrutinize ANACS-ICG-SEGS and possibly PCI for hidden gems residing in their holders and to actually "read" the coin inside these slabs. I would argue that the latter needs to be done with slabs of ALL of the TPGs, if one is truly interested in protecting yourself and the hobby.

 

[i think the whole point of collecting these days is to kind of revert back to pre-1987, and assess each and every individual coin as if it were raw; and only then maybe we should consider the final judgement that the TPG made clear on the front of the slab. We put a lot of trust in the judgement of others, but they are merely providing a service and assiging a grade; you're the one that has to physically pay for the coin and live with the decision to have it reside within your collection.]

 

Those are nice sentiments but idealistic and are not going to happen in the current environment. And if they did, all of us would find that the value of all or many of our collections would fall substantially as the "investors" left the market and its possible that many collectors would reduce their financial commitment to coins also.

 

Now of course, some of you (and others) may wish that this WOULD happen so that prices would fall because then we could afford to buy more for the same money, but since this is not the case now, then those who are paying the "big" money for coins (whatever that may be) are not going to buy the coin and ignore the holder given the sums involved.

 

I'm a small fish in the overall scheme of things and though I do not collect to make money, I ALWAYS take resale into consideration when I buy a coin. I will almost never buy a coin that I do not expect to be able to turn around and sell it right away for about the same as I paid for it if that was necessary. This is usually not possible for US coins which is one of the reasons I do not collect them.

 

PCGS and NGC make the coins I buy more liquid and especially for world coins, far more marketable because the price differences for the series I collect are very large between a raw and graded coin. The grade on the holder or the plastic itself is not the most important thing to me, but I would not pay the same (or anywhere near it) most of the time for a raw versus a graded coin. Some people say they will not pay a premium for a graded coin. I say that I will not buy a raw coin except for a discount to a slabbed one. The primary reason for this is because I do not buy most of my coins in person (they are not available) and it is a prudent risk management decision from an economic standpoint.

 

When it comes to slabbing and the market conditions in general, one of the other things I will tell you is that I believe that selective world coin series are going to move closer to the US over time. I see some evidence of that in some markets including the UK, Australia, Canada and South Africa. I'm not sure and really do not expect them to become clones, but there is definitely the potential out there. And in the case of UK coins, if the locals do not go there on their own, then Americans might do it for them at least for the premium coins. If you follow auctions like I do, you must have noticed that Goldberg and Heritage have better quality British material than Spinks or Baldwins or at least that appears to be so from my informal review. I do not know who the buyer's are, but I do believe that a decent number of Americans like yourself collect these coins and must have an impact on pricing and possibly significantly. Most of these coins are graded by NGC and PCGS.

[Doogy]

In talking to some of my British friends that are collectors, I have learned a great deal about how they see the market, as well as how they currently see our somewhat of a mess that has been created with micro-grading, problem/doctored coins, and a sliding Sheldon scale over time.]

 

I exclusively collect world coins but obviously have a different perspective since I live in the US like most of the posters on this board. I'm aware of the sentiments you share by foreign collectors. That is probably one of the primary differences which accounts for why the US is the only "investor" market and all the others are not though there are those in other countries who do buy coins for investment purposes.

 

Okay, I think you misunderstood my post, so allow me to clarify. First, I too live in the United States (Phoenix, Az), so my perspective is the same as yours. The US market is both collector and investor, the latter usually being less adept at be able to truly "read" a coin on their own. Based on many overseas auctions i've attended, there is also a strong investor core with those markets too. Free trade and the decline of the dollar has allowed a new cadre of wealthy foreign investors to enter coin collecting like never before. This huge influx of money has many of these collectors/investors buying anything nice they can get their hands on.

 

British grading is stricter from what I can tell but I do not believe there is necessarily any more consistency or accuracy in it either. I just bought a three coin world lot at a public auction for about $270 from a UK auction. I then sent in the coins to get graded and based upon these grades, I can probably sell them for about $2,000. The GEF graded AU-55, the EF graded MS-61 and the NEF graded AU-58 and I just sold this last "throw away" coin on eBay for $150. Was the consigner better or worse off because they were raw?

 

I'm not sure who you're directing this question to, as my original post is not arguing for people to sell their coins raw, or to even to have a collection of strictly raw coins, but simply to be able to truly grade and evaluate a slabbed coin as if it were raw before purchase so you don't end up buying the grading service's mistakes (and thus, the dealer's dregs)

 

[so often, we hear (for good reason!) "buy the coin, not the holder" to mean just exactly that......but often, this merely means to accept PCGS/NGC at face value the majority of the time, but to scrutinize ANACS-ICG-SEGS and possibly PCI for hidden gems residing in their holders and to actually "read" the coin inside these slabs. I would argue that the latter needs to be done with slabs of ALL of the TPGs, if one is truly interested in protecting yourself and the hobby.

 

[i think the whole point of collecting these days is to kind of revert back to pre-1987, and assess each and every individual coin as if it were raw; and only then maybe we should consider the final judgement that the TPG made clear on the front of the slab. We put a lot of trust in the judgement of others, but they are merely providing a service and assiging a grade; you're the one that has to physically pay for the coin and live with the decision to have it reside within your collection.]

 

Those are nice sentiments but idealistic and are not going to happen in the current environment. And if they did, all of us would find that the value of all or many of our collections would fall substantially as the "investors" left the market and its possible that many collectors would reduce their financial commitment to coins also.

 

Now of course, some of you (and others) may wish that this WOULD happen so that prices would fall because then we could afford to buy more for the same money, but since this is not the case now, then those who are paying the "big" money for coins (whatever that may be) are not going to buy the coin and ignore the holder given the sums involved.

 

Why would our collections "fall substantially", if a person simply learned to grade for yourself and not to simply rely on the grading services? In fact, the opposite would happen from what you propose. Many hard core investores (not the collector/investor hybrid that many of us are, me included) simply rely on the grading services to hold their hands and to ensure they get the grade right. The latter happens the majority of the time, but we've all seen high dollar coins that should not have been awarded those lofty grades, and as a result, the investor bought the coin assuming it was correct.

 

IF one learns to "read" a slabbed coin as i'm contending, you can buy the better coins (cherrypick, as some would call it) that are correctly graded or higher end (PQ) for the grade, and leave the dregs to the "investor" group that buys without much skill or sight unseen. You want an example of this, look at two collector/investors that have an incredible eye for quality, but are savvy enough to know what coins are PQ and thus make great investments (our own Bruce (Tradedollarnut) and Jay Brahin (Saintguru). Both have incredible collections of Seated/Trade dolars (Bruce) and St. Gaudens (Jay). Because of their incredible eye for quality, they will make much more out of their coins when it comes time to sell, as they know how to truly select PQ for the grade, compared to some of the stuff the grading services have chosen to award lesser coins with the same numerical grade. many/most of the true investor types are buying the latter stuff, and they will find out that their stuff is sub-standard for the grade when they decide to leave coin "investing" and invest in some other tangible asset.

 

IF you're a collector or a collector/investor with a good eye for quality, I'm simply advocating that a person ignore the grade on the slab first, to read the coin without bias, and then get and idea in your mind what it should grade and it's relative value to you. Only then should one look at the grade assigned on the holder by the TPG. The strict investor will digest the label info first, give the coin the quick once over and may or may not buy it. This person may not have the eye to know a good coin if they were looking at it, and thus may end up buying a dog. I have little sympathy for the person that is willing to spend much, and not willing to actually learn about what they are buying.

 

 

I'm a small fish in the overall scheme of things and though I do not collect to make money, I ALWAYS take resale into consideration when I buy a coin. I will almost never buy a coin that I do not expect to be able to turn around and sell it right away for about the same as I paid for it if that was necessary. This is usually not possible for US coins which is one of the reasons I do not collect them.

 

I too am a small fish in regards to US coins, i can count my 5-figure US coins on one hand, but I too take resale into consideration. This is why i try to grade a coin and evaulate it myself, not taking into account the numerical grade on the slab. If the grade on the slab is a "gift grade" by the TPG, let someone else buy it and take the loss when it comes time to finally sell.

 

PCGS and NGC make the coins I buy more liquid and especially for world coins, far more marketable because the price differences for the series I collect are very large between a raw and graded coin. The grade on the holder or the plastic itself is not the most important thing to me, but I would not pay the same (or anywhere near it) most of the time for a raw versus a graded coin. Some people say they will not pay a premium for a graded coin. I say that I will not buy a raw coin except for a discount to a slabbed one. The primary reason for this is because I do not buy most of my coins in person (they are not available) and it is a prudent risk management decision from an economic standpoint.

 

I wouldn't argue with this, ALL of my better world coins are slabbed by NGC or PCGS. I attend overseas auctions, and being able to grade and read a coin allows me to pay a decent sum for a coin, and then get it slabbed with pretty much the grade I was expecting. As opposed to US coins, the best world stuff is still out there "raw", and having an eye to look at raw coins and knowing where it will grade, allows me to buy and pay the strong money it will take to win at overseas auctions.

 

When it comes to slabbing and the market conditions in general, one of the other things I will tell you is that I believe that selective world coin series are going to move closer to the US over time. I see some evidence of that in some markets including the UK, Australia, Canada and South Africa. I'm not sure and really do not expect them to become clones, but there is definitely the potential out there. And in the case of UK coins, if the locals do not go there on their own, then Americans might do it for them at least for the premium coins. If you follow auctions like I do, you must have noticed that Goldberg and Heritage have better quality British material than Spinks or Baldwins or at least that appears to be so from my informal review. I do not know who the buyer's are, but I do believe that a decent number of Americans like yourself collect these coins and must have an impact on pricing and possibly significantly. Most of these coins are graded by NGC and PCGS.

 

If one were to do some market analysis and obversation over the past few years, better world coins have risen dramatically at close to the same ratios as better US coins. These would include coins from the following countries (in general order of highest realized prices, and as seen as "hot" markets)

- Russia

- China

- Greece

- Great Britian

- Canada

- Germany/German States

- Poland

This list isn't exhaustive, but gives people an idea of where the world coin market is headed.

I too follow the major auctions, and attend overseas auctions at some of the larger houses. While it is true that many nice (and sometimes incredible!) coins are imported from the countries I listed above for slabbing and subsequent sale in large US acutions, there are still lots of major foreign auction houses that have TONS of incredible stuff. 99% of it is raw of course, but I often see this stuff in person, and also have experience knowing that the major overseas houses know how to grade and will fully disclose problem coins, cleaning, etc. Personally, I'm really excited for the upcoming Goldberg 'Millenia' auction, as i'm looking forward to seeing these incredible rarities, and salute the Goldberg brothers for assembling this collection for their client, and NGC for having the chance to grade them all.

 

[World Colonial]

You make some good points. What I was mainly trying to say is that the grading services have brought a lot of money into coins that would not otherwise be there. There are collectors/investors with big money who collect as you state, I just do not believe (though do not know for certain) that they are more than a small minority even if the best collections might be.

 

I do not have the resources to attend (mainly) European auctions in person, but my comments about quality were specific to UK coins. If I am wrong, so be it but I have seen better quality in the US auctions than the examples I gave. The continental European auctions do have excellent quality for other issues I will admit. And yes, I am aware that most valuable world coins are not slabbed.

 

I also agree with your comment about the price performance of world coins in selective markets versus the US, though I am not familiar with the ones you listed. I do know that Russia and Greece have done very well though.

 

I too live in PHX and will be at the ANA this next week.

[World Colonial]

You make some good points. What I was mainly trying to say is that the grading services have brought a lot of money into coins that would not otherwise be there. There are collectors/investors with big money who collect as you state, I just do not believe (though do not know for certain) that they are more than a small minority even if the best collections might be.

 

I do not have the resources to attend (mainly) European auctions in person, but my comments about quality were specific to UK coins. If I am wrong, so be it but I have seen better quality in the US auctions than the examples I gave. The continental European auctions do have excellent quality for other issues I will admit. And yes, I am aware that most valuable world coins are not slabbed.

 

I also agree with your comment about the price performance of world coins in selective markets versus the US, though I am not familiar with the ones you listed. I do know that Russia and Greece have done very well though.

 

I too live in PHX and will be at the ANA this next week.