Have Certification Companies Depressed Certain Segments of Numismatics?

[TomB]

This is something I think about quite a bit and I believe that it is a two-edged sword. First off, it is my firm belief that we, as a community, are much better off since the advent of practical third party grading. The "good old days" were only good if you were an especially astute collector/dealer or if you were an especially unethical dealer. The vast majority of folks involved in coins are neither astute nor unethical. [/i]

 

There are two niche markets that I believe get hammered in their price structure because of how the grading companies grade their coins. These are classic commems and matte proof Lincolns.

 

Classic commems get hurt because the grading companies, on average and more so than any other segment of the hobby/industry, play fast-and-loose with the grades. There are simply so many extant, gem pieces of most issues that they are likely not viewed as being as valuable, in terms of time to grade, as other coins. So, we see doggy MS66 commems and superb MS64 pieces, of the same issue. This happens quite a bit in this series. Consequently, those dogs, which are continuously offered at shows, bring down the market price for the really attractive coins. I'm not talking about the MS68 monster toned pieces when I mention the really attractive coins as that is a different animal entirely. I'm writing about those original, attractive, moderate patina coins with an antique white look and perhaps a small amount of burnt in auburn around the rims. Those coins get hammered in terms of perceived value because of all the low end stuff that brings the aggregate market down.

 

Matte proof Lincoln cents also have no favors done for them by the services. I have seen a disproportionately high percentage of nasty looking pieces in high grade holders. Coins with bad spots, altered surfaces or simply unattractive toning have a tendancy to "float" up to their maxed-out grade where they then languish, waiting for a buyer of an insert, and actively bringing down the overall perception of the niche. The nice coins are tough. The nice coins also trade for a little more than most people would realize. However, the grading of this series, with the rewarding of some questionable coins, hurts the overall appreciation of the series.

 

What do you think? Are there other series that come to mind? Am I completely wrong on these ideas?

[mommam17]

I think you are right on the classic commems. I usually buy 65`s or 6`s. I see alot of coins that I would not own in 65 and 66 holders and my coin dealer friend also agrees with us. He said he has to look at alot of commems to find the right one.

[Elcontador]

Tom,

 

You can add F. E. Cents to that list. It amazes me the incredible range of these coins in MS 65 holders. 5s are always available because there are so many ugly ones . Usually it seems that the coins with nice color are horribly struck, and the nicely struck coins have spotting and / or splotchy toning.

[DaveG]

Tom,

 

I think what's involved here is a certain degree of collector sophistication. While it's true that the grading services prevent a polished XF Morgan being sold as a BU, their preferences/biases also drive segments of the market.

 

Do the services prefer "white" silver coins? If so, dip everything. Do they think that copper should like like "X", well then, make them all look like that.

 

However, as we all know, there are specialists in each niche of collecting, who know their series and look for specific characteristics: Saints without copper spots, Lincolns without spots, no-motto Coronet gold with "crust", etc.

 

And, as we all know, the really attractive coins trade among specialists at the prices they deserve, while the "rest" of the coins simply clog up some unfortunate dealer's inventory until someone less sophisticated comes along.

 

So, while you won't buy a polished XF as a BU, you might buy a dipped-out, lifeless coin in an MS-64 slab!

 

And, as you say, the trick is to find someone as sophisticated as you are who will appreciate the quality you're offering.

[jtryka]

Tom,

 

I think the issue you are touching on has more to do with the endless debate over technical vs. market grading, though this might be a particular subset of the debate we might entitle market grading after the market turns. When thinking of certain types of coins, like commems, you get blast white being what the market demands, so the result is a lot of dipped out white coins in high grade holders. When the market turns as it has, and the white coins are as desireable, then you start looking at the technical aspects, and find those former darlings coming up short. Another issue is the more generous grading sometimes afforded to older series and rarer dates. There are many bust and seated coins that could be argued are a point or two or 5 overgraded, just by virtue of what the services were looking for at the time. The fiasco over the MS-65 grade "assigned" by PCGS unofficially to the 33 Saint when most common dates in the same condition would have received a 64 if you were lucky. All these things matter, but the biggest problem, and one which classic commems now face is that although undergraded coins find themselves eventually appropriately graded, the opposite is not true with overgraded coins. Perhaps a more concerted effort by the TPGs to get these coins off the market might help the situation.

 

Interesting topic.

[TomB]

The more I read the posts, the more I think everyone has made excellent posts. As DaveG mentions, the better coins very often trade between those who specialize in their respective areas at a premium, which is sometimes substantial, relative to any guide book or bid sheet. Jeff's point about the low end coins staying in their maxed out holders is really hitting the nail on the head. These coffins that the coins end up in assure that they will never be cracked out. Thus, they pollute the rest of the pool. It would be nice to see these coins actively removed from the market, though not really practical from a business standpoint.

[Hoot]

I truly don't think that this is as substantial of a depression as when TPGs did not exist - and maybe that was part of your point, Tom. But without the TPGS, the lack of uniformity and shysterism depressed as many, if not more, areas of the market. No matter what happens, there will be doggy coins advanced as top dogs in the common market and true gems that are traded at the top end of the market but never see a bourse floor. No matter how much money is spent on the exceptional coins, they will not be the coins to make the price guides, as they are not the coins that run the common market. Consequently, I think it's more a matter of excessive demand coupled with what's commonly traded and how its traded that cause a "grade = monetary worth" depression in any given series. Perhaps that only makes sense in my mind , but what the hell. Ultimately, I think that TPGs have done more to raise all segments of the market than anything prior to them.

 

Hoot

[michael]

tomb you hit the nail with the early commems and it is a no brainer to me what you said and you are for me totally 100% right

 

it is too bad that there is so much early commem [!@#%^&^] out there in holders even in gem which really holds the market down for the nice solid average looking pieces

 

the services cant buy all these back as they would bankrupt themselves

 

but the great ones with great color and accurate graded will always command what they are worth and this is called a so called premium and it is really not a premium just selling for what they are worth compaired to a piece of [!@#%^&^] in a holder with the same grade on it

 

well such is life

 

i totally agree with you tomb with the matter proof lincolns also

 

go try to find the so called common date 1909 in a proof 66/65 red holder and the majority again look like [!@#%^&^] and if the coin is really red it has spots stains uneven color and striations

 

i bet from what i have seen many proof 66 red 1909 matte coins are really not true pf65/66 red coins either by the color designation and/or the grade

 

any true proof66 red matte proof lincoln that has even color great eye appeal little to no spots stains in the focal areas is an extremely EXTREMELY uncommon coin

 

the key to the matte proofs are two things

 

red

 

and

 

gem , even better superb gem

 

and as per the above correctly graded with tremendous eye appeal is a RARE bird indeed

 

tomb you hit the nail on the head with both these coin series

 

and unfortunately this does hold the market down on the good few good original eye appealing true to grade coins in the holders as there is at least 40% that are just not all there in terms of what the holder says for early commems and red gem 65/66 matte proof lincolns

 

again as an example this 1909 supposedly the "common" type for the matte proofs is far from common at all

 

in true red true proof66 with tremendous eye appeal no spots stains striations and totally smooth even surfaces exists but is many times rarer THAN the pops indicate

 

the services would at the very least from what i have seen in gem and higher red matte proof lincolns would need to buy back again at least 35% of the coins in holders as they are just not all there

 

some maybe lots might be close but close only counts in horseshoes and hand grenades

 

michael

[jom]

When I think "Depressed" I think "holding prices down" so the FIRST thing that came to mind was "designations".

 

To me, the overpromotion of FB or FBL or DCAM or RED or whatever has deflated perfectly good coins in the non-designated areas. In many of these cases the price difference just doesn't hold up to what you are getting in return. I realize some will say "But jom, that is the market!". I'd agree but the coin market is NOT the stock market. It is so thinly traded that I'm just not sure typical market theories hold in our area of coins.

 

Whatever the case, I think prices of non-designated coins have been flat across the board for many years.....

 

jom

[cladking]

When I think "Depressed" I think "holding prices down" so the FIRST thing that came to mind was "designations".

 

To me, the overpromotion of FB or FBL or DCAM or RED or whatever has deflated perfectly good coins in the non-designated areas. In many of these cases the price difference just doesn't hold up to what you are getting in return. I realize some will say "But jom, that is the market!". I'd agree but the coin market is NOT the stock market. It is so thinly traded that I'm just not sure typical market theories hold in our area of coins.

 

Whatever the case, I think prices of non-designated coins have been flat across the board for many years.....

 

jom

 

But Jom, that is the market!

 

It is collectors who notice that some coin is difficult to find with a full minor detail and it is collectors who lobby to get the designation. It is not a matter of promotion or hype, it is a matter of seeking the finest even when the standards used to define this are of dubious utility. It is collectors who pay substantial premiums for designated coins even when those coins are obviously not the finest quality. It is a matter of consumer education, and an opportunity to acquire great coins which don't get the designation cheaply.

[Wihlborg]

There have been great points made by everyone so far. There is one other point that I would like to add concerning why I believe the market for early commems is depressed, and this is the number of coins with truly ugly, dark, blotchy, fingerprinted toning in high grade holders being offered at full sheet prices. IMO the quality of a large percentage of these coins, both grade wise as well as eye appeal wise is not up to par with the prices being asked for them.

 

 

A lot of the early commem issues are not cheap in high grades, and I believe that when collectors who may be interested in beginning a set of these coins see the prices being asked for these ugly coins they are turned off to the series as a whole.

 

It also does not help that a lot of collectors today seem to view any white coin as having been tampered with, dipped, not original and therefore less desirable than a toned coin. So what does a collector find when looking for early commems? (1) The really nicely toned coins that are priced out of the range of most collectors. (2) Coins with toning that while not monster, is nice. (3) The ugly toned coins that most don’t want, no matter what the price. And (4) white coins. But wait! White coins are not as desirable as toned coins, right? Even if it happens to be accurately graded, has great luster, and no fingerprints on it?

 

So, where does this leave our collector? Trying to find the very small percentage of coins in category 2, the coins that are accurately graded with some decent toning. In actuality, whether they are toned OR white, it is not easy to find accurately graded, eye appealing early commems period, and there is a big difference between a dipped out white coin and a white coin with great luster and eye appeal.

 

As a whole I think the early commem series has a lot going for it. First of all it is refreshing to collect a series where all the coins don’t look the same. Second, the designs of some of the issues are beautiful. And lastly, the history behind the origin of the individual issues is truly interesting, if not amazing!

 

John

[chinook]

Tom,

 

I think they have INFLATED certain areas as well. On the other side of the street there is a guy asking $5000 for a 31 year old IKE just because the holder is the "right" one and number on it says 67. Before the TPG's you would never have see these kinds of prices.

 

And lets not forget about the 1963 Proof 70 Lincoln. That has pushed the prices of many common date Lincolns higher.

[Hoot]

All excellent points.

 

John - I think that well-preserved white commems are as rare as a well-preserved toned commem. I have a really nice white Stone Mountain, which I think is rare for that coin. Most white examples of that coin look either overdipped or come with mottled black spots. Tough coin for a nice example, either toned or not, but lots and lots of them around in gem grades.

 

jom - I think you're exactly right about how designations hold down the price of coins in the same series that did not receive the designation. It's just plain stupid. In the Jeff nickel series, just try to find a great looking, well struck MS66 or above nickel from the early 1960s. They are exceedingly tough to find, and there are many, many other examples. But herein lies an opportunity to collect the series in high gem and ultra grades without losing your shirt. Great way to take advantage of the current market.

 

Hoot

[TomB]

There have been some really good thoughts on this matter written here.

 

Hoot, I'm not certain who to be more worried about but, everything you wrote seemed crystal clear to me. You might want to moniter yourself for a bit.

 

The eloquence with which Michael writes about coins portrays his obvious enthusiasm for the subject but also imparts a level of sophistication about how tough it is to find nice coins. Of course, this is a separate issue from coins that are overgraded. However, I think it might feed into the overall problem.

 

Also, Jom mentioned something that I had originally meant to touch upon but simply forgot and that is the use of designations. The worst, in my view, is the color designation for copper. Not only have the standards shifted over time but the coins themselves might also change in appearance. Thus, that first generation PCGS or NGC holdered RD IHC might really now only get a designation of RB. I would bet though that if the coin were to come up on the market that it would be sold as a first generation RD coin without any discount for the loss of the designation.

 

John also mentioned about the fear of white coins and this is really something that is unfortunate. You all know how much I love terrific toning but I also love original white coinage. It can be near blast white or be graced with a heavy patina. Either way, if attractive and original then the coin is special and should not be looked at suspiciously or degraded.

 

Finally, chinook gets to yell BINGO because he wrote about the relative inflation of certain niche markets. I wasn't sure how to phrase this topic as it can be looked at from either side; that is, some segments might be depressed while others might be inflated. The inflation, in my opinion, comes largely from a gain in liquidity and also from Registry-type of collecting.

 

Of course, the market is determining the price for each series and each individual coin. If viewed in that manner, then the coins are neither over nor under priced. They simply are what they are. I can't help but wonder what the relative worth of many of these issues, across the coin spectrum, would be if there were no certification services.

[jom]

I can't help but wonder what the relative worth of many of these issues, across the coin spectrum, would be if there were no certification services.

 

You see. That's the bottom line. Would that RED Lincoln Cent or FBL Franklin be worth 10 times more than it's RB or non-FBL counterpart IF it wasn't slabbed? I think this holds for MS65 vs MS64 also. In fact, it may be even worse considering that, to me, it is MUCH easier to see if a coin is FB that it is to "predict" whether a TPG will go 64 or 65 on a particular coin.

 

jom

[Wihlborg]

John - I think that well-preserved white commems are as rare as a well-preserved toned commem. I have a really nice white Stone Mountain, which I think is rare for that coin. Most white examples of that coin look either overdipped or come with mottled black spots. Tough coin for a nice example, either toned or not, but lots and lots of them around in gem grades.

 

Hoot,

 

Your use of the Stone Mountain issue as an example is excellent. You are correct when you say that there are a lot of these coins in holders with gem grades, but just try to find an accurately graded gem with really nice toning or pure white with great luster. Let me give a little advice before anyone begins looking, don’t hold your breath!

 

I remember your Stone Mountain from an image of it you posted for me a while back, and it is a great looking coin! I also have an excellent white Stone Mountain.

It is in a NGC holder graded MS-66, and believe me, the luster on this coin is blinding!

 

John

[Hoot]

I also have an excellent white Stone Mountain.

 

Your coin and mine could be twins... attached ...although my scan leaves a lot to be desired. The coin is pure white with blazing lustre.

 

Hoot

[jtryka]

Interesting views on designations, and their impact on inflating some areas and deflating others. I do agree there are greater premiums for FBL, FB, RED etc. coins that are in holders than there used to be (but lets face it, these sorts of coins have traded at a premium long before TPGs. I would only point out that these premiums can only be sustained as long as market participants have faith in the TPGs to stand behind their designations. If that faith is shaken, then these premiums will only exist for those coins that truly exhibit the characteristics of the designation. We've seen a recent trend in not honoring some of those designations by some companies, and it's cast a chill on those segments. It's also important to note that those designations on holders have the biggest impact on the lower end of the market, expecially with less experienced collectors.

[michael]

for me

 

if a coin is certified and with a special designation and the coin is ALL THERE then i do not havw a problem with it

 

also if the coin is all there and it is being looked at by someone who knows how the particiular series comes and the coin is a scarce to really uncommon coin then i have no problems with a reasonable price paid even if way WAY much above another exact same but non designated coin

 

as long as the coin is an all there scarce legit coin

 

 

as with white coins the original white coins some call them antique white!!??! well the original crusty crcuchy never dipped eye appealling monster luatre and eye appeal white coins are just as good as monster toned coins

 

 

but the white coins well most have not seen such animals or know how to tell them

 

i think the big problem with all this is knowledge

 

with all this certification and pricing sheets

 

many can become instant so called expert collectors overnight i

 

think this is the biggest problem as they are not really knowledgable advanced collectors and the coins they have are not truly what is graded and/or designated on the holders

 

and that is not good or bad or right or wrong just the way it is

 

 

the key is knowledge

 

 

if the holdered coin with a certian grade and designation is all there and is a legit really scarce to uncommon coin then a huge premium might well be justified and that is okie

 

only IF THE COIN IS ALL THERE

 

 

for example there are many deep cameo coins designated as such in a certain coin pricing services holders

 

and make no mistake about it folks they are not grading companies as most all of you know waht the grades are already!!!!!!!!!!!!!!!!!!

 

you are just sending in rhese coins for the serivce to price them for you

 

so to continue

 

 

for example there are many deep cameo coins designated as such in a certain coin pricing services holders

 

 

many to most are not true deep cameos

 

they might be ugly

overdipped

one sided

just made it

 

but the ones that are properly designated and evne if blast swhite have the eye appeal and surfaces like it was struck yesterday are really undervalued and scarce coins the problem lies in thatyou need to really look for these coins and the vast majority that have been slabbed and are all there so to speak are alreasy in strong hands

 

the ones that are close shall we say are being recirculated until they find someone to take the line so to speak and eventually everything sells

 

now i do not know ABOUT A RED LINCOLN CENTS business strikes but with matte proof red coins they ARE WORTH substancial premiums and are extrmemly uncommon over their not red or sooooooo close to red counterparts

 

as long as the coin is all there red wise and is gem and has the right looking surfaces and qualities about it thayt make the coin look special

 

i guess again the key for me it knowledge

 

i have no problems with certain coins bringing huge premiums because of a designation combined with a grade on a holder

 

as long as the coin is all there and to an experienced eye of someone who knows waht they are looking at the coin is legit as far as looks eye appeal scarcity/ being a really special not usually seen coin like that

 

and also take the michael test

 

if you are ever wondering abot a coin in a holder you see for sale and you really do not know if it is worth it or not

 

ask yourself this question

 

what is this coin worth out of the holder?

 

if the coin out of the holder is only worth 50% or less and maybe lots less? than in the holder

 

this i think says lots

 

now that does not mean if you buy the coin you will loae monry you might make a killing and even though the coin might be worthless out of the holder you can still buy it if you

 

want it

 

you like it

you know and understand what you are getting yourself into

 

and you are buying it for a hobby for fun with money you can afford to lose

 

then by all means go for it

 

it is your choice

 

the problem arises where many many have coins in holders where if they would be broken out today

 

they woulds be worth anywhere from face value to maybe at most $25 dollars and yet the owners have hundreds to thousands to tens of thousands invested

 

let the buyer beware

 

these owners/buyers are unknowledgable which could mean a little blind too

 

that is the key to it all.........knowledge

 

think about it on one major forum IF THEY took away the buy sell trade boards the vast majority would never participate if they could not do some sort of business and then again all most all say ebay it says buy sell trade notauction link

 

 

they will not even give a price they first want to get as much as they can from the highest fool and think about it most to all of these sellers will not make a market or a buy back for the stuff they push once you buy it you own it and good luck to you kost would not even make an offer to buy for any price if you called them on it at a recent future date this tells me lots as actions speak louder than words

 

again not good or bad or right or wrong

 

just make sure you understand what you are getting to

 

 

michael

[EVillageProwler]

First, let me say that I have only read up Hoot's post to which I am responding in part.

 

No matter how much money is spent on the exceptional coins, they will not be the coins to make the price guides, as they are not the coins that run the common market.

 

And why should we accept that? Why don't we rename the "exceptional" coins to "basis" and the common coins to "widget"?

 

It's all relative, and those who trade coins for a living already know which coins fetch below Bluesheet and which coins are way beyond Trends.

 

Perhaps it is a reflection of my current life situation, but I weary of this industry that caters to the sludge material. It's not because I dislike low-value coins. Please believe that I am not that kind of snob. But, each of us should ask ourselves this simple question: if given fair chance to acquire our favorite childhood storybook, who wouldn't want a pristine 1st Ed over a recent dog-eared paperback reprint?

 

For those who prefer the pristine 1st Ed tome, you should expect to pay fair money for it. And, among industry experts, that fair number should be well known to within a reasonable delta. Simply use that delta and publish a guide.

 

Why spend so much effort teaching the noobs how to price the bad stuff when they would probably enjoy the good stuff so much more?

 

EVP

 

PS My fav childhood storybook is probably "Where the Monsters Are".

[cladking]

Tom,

 

I think they have INFLATED certain areas as well. On the other side of the street there is a guy asking $5000 for a 31 year old IKE just because the holder is the "right" one and number on it says 67. Before the TPG's you would never have see these kinds of prices.

 

 

This isn't true. In point of fact the Ikes actually started going up before the advent of the grading services. As far back as 1980 there were a few individuals who were paying large premiums for superb Ikes. Even when the grading services started they balked at grading moderns and there was very little interest in them except for proofs. High grade Ikes made most of their increases before the first Ike was ever slabbed. They do seem to be stirring again though.

[cladking]

Indeed, I had considered posting to this thread this morning that the TPG's had depressed moderns in general by revitalising the classics and diverting attention away from the moderns. And this in addition to the outright suppression in the early days. Remember, too, that the registries didn't include any moderns when they were launched.

 

I didn't post it for two reasons. One that it would appear to be self promotion and two that it is much more complicated than this and may not be entirely true. Certainly they've at least delayed the increases in moderns but their grading of the coins have in several ways strenghtened these markets.

[Elcontador]

Jom,

 

You make a good point re the RD designation re copper. I picked up a type Braided Hair Large Cent in 5 RB that's 80% RD (more mellowed color on the obverse, the reverse could pass for RD by today's standards).

 

I paid a 20% premium over sheet for this coin (you can't buy a correctly graded 5 RB Large Cent at sheet). But I've seen type RDs in 5 that look worse than my coin & sheet is 3X as much. No thanks.

[chinook]

Tom,

 

I think they have INFLATED certain areas as well. On the other side of the street there is a guy asking $5000 for a 31 year old IKE just because the holder is the "right" one and number on it says 67. Before the TPG's you would never have see these kinds of prices.

 

 

This isn't true. In point of fact the Ikes actually started going up before the advent of the grading services. As far back as 1980 there were a few individuals who were paying large premiums for superb Ikes. Even when the grading services started they balked at grading moderns and there was very little interest in them except for proofs. High grade Ikes made most of their increases before the first Ike was ever slabbed. They do seem to be stirring again though.

 

 

I dont believe it. Maybe somebody paid $50 for an exceptional example but I highly doubt somebody paid $1000 (large premium) for a 9 year old coin.

[cladking]

They were being advertised in the mid '80's to be purchased for prices up to around $1,500. It may well have been problematical to actually get that kind of money for one but there were purchase ads out there. While I never saw ads as far back as 1980 I am aware of private sales which exceeded a few hundred dollars. Most high grad Ikes are much scarcer than most other moderns and this was recognized early on.

[jom]

Al Hagar did write that book about Ikes in, what, 1985 or so. ??

 

jom

[cladking]

Al Hagar did write that book about Ikes in, what, 1985 or so. ??

 

jom

 

It's copywrited 1986

[chinook]

Thanks for the info Cladking, especially in the other thread.

[jom]

Hagar went on and on about PROOFLIKE Ikes. To this day I still really haven't seen one. Pretty rare bird, if they exist.

 

Whatever the case there WAS a market for Ike's in the mid 80s.

 

jom

[gmarguli]

Hagar went on and on about PROOFLIKE Ikes. To this day I still really haven't seen one. Pretty rare bird, if they exist.

 

You never visited the ACG booth at Long Beach during those days. He had them for sale with high prices. I think I have one or two silver ones that are PL.

 

 

Whatever the case there WAS a market for Ike's in the mid 80s.

 

Yep, and ACG ones sold fairly well. Their grading on Ikes was stricter than PCG$'s.