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PCGS/NGC and the bubble mentality

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I've been thinking about this as it pertains to the grading companies (sorry for those of you who hate talking about slabs), but do you think in a sense they are cutting off their nose despite their face when it comes to moderns? What I mean is, PCGS especially has been focusing on the tightness of grading standards of moderns which in essence is feeding the modern/registry bubble, and in many ways letting their treatment of classics slide. It seems by focusing on modern issues, and maintaining their lead over NGC in perceived value of moderns in their plastic, they have become far less consistent with the classics that I know many on this board enjoy. NGC has been less of a force in the modern bubble, and it seems to me that they have been more consistent on the classics (disclaimer: I have not direct evidence of this, but am relying on anecdotal evidence). I must admit, I have one slabbed state quarter for my type set, but otherwise I don't collect moderns outside of whitman folders, but I do seriously collect various classic series. What do you think about the possible impact on what we collect versus the current focus on what we don't collect?

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Jeff,

 

I think it took a while before people stopped caring about the 1950-D Jeff. By then, the newbies who collect the next gen 50-D's would carry the kool-aid banner and tell us old fogies with stories of 50-D's past to go away.

 

In this industry, as with any, there's a sucker born every minute. It baffles me why people buy into others' hype so much?!? When you buy a house, you do serious research. When you buy a car, you do serious research. When you buy an expensive coin, you just fork over the money because some sheister in a nice suit tells you that it's a good deal?

 

C'mon now... Is this a gathering of the Delightfully United Moronic Brotherhood?

 

EVP

 

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Revisionist history now? The big bubbles which have been pervasive in the hobby since the fall of he 50-D nickel have largely been the province of the established seasoned collector. This includes the silver art bars, morgan dollar, the commems, the silver craze, and the run up in '89. Even the 50-D nickel was just a part of a larger move in BU rolls which was largely pursued by people with many years in the hobby. Even after a couple years of explosive growth there are few of the old timers with much involvement.

 

 

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"It seems by focusing on modern issues, and maintaining their lead over NGC in perceived value of moderns in their plastic, they have become far less consistent with the classics that I know many on this board enjoy."

 

PCGS has recently changed their grading standards by what has now become an entire grade point tighter than they were about 6 months ago. If you have sent anything in recently, you know what I'm talking about! There is no such thing as consistency with PCGS. They grade tight for a year and then loose the next. They grade tight so that people will crack all the clearly undergraded stuff out and resubmitt it during the loose period. (I don't know why people talk about "what we will do after there is no longer a need for garding services," because so many of the slabbed coins need to be regraded.)

 

PCGS has become so tight on State Quarters that I have stopped sending them to PCGS. NGC is grading them very strictly (in line whith PCGS grading, that is before they changed their standard again) and very consistently. Plus NGC recognizes the prooflike examples and PCGS does not. The few NGC state quarters I have sold so far have gone for similar prices as the PCGs ones too!

 

To sum things up, PCGS changes their grading standards all the time, and not just on moderns. They have becocome so unrelyable that I don't use them for moderns anymore. The bubble is on all PCGS coins, not just moderns. PCGS may be happy to show everyone that PCGS has graded fewer gem coins than NGC, but thats not necessarily a reflection on the loose standard of NGC, but rather the unacceptably (that is, not accepted as the marketplace standard) tight and ever changing standard of PCGS.

 

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That is interesting, my complaint really was based on consistent tightness on moderns and rampant inconsistency on classics, but it appears that some modern collectors are seeing the same thing, though it appears to be concentrated in being too tight. My contention is that classics vary both ways, both too tight and too loose.

 

As for old collectors being responsible for bubbles, there is no argument there. But responsibility for irrational exuberance in moderns is a topic for a whole other thread!

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I really should have written my original response better...

 

I was attacking the sheep who fall for the hype. I'm not actually singling out any specific series or era. My biggest complaints are against grade hype and series hype.

 

You can't hype an area if there wasn't enough of it to hype. Thus, one normally hypes that which doesn't deserve to be hyped.

 

Ever wonder why Early Half Dimes (pre-Capped Bust) isn't hyped? Because the MOST COMMON variety is a R.3. There isn't enough to market.

 

Ever wonder why you can't really hype Seated Quarters in GEM? Because too many dates are supreme rarities even in AU. The population is too thin to be worth the effort in hyping.

 

Ever wonder why Morgans are hyped so much (by QVC, etc.)? Because they are more plentiful in GEM than the grains of sand, and they're very attractive in GEM. So, they are worth the effort.

 

I can go on and on and extend this into the current series of coinage that our blessed government have given us... But, I think you all get my point. (You may not agree!)

 

EVP

 

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There's a lot money to be made in the moderns. All you have to do is find a gem in a mint set or bag, and get it in a monster grade PCGS holder. Sure you might have a lot of misses, but the if you get a few hits and can convince a registry person or a new collector with more money than knowledge to pay a 4-figure sum for it, you are ready of your killing. grin.gif

 

I will believe in this overpriced modern market when I see some of these market markers actually PAY prices that are consistent with their selling prices. That day will probably never come because just when this modern bubble is scheduled to mature, a whole new group of modern coins will have come along, and those with the short attention spans tongue.gif will have moved on. In mean time those who invested in the "roach motel" will be more the sorrier and many dollars lighter in the wallet. confused.gif

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There are some of the larger players in the moderns starting to buy them at higher prices. It's always been possible to find these coins in the mint sets, proof sets, and the very few rolls that were saved, but the all these sources are getting a little tougher and the demand keeps growing! You'll find several of the biggest names sniping away on e-bay all the time. No, there are no buyers for raw coins yet, but this too will come to be.

 

While modern coins will be made for many years yet, it's unlikely people will depart the currently modern coins to collect them. Coins are usually ignored for ten or twenty years after issue because they are percieved as common. Never before, perhaps, have they been ignored for over a third of a century as the current moderns were.

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It still seems extremely instructive that when the tulip bulbs were hot the people all tended to see the logic in fine tulips being valuable. When MS-65 morgans were hot collectors were climbing over one another to get on board before the boat sailed. And when moderns gain some attention and hold out promise for a revitalized hobby, some are intent on dissuading anyone from getting involved. ...extremely instructive indeed.

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I have no problems with moderns, nor do I have problems with collecting the highest quality available. The only problem I have with the entire situation is that I believe PCGS has artificially held down the top populations. To me, this has price danger written all over it - but perhaps David Hall is correct - perhaps when coins are actually available the prices will rise. Who's to say?

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Can't believe I've stayed out of this discussion til now. But here goes nothing. Some of you may have read this in another Forum - and for you I apologize for repeating it ( some of you may wish I just apologize period ). But i think it deserves discussion here as well.

 

The root issue of this entire discussion is most often missed completely. Cladking always hits upon it - as do I - but for some reason nobody ever seems to understand it. Perhaps that is because nobody believes it. Well - you should believe it because it is true. And the truth can never be denied. Nonetheless - people will believe what it is they want to believe. And no amount of discussion on the subject will ever change their minds. That is the nature of people. But what we are talking about is the nature of coins.

 

Grading companies would like nothing more than to be able to give every coin they receive the ultimate grade. This would make their customers very happy and any business wants to make its customers happy and keep them that way so that they keep coming back. But they cannot do this. If they are to survive they have to give what is considered at the time to be an honest and accurate grade. Otherwise they will soon end up with a reputation such as ACG has and likely soon go out of business.

 

Now considering all the other comments I have made regarding grading companies - I think everyone here knows what I believe - and I am not refuting those previous comments. Yes they overgrade - yes they change the grading standards as it seems to suit them whenever the market changes. But there is a line that even the grading companies cannot cross - they cannot cross the line of credibility that they still retain with the vast majority of the collecting community or they will cease to exist. Recently they came perilously close to that line - which is why they have all tightened up their standards in recent months in order to maintain that credibility.

 

But the root issue is this - in coins produced for circulation it is exremely unusual - rare even - for a given coin to be produced with a quality that would deserve an honest grade of MS67 or higher. Most people refuse to believe that because of the number of coins produced. Nonetheless it is true. Horsepuckey you say!!

 

Well producing coins in huge numbers has absolutely nothing to do with ending up a large number of high quality coins. In fact - it has the exact opposite effect. Producing coins in huge numbers means more coins will be struck with the same die. And the more strikes a die makes - the lower the quality. It also means there is not enough time to even attempt to strive for high quality coins. In order to produce in huge numbers the coins must be pushed through the presses at an outrageous speed - this further reduces the quality. So the end result is that there are very, very, very few high quality coins being produced.

 

This premise is very easy to prove - not just suppose - not just think - prove. Pick any denomination you want - and any year you want of a coin that was produced for circulation. But this must include only those coins that are at least - let's say 25 years old. Then do a search - not just 5 minutes worth - an honest to God thorough search of all available information for examples of that denomination & year that exist in an MS67 grade or higher. This search should include all aution records, all coin census reports, all population reports etc. This can be done - the information is available on the internet for those who wish to take the time to look for it.

 

Now once that search is completed - tally up your numbers. What you will find is that there are certain years with a higher number of coins in that grade of MS67 or higher. But even those numbers will be quite low and only equal a small fraction of 1% of the total mintage. And in many years you will find that there are less than 10 examples. And the farther you go back in time - those numbers will decrease even more. And in some years you will find that examples in MS67 or higher simply do not exist.

 

Now we come to the question of why slab a 2002 coin ? Why indeed - the answer is obvious. Once a coin is minted its quality begins to deteriorate if it is not stored under ideal conditions. And very, very few store their coins under ideal conditions. The surface of the coin will react with the air - with the materials it is stored in - with materials that are stored near it etc etc. And gradually the coin will deteriorate and thus its quality. So by slabbing the coin or even taking the care to store it properly today to maintain its pristine condition and quality - you have assured yourself of what will in time become one of the finest examples known for that given coin.

 

But you say there are so many coins available in those high grades - why bother to keep them or maintain them ? But large numbers of high grade coins do not exist - even today - but for the sake of argument let's assume they do. Well that is exactly what collectors have said throughout the years about the coins that are produced at what was the present for them. And so those coins were not saved - they were not stored under ideal conditions and as a result even fewer of them exist today.

 

And the cycle will continue - it will not change now or ever. That is the nature of people. For they refuse to acknowledge that what may be common today - will not be common tomorrow.

 

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TDN,

 

I watched, with great interest, some of the threads that followed D. Hall's statement about MS/PR 70's. Although the flood gates haven't opened, people are now finding a few 70 coins coming back in their submissions, to both their glee and developing horror, particularly the registry guys. I think D. Hall is damned if he does and damned if he doesn't. I think you are right about PCGS artificially holding down top-pops, and now it's going to come back and bite them.

 

Andy

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There are no MS-70 regular circulation strike moderns. These coins are mostly rare above MS-66. Greater numbers of coins graded at the higher levels may well be beneficial to the post-1964 markets. While those with currently rare PF-70's may watch the slabbing of many more with disdain or even horror, even here increasing demand will bail many out of all but their worst mistakes.

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I will believe in this ultra high priced modern coin market when:

 

(1) I see dealers paying prices for RAW coins that are anywhere near the prices their customers are paying for SLABBED coins.

 

(2) I even see the same dealers paying prices for SLABBED coins that are anywhere what their customers pay for these coins.

 

When I see that I will start to believe. Otherwise I view this as promotion and a fad. Nothing more.

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The market continues to develop and evolve nearly as fast as BillJones conditions for acceptance. Hence the market should have many years of vitality ahead of it.

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The reference to the Tulip craze is very appropriate. It's only a matter of time and the drop will be abundantly swift and incredulously steep.

 

roadrunner

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ask yourself what is this coin worth out of its holder?

 

if there is a huge price difference a really huge difference then let the buyer beware!!

 

if you think about it ultimately it is the coin not the holder? right??

 

this tells me lots

 

i am sure there will be many who will make lots on these coins but a day of reckoening is coming

 

sooner or later

 

sincerely michael

 

 

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a gem proof 67 common date pcgs three cent nickel with tremendous eye appeal is worth around 1550 retail?

 

cracked out of its holder is at least has to be worth 700 dollars?

 

i know nothing about state quarters but i am sure a state quarter sold someone in the last 6 months

for lets say 1550 a pcgs coin ms 68 of a certian datre and mintmark

 

is this coin worth 700 dollars out of its holder? 70 dollars?? 7 dollars??

 

sincerely michael

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Well producing coins in huge numbers has absolutely nothing to do with ending up a large number of high quality coins. In fact - it has the exact opposite effect. Producing coins in huge numbers means more coins will be struck with the same die. And the more strikes a die makes - the lower the quality.

 

The problem with this is that there are so many dies out there, that before they wear out they have already struck MILLIONS of nice specimens.

 

 

 

It also means there is not enough time to even attempt to strive for high quality coins. In order to produce in huge numbers the coins must be pushed through the presses at an outrageous speed - this further reduces the quality. So the end result is that there are very, very, very few high quality coins being produced.

 

If this were true, then most modern coins that fail to meet the elusive MS67 grade would be because they were poorly struck with worn dies. This is NOT the case. Most modern coins that fail to meet the elusive grades do so because of marks. They aren’t MS67s because they were dumped into giant vats and run thru counting machines and thrown into bags and dumped on pallets and so on. It has nothing to do with the fact that a die struck a bunch of them. This isn’t 1820.

 

 

Now once that search is completed - tally up your numbers. What you will find is that there are certain years with a higher number of coins in that grade of MS67 or higher. But even those numbers will be quite low and only equal a small fraction of 1% of the total mintage. And in many years you will find that there are less than 10 examples.

 

And this doesn’t prove that there aren’t a bunch of gem coins out there waiting to be found.

 

I looked thru about 200 rolls of 1969-S 1¢ and I found ONE that graded MS67 and a small handful that graded MS66. Thanks to my coin the pop for MS67 went from 2-to-3. Is this an example of a coin where the large mintage resulted in poor strikings? Not at all. I could have just as easily found 200 coins that were of MS67 quality.

 

The fact that there aren’t many of these coins can easily be attributed to the fact that until recently it wasn’t worth much for searching these coins. Look at MS67 clad Roosevelts that have low pops. Ever try to sell them? They go for pathetic amounts of money. I don’t even look at them because they aren’t worth it.

 

Now look at Jefferson nickels. They’ve really heated up in price. More people are looking for them. The pops have gone up a lot because the money is there. Are the coins not out there? I’m starting to look at them more because of the money and I’m sure so are other people. BTW, slabbed a tied for top pop one today. However, I’ll likely crack it for regrade since it should have graded higher and been a finest known for that date.

 

Want to put your money on the line that this coin stays a top pop? How about that the pop doesn't tripe in the next 5 years?

 

 

 

 

Now we come to the question of why slab a 2002 coin ? Why indeed - the answer is obvious. Once a coin is minted its quality begins to deteriorate if it is not stored under ideal conditions. And very, very few store their coins under ideal conditions. The surface of the coin will react with the air - with the materials it is stored in - with materials that are stored near it etc etc. And gradually the coin will deteriorate and thus its quality. So by slabbing the coin or even taking the care to store it properly today to maintain its pristine condition and quality - you have assured yourself of what will in time become one of the finest examples known for that given coin.

 

Sorry, but this sounds like a line that a modern dealer would give us. The answer as to why slab a 2002 coin IS obvious, but it isn’t what you say. It is to make money by selling the coin to the plastic collectors. There are more than enough examples of high grade 2002 coins to satisfy demand. The mint has made an effort to produce nice coins for mint sets. Out of 10 sets I purchased I made (2) MS68 quarters, (~10) MS67 quarters, (3) MS67 halves, (3) MS67 cents, (1) MS66 nickel. If you think that I slabbed them for your reason, then you couldn’t be more wrong.

 

 

And the cycle will continue - it will not change now or ever. That is the nature of people. For they refuse to acknowledge that what may be common today - will not be common tomorrow.

 

Of course you forget to include some minor information that might be relevant. For example, many coins that were not saved in the past because they were common were minted with numbers in the millions. Today they are minted in the HUNDREDS of millions AND nicer specimens are put into mint sets for collectors.

 

 

Believe me, I LOVE moderns. Where else can you put a coin that would sell for $1 into a $10 slab and sell it for $1000? I try to finance my collection with money I make from selling moderns. I've got a nice collection. If I had to take a guess at the percentage of modern coins that I've sold that are at the same or higher value today as they were when I sold them, I'd guess 1%. I'd bet for MOST sellers of moderns, the percentage would be under 5%.

 

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One thing I've noticed in this thread is that those who write negative things about modern coins at very high prices end up with low star ratings? I tossed in a few 5 star ratings for those who are down to 1 star just to balance things out. These folks may not be "perfect 5’s," but they sure aren’t 1’s either!

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If this were true, then most modern coins that fail to meet the elusive MS67 grade would be because they were poorly struck with worn dies. This is NOT the case. Most modern coins that fail to meet the elusive grades do so because of marks. They aren’t MS67s because they were dumped into giant vats and run thru counting machines and thrown into bags and dumped on pallets and so on. It has nothing to do with the fact that a die struck a bunch of them. This isn’t 1820.

 

OK greg - let's say you are right. Whatever the reason - if they don't make the grade - they don't make it.

 

And this doesn’t prove that there aren’t a bunch of gem coins out there waiting to be found. ..... I looked thru about 200 rolls of 1969-S 1¢ and I found ONE that graded MS67 and a small handful that graded MS66. Thanks to my coin the pop for MS67 went from 2-to-3. Is this an example of a coin where the large mintage resulted in poor strikings? Not at all. I could have just as easily found 200 coins that were of MS67 quality.

 

And your statement doesn't prove that there are a lot of high grade coins to be found. If anything - I'd say it lends credence to what I have been saying. How many others like you do you think there are that have conducted this same search ? They aren't finding them either. So if it was easy to find these high grade coins - somebody would find them.

 

The fact that there aren’t many of these coins can easily be attributed to the fact that until recently it wasn’t worth much for searching these coins. Look at MS67 clad Roosevelts that have low pops. Ever try to sell them? They go for pathetic amounts of money. I don’t even look at them because they aren’t worth it.

 

Sounds amazingly like what I've been saying - that collectors are not keeping the high grade examples of these coins - because they are not worth it. And I agree completely - they aren't - today. But 50 years from now - will that still be true ?

 

Now look at Jefferson nickels. They’ve really heated up in price. More people are looking for them. The pops have gone up a lot because the money is there. Are the coins not out there? I’m starting to look at them more because of the money and I’m sure so are other people. BTW, slabbed a tied for top pop one today. However, I’ll likely crack it for regrade since it should have graded higher and been a finest known for that date.

 

Want to put your money on the line that this coin stays a top pop? How about that the pop doesn't triple in the next 5 years?

 

You might turn out to be correct. Perahps a large number of high grade examples of these coins will be saved. But again - I am not talking about how many of them will be around 5 years from now. I am talking about how many will be around 50 or more years from now.

 

Sorry, but this sounds like a line that a modern dealer would give us. The answer as to why slab a 2002 coin IS obvious, but it isn’t what you say. It is to make money by selling the coin to the plastic collectors. There are more than enough examples of high grade 2002 coins to satisfy demand. The mint has made an effort to produce nice coins for mint sets. Out of 10 sets I purchased I made (2) MS68 quarters, (~10) MS67 quarters, (3) MS67 halves, (3) MS67 cents, (1) MS66 nickel. If you think that I slabbed them for your reason, then you couldn’t be more wrong.

 

What you say is true Greg - no doubt about it. And I applaud you for being successful in your efforts to finance your hobby. But that in no way proves it is wrong for the reasons I suggest. It just proves there is a reason for doing it now as well. And of course you can find high grade examples of 2002 coins. But can you find huge numbers of them ? And by huge I don't mean 1 - 2 or 3 thousand examples. I mean 10 - 15 - 30 thousand examples. For you would have to find them in numbers like that today for there to be even a small percentage of those numbers left in 50 or 60 years.

 

Of course you forget to include some minor information that might be relevant. For example, many coins that were not saved in the past because they were common were minted with numbers in the millions. Today they are minted in the HUNDREDS of millions AND nicer specimens are put into mint sets for collectors.

 

I didn't forget - I readily admited there are huge numbers of coins being produced today. What I said was that huge mintage numbers do not necessarily mean huge numbers of high grade examples. You are correct - many of the coins in the past were only minted numbering in the millions - and not the hundreds of millions. But there were also many that were minted in the hundreds of millions. The '41 quarter - there were 112 million minted. The '42 & '44 quarters - there were 102 and 105 million of each. The '41 cent & the '46 cent - there were 887 & 991 million of those. Those are just some examples - there are many more. But go try to find large numbers of those coins - that were minted in the hundreds of millions - in MS67 or above. Good luck ! And oh yeah - they made mint sets back then too.

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As far as the modern/classic debate, I don't really care, as long as the value lies in classics, I will collect them and leave my moderns to the Whitman folders. Just think about it, I just bought a 1913-S Saint, in MS-61, for $1300. The coin has a mintage of 34,000, lower than any other coin in the series except for the 07 HR and the 08-S, and if I cracked it and sold it raw, I bet I could still get close to a grand out of it. Tell me a modern with similar fundamentals?

 

I didn't want this thread to devolve into the modern/classic debate again, and it's my own fault for not being more clear in my initial post. So let's me try again. Do you think that the current focus on moderns by the grading services is hurting the quality of the service they provide on classics?

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I didn't want this thread to devolve into the modern/classic debate again, and it's my own fault for not being more clear in my initial post. So let's me try again. Do you think that the current focus on moderns by the grading services is hurting the quality of the service they provide on classics?

 

With PCGS, IMO, yes. I think PCGS is so modern-centric that they have become clueless to what originally toned coins should look like. As a consequence, they panic whenever they see an originally toned coin and downgrade it. Or, they'll see a vibrant Ike and think it must be original. And, because the Ikes are ``original'', so must all the other visually enhanced Morgans, etc.

 

NGC, as far as I can tell, loves originally toned coins. As for the other services, I really don't know...

 

EVP

 

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I don't think that a concentration on modern coins has caused the service on the classic coins go down hill. I think that's due to other problems.

 

(1) A great many of the classic coins that could be graded (given the body bag policy for problem coins) have been graded. That's why you now see NGC marketing a problem coin slab.

 

(2) Resubmits are providing the services with more work. One big incentive is that coins that were graded years ago now have a great chance of going into a holder with a higher grade on it. I know I've got coins I'd have to resubmit before I'd try sell them. Why give the higher prices to someone else?

 

(3) All the the grading services have been inconsistent from the get-go. I'll agree that their standards have slipped for many series including all early coins, southern mint gold coins and even Morgan Dollars (some of the newly graded "CCs" are really disappointing). Now it just seems worse because the standards have slipped overall so the overgraded coins look even worse. I can't explain in words how unattractive the last AU graded 1795 half dime was that saw. Yet SOMEBODY bought from the dealer who had it for sale for around $4,000.

 

(4) Why have the standards slipped? Maybe the services feel duty bound to supply high grade coins, even if they are not available.

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