A Return to the BigE Adventure: Valuation of a Coin Bought Raw at Auction

IGWT · June 13, 2007 5:47AM

BigE's recent experience with the 1862 S$1 brings to mind a question that I've wondered about for a while. I hope that he doesn't mind me using his coin as an example, but it has already received a full airing, so I'm not revealing any information that isn't already known to everyone who has followed the saga.

BigE bought the coin raw for $9,200 -- an amount that is on the low side of the divide between 64 and 65 money -- when it was auctioned by Stack's a couple of months ago . He went beyond where any other bidder was willing to go, including knowledgeable dealers and collectors who viewed the coin in person. The underbidders (and those who decided against bidding) obviously didn't see value in the coin above what BigE was willing to pay. NGC has since certified and graded the coin as PR66 (congrats, BigE). I don't follow the prices of Liberty Seated coins, but others have conservatively estimated the value of the coin to be $25 - 30,000, and a check of the guides shows this estimate to be reasonable.

Now the question: Does the TPG opinion really double or triple the value of this coin? Or, put another way, is the value of the TPG opinion for this coin $15,800 - $20,800? (Please don't answer the question by referring to the difference between NGC and PCGS or any other grading company; if that matters to you, just pretend that PCGS graded the coin.)

Russ · June 13, 2007 5:49AM

<< Now the question: Does the TPG opinion really double or triple the value of this coin? >>

The reduction of risk and uncertainty is what added the value.

Russ, NCNE

Baley · June 13, 2007 5:51AM

a tpg slab is essentially a rough appraisal and the marketplace generally values the opinion, yes. ( as with everything, some opinions are more valuable than others)

PrivateCoinCollector · June 13, 2007 5:58AM

A most Emphatic yes.

TahoeDale · June 13, 2007 6:01AM

It depends. If the Seated dollar referred to is considered flawed, by those that are the next potential buyers, then the certification will probably not increase the value by the amount of the current guides.

But the value will surely go up from the purchase price of under $10,000.

Another example of a raw coin, that when certified, beat the current price guides when sold.

At The Buddy Byers sale(2006), an 1805 bust half, graded by Stacks as choice almost unc. sold for around $8000 hammer. The same coin sold in the Queller sale (2002) for $4250 hammer.(Graded there as BU, also by Stacks)

When certified by PCGS last year as AU 58, it sold for @$18,000.

So, depending on the quality, and rarity of the coin, certification can really pay dividends.

guitarwes · June 13, 2007 6:04AM

I second Russ' statement.

Now, a buyer, will feel all warm and gushy inside when he/she looks at it because it rests in a tomb and has been "certified". Regardless if the grade is correct or not, the plastic is the key baby!

IGWT · June 13, 2007 6:16AM

-- "a tpg slab is essentially a rough appraisal and the marketplace generally values the opinion, yes." --

So a rough appraisal matters more than the actual value as determined in the marketplace?

taxbuster1040 · June 13, 2007 6:33AM

I wonder if the result of this experience will cause some collectors to feel they can go and buy coins like this sight unseen, based on gut instinct, without a dealers asssitance, and make some money. Sure it is a risky strategy, but seems to have a handsome payoff.

ricko · June 13, 2007 6:34AM

As has been stated repeatedly... buy the coin, sell the plastic. (Wish I had said that first)... Cheers, RickO

Shamika · June 13, 2007 6:36AM

The coins value is no different. However, the coin now has a guarantee attached to it. THAT'S the premium one would be paying for.

Cladiator · June 13, 2007 6:52AM

<< just pretend that PCGS graded the coin >>

That's what BigE is going to be telling the perspective buyer when he try's to sell it.

tradedollarnut · June 13, 2007 7:00AM

Honestly, the market value depends on what the coin looks like in hand. I've seen no motto NGC PF66 seated dollars sell privately for only $15k.

fc · June 13, 2007 7:02AM

in the coin market place that slab means everything it appears.
so yes to your question.

the same thing is going on in the comic book market place. comics
that sold for 100 "raw" are selling for 350 slabbed with a little
number on it from 1-10 (grade).

the people who can grade comics laugh at the plastic companies.
the people who are new to collecting or fell for the marketing think
the plastic adds a lot of value.

me, when it comes to coins, i am quite sure if i cracked out my coins
they would not lose 50% of their value.

bigE's would. strange huh? why play the game at all. let others reap
the rewards and take the losses while you simply collect what you want.

or is coin collecting competitive in many ways?

Baley · June 13, 2007 7:51AM

So a rough appraisal matters more than the actual value as determined in the marketplace?

No, the past through current value is still what it sold for. The future value of an item is been known to change if new authentication and/or evaluation opinions are rendered.

GoldenEyeNumismatics · June 13, 2007 9:12AM

<< 

<< Now the question: Does the TPG opinion really double or triple the value of this coin? >>

The reduction of risk and uncertainty is what added the value.

Russ, NCNE >>

Longacre · June 13, 2007 10:01AM

Dang. Why are the best questions asked when I am not in the office?

IGWT · June 13, 2007 11:08AM

-- "The reduction of risk and uncertainty is what added the value." --

You'll probably think that I'm being intentionally obtuse when I ask this question, but I'm not: What risk and uncertainty? The maximum risk, e.g., a total loss if the coin is counterfeit, can't exceed the value of the coin itself. So, I don't see how eliminating risk can triple the value of any object, including a coin.

fc · June 13, 2007 11:13AM

-- "The reduction of risk and uncertainty is what added the value." --

What risk and uncertainty? The maximum risk, e.g., a total loss if the coin is counterfeit, can't exceed the value of the coin itself. So, I don't see how eliminating risk can triple the value of any object, including a coin.

-------------------------
"Would you pay even a fraction of the amounts kicked around here for slabbed 69/70 grades if the coins were raw?" -- M.

--------------------------
--------------------------

does not your own signature sorta answer the question in a way?
edited to add: you seem to have figured it out. some coin series
in certain grades are like this.

coindeuce · June 13, 2007 11:17AM

<< As has been stated repeatedly... buy the coin, sell the plastic. (Wish I had said that first)... Cheers, RickO >>

Ahhh yesss!! Gradeflation is alive and kicking!!!

roadrunner · June 13, 2007 11:26AM

BigE bought the coin raw for $9,200 -- an amount that is on the low side of the divide between 64 and 65 money -- when it was auctioned by Stack's a couple of months ago . He went beyond where any other bidder was willing to go, including knowledgeable dealers and collectors who viewed the coin in person. The underbidders (and those who decided against bidding) obviously didn't see value in the coin above what BigE was willing to pay. NGC has since certified and graded the coin as PR66 (congrats, BigE). I don't follow the prices of Liberty Seated coins, but others have conservatively estimated the value of the coin to be $25 - 30,000, and a check of the guides shows this estimate to be reasonable.

First of all $9200 is most of the way to a low end NGC65 PF NM seated dollar. I'd say that low end 65's trade in the $10-12K range.
So $9200+ might have not offered enough reward to other bidders.
Their money may have been utilized better elsewhere. So at $9000 or so the coin was being seen as 64++ or 65- by more than one person. But it doesn't appear that anyone was thinking 66.

A PF66 grade will normally about double a 19th century seated type coin's value. Yes, the holder does add value. Witness the NGC PF68 1890 half I sold a year ago that crossed to PCGS 68CAM. Overnight the value of the coin doubled - and it didn't even change numerical grades. But it went from pop 35 at type at NGC to pop 2 at PCGS. So yes, the holder and label matter in most cases. However there are clearly mistakes in holders that few if any will pay for. Also understand that while NGC guarantees this seated dollar as PF66, I'd be very surprised if they ever disagreed with that grade on a "grade review."

The PF65 pops for a NM type at NGC is less than double that of a 66.
Based on that I'd say the value should no more than double going from NGC 65 to 66. That would mean a $20-24K valuation. The coin is pop 9 for NGC66. Blue sheet only bumps the price 60% when jumping to a 66 grade (supports the <2X PF65 valuation). And using the +33% rule to Blue sheet bid gets you about $20K for a decent PF66. That doesn't mean that someone won't pay $25K+ if they love the look of the coin.

roadrunner

IGWT · June 14, 2007 12:52AM

I'm constantly amazed by the power of plastic to transform the view of what it contains. Maybe I'll get over it someday.

Longacre · June 14, 2007 12:57AM

We will not know until the time of sale. It is possible that the underbidders on the coin still think it is worth a little south of $9,000, no matter what plastic it is in. However, it is also very possible that another interested party will be willing to pay based on the number on the plastic, regardless of the "history" of the coin. So I guess I am saying that it can go either way.

lava · June 14, 2007 1:00AM

It's not "just" a grade or opinion from the TPG, at least not in the case of PCGS or NGC. It is insurance. You pay for car insurance, health insurance, life insurance, etc. Think of it as coin insurance and it is easier to see why the TPG's slab does add value.

tradedollarnut · June 14, 2007 1:01AM

Unless it's the worst POS in the history of grading, basal value on the coin is $15k.

BigE · June 14, 2007 1:05AM

You can call an auction house and ask questions such as "which more accurately describes the coin, the description or the picture", or "can you see any hairlines on it at all" and form your own opinion. On the coin above they said the description was accurate----------------------------------BigE

IGWT · June 14, 2007 1:10AM

Unless it's the worst POS in the history of grading, basal value on the coin is $15k.

Not to quibble, TDN, but it seems to me (assuming your figure is correct) that the value of the coin is $9,200, and the basal value of the holder is $5,800, for a combined value of $15K.

Edited to fix stupid math mistake.

tradedollarnut · June 14, 2007 1:17AM

<< Unless it's the worst POS in the history of grading, basal value on the coin is $15k.

Not to quibble, TDN, but it seems to me (assuming your figure is correct) that the value of the coin is $9,200, and the basal value of the holder is $3,800, for a combined value of $15K. >>

Your math is wrong.

I guess I'd tend to disagree just a little bit as I think that auction flips count as a 'holder' and have either positive or negative value associated with them depending upon the sale [ie: Eliasberg might have positive value, an obscure non named sale negative value]. There are plenty enough stories of hairlines becoming apparent after removal from the flip to justify this line of thinking.

Expanding on that line of thinking, the coin might have a base value of $15,000 and the auction flip added -$5,800. Or perhaps a base value of $12,500 and the flip added -$3,300 and the NGC plastic a minimum of +$2,500.

IGWT · June 14, 2007 1:23AM

Your math is wrong.

I fixed it. Thanks.

RYK · January 4, 2012 8:16AM

Here is a thread about the thread. I still cannot find the original.

D · January 4, 2012 8:21AM

<< Here is a thread about the thread. I still cannot find the original. >>

Eerie thread, IGWT and BigE.

-D

A Return to the BigE Adventure: Valuation of a Coin Bought Raw at Auction

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