Coin Week: "Modern Coins – Are MS-70 Coins “Value Traps”?"
Goldbully
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Good article on the subject of grading modern Mint issued coinage...........................
Coin Week: "Modern Coins – Are MS-70 Coins “Value Traps”?
By Louis Golino -
July 18, 2018
Thirty plus years after the establishment of the first professional coin grading companies, some modern coin collectors remain skeptical of the benefits of third party grading. For many of them buying raw, ungraded coins is a kind of badge of honor that shows they have not succumbed to the mania for plastic holders. They rely on their own ability to grade coins and believe third party grading is a waste of money.
There is no question that the grading companies are not perfect. Sometimes they make mistakes, giving a grade that is clearly too high or too low for a coin. But overall, they perform useful functions by authenticating coins, protecting consumers from subjectively graded coins, adding market value in many cases, and generally facilitating the buying and selling of coins.
The grading of modern U.S. Mint coins has become a huge cottage industry for the grading companies and a major source of revenue for them, especially with all the large bulk orders they receive from dealers. But the grading of these coins continues to be especially controversial for a number of reasons. Some collectors feel slabbing reduces the value of coins, no matter what grade they receive. They think slabs are like caskets and prefer to be able to view the coin more closely. Others are convinced their coins are mishandled during the grading process, or that Mint capsules offer better protection than slabs. I am doubtful of both propositions.
In addition, the labeling of coins delivered to third party grading companies within 30 days of their release as “first strikes” or “early releases” remains controversial. There is no way to prove those coins were actually struck first. But some coins were hard to obtain within 30 days of their release because of delays in processing Mint orders, such as the 2009 Ultra High Relief double eagle, and UHR’s with the first strike or early release labels do bring higher premiums than coins without the label.
Perhaps most importantly, there is a growing preference among collectors and dealers for modern coins in their original government packaging (OGP) over the same coin in a slab of any grade or grading service. Some people view modern coins which are graded MS69 or below as “damaged goods.”
Modern coins which receive the top grade of MS70 are viewed with skepticism by some collectors and dealers. That is because the Mint tends to produce collector coins to very high standards, for the most part, and virtually any coin submitted for grading will receive either MS or PF69 or 70, although once in a while one gets a coin back with a 68 grade or lower. There are some exceptions to this general rule. The bullion versions of the five-ounce America the Beautiful coins, for example, have not received grades higher than MS69 from PCGS and NGC, but the collector versions have produced plenty of MS70 coins.
The main problem with modern MS70 coins is that their market value is largely a function of the population numbers for the coin in question in the top grade, and those numbers change all the time as more coins are submitted and come back as 70’s. A lot of collectors of modern U.S. coins make the mistake of paying a high premium for a 70-graded coin when it is relatively new to the marketplace, and over time the value of their coin declines substantially as the population numbers in that grade continue to increase because more people submit their coins.
So the first recommendation I would make is if you are not submitting coins yourself which come back as 70’s, and you are buying previously-graded coins which received the top grade, wait until the coin is no longer new to the market. Track how the premium for that coin in 70 evolves over time before purchasing one. There is no set amount of time, and clearly one can wait too long, but it is a good rule of thumb with modern coins not to get too caught up in the hype that tends to surround recent releases.
In addition, shop around. There are times when one can purchase 70s for a very small premium over raw coins. For example, last year I was able to purchase a 70 of a certain precious metal coin for virtually the same price the Mint charged for a raw coin. In this case, I acted sooner rather than later because I knew the coin was a great deal. Today it carries a nice premium.
Third, if you collect top-graded modern coins, I would suggest avoiding those from companies other than NGC and PCGS. There are certainly other reputable grading companies, such as ANACS and ICG, but they tend to use different standards when assigning grades to modern coins than do the two top companies.
Fourth, even experienced collectors and dealers have difficulty telling the difference between a 69 and a 70. Examine your coin from the Mint for possible flaws, and if possible obtain the opinion of a local dealer who has more than likely seen a lot more coins than you have. Grading fees, especially at NGC and PCGS, are costly, especially if you add fees for first strike coins, and in most cases, if you do not receive a 70, you will have overpaid. Dealers send in lots of coins at once and can be assured of getting some 70’s that will recoup a lot of their grading fees, but most collectors are not submitting large numbers of coins at once, so it is a gamble. In addition, the competition for registry sets sometimes drives the prices of very common coins in perfect grades to levels that do not make any sense such as MS70 Lincoln pennies that have sold for more than $10,000.
Finally, the market for MS70 coins as opposed to those in OGP is evolving. I recently attended the Baltimore Expo and had the opportunity to discuss this issue with John Robinson of Edgewood coin store in Florida. He told me that his company pays more for modern coins in their OGP than for slabbed versions, including MS-70’s, which surprised me. In his view third party grading is really only suitable for classic coins.
But remember that some coins graded MS70 are worth a lot more than raw or MS69 examples. A case in point is the rare, proof-only 1995-W silver eagle, which has a value in MS70 that is 10 times its value in OGP or MS69. In addition, if you are trying to get a good price for an MS70 coin, sell it to a company that specializes in modern coins such as Modern Coin Mart or APMEX
Louis Golino is a coin collector and numismatic writer, whose articles on coins have appeared in Coin World, Numismatic News, and a number of different coin web sites. He writes the bi-weekly column “The Coin Analyst” for Coin Week. He collects U.S. and European coins and is a member of the ANA, PCGS, NGC, and CAC. He has also worked for the U.S. Library of Congress and has been a syndicated columnist and news analyst on international affairs for a wide variety of newspapers and web sites.
https://coinweek.com/modern-coins/modern-coins-are-ms-70-coins-value-traps/
Comments
Great article, thanks for sharing !!!
If a MS70 coin carries a big premium over the same coin in MS69, I'll buy the MS69 every time.
Worry is the interest you pay on a debt you may not owe.
I would argue that most, if not all, modern coins are value traps at least for the foreseeable future (during our lifetime at least) regardless of grade. A notable exception may be bullion coins that trade for a small amount above spot (assuming the PM market doesn't tank).
Admittedly, I only scanned the OP.
For years, I have opined that 70 prices were out of line with 69 grades.
Took on some of the big dealers that say they are worth the money.
I think they are WRONG. (and guess what? They won't buy them back at their pricing, nor allow a credit for original price).
I even hypothesized that a 70 should cost much less than 10 times the cost of a 69 and was told I was an idiot. The Registry fools were paying much more.
I rest my case. (sorry for the cabernet influence).
“In matters of style, swim with the current; in matters of principle, stand like a rock." - Thomas Jefferson
My digital cameo album 1950-64 Cameos - take a look!
That is a good read! I love raw coins but also appreciate graded coins. There is definitely label inflation and slab tricks being utilized to raise prices, such as FDOI and ER .....colored slabs and signed labels.....pretty soon we'll have a label that boasts FIRST COIN PRODUCED or maybe LAST COIN PRODUCED...you never know!!!!!
Good points. Don't even get me started on premiums for First Strike. I've never paid a premium for a first strike label.
“In matters of style, swim with the current; in matters of principle, stand like a rock." - Thomas Jefferson
My digital cameo album 1950-64 Cameos - take a look!
The article is highly misleading and it appears intentional.
The fact is that most of what he says might be considered to apply to bullion and mint issue collector coins but not one word of it is appropriate to business strike moderns. This wouldn't be concerning except the author goes on to refer to the MS-70 business strike that no longer even exists (the owner was made whole).
As a better rule of thumb people shouldn't be buying coins in grades they don't understand and nobody should be investing in coins or buying them for resale except for speculators and dealers.
I'm guessing it's impossible for you to sell and wreck the market.
Bullion is bullion. Personally I will not play the condition rarity game even in collector coins. We have all seen coins graded 65 that look better than some 66's. A coin first has to have the look I desire to make me desire the coin.
I don't understand the appeal of grading modern coins and paying a huge premiums for MS70's and PF70's, but that is what collecting is all about. Everyone can collect any way they like as long as they enjoy it and it makes them happy.
Donato
Donato's Complete US Type Set ---- Donato's Dansco 7070 Modified Type Set ---- Donato's Basic U.S. Coin Design Set
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This is true, but I think business strike moderns are potentially even a bigger value trap - though different. The latest commemorative from the Mint gets submitted in huge numbers relative to the mintage. So, for those issues, while all 69 and 70s, the relative population is known and statistically probably accurate. For a 1968-P Lincoln cent, the number of coins submitted is small relative to the tens of thousands of coins still in original rolls. For that reason, the actual populations of these in higher grades are neither well known nor fixed.
In my ever humble opinion, of course.
Interesting perspective on modern issues. I know there are many out there that are still in the original mint airtite - both proofs and business strikes... bullion and others... I am also reasonably certain that most will never be sent in for grading. People just keep them that way for various reasons (i.e. stacking, family occasions, etc)... Now, at some point, these may very well enter the market - death of collector, emergency funds etc.. When this happens, populations of top grades may well change. Interest in the particular coin may have waned... So, overall, the market changes with interests, availability and sales hype (i.e. TV hucksters). So my philosophy is to buy what I like and enjoy it.
Cheers, RickO
the "70" grade seems most applicable to Registry Set collecting and those who have a need to have the highest graded coin(s) for whatever reason. it seems to me that the coins graded "70" are most at risk of having their value fall, especially the lower pop coins or the ones first released and bought. numbers almost always increase and value falls. at the same time, the sooner a coin is graded after being struck would mean the higher likelihood of certain problems surfacing after encapsulation, and overall there is just too high of a chance that a "70" coin will change in the holder to make sense for the risky high price they usually command.
to the Registry issue, coins graded "70" tend to pervert the concept and allow collectors to have an inferior set that grades higher and costs less to build. an example would be the one Registry Set I had, Proof Jefferson Nickels. it was a nice set but I could never climb higher than #5 because I refused to populate it with PR70DCAM coins. I could have done that and spent far, far less money than what it would have cost me to buy a DCAM 1952 Proof. it made no sense to me so after I pushed things as far as was sensible I just retired the set while other competed for the "70's" they needed to climb over me.
For a 1968-P Lincoln cent, the number of coins submitted is small relative to the tens of thousands of coins still in original rolls. For that reason, the actual populations of these in higher grades are neither well known nor fixed.
Sure there are many thousands, potentially millions, of '68-P in sets, rolls, and bags. But if you think there are going to be MS-68's coming out of the woodwork you just haven't been paying attention to these coins.
Ironically the '68 cent was one of the better coins in mint sets. But now they all have carbon spots because nobody cared. Of course there aren't very many '68 mint sets left anyway so no loss.
People hardly collected moderns at all until 1999 when the states coins came out. There are virtually no "old time collections" of moderns.
Of course there are some (few) high grade moderns out there but they aren't going to get graded at these prices. Most are held by only ten or twenty entities and none of these hoards are substantial because it was hard work to find coins this scarce.
I did the exact same thing. Liquidated "inferior" proof 69 sets because I would never pay the outrageous prices for the 70s. Decided to spend money on other series from the 1800's instead.
The Registry is a game that I choose not to participate in with ultra modern proof junk. So I am glad that PCGS has sets that stop at 1964 or some other reasonable end date. To H E double hockey sticks with all the proof issues from 1971 to date (but there are a few cherrypicks out there worth scooping up, including my PCGS PR69 Dcam avatar, purchased for about ten bucks). And while I am at it, if there is EVER a registry point premium for a first strike in any of my sets, I will retire them immediately.
There I feel better, even after a few Canadian whiskeys...…. (Caribou Crossing tonight).
“In matters of style, swim with the current; in matters of principle, stand like a rock." - Thomas Jefferson
My digital cameo album 1950-64 Cameos - take a look!
Perhaps most importantly, there is a growing preference among collectors and dealers for modern coins in their original government packaging (OGP) over the same coin in a slab of any grade or grading service. Some people view modern coins which are graded MS69 or below as “damaged goods.”
I think this should be.... OPG in an original unopened shipping box.
Only problem is, the coins must be in a sealed packaged to be a high value collectible. How boring is that? You can't even look at the coin(s). Otherwise, already opened OGP Mint products could have been replaced countless times after sending in for grading. Oh the indignity!!!!!!
If we start from the premise... At least for the purpose of this thread... that the modern coin era started in 1965, the article does not convey the real difference between those coins intentionally struck for collectors and those coins struck for circulation. And there is a difference. Most of the bullion coins are well struck and handled with some care. That cannot be said for clad coinage 50 years ago. Finding early clad coinage in a lofty grade is not like shooting fish in a barrel. While I may not spend whatever the going rate is for a 1978 Clad Ike that grades 68, I would not be quick to label such a coina value trap. A 2012 silver eagle at 70 seems to be the more likely candidate. I don 't see all moderns cut from the same mold that such a broad and sweeping question has a simple yes or no answer.
Experience the World through Numismatics...it's more than you can imagine.
The market dictates......IMO
It's overpriced if you don't believe in it and otherwise 