Are we better with grading companies.

Larrob37

I remember as a young fellow collecting coins that the coin was worth what buyer would pay and seller would accept with no price guides to reference. I know there were price guides for the heavy sellers but generally most buyers had no access to these guidesI I realize a coin price still has to be agreed on between buyer and seller. The difference is now everybody has access to a price guide so a lot of times the price is automatically priced at close to guide price unless its a exceptional coin. This leads me to the question where the coin market would be without grading companies.

yosclimber

Your question seems more about price guides.
The Red Book has been around since 1948 or so, and there were similar catalogs before that.
Really the price guide does not create the prices, but is more like a recent history of prices.
Prices will reach an equilibrium due to supply and demand, and a good price guide can't fight that,
or it will be inaccurate and unpopular.

Grading companies have more of an impact on MS grade coins, and they make it possible for people
who are not grading experts to participate in the market with less risk.

daltex

I'm confused. There have to be very few of us who were collecting before the Red Book existed. Not perfect, not precise, not always very accurate, but for the last 75 years there has always been a guide you can point to. The big change wrought by TPG is that it has become more difficult for a dealer to buy a coin at one grade and sell it at another. Saying "PCGS messed up and this is a low quality XF." at the buy and "A lot of the time PCGS would call it an AU," or "This would get a Gold CAC for sure" at the sell are at once less convincing and narrower. I mean now one is going to claim a coin slabbed as 58+ is really 65.

The reason prices are more standardized is that everyone has a pretty good idea what a MS 70 2021 Morgan looks like, so they are fairly interchangeable. To a degree, coins that are not exceptional (in a good or bad way) tend to be widgets. The population of '81-S Morgans in MS 64 is, as I type, 111,182. If we assume that up to 10% are exceptionally good and a similar number exceptionally bad (either very ugly or just outright overgraded) that leaves close to 90,000 whose price should retail close to the $155 in the PCGS guide. So 10% dreck, 80% widgets, and 10% you really need to see in hand. The only problem is that that bottom 10% exists, so sight unseen prices have to be for those, which is why Bluesheet prices were/are so much less than Greysheet prices.

Obviously rarer coins won't have the same number of widgets, but the principle is the same. Also note that the widgets and especially the dreck are overrepresented among coins for sale. If you see one of the coins I'm focusing on month after month on eBay for $100, you've found a piece of dreck. It is rare to find the top 10% coin because buyers who use the guides will never pay close to what the coin is worth.

Unknown

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jmlanzaf

@alpha33 said:
"This leads me to the question where the coin market would be without grading companies."
Easy question...................,
back in the hands of the collector...........................

How is it that the US mint can produce BILLIONS of coins every year (business strikes alone), coins you can literally pull from circulation. Yet once that shiney new penny, nickle or dime is submitted and graded, it suddenly becomes a $50 or $75 coin?
The little guy doesn't stand a chance.

The little guy can slab the coin himself, if he wants. The little guy can also buy the coin raw, if he wants. You're argument is backwards. TPGs have made it harder on dealers and easier on the little guy.

Larrob37

I personally think that grading companies have taken away a lot of the dealer advantages that dealers used to have. I think grading companies have kind of evened the playing field. That being said graded coins have cost collectors a lot of money because now most sellers will say the price guide says my coin is worth this much and im pretty much sticking to that price. In the past a buyer would determine what they would pay based upon individual coin not a ms grade. Graded coins have had the biggest effect on seller fraud by eliminating most of the unknowns on a coin. This has made it safer for buyers.

CoinHoarder

Grading companies made it harder for the small percentage of coin dealers and others who "low-balled" sellers.

Also, it protected the collector from un-knowingly getting stuck with a counterfeit, altered or harshly cleaned coin. The slab also protects the coin from further damage.

I think grading companies are one of the best things, if not the best thing, that ever happened to coin collecting. I do not believe you would have near the popularity of coin collecting that you have today, without grading services.

Grading services made it so that you could buy a key, or semi key coin, with confidence that you were getting what you were paying for.

Grading companies evened the playing field between buyers and sellers.

lkenefic

The OP's thread seemed more about price guides. Certainly the Redbook springs to mind, but I also recall the first time I ever got my hands on a Greysheet... I had my epiphany that dealers bought at one price and sold at another... lol... I was around 12 years old.

I think TPGs have more allowed sales to take place on coins "sight unseen". Obviously, I'm looking for decent pictures before bidding, but I can also be reasonably confident that if a coin is in our host's plastic at a certain grade, it should at least meet that expectation when I have it in hand.

Larrob37

I really am not focused on the coin guides as i know redbook and others have been around before me. I think the redbook is better used to learn about coins instead of as a guide for prices. I always thought their prices were high. I think i should have asked where we would be without grading companies. I think we would be in same boat we were 50 years trusting sellers that the coin is free of problems, which is kind of wishful thinking. Crooked sellers have been around since the first sale of any merchandise . I dislike the grading companies because they make it more of a money game but i like the grading companies because i feel safer buying a coin. It also makes it harder to find a deal on coins as a lot of the sleeper coins have been graded thus eliminating almost all possibility of finding a sleeper at a low price.

shorecoll

FYI. The Standard Guide was the predecessor to the Red Book and overlapped it for several years...it started in 1935.

WAYNEAS

Grading services have made a big difference for me.
I am not as knowledgeable on grading raw coins as they are.
This is the reason that I avoid raw coin purchases.
Wayne

alefzero

Grading services helped clean up the messed up coins corner of the market. While it might be uneven in getting guarantees, I doubt any service would play hardball on a slabbed added mint mark, altered date, or flat out counterfeit. Used to be a minefield out there. Now it just pops up as raw coins at regional and local shows and online marketplaces, principally eBay.

Grade-wise, we now have ant arbiter on grades. Definitely imperfect, but it does work better than the old way. Teletrade created a market for sight-unseen trading of these widgets fairly early in the game. They pretty much created a commodities market in UNC Morgan dollars. Auction companies were pretty slow picking up on it, favoring tradition for years before following suit. I seem to recall Stack's cataloguing entire auctions raw well into the 1990s.

The center of the collector generation dictates how that all goes. Like it or not, we all know the old B&M shops and coin shows are mostly going out. The younger collectors are not just comfortable with, but favor, online trading. While no substitute for in-hand inspection, digital imaging is pretty damned good when done right. They also participate regularly in auctions, the former domain of national dealers and a handful of whale collectors. We miss handling coins, rather than coins entombed in seal plastic. But we also handled coins in daily commerce. The younger folks cannot relate. But there are smart ones who can see beyond the plastic and assess less tangible measures of worth, not just assigned grades and shiny stickers.

I think the grading services and online (formerly telephone) pioneers have saved the hobby and it tucked right into internet technology and culture where it needed to go. With all of the problems here and there, the hobby would be a disorganized cesspool scaled beyond the horrors of eBay without them. Could things be improved? Without a doubt, and not just in increasing efficiency and reducing submission times.