Some rambling thoughts and a question
MtMan
Posts: 47
Recently while trying to rationalize the huge jumps in prices realized for a single point increase in a coins grade a thought occured to me. Is the reason for this relatively new phenomenon that we as buyers now place more trust in a 3rd party's determination of a coins grade than we do in anyone's estimate of a coins rarity? Attractive coins have always been preffered over less attractive coins but the difference is that now we quantify a coins state of preservation (in theory). Rarity on the other hand is much trickyer to come up with even an estimate of. The following methods of assesing rarity have been used but all of these have major shortcomings that I'm sure you are all familiar with:
1) Mintage figures
2) Auction Records
3) Prices relative to other coins or series
4) population reports
When looking to buy a coin people typically want some assurance that they are getting a good deal even if they are not buying as an investment. As a result I believe that people are being drawn to high grade conditional rarities because the "number" gives them more confidence. It is also a convenient way to compete with other collectors as seen by the popularity of Registry Sets. In order to see a return of emphasis to rarity in the classical sense It would be necessary to come up with an accurate figure for the number of coins in existance with a given date, mint mark etc.
While population reports come the closest to achieving this there are still some major problems with using these figures. Even if we assume that in 20 years or so every coin worth enough to be graded has been encapsualted and accounted for it will not account for the constant attempts to resubmit coins in hopes of a higher grade. Here is where my Big Brother theory and question comes in. What if every coin submitted to any of the major grading was laser etched with a microscopic barcode that identified the coin. This identification would be linked to a database that contained information such as high resolution pics, its grade, attribution, who submitted it etc. I know many of you are cringing at this thought but bear with me a moment longer. This barcode would not be visible under normal magnification so it would not impact the coins visual appeal but would provide many advantages. Stolen coins that were cracked out and resubmitted would be red flagged and reported to the local authorities. As far as re-grading goes this would be handled as it is now. Coins would be graded based solely on their current appearance without accessing those portions of the database that contain info on previous grades. Once a coin was graded and encapsulated the new grade would be added into the database. This would allow both the customer and the grading service to monitor a coins grading history and assess how consistant a grading service or even a particular grader is being. One innevitable outcome of this that some may find annoying would be the emergence of average or composite grades. It would't take long before we started seeing coins being sold on ebay as MONSTER TONED MS 66.4. This whole idea assumes that all the major grading services would have to agree on a central database and perhapse even more consistant grading standards. To accomplish this the various numismatic organisations would probably have to apply a bit of preassure to them but it seams like it's at least possible that this could be accomplished in time.
Ok for those of you who did't stop reading in disgust what do you think? Would you be willin to pay this price (morally not financially) for the security of knowing that your coin is one of only 48 in that mint state and condition? I know most of you will probably say no but let me ask you this: Do you think the "other guy", the average collector, the competitive collector, or the new and inexperienced collector will? I'm leaning towards yes but I'm curious what the rest of you think about this topic.
MtMan
1) Mintage figures
2) Auction Records
3) Prices relative to other coins or series
4) population reports
When looking to buy a coin people typically want some assurance that they are getting a good deal even if they are not buying as an investment. As a result I believe that people are being drawn to high grade conditional rarities because the "number" gives them more confidence. It is also a convenient way to compete with other collectors as seen by the popularity of Registry Sets. In order to see a return of emphasis to rarity in the classical sense It would be necessary to come up with an accurate figure for the number of coins in existance with a given date, mint mark etc.
While population reports come the closest to achieving this there are still some major problems with using these figures. Even if we assume that in 20 years or so every coin worth enough to be graded has been encapsualted and accounted for it will not account for the constant attempts to resubmit coins in hopes of a higher grade. Here is where my Big Brother theory and question comes in. What if every coin submitted to any of the major grading was laser etched with a microscopic barcode that identified the coin. This identification would be linked to a database that contained information such as high resolution pics, its grade, attribution, who submitted it etc. I know many of you are cringing at this thought but bear with me a moment longer. This barcode would not be visible under normal magnification so it would not impact the coins visual appeal but would provide many advantages. Stolen coins that were cracked out and resubmitted would be red flagged and reported to the local authorities. As far as re-grading goes this would be handled as it is now. Coins would be graded based solely on their current appearance without accessing those portions of the database that contain info on previous grades. Once a coin was graded and encapsulated the new grade would be added into the database. This would allow both the customer and the grading service to monitor a coins grading history and assess how consistant a grading service or even a particular grader is being. One innevitable outcome of this that some may find annoying would be the emergence of average or composite grades. It would't take long before we started seeing coins being sold on ebay as MONSTER TONED MS 66.4. This whole idea assumes that all the major grading services would have to agree on a central database and perhapse even more consistant grading standards. To accomplish this the various numismatic organisations would probably have to apply a bit of preassure to them but it seams like it's at least possible that this could be accomplished in time.
Ok for those of you who did't stop reading in disgust what do you think? Would you be willin to pay this price (morally not financially) for the security of knowing that your coin is one of only 48 in that mint state and condition? I know most of you will probably say no but let me ask you this: Do you think the "other guy", the average collector, the competitive collector, or the new and inexperienced collector will? I'm leaning towards yes but I'm curious what the rest of you think about this topic.
MtMan
0
Comments
you lost me when you made that portion of your statement. i'm constantly searching for fresh material because i know it's out there waiting to be found. i assume that 20 years from now it will still be the same. i really feel that the biggest advantage any collector can give themself is to float around in the hobby for awhile until an area grabs hold of you. turn your energy towards that area, learn as much as you can about it and wait for the fun to begin. finding fresh material, stuff that's been tucked away will become almost routine after a while.
your scenario of coin identification has been raised before and though it has some merits it's most likely a bit too much for most. specialization is probably a better angle to shoot. though it's an extreme example, i think shylock can pretty much identify all primo quality IHC's. i could only hope and pray for that kind of proficiency within the areas i collect, but what an admirable goal!!!
al h.
The whole problem with grading is it assigns a numeric value to a viewers impression. And rarities are created by those opinions.
One day we should have computer grading, where a coin is scanned and the surface measured for every nick and mark. An algolrythm would be developed to convert this to a numeric value. And the 1-70 scale should be redefined say 1-100 which would indicate the coins true condition. With the current system a 70 is 70 times more valuable than 1. Why not say a coin is an 86 because it has a surface that is 14% flawed.
Until machines replace us all, we are at the mercy of PCGS et al.
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since 8/1/6
No offense but I really think that that is a big assumption. Maybe I'm way off base but I think that over time the majority of higher value coins will be slabbed. It just seems to be the way that the industry is heading. i don't mean this as an insult but I think in time that collectors that prefer raw coins will become a dying breed. New collectors coming into the hobby tend to rely on slabbed when making more expensive purchases. Even when they become more experienced I have a feeling that they will prefer to rely on grading services. This is just my opinion however, only time will tell.
<specialization is probably a better angle to shoot>
Unless your collecting a very rare series it seems unlikely you can do more than come up with a reasonable estimate of how many coins are out there of a given date. Throw in additional variables such as die variations and populations in various grades and it becomes very difficult to know how "rare" a given coin is with any certainty. My point is that given the direction in which the hobby seems to be moving, new collectors will want that certainty and will be willing to pay for it.
MtMan
...............and one day they'll do away with umpires and referees.
al h.
I tend to agree with you but the algorith will also have to take into account the marks location, length, depth etc.
Marks on the cheeks or open fields will obviously be more important than those that get lost among feathers or heraldic markings. Personally I think that this is inevitable. Not necessarily desireable from the point of view of keeping this a hobby but stille inevitable.
MtMan
Case in point: I've seen a (PCGS) MS68 1943 steel cent sell for $600, and at least one as high as $900 (which I believe was its priceguide value at one time).
An MS67 sometimes trades as low as $45.
Is a PCGS MS68 steel cent rare? You betcha.
Is that one tiny grade point (which I admit being unable to see) really worth twenty times as much?
Nope. Not to me, anyway. I have the same attitude now about PR70 DCAM graded coins.
Sure, some conditional rarities are, well, rare. However, it's an artificial sort of rarity, mostly based on someone else's opinion. I think that paying a twentyfold premium for a single grade point is absurd, just as I think the current price levels PR70 DCAM coins is. I think people who pay such premiums are "buying the holder". Not that that's all bad- the holder IS important. Instead of the old cliche, "Buy the coin and not the holder", I say "Buy the coin AND the holder". Obviously, the coin and its eye appeal is more important, but what the slab says counts in the marketplace, too.
It all comes down to trust and perception. PCGS is the industry leader because they are perceived as such. Some of this is for actual, tangible reasons and true merit, but a lot of it is purely psychological, emotional, and/or political. I don't always run with the herd, but I do try to use the third-party grading services that have the best reputations. The better the service's recognition, the more money in my pocket when selling time rolls around.
It is up to each individual collector to decide what level of trust to grant each particular third-party grading service. I gave examples of what I personally found absurd, but the very items I mentioned above might seem undervalued to someone else. And who knows? I could eat my words one day. It wouldn't be the first time I was wrong.
While third-party grading is now firmly entrenched in the hobby (permanently, I would say), it's brought up a lot of issues like this. The popularity of things like the PCGS Registry has been a driving force in the U.S. coin market, it would seem. Is this good or bad? Neither. Or both. Who knows? It has positive and negative aspects.
Overall, having been a sight-unseen buyer of mailorder raw coins in the past (Ugh! the bad old days!), I would say that third-party grading has been a major boon to the hobby, and its benefits far outweigh its disadvantages. And the Internet...
Oh, The Glorious Internet- how can I begin to properly sing its praises?
All of this only relates to the business end of things. The purest of collectors will buy what he likes, regardless of what anyone else thinks. Beauty is in the eye of the beholder, if I may use another cliche. To each his own. Diff'rent strokes for diff'rent folks, and so on. Monetary value and profit are secondary to the pure "Collector", a hobbyist. Some collectors don't care about monetary value at all. Others, on the opposite end of the spectrum, are "Investors". And then there's that third category that falls in between: the "Collector/Investor". I would imagine that the majority of us fall into that subspecies. Which one's the best? You decide.
Sorry to answer your ramble with more rambling.
PS- the laser etching idea was interesting, but I'm not sure what I think on that.
I admire your determination and already feel that I will not be able to give your post the attention it deserves. But, here goes -
I don't feel that the huge price differences based on a one point difference in grade are that much different from the uncertified days. Granted, they are more exaggerated, sometimes rediculously so, but it is not a new phenomenon. In the mid 1980's I bought an uncertified 1883 No Cents mint state Liberty nickel for MANY multiples of what typical ones were selling for because it was the finest I had ever seen. I think I sold it to the first dealer I offered it to - his name was David Hall. I and others could provide you with many other such examples of coins bringing huge premiums in the "raw"/"uncertified" days.
Your sources for determination of rarity are good ones and to that list, I would like to add EXPERIENCE. Many knowledegable collectors and dealers KNOW how rare certain coins are in various conditions, from having studied, bought and sold them for many years. The sources you listed make for good companions to that knowledge.
I like your laser etching idea, with respect to help for stolen coins. But, if the data were to be used to keep track of a coin's grading history and the consistency of grading services and particular graders, I fear rioting in the streets. Or at least on the message boards! I think the data would only serve to reinforce what many already know, anyway.
It is also a fact of life, that many buyers and sellers count on and benefit from inconsistency in grading by the major grading services. Many of these same buyers and sellers are also the very ones that complain so vocally about the inconsistencies that they try to benefit from! But, that is best left for another thread.
Again, I like your thinking and hope that many others care as much as you seem to about the hobby.
No offense but I really think that that is a big assumption. Maybe I'm way off base but I think that over time the majority of higher value coins will be slabbed.
your arguement here dissolves away because the fresh stuff i'm looking for is destined for PCGS. i guess that has us in agreement. what i would ask is this----do you look for raw material in series that you collect? unless you do, there really isn't any reason to call my statement into question. i was only stating what my experience has shown. there are plenty of fresh, ungraded coins waiting to be found. not all collectors are involved with third party grading. some are TOTALLY unaware of it. others, such as a local dealer i visit often, ignore it for reasons of convenience-----he turns a good dollar raw so why bother slabbing.
with regards to focusing on a certain area of numismatics, that is much more rewarding from my lofty perch than floating. if you pay attention here you'll notice that certain members are head and shoulders above the rest of us in certain areas, all from specializing in that area. it's taken me some time to realize that some collectors are indeed more of an "expert" than the grading services, whether that be with regard to grading or identifying variety or rarity. i have my list here of who some of them are in case i need some help about a certain coin/series and the instances of refusing to help are few and far between.
you seem rather myopic about this whole thing. had a bad day or a bad experience that's closed off your point of view? third party grading has a useful purpose to a point. while i purchase already slabbed coins, more of my "coin dollars" are going towards raw material that i then have slabbed. try it, you'll like it!!!
al h.
I personally think it is a lot of hype, pop this or pop that but to each his own.
I do not purchase MS coins. I like circulated coins. Lordmarcoven's example of a 1943 cent selling for $900, $600 or even $45. is beyond my imagination when I can own an example of that date for less than $1.
Now someone will talk about the value of one coin to another and possible future value etc. etc. and then in the same breath say that they collect and coins should not be bought as an investment. I don't know how one reconciles those two thoughts in the same sentence.
Just my rambling but again do and collect however it makes you happy. You only have to answer to yourself (and maybe the wife/hubby
Joe.
<< <i>Recently while trying to rationalize the huge jumps in prices realized for a single point increase in a coins grade a thought occured to me >>
tangential point: buying such coins sight-unseen, and whether slabbed or not, leads to absurd situations as well. a classic example is the 1884-S morgan dollar. in ms-62, catalog value is 8,000. in ms-63, catalog value is 22,000. the implication is that there are no 1884-s morgans dollars in the price range of , say 10,000 - 20,000! because a ms-62 coin would have to be seen to know whether it is really ms-62+ & therefore worth a premium ($12,000) , or a ms-63 coin is a "minus", & therefore worth a percentage of full value ($18,000).
100% reliance on sight-unseen certified grades leads to this odd phenomenon. is it possible that the lack of ability & self-confidence to evaluate such fine points in grading sight-seen leads to this oddity?
K S
I totally agree. I was just trying present some reasons why people are motivated to pay such premiums. My theory is that often it is not the observed differnce in quality due to that 1 grade point but the perceived difference that it represents and the confidence they have that the number truly represents the worth of the coin. To boil it down even further most people like numbers, statistics, certificates etc. when it comes time to plop down some money because it gives them the feeling that their puchase has been blessed by a higher authority.
<100% reliance on sight-unseen certified grades leads to this odd phenomenon. is it possible that the lack of ability & self-confidence to evaluate such fine points in grading sight-seen leads to this oddity? >
I agree here too. I just emphasize the lack of self confidence portion of your statement. I think that as new collectors come in and are confronted with professional grading services and their wares they are less likely to develop the confidence in their own grading skills that an "old time" collector had to develop out of necessity.
Sorry if I'm being a bit incoherent. I'm hopped up on Nyquil : )
MtMan
the coin.
With today's technology (or very soon), it should be a fairly simple matter to use
ultra-high-resolution digital imaging and/or some kind of laser-micro-measurements
to create a "National Numismatic Fingerprint Database" They'll have to call it
something else, of course, as fingerprints and coins don't mix!
This system would disregard toning or color, but would focus exclusively on strike,
wear and marks to uniquely identify a coin by its digital "print". This could be used
for pedigree purposes, or if it were stolen. Even if the coin were altered (tooled,
damaged, etc), it would still be identifiable by by the similarities that were left
unchanged.
As to the viability or desirability to use this system for grading, I'm not sure, but am
simply pointing out that is is not necessary to damage the coin in order to uniquely
identify it.
I think it will become more important as time goes on to do something to fix the
population reports as they become more inaccurate with each passing year. At
some point perhaps the grading companies will be able to know if a coin is resubmitted
by it's print and can automatically remove the previous entry from their database
even if the cert tag is not turned in.
Or, they can simply develop a tamper-proof slab that encircles the coin in a ring of acid!