Dichotomy - Problem Coins vs. Non Problem Coins & Their Affect on Market Prices & Availabili
poorguy
Posts: 4,317 ✭
I've seen it time and time again. I see it when collectors offer me coins to buy. I see it at shows looking through dealer inventories. I see it on eBay. I see it in droves at every large auction while viewing lots. There are problem coins everwhere and outnumber the non-problem coins at least 2-1.
By problem coins I am referring to subpar quality coins for the assigned grades, coins that have been doctored, and coins that just have a myriad of problems. The vast majority being coins that are overgraded. I know grading is subjective but in many cases, it's obvious even to a lamen when a coin is overgraded. When you get into the realm of AU58 or MS63, that's more subjective than an someone assigning a grade of MS63 to a coin that is barely an MS61 and technically an MS60 which is an all too common occurance. Problem coins include overgraded coins but the moment they are put into a holder much higher than the actual grade, nobody will touch them so they become problem coins. While they might be nice for an MS63, they certainly aren't gems and since the seller will expect gem money (because of the grade on the holder) and would never sell the coin for true MS63 money, it'll either get overpaid for, rot in inventory, or get wholesaled to a price buyer who will then start the crap cycle over again looking for the next bargain hunter.
By non-problem coins I am pointing to the accurately graded, undergraded, and problem free coins on the market and they are getting scarcer by the day. As collectors are noticing stabilizing prices they just aren't letting their collections go and therefore holding back from putting their coins out on the market. On the other hand, the problem coins will be shoveled back into the market by collectors gaining knowledge about the area they are collecting in and doing a little housecleaning letting go the overgraded and problem coins and replacing them with quality non-problem coins. The softening of prices for low-quality coins and it's consideration in price guides has also made collectors reluctant to release their treasures when such a negative impact is affecting the prices of properly graded coins. This would also explain the near 2-1 ratio of problem coins to non problem coins on the market.
Market prices are heavily affected by these problem coins circulating through the market tiers. The pricing differences between low-end and high-end for the same grade can be staggering especially where the spread is significant.
Just look at the average price differences between these 1885-CC Deep Mirror Prooflike Morgans in MS66 from the Heritage Website:
Previous Prices from Heritage Auctions
Lot Date Grade Service Realized
Auction 422, Lot 1096 Saturday, January 6, 2007 66 PCGS $9,200.00
Auction 394, Lot 6594 Saturday, January 7, 2006 66 PCGS $14,950.00
Auction 430, Lot 5527 Saturday, February 17, 2007 66 NGC $3,737.50
Auction 414, Lot 2933 Monday, August 14, 2006 66 NGC $5,175.00
Auction 404, Lot 3443 Saturday, April 29, 2006 66 NGC $5,175.00
Price Guide* Numismedia Retail Numismedia Wholesale Numismedia NGC (nmn) Numismedia PCGS (nmp) PCGS Price Guide
65 --- $4,280 $3,425 $3,000 $3,100 $3,400
66 --- $9,380 $7,500 $6,000 $6,250 $11,000
67 --- $23,130 $18,500 $16,280 $16,840 $23,500
This is only one example but there are thousands out there in almost every tier of the market. This example is especially good because it illustrates both the fluctuations in pricing compared with the differences in buyer confidence with both PCGS and NGC and speaks volumes in terms of the current state of the market. Take note of the price in the lower grade of MS65 and compare with the prices realized. The low end coins sell for closer to next down and don't even come close to value associated with the grade on the slab as indicated by the price guide information. This is what the low-end and problem coins sell for as opposed to the high-end examples which you can plainly see sell for a much higher price. (take note of this when buying because when you buy the bargain, expect the same performance when you go to sell. What goes around comes around.)
So, what is the coin you are thinking about buying really worth? Is it high-end or low end? How accurate is the pricing information available? All of these questions should be able to be answered by whom you are purchasing from. One screw up could end up costing thousands because of the price fluctuations between different examples of the same date-mm coin in the same grade, even by the same service.
The PCGS price guide indicates a value of $11,000 for this coin but the average price realized in the last 5 heritage auctions indicate $7,600 which is where the numismedia wholesale price is set at. Even the average of the two PCGS coins sold via heritage in the list above average out to over 12k. So why is the PCGS price guide stating 11k? Most likely to take into account the lower end examples that are also selling out there in PCGS holders.
Since there is no set-in-stone price guide for coins, don't rely on just pricing data to make your purchasing decision. Take into account the most important thing, THE COIN ITSELF and get as many opinions on it as possible from reliable sources before just jumping in and relying on the slab label and the assigned grade to dictate the price you would consider paying. The market is split between these two types of coins. Given the historical $$ track record of problem coins, I find it wise to be on the other end of the spectrum and pay more for high-end examples instead of hunting the bargains and getting frustrated at the quality recieved and the numerous headaches when trying to sell just to break even. You'll find yourself whining a whole lot less if you don't settle for mediocre and low quality coins, even if they are a "bargain".
By problem coins I am referring to subpar quality coins for the assigned grades, coins that have been doctored, and coins that just have a myriad of problems. The vast majority being coins that are overgraded. I know grading is subjective but in many cases, it's obvious even to a lamen when a coin is overgraded. When you get into the realm of AU58 or MS63, that's more subjective than an someone assigning a grade of MS63 to a coin that is barely an MS61 and technically an MS60 which is an all too common occurance. Problem coins include overgraded coins but the moment they are put into a holder much higher than the actual grade, nobody will touch them so they become problem coins. While they might be nice for an MS63, they certainly aren't gems and since the seller will expect gem money (because of the grade on the holder) and would never sell the coin for true MS63 money, it'll either get overpaid for, rot in inventory, or get wholesaled to a price buyer who will then start the crap cycle over again looking for the next bargain hunter.
By non-problem coins I am pointing to the accurately graded, undergraded, and problem free coins on the market and they are getting scarcer by the day. As collectors are noticing stabilizing prices they just aren't letting their collections go and therefore holding back from putting their coins out on the market. On the other hand, the problem coins will be shoveled back into the market by collectors gaining knowledge about the area they are collecting in and doing a little housecleaning letting go the overgraded and problem coins and replacing them with quality non-problem coins. The softening of prices for low-quality coins and it's consideration in price guides has also made collectors reluctant to release their treasures when such a negative impact is affecting the prices of properly graded coins. This would also explain the near 2-1 ratio of problem coins to non problem coins on the market.
Market prices are heavily affected by these problem coins circulating through the market tiers. The pricing differences between low-end and high-end for the same grade can be staggering especially where the spread is significant.
Just look at the average price differences between these 1885-CC Deep Mirror Prooflike Morgans in MS66 from the Heritage Website:
Previous Prices from Heritage Auctions
Lot Date Grade Service Realized
Auction 422, Lot 1096 Saturday, January 6, 2007 66 PCGS $9,200.00
Auction 394, Lot 6594 Saturday, January 7, 2006 66 PCGS $14,950.00
Auction 430, Lot 5527 Saturday, February 17, 2007 66 NGC $3,737.50
Auction 414, Lot 2933 Monday, August 14, 2006 66 NGC $5,175.00
Auction 404, Lot 3443 Saturday, April 29, 2006 66 NGC $5,175.00
Price Guide* Numismedia Retail Numismedia Wholesale Numismedia NGC (nmn) Numismedia PCGS (nmp) PCGS Price Guide
65 --- $4,280 $3,425 $3,000 $3,100 $3,400
66 --- $9,380 $7,500 $6,000 $6,250 $11,000
67 --- $23,130 $18,500 $16,280 $16,840 $23,500
This is only one example but there are thousands out there in almost every tier of the market. This example is especially good because it illustrates both the fluctuations in pricing compared with the differences in buyer confidence with both PCGS and NGC and speaks volumes in terms of the current state of the market. Take note of the price in the lower grade of MS65 and compare with the prices realized. The low end coins sell for closer to next down and don't even come close to value associated with the grade on the slab as indicated by the price guide information. This is what the low-end and problem coins sell for as opposed to the high-end examples which you can plainly see sell for a much higher price. (take note of this when buying because when you buy the bargain, expect the same performance when you go to sell. What goes around comes around.)
So, what is the coin you are thinking about buying really worth? Is it high-end or low end? How accurate is the pricing information available? All of these questions should be able to be answered by whom you are purchasing from. One screw up could end up costing thousands because of the price fluctuations between different examples of the same date-mm coin in the same grade, even by the same service.
The PCGS price guide indicates a value of $11,000 for this coin but the average price realized in the last 5 heritage auctions indicate $7,600 which is where the numismedia wholesale price is set at. Even the average of the two PCGS coins sold via heritage in the list above average out to over 12k. So why is the PCGS price guide stating 11k? Most likely to take into account the lower end examples that are also selling out there in PCGS holders.
Since there is no set-in-stone price guide for coins, don't rely on just pricing data to make your purchasing decision. Take into account the most important thing, THE COIN ITSELF and get as many opinions on it as possible from reliable sources before just jumping in and relying on the slab label and the assigned grade to dictate the price you would consider paying. The market is split between these two types of coins. Given the historical $$ track record of problem coins, I find it wise to be on the other end of the spectrum and pay more for high-end examples instead of hunting the bargains and getting frustrated at the quality recieved and the numerous headaches when trying to sell just to break even. You'll find yourself whining a whole lot less if you don't settle for mediocre and low quality coins, even if they are a "bargain".
Brandon Kelley - ANA - 972.746.9193 - http://www.bestofyesterdaycollectibles.com
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Comments
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
<< <i>Rather than agonizing over this stuff, wouldn't it be better just to ignore the price guides? >>
It isn't agonizing, it's warning. There are plenty of collectors out there trusting the labels and not knowing what is high-end or low end. The price guides give an idealistic structure from which to base financial decisions and are neccessary to assist in holding the market in place. They are very important. What would happen if every price guide went down 30% in the next 60 days? Yeah, it would make a substantial impact on the market even if dealers igored them and only used auction records to back up the asking prices of their inventories. Since even well designed lists of auction records aren't 100% helpful because you can't see the coins in-hand to see why it performed well or poorly, nothing can replace or represent the pricing data available to collectors better than the price guides we have now. Therefore, they can't be ignored.
I'm always hungry for professional and relevant explanations of the internal workings of the market. This was both . .
Drunner
<< <i>Since there is no set-in-stone price guide for coins, don't rely on just pricing data to make your purchasing decision. Take into account the most important thing, THE COIN ITSELF and get as many opinions on it as possible from reliable sources before just jumping in and relying on the slab label and the assigned grade to dictate the price you would consider paying. The market is split between these two types of coins. Given the historical $$ track record of problem coins, I find it wise to be on the other end of the spectrum and pay more for high-end examples instead of hunting the bargains and getting frustrated at the quality recieved and the numerous headaches when trying to sell just to break even. You'll find yourself whining a whole lot less if you don't settle for mediocre and low quality coins, even if they are a "bargain". >>
Finding true DMPL examples in NGC holders these days can be a hard find. This is one reason that you see the big $ gap between NGC and PCGS pricing with DMPL Morgan Dollars.
I have no problem paying over retail for nice PL or DMPL coins if they are worthy of the designation.
IMO... it is not so much a matter of problem COIN vs. non-problem COIN ... it is a matter of complete inconsistancy in grading standards over a period of time... not just with one TPG but with all... of course, I am referring to the so-called 'top tier' TPGs.
The decision to 'suddenly' tighten up the grading standards will only make the situation worse... and frankly, I'm not sure what a true solution might be.
Why do I think it will make matters worse? Let's say in a few months or at the end of this year, we gather together 10-20 coins, same date and denomination, graded as MS64 by the same TPG... and insure that they represent at least one coin graded/slabbed during each year the TPG has been in business. No cherry picking... just a random selection.
Now lay them out side by side... I would venture that we would find a full range from MS61 to MS65 and maybe even one we might think a 66 (although such a coin would most likely have been cracked out by now). What will a new collector coming into the market next year think of such a selection? What will we do with all these coins? Crack them all out and start over?
Will the real MS64 please stand up....
Then there is the matter of the 'tests' that have been done with many 'experts' being lined up and shown certain coins in a "Guess the grade" ... the results were sadly comical... accentuating the ambiguity of a number on a holder.
The simple fact that a coin can be resubmitted to the same TPG multiple times with various results , does not support the notion of depending on any TPG ... we need to be able to evaluate a coin for ourselves. Otherwise, we become slab collectors instead of coin collectors... which, unfortunately, is what is taking place.
Now, a problem coin, as you pointed out, is cleaned or AT'd or altered or corroded... yet, a coin in 'the wrong holder' is not a problem coin...the coin is not at fault here...it is a problem holder...
Also, I do not believe that any of the "Top Four TPGs" are any different when it comes to grading ability or consistency... yet there persists in the marketplace, the notion that PCGS is superior... this idea, once accepted is difficult to change... the reason is this...
Let's say I have 'found' an 1893-S Morgan in near-immaculate condition...every reason to believe it could grade 65 or better...it has it all...strike, luster, eye appeal... now, given the present marketplace and the track record of prices realized by coins in different holders, the likely choice to submit would be PCGS. It is not that I think they would grade it 'better' or more 'accurately' ... it is just that history shows that I would most likely be able to 'realize' more for the coin in a PCGS holder... this furthers the myth...
If it were possible to have 4 identical coins, same date, same grade, etc. ... one in ICG...one in ANACS and one in NGC and another in PCGS... and we put them all up for auction at the same time... the outcome would most likely be that the PCGS coin would hammer higher than the others...
No, I do not think it is a matter of problem coins... it is the marketplace's ever growing dependancy on TPGs.
...and then there is the matter of 'toned' coins ... whether NT or AT... and often, who really knows the difference? ... toning or tarnishing happens when a chemical action/reaction occurs on the surface of a coin and is the beginning stage of the 'degradation' of the coins' surface... it is a change in the original surface. Now we enter the realm of 'beauty is in the eye of the beholder' and the topic for another thread... has there ever been a thread on the topic of toning?
...ok...I'm done (for now)... better not drink anymore coffee today
Thanks for bringing this topic to the forefront. We need to be reminded often.
3 areas That I collect show the differences distinctly:
AU 58 early dollars and capped bust halves. And MS 66 Lib nickels.
I regularly see a 100% gap between true AU 58 ED's, and wannabe 58's. I have paid in the last 2 years in the high $20,000 for the nice 58's( 1801, 1802/1, 1803), where these dates only command less than $13,000 in NGC slabs, or where the grade is really 55.
For the AU 58 bust halves, prices in the 3000 to 4500 range have been obtained for the super nice coins, and less than $1000 for the problem coins.
While it has been some time since I assembled and sold my lib nickels, the fully struck, mark free surfaced libs can bring $4000 to 8,000(depending on the date), and the lesser 66's will not sell at all, or bring less than 2,000.
And what about the coins that trade infrequently? Be sure to get some expert help, from a dealer that has seen the market for 30 years. How are you going to be able to accurately price a coin that trades once every 3 to 5 years?
But that is another story.
Absent that, there may always be a large population of overgraded coins in the market affecting the price guides.
The grading services need to offer to pay full retail for any of their overgraded coins. That would get collectors and dealers actively pursuing overgraded coins. It would not take long to clean up this problem, IF full retail was offered. The grading services could then grade the purchased coins and sell them off, not necessarily at a big loss.
However, your statement that "There are problem coins everwhere and outnumber the non-problem coins at least 2-1" is a bit discouraging. When new collectors come into the hobby, they read or are told that they should learn how to grade for themselves. While this is good advice, a YN or average collector has a dilema: To learn to properly grade, the collector must view as many coins as possible to compare how they may look in a particular grade. But if the vast majority of coins graded MS 63 are overgraded problem coins (for example), the collector could easily reach the conclusion that those problem coins are, in fact, accurate representatives of that grade.
It's easy for a major dealer to say "Buy the coin, not the holder". A major dealer looks at lots of coins on a daily basis and is better equipped to decide if a coin is a problem coin or not. Again, the average collector or YN does not have the means or opportunity to view nearly as many coins on a regular basis. So most collectors just starting out have to rely on the grading services to help them form an opinion, at least until the collector forms a relationship with one or two trusted dealers. But this is another problem: How does the YN or average collector know who to trust?
The data provided in your post shows that the various price guides can be of little practical use...auction records also seem to be less than ideal for establishing the true value of a particular coin. So what's the YN or average collector to do? It seems to me that when a collector is just starting out, their success at avoiding getting burned on a coin depends on luck.
I first started collecting as a kid in the late '70s. I stopped collecting because grading was just too subjective - my opinion vs. the dealer's. I came back to the hobby a few years ago when I learned about how far "objective" third-party grading had come in leveling the playing field and making collectors more confident. I soon learned that PCGS and NGC were the top services and that I should stick with them. From the vast price differences between PCGS and NGC graded coins in your post, apparently NGC has fallen behind in collector (and dealer) confidence. So it seems that a collector should stick with PCGS....but will PCGS suffer the same loss of confidence one day?
I have to agree with seaeaglecoins that a large part of the problem is inconsistency with grading services. That's the way the game has been played for a long time now, either intentionally or not so intentionally, but there is a big price to pay down the line....... Smells like bifurcation™ to me...
The natural extension of the above logic is that one should not pay a price that he cannot understand. In practice, this means that one should not rely on price guides, or even auction records. If you don't have an independent sense that a coin represents good value, you should let it go. And to be clear, "good value" is not the same thing as "a good price". I often pay "too much", i.e., "a bad price", for coins that I believe to be "good value". Of course I'll still use the price guides to guide my negotiations, but the price guide isn't making decisions for me.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
I think that your estimate is quite conservative. While I suppose it depends on how you define "problem coins", if you include low-end and overgraded coins, I would estimate the ratio to be closer to 20:1 than 2:1. As Andy says, it is probably best to study market and pay what the coin is worth, rather than being a slave to the price guides and grades on the slabs. For bigger purchases, if you are not an expert, seek the help of one.
<< <i>I think that your estimate is quite conservative. While I suppose it depends on how you define "problem coins", if you include low-end and overgraded coins, I would estimate the ratio to be closer to 20:1 than 2:1. >>
If adding low-end and overgraded coins moves the ratio to 20:1 then it would seem impractical for the TPGs to buy up all those coins. If that's the case, this is a problem that will likely persist for some time.
<< <i>
<< <i>I think that your estimate is quite conservative. While I suppose it depends on how you define "problem coins", if you include low-end and overgraded coins, I would estimate the ratio to be closer to 20:1 than 2:1. >>
If adding low-end and overgraded coins moves the ratio to 20:1 then it would seem impractical for the TPGs to buy up all those coins. If that's the case, this is a problem that will likely persist for some time. >>
If the ratio is indeed 20:1 then the standard has shifted permanently.
<< <i>I first started collecting as a kid in the late '70s. I stopped collecting because grading was just too subjective - my opinion vs. the dealer's. I came back to the hobby a few years ago when I learned about how far "objective" third-party grading had come in leveling the playing field and making collectors more confident. I soon learned that PCGS and NGC were the top services and that I should stick with them. From the vast price differences between PCGS and NGC graded coins in your post, apparently NGC has fallen behind in collector (and dealer) confidence. So it seems that a collector should stick with PCGS....but will PCGS suffer the same loss of confidence one day? >>
...another thing that occurs to me whenever this one TPG vs. another comes up...
Take the example of the Ford Taurus and the Chevy Sable... almost identical cars...look the same, drive the same and cost was about the same... the difference was market perception... Ford won...they promoted more heavily and were able to gain more visibilty...meanwhile, a Ford dealer would say their car was superior and a Chevy dealer would say the same of their car.
BTW...I owned and drove a Sable for a few years before trading in for the Taurus I now drive...so I speak from experience...
Now...consider that PCGS & NGC are the only TPGs that 'employ' Dealer networks...and the PCGS dealer network is the most extensive...leading to the most visibility and then...the obvious need for these dealers to promote the idea that their TPG is superior to any other... There-in lies the crux of the matter, as far as I'm concerned.
...and myqqy...thanks...it is always nice to be acknowledged...
The coins in the marketplace represent a small fraction of what has been graded. They are mostly rejects, coins that have not yet found homes. So the 2:1 and 20:1 estimates do not paint a fair picture of how coins are actually getting graded. For all it's worth, my experience is that only 5% of the coins that come back from the TPGs are undesirable at the assigned grade, and that has been true since day one.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
<< <i>I'm thinking I'll just buy what the dealers tell me I should buy. That is, after they return from a show, and get the coins back from the grading company in the "right" holders. I say this as I know they have my best interest in their heart and soul. And, I know I'm special when they get the coins back in the "right" holders and offer me first "Shot."
That a boy ! Never, never do anything on your own...
Ken
<< <i>I'm thinking I'll just buy what the dealers tell me I should buy. That is, after they return from a show, and get the coins back from the grading company in the "right" holders. I say this as I know they have my best interest in their heart and soul. And, I know I'm special when they get the coins back in the "right" holders and offer me first "Shot." >>
Sounds to me like you need to start doing business with better dealers
Brandon -- These two sentences appear to be at odds with one another. Isn't the price difference between low- and high-end coins of the same grade a sign that the low-end coins are not dragging the market down? It sounds to me that coins are trading at the right level regardless of the inconsistency of third-party grading. Or are you suggesting that the price gap ought to be even larger?
<< <i>
<< <i>I'm thinking I'll just buy what the dealers tell me I should buy. That is, after they return from a show, and get the coins back from the grading company in the "right" holders. I say this as I know they have my best interest in their heart and soul. And, I know I'm special when they get the coins back in the "right" holders and offer me first "Shot." >>
Sounds to me like you need to start doing business with better dealers
Or, could it be what you're going through I been through? Truthfully...... the dealers I deal with are just fine. I just make my own decisions, and they know my Sig line.
<< <i>-- "Market prices are heavily affected by these problem coins circulating through the market tiers. The pricing differences between low-end and high-end for the same grade can be staggering especially where the spread is significant." --
Brandon -- These two sentences appear to be at odds with one another. Isn't the price difference between low- and high-end coins of the same grade a sign that the low-end coins are not dragging the market down? It sounds to me that coins are trading at the right level regardless of the inconsistency of third-party grading. Or are you suggesting that the price gap ought to be even larger? >>
No, I am not. I was pointing out that even accurately graded coins have their prices affected by overgraded coins.
Actually, both sentences referenced two different levels of the same problem.
1. "Market prices are heavily affected by these problem coins circulating through the market tiers. " NGC coins that are accurately graded are not trading at the levels that properly graded PCGS coins are trading at.
2. "The pricing differences between low-end and high-end for the same grade can be staggering especially where the spread is significant." Just take a look at the differences between the NGC and PCGS graded coins in the auction references I mentioned regarding the 1885-CC in MS66DMPL. It is difficult without seeing the coins in-hand, a problem mentioned earlier by lists of auction records used as a pricing guide, so one would assume that the NGC coins are sub-par quality because of the prices they realized but that isn't always the case.
I'm not saying that ALL NGC graded coins are overgraded but the general consensus is that they are of sup-par quality when compared to PCGS graded coins which is not always the case and in instances where there is a large spread between two grades or designations, NGC graded coins will typcially (all other variables unknown) sell for closer to next lower price rather than market price no matter if they are accurately graded or not. That is an effect on the market of NGC coins caused by overgraded/problem coins on the market.
<< <i>... in instances where there is a large spread between two grades or designations, NGC graded coins will typcially (all other variables unknown) sell for closer to next lower price rather than market price no matter if they are accurately graded or not. >>
And, I am finding, this is where a few jewels in the rough are to be found. While I still believe that nine out of ten times the PCGS coin will be nicer than a similarly graded NGC coin, when you find the exception there is money to be made by purchasing the NGC coin at the stereotypically lower price and crossing it to PCGS plastic. It used to be that peolpe would look for an OGH to upgrade ... I think that soon it will be find a NGC that will cross.
Still ... it is another reason to become an excellent grader of coins or find the right dealers to help you make the right decisions
I think that is already happenning. Anybody who buys modern coins of the ms67-ms70 coins paying statospheric prices for "perfect coins" will end up having his head handed to him when he sells. Most experts cannot tell any difference between these coins. Yet fools are "buying the slab". They think well, Pcgs graded it, so it must be worth what the price guide says. This will be a catastrophic crash within the coin industry when it happens.
<< <i>It is often said that you should "Buy the best quality you can understand", which means that you should avoid paying for a given grade unless you can see the difference between the offered coin and coins graded a point lower. This is because, if you can't tell the difference, you can't protect yourself, nor can you have the satisfaction of exercising your numismatic judgment. In my mind, this advice makes perfect sense.
The natural extension of the above logic is that one should not pay a price that he cannot understand. In practice, this means that one should not rely on price guides, or even auction records. If you don't have an independent sense that a coin represents good value, you should let it go. And to be clear, "good value" is not the same thing as "a good price". I often pay "too much", i.e., "a bad price", for coins that I believe to be "good value". Of course I'll still use the price guides to guide my negotiations, but the price guide isn't making decisions for me. >>
Some good points Andy. I'd like to add just a few points of my own and a couple of observations. Lately, if I find a coin, say a slabbed 64 seated coin with great original color and outstanding eye appeal, where there is only a mark or two holding it back from 65, I'll buy the coin even if it is way beyond 64 money. The "technical" 65 with no eye appeal at the same or slightly more money I'll pass on... I'd much rather own the lower slab grade, as it is the coin that will give me the greater pleasure when I admire it. Yeah, guess you can say I'm in the "bad money' camp too, but I certainly don't have the kind of buyers remorse I would be having buying marginal 65 coins from someone pushing these as 'good value" because they were able to secure them cheaply calling them "gems" when they are marginal at best. There is a lot of crap out there, and there's no doubt in my mind that many dealers given the choice of going out of business because they cannot make a decent profit on properly graded coins having to pay far more than they like to because of direct competition at auctions from collectors, will sell these low end coins anyways rather than face the prospect of going out of business altogether. (This is not a diatribe against dealers either, just an observation).
John D'.
<< <i>This is what the low-end and problem coins sell for as opposed to the high-end examples which you can plainly see sell for a much higher price. (take note of this when buying because when you buy the bargain, expect the same performance when you go to sell. What goes around comes around.) >>
Sorry Brandon, but I think you have just drawn an erroneous conclusion of what the prices are showing. The NGC coins are not low end problem coins but rather just coins that are graded to a different standard for the deep mirror designation and perhaps as well for the MS 66 grade. So long as the buyers understand that, there is no harm done—and the auction results bear that out. In fact, NGC fills an important market niche here, since the grading scale allows for no “tweeners”. Say you own a coin that has much better mirror depth than the large majority of MS66 PLs yet PCGS won’t put it in a DMPL holder. You have a choice of offering it as a 66PL for $2,400 or sending it to NGC where it might make 66DPL, and then sell for $5,000. Does that make it a low-end problem coin or just one with 6 inch rather than 8 inch mirrors?
By the way, if you look further through Heritage’s auction results you will find an NGC coin that brought nearly $11K back in 2004.
By the same token, does the fact that one PCGS coin brought more than $14K mean that the one that sold for $9K was low end or a problem, or does it just mean that the bidders may have perceived the higher price coin to have a shot at a higher grade?
CG
<< <i>
<< <i>This is what the low-end and problem coins sell for as opposed to the high-end examples which you can plainly see sell for a much higher price. (take note of this when buying because when you buy the bargain, expect the same performance when you go to sell. What goes around comes around.) >>
Sorry Brandon, but I think you have just drawn an erroneous conclusion of what the prices are showing. The NGC coins are not low end problem coins but rather just coins that are graded to a different standard for the deep mirror designation and perhaps as well for the MS 66 grade. So long as the buyers understand that, there is no harm done—and the auction results bear that out. In fact, NGC fills an important market niche here, since the grading scale allows for no “tweeners”. Say you own a coin that has much better mirror depth than the large majority of MS66 PLs yet PCGS won’t put it in a DMPL holder. You have a choice of offering it as a 66PL for $2,400 or sending it to NGC where it might make 66DPL, and then sell for $5,000. Does that make it a low-end problem coin or just one with 6 inch rather than 8 inch mirrors?
By the way, if you look further through Heritage’s auction results you will find an NGC coin that brought nearly $11K back in 2004.
By the same token, does the fact that one PCGS coin brought more than $14K mean that the one that sold for $9K was low end or a problem, or does it just mean that the bidders may have perceived the higher price coin to have a shot at a higher grade?
CG >>
he NGC coins are not low end problem coins but rather just coins that are graded to a different standard for the deep mirror designation and perhaps as well for the MS 66 grade.
I've heard the "different standard" story before and that guy sued everybody under the sun including the ANA. So yes, in my opinion, if they use a different standard, they are sub-par as the benchmark for quality has ALWAYS been the highest, not the lowest or median.
So long as the buyers understand that, there is no harm done—and the auction results bear that out. In fact, NGC fills an important market niche here, since the grading scale allows for no “tweeners”. Say you own a coin that has much better mirror depth than the large majority of MS66 PLs yet PCGS won’t put it in a DMPL holder.
The problem is that many buyers don't understand. Yes, NGC fills an important niche but if I was running NGC, I'd want the other end of this alleged niche.
You have a choice of offering it as a 66PL for $2,400 or sending it to NGC where it might make 66DPL, and then sell for $5,000. Does that make it a low-end problem coin or just one with 6 inch rather than 8 inch mirrors?
The problem is that buyers, both speculators and collectors, with enough information given, will hold a standard true to all services and not understand the subtle differences between services that can mean thousands if interpreted incorrectly. Another reason to trust a knowledgable dealer.
By the way, if you look further through Heritage’s auction results you will find an NGC coin that brought nearly $11K back in 2004.
Like I said earlier, not all NGC coins are problem coins. Not all accurately graded NGC coins slip through the cracks and not all overrgraded PCGS coins bring bargain money either..... It's easy to find enough exceptions to start an argument, but I guarantee you that you won't find enough to finish it.
By the same token, does the fact that one PCGS coin brought more than $14K mean that the one that sold for $9K was low end or a problem, or does it just mean that the bidders may have perceived the higher price coin to have a shot at a higher grade?
Since I can't hold both coins in-hand, I would have to say that someone noticed the 14k coin as something spectacular. Either that or there were at least two in the room that thought it was worth that much. No matter what, the bidders percieved it to be a quality coin, something that can't be said about the droves of other low-end coins I'm currently harping about.
<< <i> So yes, in my opinion, if they use a different standard, they are sub-par as the benchmark for quality has ALWAYS been the highest, not the lowest or median. >>
So what is the correct minimum mirror depth for a DMPL, 6 inch mirrors or 8 inch mirrors? And if its 8 inches for a DMPL and more than two inches but less than 8 for a PL, and a DMPL is worth $10K, and a PL is worth $2,500, is a coin with 7.5 inch mirrors worth the same $2,500 as one with 2 inch mirrors or 4 inch mirrors? And if the 4 inch mirror coin winds up in the same 66PL holder as the one with 7.5 inch mirrors is the 4 inch mirror coin a low-end problem coin?
CG
Edit to add: the prices realized at auction show that the buyers do understand the difference between NGS and PCGS standards. And NGC may in fact have deliberately set a different standard to ensure a market niche for grading certain coins.
Unlike many, I don't think it is inconsistency from the services. Even if they are 95% or 90% consistent, which would be quite high by most estimates, this problem would persist given a free market. The nice coins get bought quick, or sent in for upgrades, the dogs sit and beg. Repeat this cycle three, five, or ten times, and a lot of the coins that remain readily available are going to be low end doggy coins.
The other main point is that grading is a continuous scale, not discreet intervals. When price differentials are large between grades, there are sure to be a lot of action on the tweener coins. Virtually nothing can overcome this given the current system. Overall the services do a very good job. However, the market will expose coins where price and quality differences are magnified.
The grading companies could not afford to buy every low end coin that is out there. Depending on what definition is used, that might mean the lowest 10% of any given grade, or 20%, or 49%. Some folks are so finicky that they only seek out the top 10% of 20% of coins at a grade and categorize the other 80% to 90% as low end marginal coins. In any case, it would not really solve the problem. There would be another subset of coins that are the new low end. The finicky lint hair folks would still say there are a bunch of low end dogs on the market, just not quite as many.
The best thing collectors can do is learn how to grade. Learn it real well before buying high grade coins that cost a lot of money. A lot of money being a relative term. Learn what the market prices, retail, auction, and wholesale, are for the coins they collect. Understand that not all MS65s are created equal. Not even in the same company's holder. At true auction, a top end primo coin that has a shot at upgrade, will often sell for double what a low end coin that made it in on the tenth try. Like I said, it has been that way for a long time. It is old news for any veteran collector. Newbies, do read and take note.