How do you feel about buying a grade-flated coin?
Weiss
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Say you found a somewhat esoteric coin in a series you like, and it's pretty easy to research its history. It's gone from a raw XF in a catalog 20 years ago, to a slabbed 58, then 63, then 64 CAC where it now resides.
You like the coin, so that's not issue.
Do you feel like your_ investment_ (in this instance, several thousand dollars) is more tenuous because of where it started and the regrades, or do you feel it's more secure because of its current slab and CAC?
We are like children who look at print and see a serpent in the last letter but one, and a sword in the last.
--Severian the Lame
--Severian the Lame
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You'd be hard pressed to find a raw XF that made the trip to MS64 CAC as you describe. It would likely take a solid MS63 coin from the 1988-1996 era to make today's MS64 grade. Grading has loosened up....but not like that. As long as I like the coin for what it is to me today, I don't care so much what it used to be called. There are very, very few better date seated MS coins I owned in the 1980's that have moved up more than 1-2 MS points. The MS66's of 1987 are now basically 67's. The MS65's of that era tend to be 66's today. I can't think of a single coin I owned back then that moved up more than 1-2 points. And most of them are just 1 pt higher today.
One coin I tried to buy 10 yrs back was an old ANACS paper cert XF45 $5 capped bust gold. ANACS netted it down to 45 because of a planchet flaw on the cheek. But that was ridiculous. I was willing to pay MS61/62 money for it when I saw it. It came back PCGS MS62. That coin was still unc in the 1980's despite what ANACS called it. Full mint bloom where it would have been a 63/64 coin w/o the slight cheek lamination.
Though question as with so much history readily available based on the huge grade span I'd personally pass unless there's no major spread price wise. I've bought severely overgraded material when the seller and I are both scratching our heads based on the number on the slab label and its priced realistically.
I think since you are buying at the CURRENT market, you pretty much must accept the CURRENT grade, and CURRENT price.
I think that even those who agree that gradeflation has occurred will also agree that coin prices still are based on the same factors they have always been based on: Rarity, popularity, eye appeal, as well as grade, etc. Any one of them could (and maybe are guaranteed to?) change over time. So nobody is promising you will break even in the future.
But in your example, trying to pay today's XF money for today's MS-64 is just unreasonable....just like it would have been foolish to pay MS-64 money back when it was an XF coin!
I could see a vintage XF grade being Choice AU today however would be rotating it under a lamp with a loupe before accepting it as near gem no matter who stickered it.
Do YOU agree with the latest grade?
Are there potential strike issues (soft strike) that a grader back then wouldn't have taken into account and they would now?
I've been told I tolerate fools poorly...that may explain things if I have a problem with you. Current ebay items - Nothing at the moment
I've bought my share of grade inflated coins. But the price had to be right and the intent from the start was to flip them for a quick profit....never to hold long term. Some coins get grade-deflated over time. Look at some of the Eliasberg coins from 1997. I can think of a number of seated coins that were once 66/67 and have been down-graded by a point to better compete in today's market.
XF to 64 CAC is a big jump. I wonder how many coins have made such a journey.
If it has ever "legitimately" (not mechanical error or other oversight) happened, the ONLY way I can think is what was described before, where a defect present in the minting was straight net-graded by a TPG.
If I think a coin is priced fairly for the quality and value that I think it has,
then I don't care what anyone else's opinion of it was in the past, is now, or will be in the future.
The way the OP question is framed, I do not think the probability is very high that I will think the coin in question is a good deal, probably because the ever increasing grade number reflects the "market grade" (market value) of the eye appeal and color.
Liberty: Parent of Science & Industry
Raw XF 20 years ago to 64 CAC is big but doesn't seem like an impossible leap. Again, this is an esoteric coin in a less traveled series.
I bought the 1914 Saint in my box of 20 raw from my dealer (a 30 year veteran) as an XF/AU piece--essentially for melt. Sent it in across the street with a bunch of other common gold just to have it in a slab, and it came back MS63. Stories like that aren't that unusual.
It's the stop at AU58 that is unusual. Then again, the owner was clearly not satisfied with it at 58 and ultimately the TPGs and CAC agreed.
--Severian the Lame
Does the coin look like a modern 64 CAC? If so, what's not to like?
or maybe the issue typically comes with a weaker strike that was previously mistaken for wear?
Liberty: Parent of Science & Industry
...and I guess it's a moot point since I was just outbid. Kudos whoever you are
--Severian the Lame
Yes, that happens a lot when buying from your local dealers or those who aren't the best of graders. All of us have no doubt run into those are adept at buying "AU" $2-1/2 or $5 Indians from their local dealers only to send them to the TPG's and score with 63/64 grades. The coin was never an AU to begin with. The issue was a poor grader. What you almost never will see is the same top tier TPG going from XF in the 1986-1996 period and jumping to 63/64 today.
Here's another way to go from XF to MS65. In 1988 I was bidding in a Sotheby's auction in NY City containing a nice grouping of US seated half dimes. Sotheby's was using European grading standards, not that it mattered to anyone who was actually viewing the coin. These lots of half dimes ranged from circ to gem (US grading) but were called VF-AU per Euro standards. A bought a 5 piece lot that had 4 unc coins in it. The highest grade assigned to those was XF....for the 1850-0 half dime. The coin was a stone cold original gem. It came back graded NGC MS65 and is CAC'd today. So that was XF to 65CAC in about 2 weeks. Oh, and the Euro grading didn't fool anyone. I had to pay real MS63-65 money for those coins and only made a small profit on them....lol. All the typical sharks had viewed the lots and placed bids. I had visions of ripping some of those coins for a fraction of their value. Nice stuff just doesn't usually slip through the cracks. And even the "scent" of a possible rip will bring every shark within 3,000 miles to the auction.
Grading in this country over the past 20 years has not changed that much that you could blame the standards.
Even by European standards, XF is not equal to MS65/Gem/FDC (though European XF may be AU/slider by US standards)
For the grade to vary so considerably, both of those grades could be wrong, but one of them must be wrong.
As far as what it's worth.. the coin has to stand on its own merits. If it has everything going for a 64 then that's what it is. But don't just take PCGS or CAC's word. Scrutinize it carefully. Given that the coin was originally not called uncirculated, I would suspect there may be "cabinet friction" possibly related to old time storage. This is sometimes considered wear, and sometimes given a pass (on an otherwise uncirculated coin) by the grading services.
It really shouldn't matter if you like the coin...however, I have to admit it has mattered for me in one instance in particular in the recent past (though not nearly the XF to 64 disparity). I guess it was about 2 years ago when I spotted a Colonial coin on my want list on a dealer's site. It was in a PCGS VF-35 holder with a CAC sticker. I liked the coin, but thought the price was a little strong. Contacted the dealer to inquire about the coin and see if they might be interested in a partial trade. Seemed like the trade would work and got a pretty good sense for what the coin could really be bought at, but still was on the fence. Meanwhile, doing some more research and see the coin in PCGS coinfacts in a VF-25 holder...really, shouldn't have mattered, but I know it did and I passed on the coin. A couple months later it was auctioned on Heritage and went for about what I could have bought it for. Then shows up on a dealer's website for about 20% more than that and disappears relatively quickly (I'm guessing it was sold, but really don't know). Since then, I haven't seen a VF piece offered that could hold a candle to this one...so, in hindsight, I probably should have bought it.
If you are buying to sell, then labels/grade matter, if you are collecting, it is all in the coin itself - although, sellers will be pricing by the label. Cheers, RickO
What is so unique about this coin?
Is it made from unobtanium that it would have such a traceable history?
Are there others in the same grade, that have not done a Pretty Woman Journey?
I am not happy about grade-flation coins because they take more money out of your pocket, but sometimes I end up buying them because there is not a lot of choices.
I have been working on a sets of the Classic Head $2.50 and $5.00 gold pieces. These are short sets. There are 11 coins in the "Red Book" $2.50 the set and only eight coins in the $5.00 set. There are die varieties, but I'm not going there. The "Red Book" sets are tough enough.
These coins were minted when there were few collectors in America. They were also minted when $2.50 and $5.00 represented a week's work or the better part of a week's work for the vast majority of Americans. Therefore few pieces were set aside in cabinets, and "true" Mint State or even AU coins are genuinely scarce to rare.
These coins can be found properly graded, but the accurately graded ones are mostly in old holders from both services. Most of the newly graded ones have been given a push, sometimes an excessive push. As it is with many series a lot of the coins that were in the old holders have been cracked out for "the push." Quite often the coins that have been left in the old holders bring a big premium when they are nice. If the crocodiles don't get you, the mosquitoes will.
I have purchased a few coins that I knew were grade-flated when I bought them, but sometimes you don't have a lot of choice. One of them is this 1839-D quarter eagle. Like all Dahlonega coins, this one is tough, and it's under pressure from type collectors because it's the only Classic Head $2.50 that the D Mint issued. Our hosts graded it MS-60, but it's an AU-58 in my opinion. At one point I had an AU-50 graded piece that had been "processed" that really didn't please me so I traded that one in on this one. I'll post pictures of the processed one if you would like.
My other major "grade-flated" coin is an 1834 crosslet 4 half eagle. This coin is a legendary rarity in AU and Mint State. David Akers noted in his book on auction records that fewer 1834 crosslet 4 half eagles had been sold at auction than the 1838-C, which is an obvious rarity. Our hosts have graded nine of these coins in Mint State, including this one, which is in an MS-61 holder. My grade is AU-58 with the reverse holding on for dear life to that level. PCGS has graded 40 of these coins in AU. Of course all of these numbers have probably been inflated by re-submissions. And I've got say that most of the AU-50 coins I see these days don't please me. They are EFs in AU clothing. The coins that have been "processed" are mostly off the table for me too, so that really narrows my universe of choices.
So what do you do about grade-flation? You can play hard ball and insist upon the right grade, but with some coins, you can wait years, and when they do show up they will be in major sales like the Pogue auction where $100 grand is "chump change." My response has been to knuckle under and accept things as they are if I like the coin. Maybe that's nuts, but I guess I won't find out until the "Bill Jones Auction" comes to market.
Beautiful pieces, @BillJones . And the 1839 is a great example. It's a rare and beautiful coin in its own right. And I think it's a mark of a knowledgeable collector who objectively looks at a good coin in his own cabinet and asks: Why push a coin that is not uncirculated into the uncirculated category?
--Severian the Lame
Grade-flation doesn't really affect error coins. CAC doesn't affect error coins. Metal prices don't really affect error coins.
I like error coins.
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If a coin is esoteric and hard to come by, you basically ask yourself do you want to pass or play on it, because you might not see another one for five years.
Re gradeflation, you can find some really nice slider Capped Bust Halves in MS 63 holders because they are open collar coins, and imo you need to spend more than a few seconds looking at them to be sure you are grading them properly.
"Seu cabra da peste,
"Sou Mangueira......."
@BillJones
Based on what I've seen posted over the years, I will definitely be a bidder when the "Bill Jones Auction" comes to market!
Why push a coin that is not uncirculated into the uncirculated category?
Not that I agree with it, but it's because they are actually "market grading" (i.e. appraising) the coins rather than simply technically grading them. Bill's clearly AU 1839-D has original-ish surfaces and a pleasing overall appearance For The Issue, so since it's above average for one Of Those with that level of wear and marks in the fields, it was awarded "MS"60
they should drop the confusing letters and just give each coin a "grade" number.
Liberty: Parent of Science & Industry
I think I could live with that, @Baley. There isn't a magical threshold between 59 and 60.
--Severian the Lame
Coin grading standards seem to get tighter and then ease off in cycles and the upgrades occurred when the TPG entities were more lenient on grading. If it has any sign of wear, marks or scratches I would pass as it may well be over graded. Market depth is also something I would give strong consideration to. I define market depth as how many collectors are out there to sell the coin to. A nice AU, low pop, rare $10 Eagle or $20 Double Eagle is easier to sell than a Quarter Eagle of the same grade and pop. I exclude the bullion value as you mentioned the coin in question is at least a four figure coin. I would have to really want the coin you described as it sounds like several dealers have played the crack out/ regrade game and won. The money has been made and its sounds like a coin that has little if any upside from an appreciation standpoint.
If I liked the coin and agreed with the current grade, I would buy the coin. Previous grades do not matter, as long as it is properly graded (IMO) now.
I totally agree with this and I have purchased coins that I know were upgraded and have no problem with this, if they truly deserve it.
Sometimes, it’s better to be LUCKY than good. 🍀 🍺👍
My Full Walker Registry Set (1916-1947):
https://www.ngccoin.com/registry/competitive-sets/16292/
If I thought the price was fair for what I thought the coin should grade, I'd buy it. Thus if the coin was overgraded but fairly priced as an overgraded coin, I'm okay with it. CAC is nice and everything, but my opinion counts more to me than anyone else's opinion.