Economics of Grading Modern Coins

TigersFan2 · September 3, 2015 5:04AM

When I consider the coins I've sent to PCGS for grading, I do an economic assessment knowing that the total cost/coin for grading is in the $22-25 range. If my cost of my raw coin plus the cost to grade is less than what the PCGS graded coin costs, then I send it in. Otherwise, it makes more sense to sell my raw coin and purchase the PCGS coin. In my coins, I'm not considering high-end coins worth thousands which leaves other considerations.

But I don't understand how there are so many PCGS modern coins being sold on Ebay for under $10. What are the situations when someone would send these coins in to be graded?

Economy grading while including both way shipping costs and the PCGS submission fee at best gets the price to around $22/coin. There's a bulk submission rate for submitting hundreds of coins, but there are restrictions such as many of the coins have the be the same denomination/date/mintmark and that wouldn't get the average cost of submission low enough.

I hypothesize...

1. They were hoping for a MS67 and instead got a MS64 and are just dumping their coin.
2. Some people don't consider economics when submitting coins and will submit low value coins just to have everything in their collection PCGS.
3. Are there are large dealers who negotiate special rates to make submitting these low value coins economical?

Are there other reasons why low-value modern coins are submitted for grading? Thanks. A friend and I have been wondering this for awhile.

derryb · September 3, 2015 5:07AM

The flipper game with mint products: sell the 70's at a nice profit, try to break even or worse yet take a loss on the 69's.

Key to profits lies with submitter's ability to screen out the non-70's before submitting. Appears many flippers just submit the whole mint order.

TigersFan2 · September 3, 2015 5:15AM

That's another theory, the MS70s vs. MS69s. But my question relates to modern Lincoln Cents and Jefferson Nickels. For example, look at this auction where the seller has 5 available. Did someone send in a lot of 1962 Mint Sets hoping for MS67s and wind up with MS64s?

1962-D Lincoln Cent $8.95

keets · September 3, 2015 5:17AM

bulk submissions with a minimum grade .

lasvegasteddy · September 3, 2015 5:19AM

"bulk grading service level submissions" surely accounts for some you see

TopographicOceans · September 3, 2015 5:29AM

I started submitting moderns back in 2002 when PCGS charged $10 a coin.
Mostly modern commemorative's I would buy from the Mint or on eBay, but also 1968-1971 proofs and 65-67 SMS coins.

70 DCAM's were rare back then, like 2% and they did well on eBay which had a really low FVF and you got paid with checks and MO's.

I tended to throw a lot of coins at PCGS to see what would stick, and made quite a few 68-71 PR67 Kennedys

Over time PCGS raised their prices, and so did eBay. I started submitting commems ATS and would get more 70 UCAM's than 69 UCAM's. They didn't sell for as much as a PCGS 70, but more then a PCGS 69.

As prices rose it no longer was profitable so I stopped but have spent tens of thousands on grading fees.

There was a guy here, Russ, who once scored a 69 DCAM AH he got off eBay. He could pick a AH from a mile away. Sold it for around 9k.

Today the nice people on eBay are cheaper / poorer and for the most part flippers today make money for TPG's, eBay, PP and the USPS. But back in the day flipping help fund my Type Set.

I started playing again last year. I took a bath on the Gold Kennedy's, and recently got 2 70 Jackie's and 1 HR 69 and 1 HR 70. I'll be luck if I break even.

TigersFan2 · September 3, 2015 3:27PM

Here's an auction of 6 PCGS coins where I wonder what the person was thinking when he submitted at least 4 of them.

6 PCGS Jefferson Nickels

jdimmick · September 3, 2015 5:59PM

Tfan,

also looking at this listing you just referenced, many times I ll buy collections that contain coins of this caliber, and Ill list in groups just like the nickels you see, to get rid of them. Not cost effective to sell individually , so I group em
jim

TigersFan2 · September 3, 2015 11:07PM

But somewhere back in the ownership chain, someone made the odd decision to send some of these coins off for grading.

BillJones · September 3, 2015 11:30PM

<< <i>But somewhere back in the ownership chain, someone made the odd decision to send some of these coins off for grading. >>

They didn't know what the grade was going to be before they submitted the coin for grading. The "winners" are the PR-70 DCAM coins. The "losers" are anything else. It's like playing a shot machine. You hope that the winners will out weight the losers.

Even those of us who know how grade coins can't predict what is going to get a 69 and 70 with total accuracy. One might go over the entire surface of the coin with a 10X glass and find a tiny "hole" in the surface of an PR-69. That might have been the reason for the grade, but you never know for sure because the grading services never tell why a coin got a certain grade.

If you can see an obvious defect, that seals it. That coin should not be submitted for grading, but for many Proofs it's not a real easy call.

AMRC · September 3, 2015 11:47PM

The answer comes in two significant flavors.

1. BULK grading. Coins can get encapsulated for a lot less than the $20-$22. I will not quote the numbers, but it is a lot less than your assumptive $20-$22. Often, dealers in this space, send in rolls of this stuff hoping for a pop grade where they can really make up for it.
2. Lack of knowledge. I have seen families, send "grandpas" entire collection in for grading even though 99% of it was common or low grade. Very sad.

TwoSides2aCoin · September 4, 2015 12:00AM

I leave the grading to the dealers who paid the dues , and their children.
If I need something, I just go to ebay and buy it. That's the economics of grading modern coins.
Once bitten, twice shy.

keets · September 4, 2015 1:12AM

But somewhere back in the ownership chain, someone made the odd decision to send some of these coins off for grading.

sometimes the answer is as simple as different collectors do things for reasons you and I may never understand or be able to figure out.

TigersFan2 · September 4, 2015 1:23AM

Yes. Logic is subjective and differs from person to person.

Cougar1978 · September 4, 2015 1:38AM

I can see someone slabbing Modern Gold Coins. But when the slab cost is greater than say 10% of the coin's value one should take a step back and consider if this is worthwhile.

Beyond that it simply is not economical in the majority of cases based on the OP's cost vs pcgs value criteria. I think his calculations are right on and makes a lot of sense.

Even if mods make 70 its hard to get anywhere near all the money (per price guides). I am not a player of trying to get 70's on mods for this reason. In addition many USM mint issues drop dramatically in the after market once all the newness hype blows over. Further more slabbed mods can become spotted over time - try and sell a spotted 70. BEWARE of ebay sellers selling slabbed 70 mods cheap where you do not receive the coin pctured! Your risking getting some low end piece of spotted trash. I recently returned 2 of these. I guess the guy thought I was too lazy to go stand in line at USPS and send them back for refund.

Take a look at what some of the slabbed cupro nickel mods are bringing on ebay, many less than $10. In addition one can acquire many one ounce silver mod commem or ASW issues in slabbed 69 for less than melt plus $15. However I would not recommend bulking up on these - storage problems. I am currently thinning my slabbed portfolio roster down to 60 pieces. This simplifies record keeping, storage, and tax filing.

BillJones · September 4, 2015 2:22AM

When I was dealer one of my main suppliers sent in what must have been several hundred perfectly ordinary first year of issue Sacajawea Dollars for bulk grading to NGC. What he got back was a huge box of slabbed coins with Mint State grades on them. I went through some of these pieces, and I swear the grades seemed like they were assigned at random, because they sure didn't match the coin inside. There were pieces with ugly toning spots and marks that got higher grades than coins that were obviously better, at least to the trained eye. It was almost like the graders had a predetermined bell shaped curve for the grades and then just stuck coins in the holders at random to match the curve.

It was during this period that I believe NGC lowered itself to second class status when it came to the certified modern coin market. This was obviously a bulk coin grading situation, and at least from this group, I don't think that NGC put enough effort into grading the coins. I've understood that bulk grading can go as low as $8 a coin, at least back then. Maybe these Sacajawea Dollars were graded for even less, but in my opinion it was no bargain.

19Lyds · September 4, 2015 2:33AM

<< <i>Here's an auction of 6 PCGS coins where I wonder what the person was thinking when he submitted at least 4 of them.

6 PCGS Jefferson Nickels >>

Bulk Submissions

wondercoin · September 4, 2015 3:08AM

I remember a world class classic grader/ upgrader trying his hand at submitting modern memorial cents for MS67 grade in bulk and getting back MS64's and 65's! I do believe that the majority of folks who simply dabble in bulk submitting likely lose money. Just as the average collector may lose money trying to upgrade coins while the Pros can make a fortune at it.

This week, my son made his very first pop 1/0 business strike (MS68) modern quarter at PCGS- a coin that might be worth upwards of $1,500 -$2,000, but perhaps less. With it, he spent maybe about $700-$800 total in other grading fees on coins that mostly graded a point or two less and are probably not worth the grading fee cost and the overall cost of the coins. Let's say he ends up selling some of these other coins for as little as $4 or $5 each and loses many hundreds of dollars on this "other stuff" when the dust settles. To me, a small price to pay for the fabulous finest known business strike modern coin Justin just found and preserved, for the future generations of collectors, in a PCGS holder.

But, to the myriad folks who might do the same thing Justin just did but not end up with the pop 1/0 - just a pile of lower grade coins- it would not surprise me if many "lost their shirts" submitting bulk. There is a learning curve and, quite often, an extended period of time that one needs to "pay their dues" to be successful at bulk grading- especially the business strike coins.

As always, just my two cents. Wondercoin.

TwoSides2aCoin · September 4, 2015 3:45AM

I've got a few modern coins to submit. I just see "low value" as being worth less than a hundred bucks. I may up that number to $150, soon.
I love modern coins (yes they're low value now ) and I'd rather get some already slabbed by others than to put forth the effort necessary as already mentioned with wondercoin (Mitch) in this thread (numismatically and economically).
I'm glad you addressed it sir (Mitch). I'd already alluded to you and others regarding "low value " modern coins, slabbed by the TPG's in the first post. For me, tt's just a matter of what it is. And let's face it, economics dictates more than the market, for any of us on a budget.
I would not mind having a set of MS and PR coins instead of having them in albums. We know over time the albums will tarnish these coins and they'll never get a lofty grade. EVER.

TigersFan2 · September 4, 2015 3:59AM

But even with the bulk submissions policy, it still costs $12/coin plus a pro-rata share of the $75 PCGS fee plus both way shipping costs. Let's say $13/coin. Yes, it's a gamble of how many will grade high and how many won't make the grade.

TigersFan2 · September 4, 2015 4:06AM

I can see someone slabbing Modern Gold Coins. But when the slab cost is greater than say 10% of the coin's value one should take a step back and consider if this is worthwhile.

I fail to follow this logic as you'd never submit a coin worth less than $220 for regular submissions or less than $130 for bulk submissions. I think the more appropriate measurement is at what cost was the coin acquired vs. what will be the value of the coin if it makes the desired grade. I can easily see the value of submitting a $70 coin if I purchased it for $35. But for a less expensive coin, it's much more difficult to purchase at enough of a bargain to make submitting worthwhile.

Or the logic is how important that coin is for your collection and keeping it protected in a PCGS slab.

wondercoin · September 4, 2015 4:10AM

Twosides... thanks for the vote of confidence.

Wondercoin

topstuf · September 4, 2015 4:12AM

<< <i> It's like playing a shot machine. >>

Love that typo!

Economics of Grading Modern Coins

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