Grade inflation question
uscoinguy
Posts: 150 ✭✭✭
Hello- I have been a regular reader of the US Coin Forum but I am now just making my first posts. I really appreciate all the time and energy the forum members put into sharing their stories and coin knowledge. Although I have been collecting for 10 years now I feel I can never stop learning in this hobby. It seems that although not everybody collects at the same dollar level a lot of the tips on collecting shared here can apply to $100 to 10,000 coins. Not everyone can play in the major leagues but they can still be a smart player at any level.
I have read with interest articles by Q David Bowers and Rick Snow and comments by members here regarding grade inflation. So my question is if you decided to sell your coins now- and you feel they are accurately graded at prior to grade inflation levels- would you get some of your coins regraded in order to get the maximum value back? Or do you feel the quality of the coins would stand up on their own and still bring the expected value for the coin- regardless of the grade on the holder? I suppose really the first question would do you even feel that grade inflation is a reality? Thank you in advance for your opinions.
Comments
A reality? In many cases yes, especially if you look at older holders and certain series'. That said I believe most coins currently residing in older holders would not upgrade at the same TPG. Some would of course and if you have some very nice pieces consider CAC and/or posting some images for opinions. Also remember if the pieces are not at the $500+ level with an upgrade it's hardly worth the time/cost to mess with them.
Welcome aboard. Did the software upgrade bring you out of the shadows?
Take a few of your best coins (the ones you feel are most high end for the grade) and resubmit. If you don't get any upgrades on those few....then sell the rest as is.
I don't think there's a blanket statement that applies to every situation. The coins need to be evaluated on their own merits. Some collectors gravitate to exceptionally nice pieces and other collectors will have a wide variety of quality. You can test the waters with a few regrades, but just randomly submitting things to see if they'll upgrade is a great way to make the TPGs a bunch of money.
I'm working through the sale process of some items right now and working with someone who can independently assess what you have and the likelihood (and utility) of trying for upgrades is really helpful. Sometimes it's better to just sell them as-is. Sometimes you're foolish if you don't try it a few times. After all that's done, PQ coins usually command PQ prices and overgraded coins usually don't. The "right" combination of plastic and stickers helps, but is not as important as what's inside the capsule.
Yes- the upgrade does seem to be a lot more user friendly- kudos PCGS.
It's a risk/reward proposition. If you're rather certain that the coins would upgrade and an upgrade adds significantly to the potential sale price, you should have them regraded.
The answer depends on how you plan to sell them. If you group wholesale them then grade means everything as the price will directly correlate to the grade on the holder. If you sell them individually, then grade may not matter as much as quality may bring a higher price than the grade on the holder.
The big scare with grade inflation is buying a coin that has been over graded (grade on holder is more than perceived quality of the coin) and then it becomes very difficult to sell and many buyers will pass over it until it is priced closer to a grade lower than what is on the holder.
Welcome. This is an interesting question with many layers. I will give you my opinion on some of what I am reading into your text.
1) I believe grade inflation (gradeflation) is real, but I don't think it is linear, I don't think it is constant and I don't think it has always gone in one direction (that is, sometimes I believe it has worked as deflation instead of inflation).
2) The phenomena of gradeflation not only occurred at PCGS, but also happened at NGC and even happened with CAC, again all in my opinion.
3) Some designations, not grades, might be tougher to earn today than in the past.
4) Likewise, some coins that appear to be conservatively graded and in older holders might have been held back in grade and "silently net graded" due to a problem that may keep the coin out of a straight grade holder today.
5) If you are buying older holder coins today then you are likely buying coins that others have picked over many times in the past, though of course this is not always the case.
6) Coins in older holders retain a certain cache that coins in newer holders do not possess. This can make these older holder coins more valuable and/or more liquid. Both of these characteristics might be worthy of preservation.
7) Depending upon the value of the coin in question, an upgrade might make the coin less liquid. That is, if you have an MS64 coin that is worth $3,000 in an old holder and it has CAC sticker on it, but then upgrade it to MS65 in a new holder and it fails the CAC approval process then the coin might actually lose liquidity. No doubt you may certainly well realize more for it when it is sold, but it might take more work or time to achieve that goal.
8) A coin with a maxed out grade might not be as desirable as a coin with a potentially conservative grade.
No doubt there are other points that I have forgotten. Good luck.
In honor of the memory of Cpl. Michael E. Thompson
Good post Tom, thanks. There are lots of photo references online that you can use (somewhat...the final call lies in the eye of the grader) to see how your older graded coins stand up to newer ones.
I have a couple of Mercs graded by ANACS in the old small holder that I picked up a long time ago...one is an F12 and the other and F15. Recently a 1916-D was offered that was an F-15, in a newer holder from our hosts. The obverse matched my F-15 obverse very closely in terms of wear but the reverse more matched the F-12. So not much gradeflation there assuming my grading examples were accurate at the time.
Thanks!
K
Collectors with enough experience don't need a number on a label to decide whether to buy a coin, and what to pay for it. Those who are new, or who prefer to rely on a number chosen by someone else are sitting ducks for the UPgrading con artists who resubmit endlessly, hoping to snag a grade previously undeserved.
Before you hit "Disagree," please note that I wrote UPgrading con artists to include only those who crack holders before resubmitting in order to deceive the TPGs. These people undermine the integrity of the system, making coins that are accurately graded suspect, and distorting the population statistics. An UPgrading con artist is not interested in REgrading, only in the next person's money. They have also helped add to everyone's cost, by creating the "need" for CAC stickers, for those who don't trust the label like before.
my early American coins & currency: -- http://yankeedoodlecoins.com/
Welcome uscoingguy
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Welcome aboard uscoinguy....There is excellent advice above (i.e. TomB)...I will not repeat that.... I would say, if you are planning to sell, consult with an expert or post pictures here... (pictures must be good). Cheers, RickO
UScoinGuy:
The smartest policy may be for a collector not to assume that he can grade coins as well as the experts. Moreover, there are different categories of grading experts. Usually, crackout artists have a more advanced understanding of the cost-benefit calculations of upgrade attempts than dealers who sell to collectors.
Bryce:
TomB:
I agree with some of the points put forth by Bryce and TomB. This is a very worthwhile thread.
UScoinGuy:
I have thought much about it:
How will Coin Collectors Interpret Certified Coin Grades in the Future?
insightful10@gmail.com
I believe if grade inflation exists there are a lot of under graded coins out there waiting to be discovered, resubmitted, and get higher grades = More $. However grading submission can be expensive, especially considering collector society memberships so one has to pick their submissions for the grading bus carefully.
Perhaps I should purchase my plane ticket for the next big show and walk the bourse looking for these treasures (yeah like those dealers don't submit stuff they think is under graded) or go wild buying stuff on the bay I think is under graded - rattlers, OGH on the menu?. Two of my purchases this evening on the Bay were at 48% of TPG MV. This was a MS65 WLH and a MS65 FBL FH. The WLH I got for 78% of CDN bid. I think for now will just go with what I can get running between the tackles vs pitching the ball (grading submission) which can be risky.
I probably would not spend the money to get my coins re-graded unless an expert at one of the big auction houses like Heritage told me it would be worth my while to do it. I definitely would think twice about cracking out coins that are in Old Green Label Holders (OGLH), because the perception is those pieces are all conservatively graded and as a result sometimes bring more money. I don't think that is a blanket statement you can take to the bank, but some people think that it's true.
Bill, in a lot of cases perception = reality.
I think that's true with a considerable number of OGH and, increasingly so, OBHs.
Let the buyer decide if it's a crackout/undergraded possibility and price your coins accordingly.
I hit disagree because there's no difference in the regrading process vs. sending the same coin in raw. In either case the coin is seen raw by the graders and they should have no knowledge of what it might have been graded before....or if it were raw. They get to grade it on a clean slate. So whether you send a coin in for regrade 20X or crack it out and send it in raw 20X, it's the same basic thing. And that would make serial resubmitters just as much con artists as the crack out wizards. Fwiw, in the old days I must have been a con artist too. There was no regrade option back in the late 1980's. I cracked out hundreds of coins that were incorrectly graded imo.
I recall one in particular, a gem 1893 Barber quarter that had been kept in tissue paper since being put away in 1893. The coin was flawless though deeply toned in dark blue/purple. I submitted it for my local dealer who no doubt paid peanuts for it over the counter from the family who kept it perfect for nearly 100 yrs. I told him it would come back no less than 65 and possibly even 66. It came back NGC MS65 - this was 1988. I was hoping to buy the coin from him because I truly felt it was a 66. He asked me point blank, do you think it's properly graded? Could it go 66? I was truthful and said no to being properly graded and yes to a potential 66 grade. I took the "Crack Out Con" and resubmitted it....NGC MS66. Rather than paying him $3500 for it, I now got to pay him $6000 for it. I flipped that coin for $6500 to dealer/PCGS grader Jay Miller who also loved the coin. There was no con going on here. My dealer client got strong money, I made 8%, and Jay probably made 5-10%. I've had submissions stupidly graded by the TPG's. I had no option but to crack out and resubmit. It's happened dozens of time. My near gem 1838-0 dime was graded MS63 by one of the TPGs....after the other TPG graded it MS64. I felt the coin was a 64+ and paid that kind of money at public auction for it. I had no choice but to resubmit that one because I wasn't about to take a $3,000 hit on a $7500 coin now graded 63. 3rd time in it came back MS65....pop 1...highest graded (tell me what the real grade was as it went 64, 63, 65 in just 1-2 months). I sold it over the phone for $15,000 sight unseen to one of the sharpest seated experts/dealers in the country. Again, no con going on here. If there was a con....it was the TPG grading that coin MS63 and forcing me to submit it a 3rd time.
My resubmissions and crack outs are about maintaining "my money" and not the next guy's. I've almost never resubmitted or cracked out a coin I felt was properly graded and had no real chance of upgrading. The joke's on me though as quite a few of my "no upgrade shot" coins were soon upgraded by the dealers that bought them from me. They did nothing wrong....only took advantage of the opening I willingly provided. Knowledge is key.
Let's get real here. CAC only came about because some of the TPG grading standards got sloppy from 1997-2008. I'd say that 20-40% of the slabbed coins in the market by 2008 were either lower end or next grade down. That was a big problem and we all saw that problem grow. It was discussed around here numerous times from 2004-2008. Even if CAC had not come about, you'd have seen a major shakeup in coin pricing from 2009-2011....probably not too different than what went down in 1981-1982. CAC just gave everyone a name or entity to pin their frustration on....even if it was erroneously placed.
When I get back coins that are clearly under-graded, what about the TPG's trying to deceive me on any particular submission? How about not being able to cross any solid for the grade NGC gem seated type coin, even those with CAC stickers? Isn't that in a way the TPG also trying to deceive me? I don't think you can separate out intentions from the reality. A crack out dealer is trying to get the best grade possible on coins that have "some" potential. They aren't necessarily doctoring them....that's a whole different issue. Not all of them resubmit something 5X, 10X or 20X. It might only be once or twice. And even if they don't do it 20X, you will find 20 separate dealers and high end collectors who will do the same thing one shot per person.....just taking a lot more time to get it done. The 20th person in that chain will be rewarded while the first 19 lost on fees.
A worthy coin is going to resubmitted until it goes up a grade, period. That's the reality. And if that coin falls in my lap, I'd probably take a crack at it too. The end result is the same. The real question to ask is why after 5 to 20 submissions does a "worthy" coin go up a grade? That is the crux of the problem? Or from earlier examples in my post above, how do you get 3 diff grades in 3 submissions? How do I crack out a near flawless TPG MS64 $10 Lib and get body bags from both PCGS and NGC? And then the 4th time in the coin goes MS66? There are issues for sure. It's not just the fault of crack out dealers. It's the fault of all of us that have a different opinion from the TPG's on what a coin might be.
I did not hit the disagree button, but I disagree with your characterization of those who crack out coins for resubmissions as unethical people. In my opinion you are wasting your money if you send in crossovers and potential upgrades in the original holder. You need to start from scratch. When I was dealer, I sent in a crack-out candidate once. If it didn't work, that was it, but it almost always worked for me.
Yes, it is unfortunate that the population reports have been distorted by crack-puts, but that is the nature of the business.
To answer the OP's question. When it's time to sell it's almost always preferable to have the coins in higher holders. So however you would get that done, it's time to do it. Since many collectors don't have the skills to figure it out, it might not get done. You may need help. Major collectors like Gene Gardner sent many or all of their "coins with potential" back to the TPG's (and CAC) prior to being auctioned. I recall Gene getting my former 1858-0 dime to a PCGS finest MS66+ CAC pop 1 grade. That coin graded NGC MS65 in 1988. I resubmitted it in 1997 in the wake of the Eliasberg upgrades and it went NGC MS66. Attempts to cross that coin always failed for me. I found it sort of interesting that today it's not only crossed, it's in a higher grade too. So I guess that makes both myself and Gene as well as others, con artists.