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SALES OF SLABBED COINS INFLATE MARKET PRICES!
GOLDSAINT
Posts: 2,148 ✭
SALES OF SLABBED COINS INFLATE MARKET PRICES!
All of the publications we rely on each day to determine what price we will pay for a particular coin has a built in inflated value due solely to grading companies, and the way price publishers gather information to publish new prices each month. All of the publishers of coin pricing guides i.e. the Red Book, Trends, Coin World, Grey sheets, Coin Values, PCGS Coin Price Guides, etc. accumulate information from published market sales from auctions, Ebay, Yahoo, etc. Over the last couple of years as the market has heated up and new, as well as old, collectors rely more on the grading companies the demand for plastic graded material has increased far in excess of like kind coins in a raw state. In a normal situation and a calmer market a slabbed coin should perhaps be priced at a few percent higher than a raw coin, as it does eliminate some risk. In addition there is the hassle factor and cost of having a piece slabbed. My opinion is that this higher price for slabbed material should be 10% higher plus $20 for slabbing and mailing.This unfortunately is not the case. Depending on what slab a coin is in makes all the difference in the prices but they are all above what would be a reasonable margin.
PCI and other out of favor grading companies slabbed coins may in fact fall close to the increases I suggest as fair, but the in favor companies like PCGS and NGC push price data far beyond where it should be. So what is now happening is that we are all paying inflated prices for all of our coins. Here is an overview of how this works. The price publishing companies have large research groups that keep track of published sale prices. They gather data every month from where ever they can so they can publish monthly price guides. There is a large group of coin collectors and investors that will only buy slabbed material, and some of those will only buy certain slabs. This group competes with one another in many areas of the coin buying market and continually pushes the price of slabbed material far beyond the raw coin prices. Unfortunately there is no possible way for price publishers to determine what part of he price is being paid for plastic, and what part for the coin. PCGS graded coins commonly exceed like kind raw coin prices by 25 to 50 percent depending on the issue.
Here is an example, 20 Morgan Dollars all fairly graded MS 64 sell in a publish forum.
Seven of these coins are raw and sell for $550 each or $3,850. Four of the coins are NTC slabs and sell for $675 each or $2,700. Six of the coins are NGC slabbed and sell for $725 each or $4,350. Three of the coins are PCGS and sell for $795 each or $2,385.The totals then are 20 coins that sold for a total of $13,285 or an average price of $664 each. This new price average of $664 is what the publishers print as the new price for next month, and this price is what every dealer now wants to sell his coins for. If the dealer is honest and a good grader he wants to sell his MS 64 Morgan for the new price of $664 even though this price includes a large increase for PLASTIC. As the market heats up and more new untrained coin collectors and investors come into the market this problem will become much worse than it is today as demand for slabs increase. In their defense I am sure this was never the intention of any of the grading companies, but this is happening nonetheless. Since the very first humans started collecting coins two factors have been the determining factor as to price, the rarity and the grade. There is now a new artificial factor, CERTIFIED COINS. It is unreasonable for collectors to pay consistently higher prices for coins that are no rarer this month than they were last month just because certain segments of the collectors group artificially change the curve by insisting to pay more, not for the coin, but for the plastic. I can see only one thing that can be done about this situation, as it currently is already out of control. The major publishers must start dividing their price sheets into two price categories. One price for slabbed material and one for raw coins. What is your opinion of this?
All of the publications we rely on each day to determine what price we will pay for a particular coin has a built in inflated value due solely to grading companies, and the way price publishers gather information to publish new prices each month. All of the publishers of coin pricing guides i.e. the Red Book, Trends, Coin World, Grey sheets, Coin Values, PCGS Coin Price Guides, etc. accumulate information from published market sales from auctions, Ebay, Yahoo, etc. Over the last couple of years as the market has heated up and new, as well as old, collectors rely more on the grading companies the demand for plastic graded material has increased far in excess of like kind coins in a raw state. In a normal situation and a calmer market a slabbed coin should perhaps be priced at a few percent higher than a raw coin, as it does eliminate some risk. In addition there is the hassle factor and cost of having a piece slabbed. My opinion is that this higher price for slabbed material should be 10% higher plus $20 for slabbing and mailing.This unfortunately is not the case. Depending on what slab a coin is in makes all the difference in the prices but they are all above what would be a reasonable margin.
PCI and other out of favor grading companies slabbed coins may in fact fall close to the increases I suggest as fair, but the in favor companies like PCGS and NGC push price data far beyond where it should be. So what is now happening is that we are all paying inflated prices for all of our coins. Here is an overview of how this works. The price publishing companies have large research groups that keep track of published sale prices. They gather data every month from where ever they can so they can publish monthly price guides. There is a large group of coin collectors and investors that will only buy slabbed material, and some of those will only buy certain slabs. This group competes with one another in many areas of the coin buying market and continually pushes the price of slabbed material far beyond the raw coin prices. Unfortunately there is no possible way for price publishers to determine what part of he price is being paid for plastic, and what part for the coin. PCGS graded coins commonly exceed like kind raw coin prices by 25 to 50 percent depending on the issue.
Here is an example, 20 Morgan Dollars all fairly graded MS 64 sell in a publish forum.
Seven of these coins are raw and sell for $550 each or $3,850. Four of the coins are NTC slabs and sell for $675 each or $2,700. Six of the coins are NGC slabbed and sell for $725 each or $4,350. Three of the coins are PCGS and sell for $795 each or $2,385.The totals then are 20 coins that sold for a total of $13,285 or an average price of $664 each. This new price average of $664 is what the publishers print as the new price for next month, and this price is what every dealer now wants to sell his coins for. If the dealer is honest and a good grader he wants to sell his MS 64 Morgan for the new price of $664 even though this price includes a large increase for PLASTIC. As the market heats up and more new untrained coin collectors and investors come into the market this problem will become much worse than it is today as demand for slabs increase. In their defense I am sure this was never the intention of any of the grading companies, but this is happening nonetheless. Since the very first humans started collecting coins two factors have been the determining factor as to price, the rarity and the grade. There is now a new artificial factor, CERTIFIED COINS. It is unreasonable for collectors to pay consistently higher prices for coins that are no rarer this month than they were last month just because certain segments of the collectors group artificially change the curve by insisting to pay more, not for the coin, but for the plastic. I can see only one thing that can be done about this situation, as it currently is already out of control. The major publishers must start dividing their price sheets into two price categories. One price for slabbed material and one for raw coins. What is your opinion of this?
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the greysheet, is supposed to be based on ACTUAL BID & ASK prices, but the reality is those numbers can be (and are) manipulated as well. ie. if a major dealer suddenly lands a roll of 1801 bust halves, what do you suppose will be reflected in the grey sheet? do you suppose it just might be a HUGE JUMP in value of said halves?
there is only 1 price guide of merit, & that's the 1 that you gain through experience.
slabbed/raw has absolutely NOTHING to do w/ coin values.
K S
With an expensive coin, i.e. 1916-D Mercury dime, I want to be certain it is not a fake. The grade assurance provides that and the condition is an opinion that carries more or less weight depending upon which company rendered the opinion.
It is this opinion that creates a different perception of value in the marketplace. As many here will say, learn to grade yourself. However, this takes a while and if you are not specializing in one series it is hard to be an expert on everything.
I will say that the one thing that has increased market prices is the move to using the upper end of the Sheldon scale for grading. Again, 20 years ago there was BU, Gem BU... etc. Now were are using a far more granular approach and thus the very top coins are diffentiated from the nice coins. Thus, a premium is charged for these coins. Because an opinion has been rendered by someone who is NOT the owner of the coin, there is a perception of independence and impartiality with regard to this opinion. This all adds an element of value.
Many collectors choose to collect raw coins exclusively. The risk is now theirs to bear and the owner and buyer must now agree as to the condition of the coin. How many people have been burned buying raw coins on eBay?
Again, the coin has a value no matter how it is stored, raw or slabbed. The value is exactly the amount you can convince someone to pay you for that coin, no more, no less.
1. There is only a limited number of collector coins, especially high-end coins.
2. If a collector buys a coin for a collection because s/he likes it, it will take a higher bid price to cause her/him to sell the coin again barring a change in personal economic factors.
To say that this is accelerating to a bubble resulting in a burst similar to that of the stock market or 1989 coin market is premature. However, if it is true, then all you have to do is wait for two years, sell all your coins at the height of the frenzy and then after another year buy them all back and more at the lower, post-burst prices when everyone is hurting to move any inventory at all.
Simply stated, just like everything else in life, the monetary value that you put on an item may not be the same as what other people place on an item. At those times, the person that places the higher value, and is willing to pay that value, will own the given item.
In a (choose your color)-hot, double-nuclear market, prices will go up and collectors may have to reevaluate their collection expectations based on their budgets.
Edsondl,
NO that is not what I am saying ! What I am saying is that the prices are moving up not based on demand for a particular coin but because many of the last prices used by the publishers were for Certified coins. Were all coins un-certified they would have sold for much less. You are right the economic factors will take this where it will, but the result of that will be a bubble. This will not happen tomorrow, but it is coming.
One other point here, hard asset markets are not like stock markets in that they never have the liquidity, and people that own hard assets will set on them for years rather than incur large losses, so the market will not recover and go to lower levels in a short period on time, once the bubble bursts.
I'm just an average Lincoln cent collector who started in the early eighties buying circulated Lincolns. Then I upgraded to all uncirculated in the late eighties. Some of my key Lincoln's I cracked out of PCGS and NGC slabs so I could put into my Capital holders. Finally, in 1997 with the start of the PCGS collectors club I made the decision that in order to protect the potential resale value of my Lincoln's I should get my most valuable ones into PCGS holders. Over the next several years I have done just that.
While there are a number of collectors/investors who "play" the slabbing game, I believe the reason slabbed coin prices are higher than raw coins is most average collectors, like me, feel much more comfortable with a coin already graded by a major grading company like PCGS. If we are going to spend $300 or more dollars for a nice coin, we want to believe we have gotten value. PCGS holders provide that assurance and are worth the cost to me. The price guides just reflect the reasonable price for a given coin, not an exact price. JMHO. Steve
My Complete PROOF Lincoln Cent with Major Varieties(1909-2015)Set Registry
What are the reasons that a raw coin that could be had for $550 is not in a holder if the exact same coin in a slab is routinely sold for $795? Is the fact that these coins are slabbed prove by default that they better than their raw counterparts? I don't know. At less than $50 to $100 I would say "probably not" since the cost of slabbing would not be recovered by the increased value at selling. But for the example given by Goldsaint, one has to wonder. Otherwise, I would suggest buying up as many of those raw coins as possible, slab them and reap the approx. 33% return on investment (after shipping and grading fees). For myself, at the $550 price point, I don't feel entirely sure of my own grading ability.
Edsondl, please dont think I am against Certified coins, and yes you are right I personally like some gradeing help when it comes to certain key coins I am looking for. My reason generally has more to do with price than high grade. If I am going to pay $5,000 for a key coin, even in a lower grade, I look for a certified coin.
I dont think that is my beef here. How much am I going to have to pay for that Grading help? As I stated my personal opinion is that the Raw coin price plus 10% would seem like a fair number. I know what you are going to say, if you don't want to pay a plastic fee of 50% more dont buy, but that was not my original point to this thread.
My point is that the raw coin prices are going up because the pricing curve is skewed by the high preiums on certified coins.
So far no one has like my Idea of have a priceing sheet with two prices, both a slabbed price and a raw price?
Read more.... Type less...
Maybe I'm grumpy because I have a Numerical modeling exam to take in 15 minutes but I was hoping to read something worthwhile numismatically before I was hit with my dose of meteorology and oceanography for the day.....and all I get is this...
John
siliconvalleycoins.com
greysheet prices are higher than bluesheet
Raw----------------------------- Pcgs
s$1 1899s-315/335 ---------- 292
1900s-260/285 -----------242
1901s-475/525 ---------- 445
I find that interesting?I would assume it is because Bluesheet is for sight unseen and greysheet is Sight seen?
Raw 78-CC Morgan MS 63 $215
Slabbed same $330
Raw 78-S Morgan MS 64 $65
Slabbed same $105
Raw 1898-O Morgan MS64 $37
Slabbed same $55-$60
Bottom line, I agree w/Goldsaint's assertion. Whether the pricing difference is psychological, quality, authentication or whatever, there is a significant pricing variance between slabbed and un-slabbed coins.
I cannot speak for other series, but what would the selling price of that $22,000 MS69 1940 Lincoln have been if it was raw? Also, what would the selling prices of the MS68-MS70 coins be if they were raw?
No one grades with 100% certainly. If a grading company is right 95% of the time, I have a 95% certainty that my MS66 whatever is in the 66.1 to 66.9 range. With a raw coin being sold by someone I've never met, HIS 66 opinion may fall as low as a 64 and possibly as high as a 67 or 68. Shouldn't be that far of a range, but we've all seen them. The slabbed coin should trade in a fairly narrow range. But how much are you willing to spend, sight unseen, on a raw coin that someone says is equal to the slabbing company's 66? Probably not as much. To me it's as much a raw "discount" as it is a premium for slabbed.
If a guy walking by my car says I have a valve tap in my engine, he might be right. I'm not likely to spend $300 to get it fixed unless my dealer, who is right 95% of the time, says that's the problem. JMHO.
Joe
The test went fine thank you.
Now let me comment on some assumptions that you made that are flawed in your post which lead to your conclusion of the two pricing sheets.
#1.
In addition there is the hassle factor and cost of having a piece slabbed. My opinion is that this higher price for slabbed material should be 10% higher plus $20 for slabbing and mailing.
What? How should a slabbed coin be priced 10% higher +20$ slabbing fees than a raw coin of the same grade. If the coins are equals in every aspect to include grade, they should be priced the same!!! This is the whole concept of buy the coin not the holder that you have been throwing around in your thread. If you are going to quote that cliche, then stick by it. Please dont contradict yourself.
#2.
Since the very first humans started collecting coins two factors have been the determining factor as to price, the rarity and the grade.
You forgot a very important one... Demand. The coin market, while vulnerable to hype, is driven like any other market. It is supply and demand my friend. If the two factors that you mentioned are the determining factors, why isnt an 1885 quarter eagle worth tens of thousands of dollars? I guarantee that if it were a barber Half dollar it would be.
Why? Because very few collectors want a date set of quarter eagles.
#3.
This one is not anything specifically quoted in the post, but rather the spirit of the post. In order to perform a business analysis of what you are talking about, like a scientific experiment, you need controlling factors. Since you are talking about having a pricing sheet for raw vs. slabbed coins, how are you going to control what the raw coin grade is?
You have one group of collectors only buy raw and the other only buy slabbed... Here is a lack of control for you. How do you explain that one PCGS MS65 Morgan Dollar, say an 1880-S selling for 50$ on ebay,while another sells raw for 300$. You have no control in the grade realistically for eye appeal, high end 64's, low end 64's, toning. The list goes on and on.
I understand your frustration with the pricing and numbers game that is involved with our hobby. Let me give you this advice. Do with it what you will...
#1. I reiterate what I said before... Read more, type less. By that I mean, dont post messages (or parts of messages to make a point) as absolutes when you have no idea what you are talking about. It makes you look silly and arrogant and reduces your credibility. I am a relative newbie too and I assure you that I have said some idiotic stuff when I first came on here. I learned quickly that this is not a race or competition and I try and make sure when I post something on the boards that I dont post it as fact unless I am sure it is.
#2. If you really want to educate yourself so you dont lose money on your hobby, the best way to start is to look at as many coins as possible. Determine in your gut as you go along what YOU think that they are worth. As you see more and more coins and more and more prices (both retail and wholesale), you will come up with your own pricing guide in your head. That the mental sheet that really sucessful collectors and dealers carry with them always.
R,
John
siliconvalleycoins.com
I apologize; I think I am getting dyslexic. For whatever reason I just am not getting my point across. This has nothing to do with me, or my collecting habits. This has to do with a built in hidden cost that ALL of us are now paying because the price of certified material has far exceeded the cost of the same like kind coins in the Raw. Please allow me to try again.
All personal property when sold is evaluated by a market, or an expert, or in the case of Coins by experts that publish price guides.
In your theory you cannot have a price increase without increased demand. In my theory you can, and we are! Here is how.
Example one: You have 100 people that buy 100 Raw coins, all the coins are exactly the same, all are sold at $100 each because that is what the Grey sheet says they are worth. All the coins sell at a total of $10,000.
Example Two: You have 100 people that buy 100 coins. 50 of the coins are Raw and the Grey sheet says they are worth $100 each and they sell for that for a total of $5000. 50 of the coins are in PCGS slabs and they sell for $ 150 each for a total of $7,500. In this example all 100 coins sold for a total of $12,500.
As the grey sheet research people gather their data to publish the new sheets they notice that the price of the 100 coins have gone up to $125 dollars each so that’s what they publish in the new price. All things being equal all of us both dealers and collectors alike are now using the $125 per coin number to base our buying and selling decisions on.
Did the price increase because there was more demand, NO. The price increased because no one paid attention to the fact that the price of Graded plastic is now in the pricing equation.
Perhaps this would not be a big problem if the market had an acceptable stable amount that was commonly paid for certified coins above Raw coins, but it does not. The price of Certified slabbed material in relationship to Raw material seems to be growing every month, and therefore the prices being published are skewed upward. Even with no new demand the published prices will go up as long as collectors are willing to pay abnormally high amounts just to buy a coin that is certified.
<< <i>I find that interesting?I would assume it is because Bluesheet is for sight unseen and greysheet is Sight seen? >>
marmac, the phenomenon you described is why i've typed it time & again , the most basic rule for buying coins is:
do not buy coins sight-unseen.
period.
end of story
your observation is exactly correct.
K S
<< <i>SALES OF SLABBED COINS INFLATE MARKET PRICES >>
Isn't this about the same as saying, "Warrenties on Used Automobiles Inflate Market Prices." Since most automobiles are priced based on the Blue Book, wouldn't any amenity that enhances the marketability of any object for sale (for that matter) add to the market price???? Aren't most home buyers apt to pay market price or more if a home inspector examines the property and deems it structurally sound and the mechanics in good working order??? Also, one should never buy a used automobile without getting behind the wheel and driving said automobile...right Dorkkarl???
No this is not the same. Here is what would be the same. The auto bluebook takes all the sales of particular cars in the U.S. and then takes all the sales of those same cars in Europe, with all the extra transportatin costs, and in a totally different market, and they add all the sales together and publish a price for U.S. car buyers.
My contention is that there is a great need for certified coins in some cases but there should be TWO quoted prices, one for coins in slabs and one for raw coins. This way people that want slabs can see what they are paying for this service in relationship to what they might buy the coin for raw, and the prices are not added together to get one price for all.
<< <i>but there should be TWO quoted prices >>
Aren't there two quoted prices. One for raw and one for slabs???
In my experience (in the decade since I returned to active collecting), in a face-to-face transaction between a sophisticated buyer and a sophisticated seller, there is no price difference between a raw coin and a slabbed coin, if they are otherwise equal.
What this means is that the person who had the coin slabbed essentially "eats" the slabbing fee (in terms of price), but the fact that the coin is slabbed (by a major grading service, of course) usually makes the coin more marketable.
I think what you're seeing is the discount that ebay buyers assign to raw coins: because an ebay transaction is essentially a sight-unseen purchase and, unless the buyer has experience with the seller, he has no idea whether the coin has a defect that isn't revealed in the coin's images (no matter how good they are), most buyers will not pay full price for a raw coin. The burden of returning a coin and getting a refund must be allowed for in the coin's price.
As far as your example using Steve Estes' inventory (I've seen his ads in Coin World, but don't otherwise have any experience of him), I draw your attention to the following:
In your example of the 1878-CC Morgan dollars in MS-63, the first (raw) example is priced at $215 and has no description. The second and third dollars, both slabbed by NGC, are listed as "EA 9" and "EA 8", respectively and are priced at $330 each. I infer that "EA" stands for Eye Appeal, which is Mr. Estes' way of saying that, in his opinion, the second and the third coins are much more attractive than the first and, therefore, deserve a higher price.
Also, let me draw your attention to the seven 1878-S Morgan dollars that Mr. Estes is offering. The first is raw, has no description, and is priced at $65; the second, third and fourth coins are graded by NGC, ANACS and NGC, respectively, are all "EA 9" and all priced at $105; the fifth and sixth are graded by NGC, are "EA 10" and priced at $115, while the seventh is "PL" (prooflike), graded by NGC and is "EA 10" and priced at $135.
What one should conclude from this is that not all coins graded the same will command the same price - the lower-end examples will sell for less and the higher-end examples will sell for more, regardless of who grades them.
Check out the Southern Gold Society
I wonder if this is true. I for one, buy both slabbed and unslabbed coins.
Secondly, I can think of mutliple examples in which raw coins sell for more than their slabbed equivalents. Examples are coins in their original and highly prized government packaging that cannot be replicated.
Thirdly, ebay is a poor venue to evaluate the entire coin market's pricing. As mentioned before, ebay is well known for slaes of questionably graded raw coins which makes the slabbed coin prices appear inflated in comparison.
Forthly, there is a higher percentage of problem raw coins versus problem slabbed coins that are of the same grade so this will skew results.