Bowers: How third-party-grading benefits the hobby
- Published: Sep 26, 2016, 4 AM
The Joys of Collecting column from the Oct. 10, 2016, Weekly issue of Coin World:
Recently, I have received more than 100 letters from Coin World readers who have experienced gradeflation or who have been harmed by it. Just about everybody is happy if they own a coin graded, say, Mint State 63 in 1990 and today in 2016 it grades MS-65.
However, one reader told me he lost several hundred thousand dollars by buying most of the top-graded certified 1909-S Lincoln, V.D.B. cents years ago, because now many dozens of such coins are certified, many of them upgraded.
On balance, I believe that third-party certification has been a great boon to coin prices and to the market in general. It has other advantages as well.
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First of all, although nearly all experienced collectors and dealers know that grading numbers are not at all scientific, to newcomers such numbers appear to be such. To neophytes, clearly, a coin certified as MS-65 is better than an MS-64 or an MS-63.5, verifiable in any number of price guides.
You (if you have been in numismatics for more than a year or two) and I know that modern Mint coins sold to collectors are nearly all MS-70 or MS-69 out of the box. (Indeed, an MS-66 coin would be a great rarity, say among the latest 2016 Standing Liberty gold quarter dollars.) However, such a coin in a plastic slab marked MS-70 would seem, to the uninitiated, to have exceptional value — an ideal investment.
Certified coins with scientific-appearing numbers thus act as a magnet to attract would-be investors. So long as they keep buying, all is good. However, if they try to sell, they will find that in many instances there is little or no aftermarket beyond what an uncertified coin would bring.
Modern coins and bullion pieces that are super common in ultra-high grades and marketed in popular magazines, newspapers, and on television apparently attract thousands of buyers, given the cost of that advertising.
You are on your own and need to be a winner! Don’t buy anything until you go to a coin show and spend a day looking and asking questions.
A small percentage of new investment buyers will stay with numismatics, buy some reference books and read them, and will become solid collectors. The hobby will thus benefit.
Also benefitting are the marketers. Some of them have gained great wealth. The third-party services share in the profits.
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