Article by:

Ray Gaudette
surok@adelphia.net
News

Thoughts on Coin Certification

I was recently struck by an eBay ad where the seller was asking $25 for a 1955-S Lincoln Cent in MS 65 slabbed by one of the “Big Three” slabbers. I wondered why he was asking so much for his coin while I have scads of 1955-S Lincolns in the same condition that I am hard pressed to sell for $2 each. The difference is that mine is “raw” while his is “slabbed”. Having a coin slabbed means having to recapture the expense of the slabbing process when you sell and having to pay the additional premium of the slabbing when you buy, a needless overhead, in my opinion.

History

Back in the old days, pre-slabbing, coin collecting was basically a contest between the collectors and the dealers. I call it a contest because the collectors were trying to buy their coins as inexpensively as possible from dealers who were trying to maximize their profits on every sale. Some dealers would play games like selling a coin as “Gem BU” and attempting to repurchase this same coin at a future date as an “AU Slider”. While many collectors cried foul at this practice, some even decrying this practice as portending the “death of coin collecting”, it was really very good for the hobby as you will see. In order to play this game the collector needed to develop a knowledge base from which to compete with the dealer. That meant that the collector needed to study the grading standards for the types of coins that he collected and needed to keep abreast of the values at which these coins changed hands. There were plenty of resources available as most folks graded according to the Red Book and bought/sold according to the Red/Blue Book or Coin World’s published price lists. Requiring the collector to study his coins and become familiar with the market was not a BAD thing to require.

Some of the major criticisms were that dealers would sell you a coin as “strict BU’ and later try to buy it back from you claiming it was only an “AU slider”. The collectors thought that this was unfair and protested loudly. This opened the question of the coins actual grade. How could a collector actually know? Here’s where that studying came in handy. A collector should never buy a coin from anyone unless he is satisfied as to both the coins condition and the price to be paid. Knowing the grading criteria for a coin is critical and there is no excuse for an uninformed buyer. Price is another matter. What a coin is worth is very subjective and depends on just how badly the seller wants to sell and the buyer wants to buy. This is where the capitalistic bargaining procedure takes place. No one is forced to buy or sell and the collector has every right to walk away from any deal with which he feels uncomfortable.

Coin Certification

Hearing the hue and cry from the masses that the dealers were “crooks” and that the collector could not get an “honest deal”, some enterprising souls came up with a brilliant idea. If collectors were so concerned with “grading” inconsistencies, and could/would not learn to grade for themselves, why not start a service where “professional” graders would render their opinion on a coins true grade and then, for all eternity, encase that coin in plastic so that the grade would forever be inseparable from the coin? This was the idea that was sold to the public in the early 1970’s.

This process required both the collectors and dealers to buy into the idea that both would forever accept the “grading companies” opinion on the true grade of the coin in question. To further cement the necessity of the grading companies, they expanded the range of grades for uncirculated coins from 3 to 11. Most folks could not tell the minute differences that separated one grade of uncirculated from the next and thus the grading companies were born.

The Reality

All was well in the kingdom for a short period of time before the problems started. It became quickly apparent that some of these graders, were not the benevolent folks that they were made out to be. They had to make living too and thus charged fees for their work. Fees that had to be passed along every time a slabbed coin was bought or sold. We are not only talking about the fees that the graders charged to look at your coins, but postage and insurance that you had to pay to get the coin to the grader and to get the coin returned to you. This increased the expense of these coins to a large degree but also adding value to them as well. This added an extra column to the price guides as we now had to consider the price for a slabbed coin at a given grade vs. the price for a “raw” coin at the same grade. The slabbed coin was always priced higher, not only because its grade was “verified” but so that the seller could recoup his slabbing costs.

If One Is Good, More Must Be Better

With the early “success” of the grading companies, more folks wanted to get into the act. Grading companies proliferated. Competition is indeed the lifeblood of capitalism but there must be structure! What were the qualifications by which one became a professional grader? What standards were they following when affixing a grade to a coin? Some followed the Red Book, some used Photograde, some used the ANA Grading Guide and some had their own system of grading which they would not divulge. At last count, there were at least 80+ grading companies that had started up, with most having a short run and then going away. All of these companies put their “brand” on a slab to which their “professional” grader affixed a grade. Some companies were very lenient while grading while others were very tough. Collectors had to not only master the art/science of grading coins while remaining abreast of the value of their coins in the market but had to be up to date on all the different slabbing companies. Would there soon be a “Guide To Slabbing Companies” published?

Grade Shopping

This resulted in the situation that we see today where different slabbing companies often disagree with each other as to the grade of a coin. Collectors and dealers now frequently “grade shop” by cracking a coin out of its eternal slab and resubmitting it to the same or different grading company in hope of getting a higher grade put on the slab.

Collectors Confidence

In the last few years, it has become important to “buy the coin,” not just the slab. Not all dealers will buy every slabbed coin, sight unseen. Since there are so many factors that determine a coin’s value and grade, some need to be examined before they are purchased. Hopefully, at some point the grading services will reach the highest level of consistancy and uniformity. This will enable more slabbed coins to be traded between dealers and collectors “sight unseen.”

Body Bag

One problem faced by the grading services are coins which are returned unslabbed. These uncertified coins which are returned by the services were body baged. The slabbers give very little information as to why the coin was not graded. It would educate the collectors to know why their coins were not authenticated and/or certified. Here is an example: on the back of a flip the graders will check off a box designating why the coin was not slabbed. Common reasons given are “questionable authenticity” and “rim filed.” Even a slightly expanded explanation would greatly assist the submitter as to why the coin could not be slabbed. Even something as simple as “questionable authenticity - fake dies” or “rim filed - obverse 2:00” would be sufficient.

Cleaned Coins

One excuse that slabbers often give for rejecting coins is that they may have been “cleaned”. In fact, most slabbers publicly state that they will not grade “cleaned” coins. While that is certainly their prerogative, one would hope that they would apply this criteria to each and every coin without prejudice. It would be helpful if the grading services would issue a list of reasons why cleaned coins can or cannot be slabbed. It is confusing when some dipped coins are slabbed but others are not. Also confusing the collector are the curated gold coins recovered from treasure ships which have been certified.

A Need For More Information

The slabs themselves, for acceptable coins, do not contain enough information. Consumers would like to see weights listed for thin/thick coins and better attribution for varieties. Some collectors have even suggested embedding in the plastic slab a computer chip which would contain the pedigree and all relevant information about the coin. These suggestions have not been greeted with joy by the slabbers.

Excessive Slabbing Times

Slabbing times have become very long, with it taking months to have a coin graded and slabbed unless you agreed to pay extra for “express” grading. Many collectors with limited budgets have to patiently wait up to two months to find out whether their coins were certified.

Slab Sizes

Lack of uniformity of slab sizes also plays a roll in collector dissatisfaction. Not only won’t the darned things fit in the holes in our albums, but we need a special size box to hold each companies slab!

Conclusions

So, after 30+ years of collectors experiencing the fruits of slabbing services, we are all faced with the simple question. Have grading services enhanced or detracted from our collecting experience? Collectors are frustrated when they attempt to part with some of their certified coins in their collection. Occasionally, dealers will tell them that their coin is overgraded, too dark or does not have enough eye appeal and that they do not agree with the grade on the holder. It is confusing and frustrating for collectors since they were under the impression that the grading services had a uniform standard in determining grades, which obviously has a direct correlation to the price that is offered for the coin in question.


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