Longtime CMIGS clients know the contempt with which we hold telemarketers’ promotions of overpriced numismatic and collectible coins. Our disdain stems from the unbelievable horror stories we have been told by persons who have been conned. It is absolute that the more helpless the victims, the more money the con artists will try to extract. No one who can write a check is safe. We have talked to victims in their nineties.
We went public with our condemnation this practice back in 1996 with a Monetary Digest article titled Myths, Misunderstandings, and Outright Lies. When we launched our first website, Myths, Misunderstandings, and Outright Lies became a permanent fixture. Today, the article is legendary in the coin industry, lauded by many, but despised by telemarketers. Readers who have not perused the article are urged to do so.
As explained in Myths, Misunderstandings, and Outright Lies, in the mid-1980s two grading services sprang up to counter the practice of individual firms flagrantly overgrading coins. Today, those two grading services, PCGS and NGC, are part and parcel to coin collecting. Even coin dealers with thirty years’ experience, who are probably much more qualified to grade coins than are the grading service employees, meekly submit coins for one of the services’ stamp of approval.
When dealing with coins that once circulated as money, “slabbing,” as the practice of submitting coins to grading services is called, makes sense. The services are–supposedly–unbiased third parties who grade the coins for the benefit of sellers and buyers alike. The wide acceptance of PCGS and NGC coins validates this practice.
When the grading services were launched, PCGS (I believe it was.) announced they would not grade modern coins. PCGS’ goal was to foster the development and the veracity of collecting genuine numismatic coins. However, money changes things.
PCGS and NGC charge fees for grading coins. The more coins the grading services slab, the more they earn. So today, PCGS and NGC will slab modern coins, and, unfortunately, this causes unknowledgeable persons to believe that modern coins have added value if they have been slabbed. They do not.
True, a few slabbed modern coins have brought higher than market prices on eBay, but eBay is not the real world. Too many eBay buyers fall into the unknowledgeable camp, and sometimes “auction fever” takes over, and coins sell at higher prices than warranted. However, when slabbed modern coins make it back to dealers’ inventories, they command no higher prices than unslabbed coins. This is certainly true with Gold Eagles and Silver Eagles, which are the most frequently slabbed modern bullion coins.
Gold Eagles and Silver Eagles have never been used as money and, therefore, show absolutely no wear. A few have been used for jewelry, but most have remained in their original tubes and are still in pristine condition. Consequently, nearly all Gold Eagles and Silver Eagles submitted to the grading services come back MS-69 or MS-70.
Considering that the bulk of Gold Eagles and Silver Eagles submitted have never been touched by human hands, one has to ask why all coins do not come back graded MS-70, the highest grade awarded. Promoters of slabbed modern coins would tell you that it is “the quality of the strike.” They further assert that coins struck early in a die’s life receive better “strikes.” This is telemarketer mumbo jumbo used in attempts to impart greater value to modern coins.
More than ten million 1-oz Gold Eagles have been minted. For Silver Eagles, the total balloons to more than 128 million. Because most of these coins would grade MS-69 or MS-70 if submitted to PCGS or NGC, real coin collectors and numismatists have absolutely no interest in slabbed GEs and SEs. Promoters use the acceptance of grading services to imply added value that simply does not exist. PCGS and NGC go along with the scam because they earn fees grading the coins.
The principals at PCGS and NGC know what is going on with the grading and promotion of modern bullion coins. The industry would have still more respect for PCGS and NGC if they had continued to refuse to grade modern coins. Money has a way of clouding one’s vision. Why turn down grading fees just because the coins are being used to hoodwink the unwary? Visitors to this site have been forewarned.
Some final observations on the grading services
Grading services came to life because of the rampant practice of overgrading, which led to major rip-offs of unsuspecting gold coin buyers. The slabbing of coins has pretty much ended the practice of overgrading. Unfortunately, the slabbing of coins does nothing to stamp out the overpricing of coins, which remains a major problem for investors.
Now, though, the grading services are part and parcel to the promotion of modern gold bullion coins, which has become a problem not so much for coin collectors but new investors who, wanting only to invest in gold coins, sadly fall victims to telemarketer stories. PCGS and NGC helped stamp out one unscrupulous practice but are implicit in another.
Because slabbed coins are so widely received, the slabbing of modern coins lends validity to them that they do not deserve, and that is a shame. The services are tremendous assets to coin collecting. They should have never started grading modern bullion coins.