Question for Joe_collector regarding certified books

[BodyBag]

Joe,

Can you expand on your signature comment regarding certified comics? I've been in the coin world a long time (I know, don't hate me) and the slabs there have made higher end coins a little easier to sell and buy. I have some (access to) a pile of books and was going to certify the ones worth over $X. Any advice?

[joe_collector]

If you've been in the coin (or sportscard) world for awhile, then you know which phase graded comics are in. We're just out of the initial, hype-driven mania and prices are coming down on non-keys and most books under CGC 9.6.

 

It's like graded coins, where early on, $25 graded coins were drawing thousands of dollars, and now you can pick up many of those same coins for $25-$50. We're starting down that road right now.

 

If you're buying, it's a volatile market in a downturn, but if you're going to certify the books for immediate resale, then I say go for it, assuming you can grade and only send in the primo ones.

[BodyBag]

Thanks for the response Joe. Due to my lazy nature, I didn't track down how long the graded comics have been around. The early days of PCGS and NGC were comical, no pun intended. Luckily, I was a huge advocate of "buy the coin, not the holder", so it was like 1993 before I owned my first certified coin.

 

 

 

 

 

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I'd like to appologize to Helga for being here.

[joe_collector]

>>The early days of PCGS and NGC were comical, no pun intended.

 

Would it be possible to relate some of these stories for the uninitiated graded comic buyer? I'd certainly appreciate hearing about the early days of graded coins, vs. today, as I was not actually buying them, just following the market for some relatives.

[TomB]

The early days of PCGS and NGC were driven by the desire to establish a sight-unseen market in coins whereby coins would be sold as a commodity like stocks, bonds or futures. One would simply order a particular coin in a certain grade, say, an 1881-S Morgan dollar in PCGS MS65 and the coin would trade electronically. This didn't work since the coin market is largely driven by eye appeal and few coins are clones of one another. In this early market, though, many thousands of coins were submitted for grading and the third-party certification companies were overwhelmed with submissions. This created excrutiatingly slow turnaround times and, as such, if you just had to have that 1881-S Morgan dollar in PCGS MS65 well then you had to pay what the market would bear. This meant paying perhaps $800 for the most common Morgan dollar in 1986-1988 dollars. Today that coin, as an average looking coin, is about $80.

 

In other words, the demand far outstripped the supply and the markets were skewed for several years until there was an equilibrium.

[joe_collector]

>>The early days of PCGS and NGC were driven by the desire to establish a sight-unseen market in coins whereby coins would be sold as a commodity like stocks, bonds or futures.

 

Yep, and hence my comment that CGC is designed with the express purpose of turning comics into a commodity.

 

"I'll have a pound of hamburger, a pound of butter, and gimme 2 pounds of CGC 9.8 comics".

[fantastic_four]

What happened back in the early days of coin certification with coins that were in low supply both in and out of a slab (i.e. uncommon), and how has the price on those changed over the years?

[COI]

since the coin market is largely driven by eye appeal and few coins are clones of one another.

 

Nicely put. I firmly believe this to be true of comics as well.

[joe_collector]

Andrew, you seem to be the type of person who doesn't automatically close your eyes to the changes that may potentially occur with slabbed comics, and it'll hold you in good stead in the future.

 

The winners will be able to predict and adapt to future trends, not follow current ones.

[TomB]

That is an excellent question you bring up, fantastic four. Coins that were rare because of low survivorship or initial mintage were never thought included when the concept of sight-unseen comodity trading was being developed. Such a coin would be a 1796 quarter where there were only 6,000 originally minted and perhaps 500 or so survive to this day in all grades combined. Coins like this are impossible to make a market for, therefore, they defy the certification concept as originally conceived. Third party certification was meant to take the common to truly generic coin and to make a new, artificial market for it by allowing these coins to be used as fungible assets. The unique nature of a coin's appearance, among other things, circumvented the widespread use of this for the original goal, however, authentication and grading became valuable tools for the third-party certification services.

 

Coins that are rare because of few extant pieces do not follow volatile swings in the market, retain their value in poor economic times, are extraordinarily easy to sell and always have many people looking for them. Coins that are rare because the plastic makes them rare typically do not have those qualities. Plastic rarities are coins such as modern Lincoln cents that were made in the billions but that grade highly (MS68 on the 1-70 numismatic scale) when certain third-party certification companies grade them. These coins sell for far more in the holder than they would ever be worth out of the holder.

 

For my own collection, I try to buy and sell coins with superb eye appeal that have some inherent rarity as an issue and that do not rely on the grade or plastic to retain their value.

[fantastic_four]

For my own collection, I try to buy and sell coins with superb eye appeal that have some inherent rarity as an issue and that do not rely on the grade or plastic to retain their value.

When it comes to my collection I buy all over the place, but when it comes to deciding whether to plunk down a wad of cash, I follow the exact same guideline you just outlined.

 

Is there much speculation in coins as to whether "virtual" money (credit, e-cash, etc) will eventually soften or possibly kill the coin market? What's the biggest threat to the coin collecting market as a whole? Most of us longtime comic collectors wonder when television or film will put the values of our collections under. I don't think it'll happen during our lifetimes, especially for the popular early issues of characters known worldwide like Superman or Spider-Man, but it will likely happen to most other comics within the next 100 years. I believe the only reason comics are even still as popular as they are now is because doing justice to super-powers in film has been mostly impossible until very recently. This is why comics are no longer really "funny" books anymore; it's cheap enough to do humor 24 hours a day, 7 days a week on the far superior medium of film/video. Even though it's possible to do superpowers in moving pictures, it's far too expensive to fulfill demand for superhero stories like the lower production costs for drawn comics can. And I don't think computer graphics will get good or cheap enough to challenge the cost of drawn comics for at least 20 years, possibly much longer. So...how's the long-term viability of coin collecting looking?

[TomB]

I don't believe there is much of a threat of electronic funds hurting the rare coin market. I think the greatest threat to the coin market is two-pronged.

 

The first threat is of coin doctors, those who manipulate a coin's surfaces in a deceitful manner in order to get a financial edge. I am not talking about "dipping" here as dipping is an accepted part of numismatics, albeit one that is not universally liked. I am writing about smoothing out minor digs in fields, applying false cameo contrast, artificial toning, use of lasers to simulate original mint luster and so forth. These, combined, are huge problems. If the technology of the coin doctors outpaces that of those who try to thwart them then the originality of nearly every coin would come into question. Originality is perhaps the greatest attribute for a coin to have.

 

The second threat is from the third-party certification services themselves. The independent companies must strive to grade according to a common scale (most do) and should try to have total consistency in grading (impossible) while still weeding out coins from coin doctors. If the certification companies can manage those requirements then coin collecting, as we presently know it, should be fine. If not, then a major shift will occur in the market back to raw coins and many people, who have not learned yet how to grade on their own, will be in trouble.

 

Overall, I think the coin market is fairly robust in that most things that could happen will still leave a residual market for knowledgeable folks.

[clobberintime]

I don't know anything about coins but was struck by a few very similar issues you mentioned that effect the coin market that also play a big part in comics. Working on a book is called restoration here - maybe it is called something different with coins - but that is a big problem and I believe one of the main factors that helped CGC become accepted with big time collectors. It is hard to detect very good restoration - I have been collecting a long time and thought I could tell color touches and other such stuff. I learned better the hard way! Restored comics sell for a fraction of the unrestored price. Is it the same with coins - if certified, do they note work that has been done. and I liked your comments with the plastic price and the creation of an artificial collectible. Same has been done with comics. The good rare old stuff will always move quickly and for good money but who knows about the month old stuff in the ultra high grades fetching 10x cover price due only to the grade! I have alwys thought that is how CGC would make money - convincing people to pay $50 for brand new comics because they are cgc 9.8 - they will inevitably run out of the older very high grade books so the future surely lies with the new ultra high grade books. it sounds like for coins they have a 70 point scale? I would hate to try to master that without having the coin already certified! But very interesting comments and thanks for posting them here.

[joe_collector]

Actually the coin and card grading companies I know of don't even slab restored or otherwise worked on collectibles, assuming they catch the problem.

[TomB]

I agree that there are many similarities between the two hobby/businesses.

 

There is a grey area for coins in terms of being worked on and yet being market acceptable. If a coin is dipped quickly in a mild acid solution of thiourea then the outer most layer of the coin's surface is removed. This is the layer of oxidation that makes coins turn colors and is usually called toning. Most toning is not that attractive and will not push the price of a coin higher. In fact, most toning will hurt the turnaround time to sell a coin and might also hurt the price. Very few coins turn bright, vivid colors. My avatar is an example of a dime that turned neon purple and blue. This is extremely rare. If a coin is dipped properly it turns close to the white or silver shade that is seen when it is just released from the mint. It can be very difficult or even impossible to tell if a coin has been dipped as long as it was dipped properly. Most collectors want this artificially white coinage and so the market accepts it and the coins are slabbed without notation.

 

Coins that have been mildly cleaned with soap and water and that are old (150+ years) usually also make it into holders without any notation. This is because it was considered good coin conservation to clean your coins 150+ years ago.

 

Other than those cases, if a certification company spots a problem they simply send the coin back to you, uncertified and in a little baggie. This is called a bodybag in numismatic terms. The largest certification companies (PCGS and NGC as well as ICG) will not put this type of coin in a holder. However, other certification companies (ANACS, SEGS, PCI) will certify the coin but will also note on the holder all the problems.

 

The 70 point scale in coins is not too bad since points 1-58 are for coins with various degrees of circulation wear patterns on them and these are fairly easy to grade once one gets a little experience. The points from 60-70 are the tough points since all these coins show no wear and the grade is based more on the various imperfections the coin has. This can be a real bear.

 

Thanks to everyone for the warm welcome.

[fantastic_four]

Such a coin would be a 1796 quarter where there were only 6,000 originally minted and perhaps 500 or so survive to this day in all grades combined

Why would only 500 out of 6000 survive? I would think almost all coins would survive in some kind of shape, even if it's at the bottom of a river and lost for a few hundred years. Does the government slowly reclaim them and melt them down after a while or something?

[TomB]

Survivorship falls for many issues and you have perceptively hit on one of the reasons for a low number such as the 1796 quarter. Coins seem very permanent from their very nature as metal objects, however, if mis-treated they will degrade.

 

Over time there are coins lost in the soil from pants pockets, bags or whatever. These coins are occassionally dug out of the soil at a later date but most languish there and corrode from the acids in the soil. These acids are usually from leaves or grasses. Other coins are lost in house, business or bank fires where the heat is so intense that they are melted into blobs that are not identifiable. Still others were turned into jewelry over time and worn on bracelets or necklaces until every design element of them is worn away. Another peculiar coin problem is that of having the surfaces ground away on purpose to make what is known as a "love token". These were popular in the 19th century and were given as gifts. Typically, one side was ground off of the coin and then engraved with a message. Sometimes both sides were ground off.

 

By far the largest issue for coin loss from an issue like the coin in question is from melting. These coins were slightly larger and heavier than coins that were minted later, therefore, they had intrinsically slightly more value than coins with the same denomination of later on. So, many people simply melted all the older coins that passed through their hands to recoup the 5-10% profit on the differences in weight. Others sliced bits of the edges off of coins to get the precious metal and there would come a point where no one would accept the coin as payment and the government would melt them. Still others were melted because they were holed or terribly bent.

 

In fact, the 500 piece survivorship for this issue is high, as a percentage of original coins, for US coins of this period. There were a large number of these saved because it was the first US quarter dollar. Even with that, this issue ranges from about $3,000 when mutilated to $50,000+ when very nice. I have included an attachment of a very nice one that I own.

[sfilosa]

While I don't collect coins, I believe the slabbing of coins started in the early 1980's. Well if anyone remembers the early 1980's the price of gold shot up to $800 an ounce and the price of Silver was $20 an ounce.

 

My point to this is:

 

If you owned a Silver Quarter (i.e. minted before 1965) in 1980 it was worth $5 just because of the silver in it. Nowadays it would only be worth $1.

 

Therefore there is a certain value (for the more old common coins) that is linked to the price of the metal it is made of, regardless of supply and demand.

 

Just my two wheat penny cents.

[COI]

In fact, the 500 piece survivorship for this issue is high, as a percentage of original coins, for US coins of this period. There were a large number of these saved because it was the first US quarter dollar. Even with that, this issue ranges from about $3,000 when mutilated to $50,000+ when very nice. I have included an attachment of a very nice one that I own.

 

So just out of curiosity, what would be the average survivorship for a coin of this era if 500 is high? And what percentage would you aproximate would be high grade?

 

Nice posts BTW....they can actually help to shed some light on the possible future of comics.

[TomB]

Thanks for the kind words.

 

As for extant pieces, there are fairly well respected estimates that from 3-5% of many issues are still around for the early Federal coinage. This is the period from the US Mint's first official, regular coinage release of 1793 through to about 1807. Since the absolute number minted for many of these coins was not very high, you can imagine that not many are left.

 

I have a PCGS population report in front of me and I have taken the Draped Bust series to look at. This covers years 1795 and 1798 for silver dollars. The total mintage of all four years combined was about 163,000 and the total graded by PCGS is about 1,700. So, slightly more than 1% graded by PCGS. The numbers for NGC would be very similar. This does not include coins that were cracked out of their holders and re-submitted in the hopes of getting a higher grade. This happens quite often and skews the population figures for the expensive coins. Of the total graded by PCGS, more than two-thirds were given grades of PO1 through VF35. These are very heavily to moderately circulated coins. There are only less than 250 graded as high as what might be considered Near-Mint for comics. Again, NGC would have similar numbers. If one totals ANACS and ICG with them and guesstimates at the number of re-grades then there might be as high as 3% of the original mintage slabbed and maybe only one-tenth of that figure would be high grade coins.

 

An issue as I have chosen has historically been high priced and, therefore, more likely to be slabbed than a low priced coin. There are also certainly more coins out there that are not slabbed, however, many of these have nasty problems.

 

Coinage of other denominations was not typically saved as much as silver dollars, so, if one were to look at half-dimes (the precursor to the nickel), dimes, cents, half-cents (really, they were worth one half-cent) or gold coinage one would find even smaller percentages.

 

I would imagine many early comics are even more scarce, on a relative basis, than early Federal coinage.