What does eye appeal have to do with grading coins? If the top grading services, NGC and PCGS, label a coin with a grade, shouldn't it be the same price no matter what? The answers to these questions are as complex as buying a new car.
What does eye appeal have to do with grading coins? If the top grading services, NGC and PCGS, label a coin with a grade, shouldn't it be the same price no matter what? The answers to these questions are as complex as buying a new car. All cars have four wheels, an engine, some seats, brakes, and can be driven from one place to another. Yet, all cars are not created equal. There are hundreds of different makes and models that vie for the consumer dollar. The difference in price between two new 2006 cars can be as much as $50,000 to $100,000; sometimes even more. Coins are no different. The certified holder is just the beginning and you should not expect to purchase a Rolls Royce for the price of a Mustang. Reputation and eye appeal are the two main ingredients in selecting a grading service.
Many ask which grading services serious collectors should focus on when acquiring coins that will command the most respect in the industry. You should have noticed by now that we report on properly graded coins that trade among the nation's top numismatists. The benchmark used by most legitimate dealers is that NGC and PCGS really do know what they are doing when it comes to grading U.S. coinage. Both of them are capable of attributing the full range of coins that we see in the marketplace today. Not all of us will totally agree on the grading of every coin they certify but that is what makes for nuances in any business as intricate as numismatics.Once again, not all coins are created equal and the eye appeal or lack of eye appeal is what will ultimately determine the final price of a specific coin.
There are other grading services out there, but even ANACS, which is one of the oldest grading services in the industry, does not command the dealer respect that is required for its coins to trade at the same levels as NGC and PCGS. But they can be close and they are way ahead of the others. What does it take for a grading service to be recognized as one of the top companies in numismatics? Strangely enough, you are known by the company you keep. The quality of the grading service depends on the quality of the experts grading the coins and placing the final label on the holder. If the graders are known to the industry and they have a strong reputation for consistency and an eye for all the variables that can influence a grade, then the industry will support the overall product. When buying coins, ask the dealers which coins they buy and sell on a regular basis and you will find that the preponderance of major dealers trade in NGC and PCGS coins with some ANACS thrown into the mix. Whatever you buy, just make sure you like the coin for the value received.
So, why is there such a variance in values of coins when they have the same grade? This is where eye appeal comes into play. What better example can we use than the Battle Creek Dollars that sold at auction within the last year? The majority of these Morgan Dollars were so-called common dates that normally trade from $50 to $500 each. However, these specific coins have tremendous color. We saw some of these coins, with a Fair Market Value of $75, realize as much as $3,000 at one of the four Superior Galleries Auctions. There were a few that brought over $8,000, but of course these graded MS65 and the typical FMV for these is $170. So, what is eye appeal worth? You must have heard by now the famous quote "grade is in the eye of the beholder," and these Battle Creek Dollars prove this statement.
The grading services can do an extremely good job of determining the technical grade of a coin, but they cannot set the value of that coin; and they should not. They are in the business of authenticating and grading. The graders should not even know the values for the specific coins they grade. This gives them an arm's length perception of the coin without the influence or pressure of valuation. However, if NGC or PCGS actually gave a grade for color, many of these Battle Creek Dollars would have been MS69 or even 70s. In fact, NGC does use a star system that designates a coin as having extra eye appeal for the grade.
More coins are changing hands today than in the past with new collectors entering the market every day. As these new collectors become more enthused, they expand their collecting interests to harder-to-find coins. The only way some of these coins can be acquired is by submitting the highest bid. Rare coins with very low census records have been climbing at an ever-increasing rate. When you see some of the major dealers in the country extolling the virtues of specific rarities, the market of late has tended to get way out of hand. Or, has it? The search for these rarities turns into a frenzy with each "true" buyer trying to outbid the others. We have seen many of our FMV prices jump 50% just in the last year because a coin sold to an aggressive collector and there are virtually no other of the same coin available. Yet, we also know that five more coins could have sold near the same levels if the coins were available.
The NumisMedia Online Price Guide features a massive number of price increases this month as the market remains virtually unstoppable. The amount of coins wanted to fill the needs of all those ambitious collectors is phenomenal; and the only way to attract some of these coins is to raise buy prices to exorbitant levels. Of course, many of us who have been in this business for 30-50 years become a little concerned when prices move too fast. We have all heard about cycles and there must be corrections on every upswing. The problem with this warning is that we have never had so much demand for so little supply. And as long as this demand prevails, prices will continue to rise.
The 2006 Annual is out and is better than ever. All the FMV prices found online are in one spiral bound book. Everything from Half Cents to $20 Gold, including Modern Commems and Eagles, are listed in Good to MS70. See the center ad for more information.
NumisMedia is the Official Price Guide of NGC.
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The thoughts and opinions in the piece are those of their author and are not necessarily the thoughts of the Certified Collectibles Group.