Graded coins - when will the market crash?

Wouldn't it be safer to say that nobody has gotten caught yet?

I find it hard to believe that no one is successfully faking slabs. Then again, with all the shady grading services out there, maybe it's not necessary.

 

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I'm honestly not trying to be difficult, and I am new to this hobby, but how can you know that?

 

Yeah i agree with the guy below ANACS has had problems with people switching out coins from their slabs and there is no way to tell that their is (no) fake slabs out there if people have gotten caught doing it then there are people who have gotten away with it just be carefull and look at everything you buy cautiousaly if it dosnt look right then stay away!

 

With any luck the market WILL crash in the case of the self slabbers and those that are not even remotely qualifited to slab in the first place. We can only HOPE this will happen.

CoinGal07 spoke of disposable income being a factor. I don't really see it as the rich just keep getting richer and need to feed their egos and wallets. Of course this is for the Extreme rarities. In Morgans, for example, I can see a stagnation - maybe even a drop but not a crash.

Slabs have a purpose. For me it's authentication and better return on my dollar when I decide to sell my "good" stuff. This will take place years from now so at present I own VERY few slabs. I took the time to pick up an ANA guide and learn how to grade. Guess that makes me a certified slabber.
As for the people with big disposable income that buy slabs as an investment. I'd love to see them get their asses burned and burned bad.
They have basically no interest in the hobby, no knowledge and no character. It's all about greed. They have contributed to the rise in prices and will, at some point, contribure to the fall in the "non super rare category". I do believe it will bounce back as long as us "real collectors" are around.

When it comes time for me to slab it will be PCGS, NGC or ANACS. I think those companies will retain their reputation. What I intend to slab are truly scarcer coins. Key and semi keys from many odd demonination coins and series that are overlooked for the most part.

I'm not out buying raw Morgans and Walkers to slab. Nothing against these but I think they have been slabbed to death. Give me some low mintage stuff.

The "big series" coins are where the hairs are really split. You just don't see that too much in the lower mintage coins of other series.

As for the MS70 and PR70 coins I believe a lot of these will tank. Some actually deserve recognition but think about it. Other thatn modern stuff do you see these grades even in Lincoln Cents, Morgans, Walkers etc.? No because the technology in the mint was not there in large part.
How rare is an MS69 PCGS Silver Eagle these days? I pass them up all of the time because they are NOT THAT rare.

Truly scarce coins slabbed by reputable compananies will probably retain value. "Garbage slabber" coins and coins in high grades with high mintages will probably take the hardest hit.

 

I dont like everything written here but i think it serves a good point the ANA grading standards is actually a very good book and its what taught me some of the basics of grading, but if you are a serious collector or part time dealer i would highley suggest that you attend the ANAs summer seminar in Colorado Springs they have classes from Photography to Advanced Grading and anciants the list goes on Go to MONEY.ORG and check it out. As for the slab market droping I hope it dosent as for I am involved in the coin business and that would be bad for collectors, but i dont think it will just as coingal07 said the ones that will suffer are going to be the off brand companies or self slabbers, the ones that grade a coin a 70 that if you tilt it into the light you can see scratches. now back to the modern collector coins that are graded 69 it is actually more rare to see a modern collector series coin graded below a 69 than an actual 69if that makes sence? for example whenever we are low on RGAE's Random Gold American Eagles and dont have any in stock we will send out one that is graded a 69 you just dont see any that are graded lower than that the same is with the SAE's Silver American Eagles you just dont see them below 69. i am serious though about the summer seminar it is a whole lot of fun and i would suggest it to any one who would want to go at least read a little about it MONEY.ORG

 

Coinfisher91,

I used to belong to the ANA but wasn't worth it in my opinion. Just not my cup of tea for the money shall we say.
I obviously like the ANA standards and will do some more reading thanks to your suggestions.

After all a closed mind is no mind at all....

 

I don't know if I quite agree with this. I don't know if you are saying that the slabbed coin market will never slow down, or keep increasing. I don't know if I can think of one market that has never crashed, or at least gone down significantly at some point. I mean that it's possible, although not very likely, that some segments of the market might keep increasing, like ultra-rare coins or keys.

On one side it is a question of supply and demand. Some key coins at high grades, with populations of only 1 - 5, are in great demand, with very limited supply, but the supply could easily double in no time. Take as a really bad example the cheerios millennium cent (I've been looking into this one a lot recently). According to NGC the graded population is like 64 coins, out of a possible 10,000 coins. In the past 30 days on eBay there have been at least 30 auctions for raw coins. This is half the graded population. Raw coins are going for $5-$10 each, graded $40-$60 dollars. If I had the time, inclination and the money, I could easily buy all these coins myself submit them for grading and double the population. What would this do to the price of the coin? You might say that this is a common coin and it couldn't happen to every coin. Really? Look at the 1933 Double Eagle. This is probably one of the most rare coins ever in US numismatics. That population went from 1 known example to 11 overnight. When there was only one coin it sold for 6.6 million, don't think that if the other 10 ever make it to market that all 10 will sell for the same price. I'm sure the price for the rest will be substantially less. There are stories of people still holding bags of MS Morgan’s in rare dates. Morgan’s are coins that people love to slab. What would happen if a population of Morgan’s went up by 1000?

The other side of this is demand. People will say that there will always be a demand for graded coins, so the market should be somewhat stable. Look at the housing market in the US. There will always be a demand for houses in the US. Even if you discount the recent bubble in the market, the demand, and as a result the value of houses, had gone down. This will happen to graded coins. To think differently would be to suffer from tulip mania. Right now there is strong demand for graded coins, maybe enough demand to absorb the sudden increase in the population of 1933 Double Eagles (I know, if they ever make it to the market, right) but is it strong enough to absorb a sudden influx of 1000 Morgan’s in a key, graded date? Or even 100 Morgan’s?

The market is strong right now, it has been growing for 20 years. I'm sure, if you really looked at the data, there have been some ups and downs in the graded coin market already. Is there going to be a crash? If something really drastic happened to the economy, then yes there might be a crash. But given the absence of a bubble in the market, and I don't think there is a bubble yet, we might be at the beginning of a bubble but we are not there yet, I do not think there will be a crash. It would be irresponsible to say that the market will never go down, It will go down, I guarantee it. but when and how much? That's the question.

Of course, as with any market you can say with 100% certainty that the market will go up... or down... the real question is when.

 

I think he means that there may be (some) that have never been discovered.

 

more and more world coins are finding their way into slabs - this is being done to open that market to the deep pockets of US collectors who don't trust un-slabbed grades. i know several world dealers who are sending coins to NGC and once in slabs, they sell quickly. as more world coins are slabbed, the market will demand more coins in slabs.

there will not be a slab crash - the point of slabs is to retain value - the price for a given coin will always remain in flux, but since the grade never changes on the slab, the value of that coin will always be a known number. this instant market valuation allows the coin to be used in a more liquid manner thus appearing more attractive to both the casual collector and investor.

being able to cash out at a known value will bring in more money to the market overall.

-steve

 

I don't think that this is entirely correct. The point of a slab is to retain grade, not value. All a slab says is that a coin is a certain grade. Grades of coins determine value. As you said the value of a coin is always in flux. If the price of coins drops, the price of slabbed coins will drop. The slabbed coin might have a higher value than the raw coin, right now, but the value will still fall. The value of a slabbed coin is higher right now because consumers and investors have confidence in slabbed coins. This could easily change. With the number of self-slabbers growing introducing questionable grades into the market confidence could easily errode. When this happens the premium that people pay for coins in slabs will drop. If this happens in conjunction with a drop in the overall coin market there will be a crash.

As you say being able to cash out at a known value helps the market. But remember those values change, if those values drop, suddenly, there will be a crash. You still will be able to cash out at a known value, the grades on the slabs will remain the same, it's just that you will not be able to get the origional value for the coin.

 

Well said ~ we already see this at shows or trading where the bottom tier slabs ' are such a good buy' compared to the top tiers ~ and while the TPG's all started for authentication and objective grading the confidence has been compromised by the abuses uncovered... over grading, errors, etc.,.

 

One of the most popular CT themes is "bogus E-bay auctions". We've got dozens of 'em.

Have you ever seen a thread pointing out a phony PCGS or NGC slab ?

Perhaps there have been one or two (or not). My point is there is a great deal of spurious activity in numismatics. Most of it involves raw, uncertified coins. E-Bay is proof - along with dozens of E-bay expose threads.

Top TPGs have a MUCH higher integrity than the marketplace as a whole.

I personally have seen no evidence of slab counterfeiting.

 

I think more than anything, you have to select a highly reputable slab company. There are only two I would consider are PCGS and NGC, but at the same time if you want the very, very best and the highest resale for your coins go PCGS.

I agree with posters that say the price of "quality" slabs (basically PCGS, NGC, ICG, ANACS) will continue to remain much higher than unslabbed coins especially in the modern mintages. If you are buying those other garbage slabs then shame on you. I would consider it impossible to safely buy coins via the Internet if not for reliable slabs that guarantee their grade and I have purchased the vast majority of my sets via the Internet.

I also agree that until recently the coin industry was primarily dominated by the "real" coin collectors (or experts really) that can grade their own coins, spot fakes, identify errors and understand the history/politics of the coins. In a way it made it hard to get into or back into coin collecting unless you really knew what you were doing or were willing to bet the farm. I absolutely respect you guys (and girls), but since I didn't have those skills I was happy to have PCGS and NGC around so I can collect too without having my savings swindled away. That doesn't mean I didn't learn along the way though.

Just my thoughts. :whistle:

 

I think it's about time for a graded coin bubble. We had the tech bubble in the 90's, the more recent housing bubble, so why not a graded coins bubble. People seem anxious to throw their money at something, why not at us for awhile? The question left is how do we get everyone to invest in our hobby...Oh well, I can't think of everything.

 

Interesting thread - I think the greatest thrill for my father is to spend MS63 money for a raw morgan that he thinks is 64 or higher. Then have it come back from PCGS as 63 or 64. I have to admit it is kind of fun lining up the graded morgans with the raw morgans and trying to guess(yes guess) what grade they will come back with. Will the slabbed market crash - maybe, but I do not think it will shrink. Probably the end of next month I am going to send in some IHC to have them graded. I plan on keeping my other raw coins as they are.

As for fake PCGS coin slabs - shesh - my father bought one that was so obious it was funny. Of course the seller did not show the slab itself in the auction. And yes it was a auction from China(he figured it was fake) - he called and told me it figured it was fake. Luckily he called PAYPAL and they returned his money(including the shippin charges) - he still has the fake coin and likes to carry it around. At the same time I could see someone buying one of these coins, sticking the slab up for years, and then finding out it was fake.

 

I have to disagree strongly with several posts here. There is no slab bubble, but there are slab pimples. These pus filled bubbles are a result of these illegitimate and sometimes criminal grading companies. I have bought MS70 JFK's from SGS only to have them grade MS64. If you buy slabs other than PCGS or NGC then you are just throwing your money away on pimples. If all you can afford are these crap pus companies then just put that money under your mattress or bury it in the backyard as you'll come out ahead double. :goof: