Featured An example of "grade-flation" lowering specific grade market values

Discussion in 'US Coins Forum' started by johnmilton, Jun 25, 2019.

  1. johnmilton

    johnmilton Well-Known Member

    I am a type collector, and one of the "sleepers" in the U.S. gold type set is the Type II Liberty double eagle (1866 - 75). This coin has the motto, "In God we trust," on the reverse, but the value is defined as "TWENTY D." instead of "TWENTY DOLLARS" as it is on the Type III Liberty Double Eagle.

    This type is not rare or scarce overall, but it is hard to find in strict Mint State. The coins were too valuable to pull from circulation and put in a collection "back in the day," and none of them have been recovered from shipwrecks like the SS Central America.

    Here is the coin in my collection, an 1873, Open 3 Double Eagle. This piece is graded PCGS MS-63 and for that reason I paid a strong price for it at auction. Another, almost identical piece in the same auction sold for similar money. A few years ago, any Mint State grade higher than MS-63 was very hard to find and MS-65 graded pieces were virtually impossible.

    1873 $20 O.jpg 1873 $20 R.jpg

    A little less than a year ago, I was thumbing through the Greysheet. I shocked to find the bid on this coin had dropped to less than half what I had paid. What happened? I knew that the coin market was down, but was it down that much.

    After doing some searches on the Heritiage auction site, I got my answer, "grade-fltion." Here are some obverse photos of the coins that have been selling at the much lower prices. All of these coins are graded MS-63. The reasons for the lwer prices are a weaker market, in part, but the main reason is that you don't get what you used to for the MS-63 grade. All of these photos are courtesy of Heritage.

    1873 over graded O.jpg

    This coin had a CAC sticker

    1873 over 2 O.jpg 1873 over 3 O.jpg
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  3. Al Kowsky

    Al Kowsky Supporter! Supporter

    johnmilton, I've made similar posts on Type III $20 gold coins & $20 Saints. It's too bad to see this happening :( but eventually the market will correct itself. Collectors must get out of the habit of buying the slab & start buying the coin :smuggrin:. Collectors must also start making the distinction between weak strike & strong strike. Coins that are weakly struck should sell for less than a coin with a strong strike, regardless of what the slab says.
  4. johnmilton

    johnmilton Well-Known Member

    I did buy the coin before the grade-flation started. Now, in order to have any hope of getting my money back out of it, I'll have to send it to PCGS for a re-grade. That will reward them for bad behavior. It's one of the reasons why I'm not buying expesive U.S. coins any more. Between grade-flation and CAC, the fun as gone out of it.
  5. wxcoin

    wxcoin Getting no respect for 64 years

    Your example looks much nicer. If those others are MS 63 then your coin has to be at a minimum MS 64. Of course that's my opinion.
    George McClellan and harrync like this.
  6. medoraman

    medoraman Supporter! Supporter

    Yep. Continuing game to force people to pay them ever more money. Someday, it will come to a point where everything is overgraded, than they will come out with a "green holder" special grade that is tougher, and everyone will be forced to send all of their coins in again. Must be great to get paid tens of millions in the coin industry without actually having to sell coins.

    This game is allowed because of one original sin: No one demanded that they grade based upon ANA standards. Since they themselves determine what is a MS63, they can never misgrade it because by their definition if they grade it a 63, it IS a 63. Now, if the hobby truly demanded that they grade according to a third party standard, those coins misgraded could hold the graders responsible. However, no one likes to be held responsible for your work, (heaven forbid), so this I doubt will ever happen. I will pledge publicly if a slabber would ever put in writing they grade based upon ANA standards, I would collect those coins in those slabs exclusively.

    To me, I appreciate verifying authenticity as well as making sure problem coins are identified as such. Those were two very real problems slabbing helped cure in the 1980's. As such, I do treat a slab much like a very good dealer's verification that the coin is a good coin, but ignore the grade they assign. I crack open the slab, but keep the insert with the flip.

    Get ready for a few TPG apologists to slam this thread.
  7. CoinCorgi

    CoinCorgi Derp, derp, derp!

    Where's that baseball guy...I sense a few trigger words in this thread.
  8. wxcoin

    wxcoin Getting no respect for 64 years

    Batter up!
  9. Skyman

    Skyman Well-Known Member

    This is EXACTLY my thoughts on the matter.

    I still enjoy coins, I just am not buying, as I have zero interest in supporting bad behavior by the TPGs, and if you want to have any hope on getting a reasonable value out of a valuable coin it has to be slabbed.
  10. EyeAppealingCoins

    EyeAppealingCoins Well-Known Member

    It's pushing me out of the hobby completely. When I can get fair money for my coins, I'm slowly dumping them a few at a time. I can't wait to be out of the market for good.
  11. EyeAppealingCoins

    EyeAppealingCoins Well-Known Member

    I don't think we have seen the bottom yet.
  12. wxcoin

    wxcoin Getting no respect for 64 years

    What this is telling me, as a buyer, there could be some good bargains in older holders. Although, I'm sure many, if not most, have already been sold, cracked out, and regraded. In fact, I'm sure that I've been a day late and a dollar short.
    Terrifrompa and RonSanderson like this.
  13. EyeAppealingCoins

    EyeAppealingCoins Well-Known Member

    I think it is time to coin the term "old blue holder" to refer to the more conservative old blue holder days (pre-gradient label).
    ANAlover likes this.
  14. johnmilton

    johnmilton Well-Known Member

    Watch out for CAC because there is a growing number of collectors who won’t buy anything that is not CAC approved. They will even sell the coins in their collections if CAC has not approved of them.

    CAC gets it right a large percent of the time, but you can’t take their sticker to the bank unless you are selling to CAC believers who want that coin. Their mistakes are too numerous to take the sticker on face value.
  15. medoraman

    medoraman Supporter! Supporter

    Oh, don't do that. Have you considered ancient coins? We HATE slabs. We have parties celebrating cracking them open. I keep the insert, since it is, like a said, a pretty good affirmation that it is genuine, (though NGC specifically does not guarantee ancients, Mr Vagi is a pretty good dealer).

    Lots of cool coins, cool history, and we get to TOUCH our coins. :)
  16. micbraun

    micbraun coindiccted

    PCGS is right. Always. You know it. I know it. Everybody knows it.
  17. green18

    green18 Unknown member Sweet on Commemorative Coins Supporter

    If ya gotta worry about getting your money back, ya ain't a collector..........
    dwhiz, CasualAg$, easj3699 and 3 others like this.
  18. EyeAppealingCoins

    EyeAppealingCoins Well-Known Member

    I have always found the history and designs of ancient coins to be fascinating, but there would be an enormous learning curve for me. I also worry that it will only be a matter of time, even if a decade down the road, when the counterfeit junk from China and elsewhere becomes so pervasive that the grading services will infect that area too.
    Terrifrompa and Mainebill like this.
  19. ksparrow

    ksparrow Coin Hoarder

    another thing to consider in terms of lower prices is the the appearance of the Fairmont Hoard on the market, tens of thousands of eagles and double eagles from a European bank, about a year ago. The 3coins from HA pictured above have that "Euro look" to them (dark on the high points). Could the needs of US type collectors been sated now by this massive influx, leading to lower prices?
    mill rat41 and Terrifrompa like this.
  20. Murphy45p

    Murphy45p Active Member

    That's the rub isn't it? Putting dollars into these type of gems keeps the quantity of coins needed for investment lower than say, most key date coins of lower denominations, but then it limits an already limited buyer's market further, especially when these hoards are sold. Rick Tomaska has been offering a lot of this variety on his show, nice coins for sure, at small numismatic premiums. I think its just a window reflecting a sort of glut and will correct itself in the next few years.

    To me, the trick to investing in coins seems to be to find what is in demand and what will likely remain in demand into the future. Gold coins are nice, because its easier to park $10k in a single transaction and there's also the spot gold market to provide a little safety, but I'm also looking at key date coins in demand, the 1916 SLQ, the 09 vdb-s, three legged buffalo, etc. Coins that always seem to be in demand and are more easily attainable by those with less funds.

    I'd love to hear how people have fared over time using these philosophies.
  21. Murphy45p

    Murphy45p Active Member

    Very well demonstrated. Your coin is FAR superior, even to my very untrained eye. Were all of the coins shown by Heritage graded by PCGS? I also wonder about the major dealers with bulk submissions, for instance, if one of the large coin shows submits a pile of coins expecting a certain grade, can their volume (and hence overall revenue stream to the TPG services) influence a grade? Based on the grade of your coin, the others should have been what, MS 61? At least one grade difference in my view, but if the hoard submitted didn't come back at a 63, could those dealers threaten to go to the other TPG and would that influence the grading service?

    Great thread.
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