Featured Observations from the Bourse-CAC

Discussion in 'Coin Chat' started by Tom B, May 18, 2014.

  1. Tom B

    Tom B TomB Everywhere Else

    Two months ago I posted the first of an irregularly produced series of observations from the bourse and the subject was “but-coins”. Today I will take on what might be viewed as a slightly more controversial topic and that is the value or usage of CAC. I’ll be upfront and state that from my vantage point, there is little that is controversial about CAC, but that has not stopped this newest market presence (market maker, perhaps?) from becoming a lightning rod of criticism and conspiracy theory while at the same time proving to have an avid and sometimes extraordinarily loyal base.

    Prior to my career as a full-time numismatist I had been a scientist and serious coin collector, or more accurately a student of numismatics, for quite a few years. As a collector I had four criteria for placing coins into my collection and these criteria existed well before CAC came onto the scene. They were-

    1) The coin must have superb eye appeal.
    2) The coin must appear to have original surfaces that are problem-free.
    3) The coin must either be undergraded, when in a holder, or at least solid or high end for the assigned grade.
    4) The coin must be perceived by me as a good value.

    [​IMG]

    While these parameters can be of great advantage that collectors have at their disposal if they are patient, disciplined and knowledgeable, they are also not parameters that collectors are required to embrace. Also, as a collector, I had always cycled coins into and out of my collection since I acted as a part-time dealer. Again, the benefits of being a collector helped me here since I was only selling coins that had already passed my review to be in my collection. When CAC came into being it was an interesting development as far as I was concerned.

    I was fortunate enough to know the people behind CAC and this allowed me to bring my coins directly to them for review. Over the years my collection has stayed within the 80-coin range with various additions and subtractions over time. When bullion gold is included in the form of classic US coinage, which is a favorite way of mine to acquire bullion with a numismatic component, then we might be writing about the 100-coin range. The total coins sent to CAC by me for my collection, regardless of if the coins have been subsequently sold or retained, has been about 120-pieces. Of this total only a few were rejected. One coin allowed CAC to teach me something valuable about surface manipulation; one coin revealed to me that a specific quality of a specific series CAC valued at a level that I did not value; one coin educated me on a form of artificial enhancement; and one coin I disagreed with the CAC evaluation. What this showed to me about CAC was that the qualities that I had always valued in coinage were largely the qualities that CAC was attempting to identify and that my requirements for a coin being included in my collection dovetailed quite nicely with the requirements that CAC had put in place to award a sticker. Therefore, as a collector, I have nothing but positive reviews to write about CAC.

    Counterintuitively perhaps, as a dealer I find that CAC can complicate my life. Numerous clients of mine have asked that coins be sent to CAC prior to a commitment to purchase. This is fine and I have no issues with this desire, but these contingency purchases tie up a coin for one-to-three weeks and can leave me quite surprised if the coin fails the CAC evaluation. In fact, there have been two instances of coins being sold to clients where the coin eventually failed CAC evaluation. One coin had been sold several months prior to a client who subsequently asked that I send it to CAC. It failed and neither of us had anticipated the CAC decision, but he still enjoyed the coin and kept it in his collection. The other instance was a contingency sale where the coin failed and CAC explained to me why it failed. Truly, it was something that I had not seen at all, but was a subtle surface manipulation. As a test, I brought the coin to a large show and asked six dealers who deal in the same approximate niche to examine the coin. Four noticed no issues with the coin, one noticed the issue in question but didn't think it too bad at all and one immediately recognized the manipulation and helped educate me on the coin. This coin was rejected by the client while I learned a valuable lesson.

    [​IMG]

    Additionally, I have found with my clients that coins priced above $1,000 or so move faster with a CAC sticker and that those without the sticker sometimes have questions asked about them. I understand and embrace this desire as a collector who has time on his side, but as a dealer who strives to buy quality coinage and then sell it with minimal markup in a timely manner this can be viewed as another hurdle. As time has gone by, those coins above a certain value threshold, which is dictated by the individual collector, have increasingly needed a CAC sticker to validate their grade and market acceptability. Again, I understand this as a collector and appreciate the ongoing work to identify better (solid-to-superb for grade, problem free, apparently original, etc…) coins as a dealer in order to possibly increase the overall quality of the pool of coins in the industry, but it can definitely freeze plans up a bit.

    Lastly, I don't fully buy into the pure price comparison of coins with a CAC sticker vs. those without since CAC strives to sticker only the better coins within a grade range and attempts to exclude overly manipulated coins from their pool. Therefore, in a perfect world, the CAC stickered coins should, on average, be nicer than those not stickered if all coins were sent to CAC. The last requirement; “if all coins were sent to CAC”, is the supreme sticking point holding up a universal comparison since not all coins will be submitted to CAC. While it cannot be argued that both of these are prevalent, there is a very healthy component of “nice coins sell for more money and also receive CAC stickers” as opposed to “nice coins receive CAC stickers and then sell for more money”.

    Personally, I like CAC and am an authorized dealer. I will also include the following bit that I have written many times previously. CAC is a tool that is available to all and, as such, it is quite similar to knowing how to use a loupe; having the knowledge to spot counterfeit pieces; understanding what manipulated and original coinage should look like or how they will likely appear; being able to interpret printed guide prices and auction results; understanding how to grade according to the ANA standards and how this grading differs from the various TPG grading standards; and learning all the options for buying and selling within the market. Sadly, a large pool of collectors ignores the study of coinage and thus does not take the next step to being true numismatists. However, some folks pursue this knowledge and will happily listen to other opinions, regardless of whether or not they agree with those opinions. CAC can help all, but will help those who are willing to accept their help the most.

    [​IMG]

    No doubt I have not covered every aspect of CAC and/or competing arguments questioning the need or validity of the service. Additionally, I state upfront that I like what I understand to be the idea or goal of CAC and that I know and have good relationships with many who are closely affiliated with CAC. This latter fact might paint me as a CAC apologist to some, but I welcome competing viewpoints and as a scientist and numismatist I am readily willing to alter my opinions based upon observation and experience.
     
    mark_h, Mainebill, carboni7e and 12 others like this.
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  3. cpm9ball

    cpm9ball CANNOT RE-MEMBER

    Tom,

    I've always admired you for your insight, respected your opinions, and I consider you to be in the top-most echelon of numismatists, but I can't help but wonder if the majority of collectors who seek out CAC'ed coins are not too unlike those who (blindly) buy First Strikes and Early Releases. This may be a poor comparison, but do they really understand how the CAC designation is earned or do they just buy them because it's on the slab? What do you think?

    Chris
     
  4. josh's coins

    josh's coins Well-Known Member

    Quite an interesting read. I'd like to become an Authorized Dealer for CAC however they are not accepting any memberships. Any idea when they will allow more people to join?
     
  5. josh's coins

    josh's coins Well-Known Member

    I'd say there is a mix. some understand what earns that green or gold sticker on the slab while others will just buy it because it is there without any knowledge. Just as Tom stated that a large portion of collectors ignore the study of coinage. CAC included.
     
  6. Treashunt

    Treashunt The Other Frank

    excellent write up.

    and a nice start for discourse
     
  7. Jwt708

    Jwt708 Well-Known Member

    Enjoyed your write-up Tom and I appreciate your perspective.

    Also nice coins!
     
  8. Great write-up. I can easily see the utility of CAC for high-end coins. If you are spending a lot of money, you want to be confident you are getting the best and their objective second opinion seems to provide that to you. TC
     
  9. KoinJester

    KoinJester Well-Known Member

    Tom as usual most excellent write up.

    But it would be interesting to discuss the coin that was manipulated with pictures (if you still have it of course) as if if fooled you and other's it would be a great teaching coin to
    1st see how many can spot the problem.
    2nd to discuss how to spot and advoid such coins
     
    medjoy likes this.
  10. Catbert

    Catbert Evil Cat

    Gawd I love that 1839 coin, Tom. Would like to own that one!

    I admit to having a preference to own CAC stickered coins (and I've made a few through my collector membership) for my collection. I consider it a validation of quality and I also value the liquidity factor which has served me well when I decide to sell something to fund a new piece. I've resold pieces several times as I find something more compelling that I want to own.

    I see the service as a net positive for the hobby and have done a 180 on my opinion of them from when they first came on the scene. I initially felt they would simply drive up pricing for the average collector and that would result in driving down the value of what I owned since they were unstickered. However, over time and for coins that are more expensive, I've come to appreciate what they do. I'm willing to pay a small fee for having another expert opinion.

    While my coins don't reach this value threshold, CAC states the average value of a coin they review is $5000. I don't recommend the service for coins that have a value of < $500 (my suggested threshold). When you add up postage/insurance/submission fee, the value proposition doesn't usually add up for something at that value level.
     
    KoinJester likes this.
  11. Tom B

    Tom B TomB Everywhere Else

    Thank you all for the wonderful comments and for bringing up many points that I had either not thought of or that had completely slipped my mind.

    Chris brings up an excellent point about folks who put more faith in a CAC sticker than perhaps they should. After all, a coin might meet the standards of CAC while at the same time failing in one or more of the requirements for the individual collector. For my own collection, there are myriad CAC certified coins that I would not buy and this is not a slam on PCGS, NGC or CAC, but rather simply a reflection of the reality of what I am striving to incorporate into my own pieces vs. what the broader market defines in terms of grades and market acceptance. To further the point about CAC guidelines and possible confusion, there was a period early on in the CAC history where CAC did a relatively poor job of communication with the public in order to explain their mission and what they liked and did not like. During this period I was rather critical of the communication from CAC and wrote such on various boards. To their great credit, CAC addressed many of these issues and I believe at this time they are quite responsive with the collecting public.

    CAC acceptance of new dealer or collector members is entirely up to CAC and I would have no special insight into the process or any delay. Obviously, since I am a dealer member I have been through the process, but truly it was a while ago and I do not recall what I had to do to be accepted. However, because of my long-term relationships with those who run CAC, it might have been a streamlined process for me since they knew what to expect. I realize this does not completely answer josh's coins question, but it is the best I can do since I am not a spokesperson for CAC.

    Unfortunately, KoinJester, I can not share images of the coin in question.

    Catbert, that is a great 1839, isn't it? It's a half-dime in an OGH graded as an MS65, but it looks a whole lot nicer than the assigned grade. The obverse strike is terrific and the reverse strike matches it, just as the reverse toning pattern and depth match the obverse. The coin might not be sexy since it does not have monster colors, but for only about $1,500 I simply could not pass up on such a wonderful, original coin. I also prefer to have CAC stickers on the coins in my collection and part of that is because so many already have CAC stickers that it makes the coins more uniform and also removes any inference from those pieces that they have failed the process. Additionally, future liquidity may be enhanced by having the sticker and I believe it help to financially protect my wife and little girls in the event that something happens to me rather quickly. I never realized that CAC mentions the average declared value of coins they have stickered, but in my case it would be far lower than the $5,000 average mentioned in your post. I have no issue with dropping off a $250 coins that sits in my collection if I am going to CAC for a walkthrough visit.
     
  12. micbraun

    micbraun coindiccted Supporter

    Do I understand correctly that one of the TPGs graded a coin but CAC said the surfaces were altered/manipulated? Did you bring that to their attention? If so, what did they say?
     
  13. Tom B

    Tom B TomB Everywhere Else

    The requirement for a problem-free grade at a TPG, resulting from a subtle injury or manipulation to a coin's surface, may not always be the same as the line that CAC uses to award a sticker or not. Similarly, the requirements that the TPGs use and that CAC uses for problem-free grades and/or for the awarding of a sticker need not the same as what I use. All four sets of eyes (PCGS, NGC, CAC and myself) have personal or proprietary standards that overlap in areas and diverge in others. In this case, I had missed something that CAC pointed out to me.

    Regardless, the TPGs routinely grade coins with manipulated surfaces as problem-free and CAC will sticker some of these, too. Dipped coinage is a great example of this.
     
  14. C-B-D

    C-B-D Well-Known Member

    Thanks to another member, I sent my first order of 6 coins to CAC. Only 2 of them stickered, but I got a no-charge pass on the 4 that didn't grade! Why? My guess is he saw that the other 4 had already been sent and failed to pass... which I totally believe since I was silly enough to send coins purchased from CAC authorized dealers. Duh!
     
    carboni7e likes this.
  15. Tom B

    Tom B TomB Everywhere Else

    "I was silly enough to send coins purchased from CAC authorized dealers. Duh!"

    I was down in NJ this last week and brought with me coins from a few folks for CAC evaluation. Since I was going down there I also brought a few coins from my own inventory that have been on my site for a period of time. All of the coins from my inventory received stickers and one of those coins, which is already listed on my site and has had no requests as of yet for purchase, received a gold sticker. Therefore, simply because you purchase a slabbed coin from a CAC authorized dealer should in no way mean those coins have cycled through CAC already.
     
    geekpryde likes this.
  16. Tom B

    Tom B TomB Everywhere Else

    A second thing I should point out is that I have been told by others that CAC also will waive, on occasion, the fee for evaluation on coins that do not receive a sticker. I do not know of any written policy on the part of CAC for this, but at one time they would nearly always waive the fee for collectors.
     
  17. Jwt708

    Jwt708 Well-Known Member

    I imagine that coin will move much quicker with the gold sticker.
     
  18. Tom B

    Tom B TomB Everywhere Else

    It might, but I won't increase the price.
     
    green18 likes this.
  19. geekpryde

    geekpryde Husband and Father Moderator

    Awesome. Tom B, you are one of my favorite members here. I value your opinion greatly.
     
  20. GDJMSP

    GDJMSP Numismatist Moderator

    OK, but will you please tell us what that manipulation was exactly ? In other words, specifically, in what way was the surface manipulated in this case ?

    Besides dipping, can you give us examples of what other kinds/types/methods of manipulation those might be ? I guess what I am getting at is I think people would like to know, in your opinion and experience of course, what kinds of manipulation (other than dipping) will 1 - the TPGs accept, that CAC will also accept; and 2 - what kinds of manipulation will the TPGs accept that CAC will not accept ?
     
  21. GDJMSP

    GDJMSP Numismatist Moderator

    There is one other thing that I would like to comment on. That is that it is generally accepted that the TPGs will rather routinely bump the grades (over-grade if you prefer) coins : 1 - from famous or well known collections, pedigreed coins in other words, 2 - coins of a certain scarcity, 3 - coins of high or higher value, and 4 - coins from the early years of the US Mint, copper with obvious corrosion for just one example. Also, it is not unusual and often even expected that the TPGs will slab & grade coins from any of these 4 categories that have other kinds problems such as surface manipulation that has already been mentioned, scratches, damage, rim dings, etc. - in other words things that were it another coin that had the exact same issue/problem, the coin would not be graded and slabbed.

    The point I am getting at is that from my observations with these kinds of coins specifically, if the TPG accepts it, CAC will usually accept it as well. In other words, CAC follows the same basic policies that the TPGs follow when it comes to these types of coins. Or, if the TPG finds it market acceptable, CAC finds it market acceptable as well.

    Personally, I would much prefer it if they didn't do that.
     
    imrich likes this.
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