by Louis Golino for CoinWeek ……

One of the most hotly contested issues in the modern coin realm concerns third party certification and MS70 coins.

A lot of people love slabbed coins, while many others hate them. But at the end of the day, two points matter above all. First, having your coins graded or buying graded coins is clearly a personal decision based on your own preferences. Second, no matter how you may personally feel, the marketplace has its own changing way to value to such coins.

ms 70 ase The Coin Analyst: The MS70 Debate RevisitedMy own view is that certification and grading is essential for most U.S. classic coins worth more than $100 each, unless you really prefer raw coins and have found one of the few trusted dealers in classic raw coins. And in certain cases having your modern American and world coins graded can add substantial value, if you are good at identifying high-quality coins likely to get the coveted 70 grade. But caution is in order when it comes to grading moderns, as it is not always worth having them graded, or even buying graded examples, unless one pays only a modest premium over a raw coin and has a preference for holdered coins for display or storage purposes.

In some cases, such as the 2009 Ultra High Relief double eagle, an MS70 is worth substantially more than a 69. Another example is the First Spouse gold series where coins from 2008 to present in the top grade are usually worth quite a lot more than ungraded examples or 69’s, especially if the coin has been available for several years and few coins have received the top grade. In other cases, the difference in value is smaller.

Recently when the Perth Mint released its 2013 bullion coins, a U.S. coin dealer named Paradise Mint (www.paradisemint.com) began selling graded examples of the first 1,000 and 2,500 coins struck. The coins have NGC labels that make those claims. I wonder how they made that determination, unless Perth has some way to track the first coins struck. I will ask Perth officials next time I am in touch with them if they have a way to do that.

It’s worth noting that even if you could actually prove that they were the first coins struck, why would that really matter in terms of the coin’s value? Some collectors are clearly willing to pay more for such coins, but what really makes them better than the ones struck later if they look exactly the same?

Hundreds of years ago when coin production was much more primitive, it was probably the case that the first-struck examples of a coin were of better quality than the ones made later after dies had been used repeatedly. And there could be historical reasons why early first strike coins, if there is paperwork to prove they are the first coins made, are clearly more valuable. For example, the first coins struck of certain issues were often given as gifts to important people, so it makes sense those would have greater value because of their special pedigree.

But today the situation is very different.

ms 70 eagle The Coin Analyst: The MS70 Debate RevisitedModern coins made by most major mints, such as those of the U.S., Canada, Australia, and other countries, use advanced technologies that help produce much higher quality coins than was possible in the past. However, in the past couple of years an increasing number of people who buy numismatic releases from the U.S. Mint have been reporting that they received coins with significant quality issues that they had to return. That applies more to some series than others. On the 2011-W burnished $50 American gold eagle, it is a major issue because most coins had some surface problems.

At the same time, values for MS70 examples of the bullion versions of the widely collected American silver eagle have been coming down, as more coins are graded and receive the top grade. 70 coins that brought $100 and more just a year ago, now sell for $75-80. And the general quality of bullion silver eagles is way up compared to years past when coins with milk spots and other problems were common.

If, for example, someone is building a graded set of 70 eagles and wants a top-quality example of the 2012-W burnished eagle, they can purchase one from a competitive dealer for $75, which is the same or less as they cost of buying a raw coin for $45.95 from the Mint, and having it graded.

Within the area of the limited-edition collector versions of these coins, such as those in the 2006, 2011, and 2012 anniversary eagle sets, the number of 70 coins was higher with last year’s sets than with the 2006 coins, but much lower for the coins from the 2012 San Francisco sets, which for reasons the Mint has not explained, seem to often have quality problems. So far, roughly one-third, or 35% of the 2012 set coins are receiving the top grade at PCGS (www.pcgs.com), for example.

Another aspect to the 70 issue that has changed in the past couple years is that the difference in value between PCGS and NGC-graded modern coins has been narrowing, and in many cases no longer exists. In fact, a growing number of collectors have expressed a preference for NGC (www.ngccoin.com) coins, which they feel tend to have fewer imperfections and a more crisp look.

Many collectors also say they prefer NGC holders because they prefer the white background, or like the ability to see the rim of the coin, as is possible with newer NGC slabs. And some even allege that PCGS treats their coins with a lack of care while in their possession, and even adds some kind of material that makes the coin tone over time. I have come across this criticism numerous times, but I cannot say I have personally experienced it, so I do not know what to make of it.

So what exactly does a grade of 70 mean? Is it really a perfect coin with no imperfections or blemishes of any kind? Are all 70’s created equal, even from the same grading service and in the same coin series?

These questions are not easy to answer, but from my own study of the issue and experience with such coins, I agree with the view that 70’s are not actually perfect and that they can vary in quality.

I consulted the just-published third edition of Coin World’s Making the Grade: Comprehensive Grading Guide for U.S. Coins, which is published by Amos Press and was the last major project of recently-retired Coin World editor Beth Deisher. It refers to MS70 eagles as “perfect” and “free of defects.” In the section on the five-ounce America the Beautiful silver coins, it says a 70 coin is “flawless” and has “pristine surfaces with a full strike.” But PCGS and NGC have yet to grade a single ATB coin as a 70 because the very large surface area lends itself to marks and abrasions.

My understanding is that to the naked eye a 70 should look very close to flawless, but depending on the level of magnification used when examining the coin, a couple very minor flaws can almost always be found.

John Maben of ModernCoinMart, made this point in July 2011 in an article written in response to my first column on this issue . Mr. Maben stated explicitly that perfect coins just do not exist and that a trained eye using a magnification device can generally find some kind of flaw on any coin. And he is a former professional grader.

As far as modern world coins, I would be very cautious about spending a lot for 70-graded pieces.

The world coin market has grown dramatically in recent years, but it is still a less liquid market in the U.S. than overseas, and low population numbers can be misleading. Some modern world coins have tiny populations, but that is usually just because very few people have submitted the coins for certification, and there may not be a lot of demand for top-graded examples of the coin. Moreover, I have a personal preference for modern world coins, which often are what I call “coin art,” in their original packaging because I prefer to hold the coin in capsule in my hand, or to display it in the original box rather than what some collectors refer to as the “tomb” of a third-party slab.

Finally, remember that 70 coin values change over time, particularly as more coins are graded and receive the top grade, especially for more common coins. And as those who are skeptical of the value of 70 coins often say, who knows how the collector of the future will value those same 70 coins worth so much today?

golino portrait thumb The Coin Analyst: The MS70 Debate RevisitedLouis Golino is a coin collector and numismatic writer, whose articles on coins have appeared in Coin World, Numismatic News, and a number of different coin web sites. His column for CoinWeek, “The Coin Analyst,” covers U.S. and world coins and precious metals. He collects U.S. and European coins and is a member of the ANA, PCGS, NGC, and CAC. He has also worked for the U.S. Library of Congress and has been a syndicated columnist and news analyst on international affairs for a wide variety of newspapers and web sites.

 

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10 Comments

  1. First, great piece by Mr. Golino. I have briefly addressed this topic in my own writings (perhaps more bluntly) on the CertifiedAssets.com website where it earned me an UNfriending by Collectors Universe President Don Willis on Facebook. Here’s the link to my first comments: http://www.certifiedassets.com/inv/news/2249-2/ The population of modern MS70 slabs imho should be far smaller. It should nearly be an impossible bar to reach. So I take issue with PCGS and NGC and their proliferation MS70 moderns. Here’s the link containing the Facebook exchange with Don Willis: http://www.certifiedassets.com/inv/news/2251-2/ . I did not intend for this to be a clash with Mr. Willis, but as an accolade to CAC and to address what I see is a problem of the MS70 grade being diluted by PCGS and NGC and their standards for grading modern coins. Mr. Golino also makes a great point about what I see as monkey business involving “First Strike” slabbed coins. smh (shake my head).

    • Louis Golino says:

      Thanks for your contribution and kind words, Mr. Kingsland.

      This is my 100th piece for CoinWeek, so I wanted to make it a good one!

  2. Hi Louis,

    Another good article, and thorough as always.

    On this: My own view is that certification and grading is essential for most U.S. classic coins worth more than $100 each, unless you really prefer raw coins and have found one of the few trusted dealers in classic raw coins, I agree 100%. I’ve always found the value in third party graders to be primarily in preventing buyers from getting ripped off buying cleaned or otherwise doctored historic coins.

    So what exactly does a grade of 70 mean? Is it really a perfect coin with no imperfections or blemishes of any kind? Are all 70’s created equal, even from the same grading service and in the same coin series?

    Something else to consider is that definitions of what constitutes “perfection” may change over time. Is that coin that you paid $500 to buy at 70 going to be worth the same 20-25 years down the road? If NGC or PCGS lose their credibility and/or are replaced by a new major third party grader as “the standard,” will coins graded by them at 70 still maintain their value and credibility?

  3. Shutter says:

    The coins have NGC labels that make those claims. I wonder how they made that determination, unless Perth has some way to track the first coins struck.
    According to NGC, they received documentation from the Perth Mint saying that the coins were the first struck. You can read that here. It is probably easier for a mint to track that when they produce 5,000 coins, than if the mintage is 5,000,000.

    Mr. Maben stated explicitly that perfect coins just do not exist and that a trained eye using a magnification device can generally find some kind of flaw on any coin.
    That is true. With sufficient magnification, any metal surface will reveal some sort of flaw. NGC explicitly states that they use 5x magnification. Of course, mere absence of flaws or defects does not guaranty a 70 grade. There is the fullness of strike and the ever subjective eye appeal.

    But PCGS and NGC have yet to grade a single ATB coin as a 70 because the very large surface area lends itself to marks and abrasions.
    Also, the mint has had process control issues with these brand new coins. In, addition, so few of them have been graded, it is possible that even if a handful of coins worthy of 70 grade were produced, it is possible that they didn’t make it to the graders.

    • Louis Golino says:

      Thanks, Shutter. All excellent points. I probably should have mentioned that as far as MS70 AtB five ounce coins, I was specifically referring to the bullion coins since there are definitely 70′s for the numismatic version. I received a terrific Acadia coin today from the Mint that would most likely garner a 70 if submitted, which it will not be. These coins are bulky enough without adding a slab.

      Do you happen to have a handy stat on the approx. % of numismatic AtB’s that have been graded 70 by either NGC, PCGS, or both? I believe you were tracking that not long ago. Thanks, Louis

      • Louis Golino says:

        On the NGC-Perth arrangement, I would point out that they actually tracked the first 2500 bullion Kookaburras (out of 1 million struck), and the first 1000 bullion snakes (out of 300K).

  4. Louis Golino says:

    Paradise Mint sent me the following information which explains how NGC knew which coins were the first struck. I think readers will find it interestesting, esp. those who are skeptical about the first strike concept:
    “The coins go direct from Perth to NGC and have a letter from the production manager inside the crate that certifies they are the first 2500 struck.”

  5. Shutter says:

    With the caveat that total graded population is pretty small, NGC’s graded 51% of uncirculated ATB as 70. The worst was Hot Springs at 33% and the best were El Yunque and Chaco Culture at 81% and 83%. The much maligned Grand Canyon turned in a respectable 50%, but 15% of Grand Canyon graded at less than 69. That’s half of all uncirculated ATB coins graded at lower grades. The last 5 issues (starting with Vicksburg) got at least 63% graded 70. That could imply that the mint finally resolved issues producing these coins.

    • Louis Golino says:

      Thanks for that info., Shutter. It does seem to confirm what I have heard anecdotally, which is that the quality of the uncirculated collector versions buyers are receiving has been increasing, though there are of course exceptions. It will be interesting to see if Hot Springs 70′s acquire a higher premium.

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