By Mark Ferguson for CoinWeek.com – MFRareCoins.com
As coin market trends change and evolve, and prices rise over the long-term, buyers’ demands change and become more refined. The current demand trend for high-end coins is a preference for problem-free coins and premium quality. By problem-free, I don’t mean coins without scratches, spots, or other imperfections. That’s a given. I mean coins without "enhancements" such as cleaning and artificial toning that have been graded and holdered by major grading services.
Back when I first began attending major national coin shows, during the mid-1970s, an experienced coin dealer said to me, "When you’ve got a coin with a problem…You’ve got a problem!" That statement stuck with me and has served me well since that time. Being able to buy a rare coin for a “bargain” price from a major auction or on the open market usually means the coin has a problem – which is often not very obvious to the inexperienced buyer.
This is a primary reason CAC (Certified Acceptance Corporation), which is the company that verifies solid for the grade and premium quality PCGS and NGC graded coins by affixing a green sticker to their “slabs,” was created, and why PCGS and NGC began their “Plus” grading designations two years ago, in response to CAC.
Additionally, PNG, the Professional Numismatists Guild, voted at their general membership meeting last week at the Central States Numismatic Society Convention in the Chicago area, to adopt a definition of "coin doctoring" and enforce violations of this "rule" with suspensions or even expulsions of members who step over the line in attempts to deceive coin buyers and grading services by "doctoring" coins. Details of that definition can be found here at CoinWeek.com.
At the CSNS convention trade show and auction, I looked at major rarities for clients, that we had previously discussed, only to find that some of them, which were graded and encapsulated, had been cleaned or artificially re-toned, in my opinion. These were coins that are priced well into the five and six figure ranges. They are often beautiful looking coins at first glance, but upon closer inspection such problems come to light.
This is very disappointing to say the least – because these coins have been permanently "disfigured." They’ll always sell for big discounts to knowledgeable buyers – or be avoided all together.
However there are some coin dealers who intentionally push these coins on buyers, or even naively buy and sell them for themselves – just as inexperienced collectors and investors may unwittingly buy such coins from auctions or the open market.
Important rare coins, with problems, will always be wanted by someone, but again, they’ll sell for big discounts, or be avoided all together by knowledgeable buyers. Additionally, they are not likely to reap the benefits of long-term market appreciation that will be achieved by high-quality, problem free rare coins.
There are many coins that have appreciated by multiples during the last fifteen to twenty years. In fact, some of the major rarities that are now selling for multi-million dollar sums were selling for just a few hundred thousand dollars, or less, during the 1990s. Consider what’s going to happen to rare coin prices as prosperity returns after the recessionary period the economy has been in comes to an end or if inflationary forces propel precious metals prices and the rare coin market to new heights.
If it’s investment potential you’re concerned about for your rare coins – as it is for most owners of rare coins – you need to prepare your collection/investment now to achieve maximum future price appreciation. The first thing you need to do is carefully scrutinize each coin in your collection or portfolio for quality – whether they’re in major grading service holders or not.
By "quality" I mean several things – first you need to make sure your coins have not been cleaned or dipped in a cleaning solution which breaks down their luster. Secondly, buyers who will ultimately pay the most for coins want original, eye appealing surfaces that have not been tampered with. Old, "original" toning is also a must in order to achieve maximum appreciation and desirability when it comes time to sell. Too many rare coins have been cleaned and artificially re-toned to make them look like top of the line coins. Thirdly, you need to make sure your coins are at least solid for the grade.
If you’re not comfortable knowing how to tell which of your coins have been cleaned or re-toned, then you’ll need to engage the services of a competent advisor. If this is the case, remember that many rare coin dealers are also unsure about the same things. In fact, third-party grading and “slabbing” has given many coin dealers the confidence to buy and sell, just as it’s done for investors. You need to make sure your advisor has the experience to properly advise you – and is someone who you can trust.
Once your coins have been scrutinized for problems and for grading, you should sell the coins that have been cleaned, re-toned, or aren’t solid for their grades, and replace them with coins that meet the standards of top-notch rare coins for which buyers will pay premium prices. You can consign those you want to sell to major auctions, but you’ll have to pay their commissions, and if you want to protect the prices of your coins you may even have to pay commissions if they don’t sell.
But, competent dealers will be able to pre-determine fair market prices for you and sell them back into the market on consignment, usually for very reasonable commissions, and you most likely won’t have to pay commissions until they sell. Even if a dealer does not feel comfortable selling problem coins to other collectors and investors, such coins can usually be sold to other dealers who will push them on, or who just don’t know themselves about problems such as cleaning and re-toning.
For your coins that are determined to be solid for their grades and are un-cleaned or dipped and have “original” surfaces – the coins you want to keep – I recommend that you have them submitted to CAC for further examination and to get CAC’s green stickers of approval put on your coins’ slabs, which are often known in the trade as “green beans.” This designation has been shown to help you receive maximum prices for your coins.
The long-term market trend is such that buyers are beginning to question coins that don’t have these green endorsement stickers from CAC on their PCGS and NGC holders. Importantly – this trend of CAC verification is growing, just as acceptance of PCGS and NGC grading grew during their early years in the 1980s.
"Plus" grading by PCGS and NGC are helpful, but they just haven’t caught on in the marketplace like the third-party check and balance the CAC endorsement stickers have provided. However, an exception could be made for PCGS and NGC Registry coins. Of course, if you want to weed out and replace problem coins that you own, you should expect to pay premium prices for replacements that meet these standards. But the premiums you pay now, for coins that meet today’s premium standards, are likely to reward with you higher profits in the future!
Mark Ferguson has been dealing in high-end rare coins and precious metals since 1969. He has graded coins professionally for PCGS and was the Market Analyst for Coin World’s Coin Values magazine between 2002 and 2009. He has written feature articles and regular columns for Coin World, Coin Values magazine, The Coin Dealer Newsletter, Numismatic News, The Numismatist, ANA Journal, Coin News - a British publication, and currently writes a weekly column for CoinWeek. He is a recognized authority in appraising rare coins and a recognized expert on the 1804 silver dollar, which is known as “The King of American Coins.” Mark can be reached at Mark Ferguson Rare Coins, LLC - www.MFRareCoins.com