Commentary206

*MASTERCOIN'S*

Coin Commentary

Numlet: "To Slab or Not to Slab"

(with apologies to Shakespeare)

by Robert G. Duncan

A slightly edited version of the following, under a different heading, was the "Guest Commentary" in the February 27 2006 issue of the weekly newsmagazine Coin World.

The Feb. 6 Coin World contained two new severe attacks on professional grading services. In a letter to the Editor, Mark Bernard of California accused the services of benefitting no one but their founder, while in his Guest Commentary, veteran British dealer Richard Lobel raised a cry similar to a paraphrase of an ancient Hebrew plea, "Let My Coins Go!"

Mr. Lobel's call for "liberating" coins from slabs is certain to be applauded by many collectors, particularly outside this country where American grading services often seem to enjoy a reputation a notch or two below terrorists.

Certainly it is true that a slabbed coin cannot be felt and enjoyed the same way a "raw" one can. Certainly the all too human graders at these services make mistakes which can mislead others about a coin's value.

But I disagree that the main reason the grading services are so popular here is that the American market is driven more by investors than collectors. This is a cliche that may betray a lack of appreciation of the advantages of slabbing.

Those advantages include:

1. Authentication. No collector knows every trick of the counterfeiter or date and mintmark alterer. Getting assistance from experts who are trained to recognize most of the tricks screens out a large percentage of fake and altered coins and helps collectors feel more confident that they have a genuine article.

2. An expert opinion on state of preservation. No collector knows everything there is to know about every possible environmental or human effect on a coin. It is helpful and reassuring to have professional graders provide their opinion. Helpful and reassuring also when it comes time to resell, especially if the seller is a spouse or heir who is not a numismatic expert.

3. Protection of mint luster and eye appeal from environmental pollution or mishandling. Admittedly protection is not 100%, and some slabs have even been accused of causing harm, but on the whole most coins are probably better off sealed in plastic than left more open to the air and exposed to possible mishandling.

Mr. Bernard, while ignoring benefits #1&3 above, complained that slabbing provides no grade security for its owner because buyers, using the slogan "buy the coin not the slab," will still claim the coin is either overgraded or impaired and not offer good market value.

Of course it is true that quality varies because graders are human and such things as eye appeal or even the extent and nature of apparent wear are sometimes difficult to judge with perfect objectivity. It must be understood that totally trusting the humans at grading services to grade 100% correctly to everyone's satisfaction when there are so many variables involved in grading is simply unrealistic.

Thus it remains imperative that unless collectors are able to buy slabbed coins only at "sight unseen bid" prices, they must become more knowledgeable about grading themselves so they can reply intelligently to their coins' critics.

Since Mr. Bernard says he has been collecting for thirty years so that we might assume he has developed a good deal of grading expertise, a much more likely cause of his difficulty in selling his slabbed coins for the full wholesale value of the grade on the slab (assuming he is realistic about the margin of profit a dealer needs to operate and that his coins are in slabs of one of the top services) is that he has been trying to sell to dealers who may be a bit too shall we say integrity challenged.

In the proliferating ranks of coin dealers there are a few who seem to feel that when it comes to buying and selling coins, pretty much anything goes, including verbally tearing down the quality of coins when it comes to buy and then building them up when it comes time to sell. To me such dealers are in the same ethical rank as con game artists. Their short term gain is to the destriment of the long term reputation of numismatics.

Mr. Lobel also implies that American grading services regularly overgrade European coins. Well there are at least two factors to consider which he did not mention:

1. European and American grading terms, though somewhat similar, do not refer and really never were intended to refer to the same state of preservation. This is especially true of the terms "Very Fine" and "Extremely Fine." An American EF40 and a European Extremely Fine have been about a full American grade apart since at least 1970 when I became a dealer in British coins.

2. American grading standards tend to be more forgiving as the age of the coin increases, whereas European grading, which more frequently involves coins of greater age made with better minting methods, is not. A 1793 chain cent graded VF20 by even the most conservative US grading service might be called no better than a Fair in Europe (where "Fair" encompasses all American grades from Fair-2 to at least Very Good-10)!

It is unfortunate though understandable that Europeans so often do not fully understand or appreciate the popularity of slabbing in America. It tends to interfere with commerce between European and American dealers and collectors.

Perhaps one of the best recent examples was the decision last spring by a major American auction company to have a famous American collection of European coins authenticated and graded by a top American grading service, but not slabbed, in order to accomodate slab-shunning European buyers! Many Americans including myself who bought coins in that auction were inconvenienced by having to resubmit the coins to the service for slabbing at additional cost.

Europeans use the difference in quality referred to by their VF and EF and ours as proof that their system is better because it's more conservative. It isn't; it's just different. Mr. Lobel notes that in England they have three Uncirculated grades: Uncirculated, Choice Uncirculated and Gem Uncirculated. This is the same as Americans used to have before the Sheldon 70-point numerical system became popular here. At that time, before the 1980s, the Brits had only two Uncirculated grades: Uncirculated and Fleur de Coin or FDC.

Now we have eleven Uncirculated grades, and there is a call to add even more by switching to a 100-point system. So now the Brits' grading system has evolved to where we were thirty years ago. Maybe someday we'll finally be using the same system.

In my experience most coins slabbed by the top four American services are graded accurately enough that barring one of several possible aesthetic variables, most collectors will agree on the grade. But until either Americans or Europeans fully embrace the other's grading system, a high degree of grading - and grading service vs. raw coin - incompatibility will remain. In the meantime, perhaps collectors and dealers on both continents can benefit from a little more effort to understand, accept and adjust. And until the ethics of some American coin dealers improve significantly, American collectors will continue to need to become grading experts themselves in order to avoid being victimized by those dealers who might qualify for government aid if moral handicaps were considered innate.

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	*MASTERCOIN'S* Coin Commentary Numlet: *"To Slab or Not to Slab"* (with apologies to Shakespeare) *by Robert G. Duncan* A slightly edited version of the following, under a different heading, was the "Guest Commentary" in the February 27 2006 issue of the weekly newsmagazine Coin World. The Feb. 6 Coin World contained two new severe attacks on professional grading services. In a letter to the Editor, Mark Bernard of California accused the services of benefitting no one but their founder, while in his Guest Commentary, veteran British dealer Richard Lobel raised a cry similar to a paraphrase of an ancient Hebrew plea, "Let My Coins Go!" Mr. Lobel's call for "liberating" coins from slabs is certain to be applauded by many collectors, particularly outside this country where American grading services often seem to enjoy a reputation a notch or two below terrorists. Certainly it is true that a slabbed coin cannot be felt and enjoyed the same way a "raw" one can. Certainly the all too human graders at these services make mistakes which can mislead others about a coin's value. But I disagree that the main reason the grading services are so popular here is that the American market is driven more by investors than collectors. This is a cliche that may betray a lack of appreciation of the advantages of slabbing. Those advantages include: 1. Authentication. No collector knows every trick of the counterfeiter or date and mintmark alterer. Getting assistance from experts who are trained to recognize most of the tricks screens out a large percentage of fake and altered coins and helps collectors feel more confident that they have a genuine article. 2. An expert opinion on state of preservation. No collector knows everything there is to know about every possible environmental or human effect on a coin. It is helpful and reassuring to have professional graders provide their opinion. Helpful and reassuring also when it comes time to resell, especially if the seller is a spouse or heir who is not a numismatic expert. 3. Protection of mint luster and eye appeal from environmental pollution or mishandling. Admittedly protection is not 100%, and some slabs have even been accused of causing harm, but on the whole most coins are probably better off sealed in plastic than left more open to the air and exposed to possible mishandling. Mr. Bernard, while ignoring benefits #1&3 above, complained that slabbing provides no grade security for its owner because buyers, using the slogan "buy the coin not the slab," will still claim the coin is either overgraded or impaired and not offer good market value. Of course it is true that quality varies because graders are human and such things as eye appeal or even the extent and nature of apparent wear are sometimes difficult to judge with perfect objectivity. It must be understood that totally trusting the humans at grading services to grade 100% correctly to everyone's satisfaction when there are so many variables involved in grading is simply unrealistic. Thus it remains imperative that unless collectors are able to buy slabbed coins only at "sight unseen bid" prices, they must become more knowledgeable about grading themselves so they can reply intelligently to their coins' critics. Since Mr. Bernard says he has been collecting for thirty years so that we might assume he has developed a good deal of grading expertise, a much more likely cause of his difficulty in selling his slabbed coins for the full wholesale value of the grade on the slab (assuming he is realistic about the margin of profit a dealer needs to operate and that his coins are in slabs of one of the top services) is that he has been trying to sell to dealers who may be a bit too shall we say integrity challenged. In the proliferating ranks of coin dealers there are a few who seem to feel that when it comes to buying and selling coins, pretty much anything goes, including verbally tearing down the quality of coins when it comes to buy and then building them up when it comes time to sell. To me such dealers are in the same ethical rank as con game artists. Their short term gain is to the destriment of the long term reputation of numismatics. Mr. Lobel also implies that American grading services regularly overgrade European coins. Well there are at least two factors to consider which he did not mention: 1. European and American grading terms, though somewhat similar, do not refer and really never were intended to refer to the same state of preservation. This is especially true of the terms "Very Fine" and "Extremely Fine." An American EF40 and a European Extremely Fine have been about a full American grade apart since at least 1970 when I became a dealer in British coins. 2. American grading standards tend to be more forgiving as the age of the coin increases, whereas European grading, which more frequently involves coins of greater age made with better minting methods, is not. A 1793 chain cent graded VF20 by even the most conservative US grading service might be called no better than a Fair in Europe (where "Fair" encompasses all American grades from Fair-2 to at least Very Good-10)! It is unfortunate though understandable that Europeans so often do not fully understand or appreciate the popularity of slabbing in America. It tends to interfere with commerce between European and American dealers and collectors. Perhaps one of the best recent examples was the decision last spring by a major American auction company to have a famous American collection of European coins authenticated and graded by a top American grading service, but not slabbed, in order to accomodate slab-shunning European buyers! Many Americans including myself who bought coins in that auction were inconvenienced by having to resubmit the coins to the service for slabbing at additional cost. Europeans use the difference in quality referred to by their VF and EF and ours as proof that their system is better because it's more conservative. It isn't; it's just different. Mr. Lobel notes that in England they have three Uncirculated grades: Uncirculated, Choice Uncirculated and Gem Uncirculated. This is the same as Americans used to have before the Sheldon 70-point numerical system became popular here. At that time, before the 1980s, the Brits had only two Uncirculated grades: Uncirculated and Fleur de Coin or FDC. Now we have eleven Uncirculated grades, and there is a call to add even more by switching to a 100-point system. So now the Brits' grading system has evolved to where we were thirty years ago. Maybe someday we'll finally be using the same system. In my experience most coins slabbed by the top four American services are graded accurately enough that barring one of several possible aesthetic variables, most collectors will agree on the grade. But until either Americans or Europeans fully embrace the other's grading system, a high degree of grading - and grading service vs. raw coin - incompatibility will remain. In the meantime, perhaps collectors and dealers on both continents can benefit from a little more effort to understand, accept and adjust. And until the ethics of some American coin dealers improve significantly, American collectors will continue to need to become grading experts themselves in order to avoid being victimized by those dealers who might qualify for government aid if moral handicaps were considered innate. Return to the Main Page