The Argument Against Slabs

     In this guide I will detail the many reasons that buying raw, or unslabbed coins is preferable to encapsulated coins.  Before I do this though, I will mention that when dealing in rare date coins that need authentication, the main top 4 grading services can be invaluable.  My concern focuses mainly on grading.

The Problem With Grading

Or should I say the many problems?  We have a grading system where the mint state coins are graded by, as well as other attributes, "eye-appeal" and the rest of the circulated coins of the world are not.  I find something wrong with this.  Grade is supposed to denote value, or at least be a helpful guide to determining value.  But it really isn't anymore.  A coin can be graded by PCGS or NGC as XF 45, and technically be correct.  But the actual detail the coin shows looks like a Fine 12 because of weak strike.  The grading company just ups the grade based on what they know about the striking characteristics of any given date.  And yet when we deal in mint state coins, if a coin has week strike, it dosen't get that same bump up.  And even though eye appeal is supposedly in play when third party graders grade mint state coins, I can't tell you how many times I've come across MS and Proof 66 and higher coins that look so hideous that I wouldn't pay AG 3 money for them! 

Buying A Piece Of Plastic

That is what is happening.  Many collectors these days don't worry what is inside the holder anymore.  It says MS 63, so that's what it is.  Yet, try taking that coin into any dealer to sell and they will treat it as if it were raw.  If it's a premium coin, they will give you good money for it.  If it dosen't measure up to other coins of similar grade, they won't buy it just because of the grade on the holder.  There is little to no secondary market for Proof and MS 70 modern coins.  Becasuse of PCGS and NGC  Registry sets, there are a handful of people looking for these coins and paying outrageous prices.  But that bubble will burst.  I asked a local dealer in my town once what he would pay for any PCGS MS 70 State Quarter.  His reply: 24 cents.  While he is joking, in that he will pay whatever is the going rate for the coin ins mint state (a couple dollars most likely), this market made in the last two decades of "perfect" coins is just not going to last.  We have a nation of OCD perfectionistic coin buyers.  The guy on HSN shouts at buyers about how you want perfect and people eat it up.  Well, guess what?  I have sold a couple hundred 2007 Mint Proof Sets this year.  Of all the coins I've seen in the sets, I would say none grade less than Proof 68, 3/4ths grade Proof 69 and almost 1/4th are Proof 70's.  Not to rare then are they?  What happens when we rely on others to grade for us is we don't learn the nuance of grading for ourselves, which is very important.  And while I can understand some buyers like modern coins because of the satisfaction of knowing that they have very high grade coins, they don't need them in PCGS holders.  They are all Proof 69/70 and the difference between those two grades is a tiny speck or two that you have to look really closely to see. 

Time For A New Grading System

The reason attempt at a grading system based on a 100 point system was more of the same.  I advocate a system whereby we can use a grade to determine value.  What makes up the value of a coin?  Rarity/Demand, eye appeal, good strike, lack of problems/dings/cleaning.  Except for the rarity and demand, the other aspects of value need to be addressed when grading circulated coins.  In fact, this has already happened with large cent collectors (and this is ironic because Sheldon, a Large Cent collector came up with the original system).  A coin might be have the detail of an XF 40, but if it has a rim ding and light cleaning, it gets knocked down to VF 25.  On the other hand sometimes they grade coins higher than those at PCGS or NGC!  When I look in my trends guide for the price of a VF 1919 S Mercury Dime it tells me thats a 17 dollar coin.   But in my experience, a nice original, strongly struck VF 1919 S will go for almost double that.  Grade and value just don't correlate anymore.

Longing For A Simpler Time

I'm only 26, but I wish we could go back to how grading was before I was born.  Did you know there were only three mint state grades back then?  All the rest, MS 62, 64, 68 etc came along in the 80's.  All modern inventions.  The thing is, there is nothing wrong with adding or changing grading.  But the joy in owning a coin is so much more than just thinking you know it's value because the grade is on the PCGS holder.  Token and Medal collectors focus much less on grading, and in some token collecting, such as trade or transportation tokens, there is almost no grading.  But the grading services have come along in recent years accepting Civil War Tokens, So Called Dollars, Conder Tokens, etc making a market where there was none before.  All of this said, I do own a couple of coins that are slabbed.  I own them because they are coins I like and they just happen to be in the holders.  I could care less what the grade on the holder says, I feel I am an expert grader and grade them myself.  In all this discussion I have failed to mention grade inflation.  The fact that PCGS and NGC are much more liberal with their grading than they were years ago.  This is a fairly established fack now.  Grading, because it is subjective and loosely defined, will continue to morph.  Third Party graders will inflate and deflate their grades at various points.  I'm a bit sickened by a new company that is going to rate the Third Party graders by putting stickers on coins with premium coins.  The reason this makes me ill is they have said they are doing this specifically as a market maker.  Well, that's now what I believe in.  If you visit my ebay store, you can find properly graded, problem free, eye appealing raw pieces at reasonable prices.   The one last reason why I don't like slabbed coins: The slabs so often get scratched up, and then you can't enjoy the best part of the hobby...looking at your coins!