in reference to slabbed coins. This member shared the response with us at the World's Fair of Money. The Staff has come to the conclusion that we would be doing the members here a disservice if we didn't share...
I contributed to the initial $50,000 that the ANA
raised to form ANACS, before I even became an ANA-LM, and I have an ungraded svdb and its certification and pix from ANACS. Why ungraded? That was how they came.
It wasn't until PCGS
came up with their idea that they scrood the pooch. Their whole concept was based on the idea that if coins could be put in tamper-proof holders and guaranteed to be genuine and a standard grade, then anyone could trade coins sight unseen, just like stocks, where no one cares what the stock certificate looks like. They spent tons of money promoting this exact concept.
As anyone who knows anything about grading can tell you, not all ms63 are created equal, but here we have a program that claims they are, which means it's doomed to failure from the start. So why did it succeed at all?
By promoting a no-peek price market, they could get the backing of big dealers and investment brokers. How many 1881s dollars does a Morgan collector need? A grand total of one. How many collectors are putting together a date set of ms Morgans? 100? 1000? 10,000? (In your dreams)
By comparison, you can show an investor with $100,000 that $1000 invested in coins in 1970 would be worth $181,000 in 5/89. Common date Morgans in ms65 were $500, so he can buy 200. There are over 55 bags of ms65 81s slobbed. Even under the ridiculous assumption of 10,000 date collectors wanting a minimum ms65 and having the $500 to buy one, there's still 45,000 coins more than needed by the market.
However, if you can convince just 225 investors to buy 200 each (or a few multi-million dollar investment groups to buy 2000 each), you can get rid of all of these common coins that every dealer has a bunch of, making them (and PCGS
In 5/89, the bubble burst. Silvertowne
lost $3 million in bid value of slobbed inventory in one weekend. Dealers couldn't understand what hit them, but it's obvious--that's how investors react. Someone put 2+2 together and realized that no matter whose hands they were in, 55,000 coins for 10,000 collectors = common.
Did slobbing solve any problems? Not really, they just changed the faces and created new problems.
There used to be fake coins, now there are fake coins in fake slabs, AND since even a seven year old girl understands coins should be slabbed, people not only have no incentive to learn how to detect counterfoots or grade, but they blindly believe whatever the piece of plastic says. AND you now have pariah basement TPG
, slobbing fakes and overgrading both.
I saw two posts from a Clewless Gnubeeâ„˘ today, wanting to know which CWT were rare, and a list of rare coins to look for. Does that sound like a collector, or like someone who's gonna buy the first overgraded piece of crap with a low price?
How about the 95% of coins that aren't textbook examples of a grade? First, they got bodybagged, creating a dual market: slobbed and worthless. Then when they ran out of "textbook" coins, they changed to "market" grading, which isn't grading at all, but pricing. So a pretty au58 is now ms63, which means the no-peek price for ms63 has to drop to what an au58 us worth, because you have to take anything with a ms63 label.
Meanwhile, the big three have slobbed 50 million coins, and taken at least a half billion dollars for their services. That's a half billion dollars that could have been spent on coins instead of plastic.
If I was a new person to CCF this would make me double think. Good, because that's exactly what you should do. Measure twice, cut once. Study the book before buying the coin. Investigate before you invest.
BTW, coins are only down 62% from 5/89, having recovered 44.5% from the 12/94 low. At that growth rate, they should be reaching a new peak around 12/2046.
I'll be happy to listen to counterarguments, but slobbing has ruined the hobby, on many levels.