There’s a revolution brewing in the numismatics markets that is being fed by its own successes causing its own failures.
The first salvo was fired by the Professional Numismatic Guild and Industry Council for Tangible Assets in 2006 when they jointly performed their own survey. One of the results was that PNG and ICTA were sued by a few of the services whose services were deemed unacceptable.
Following the report, the services not named Numismatic Guarantee Corporation and Professional Coin Grading Service went into turmoil. PCI went out of business around the time the J.T. Stanton left the company. James Taylor bought ANACS from Anderson Press and move the company to Englewood, Colorado. Taylor raided graders from Independent Coin Grading Company. As a result, ICG moved to Tampa, Florida.
In the meantime, most of those companies rated “Unacceptable” in the PNG-ICTA report either went out of business or have been marginalized to the point of irrelevance.
Next was the creation of the Certified Acceptance Corporation as a grader of the graders. As I have explained in the past, although a fourth-party or validation service might be helpful, the CAC is not an independent organization providing the service. The company trades on its inside information in what it calls “market-making.” This type of arbitrage activity would be illegal in the securities industry but has given a false sense of security in the numismatics world.
Now there are rumblings again and this time there are a few significant people doing the talking.
For the last six month, noted numismatist and author Q. David Bowers has written several stories for Coin World that has been both critical of the coin grading business and the complexity of the grading system. Although Bowers recognizes that there are advantages to third-party grading there has been changes and not for the better.
In other words, third-party grading and authentication is good for the hobby but the services have problems.
Could you tell the difference if they were not in the holders?
2016 American Silver Eagle graded MS-69 by NGC
2016 American Silver Eagle graded MS-70 by NGC
Following NGC’s change in its registry rules to no longer allow coins graded by PCGS in their sponsored registry sets, NGC Chairman Mark Salzberg publishes an analysis on what he claims is the decline in PCGS-graded coins. In his analysis, Salzberg looks at the prices realized from auction sales of certain PCGS coins over time and compares them to PCGS population reports for those coins.
Through a set of charts that resemble the supply-and-demand curves, it is unsure if the charts prove anything. If Salzberg is trying to say that PCGS is practicing grade inflation, known as gradeflation, then he could prove that with the changes in the grading for many modern coins. However, comparing the population report (supply) of a classic coin like the 1912-S Liberty Nickel, may not be valid without looking at other factors, such as the population report of lower grades declining. Also, Salzberg only uses the prices realize from auctions held by Heritage Auctions and not a survey of the industry as a whole.
Does PCGS practice gradeflation? Can we also ask does NGC practice gradeflation? And we do not know how these services fare with CAC who keeps its raw data hidden from the public while using it to increase the value of the coins it examines.
Dave Bowers provides good insight into the problems with coin grading without trying to overburden the reader with statistics even with the suggestion that dealers may overly emphasize grade differences and not the aesthetics of the coin.
Bowers is not the only one complaining about grading, last September, Rick Snow wrote an article on the CDN Publishing Blog suggesting grading be adjusted to a 15-point technical scale without the qualifying notations such as “”Full Head” or “Full Bands.”
The numismatics industry has put too much trust in these grading services without oversight. When oversight was tried by industry representative organizations, the companies that did not like the results litigated rather than fix their problems causing the attempt at oversight to be eliminated. Then a validation service appears to only turn out to be something they are using to manipulate the markets in their favor.
In numismatics as in politics, I agree with Thomas Jefferson when he said, “I hold it that a little rebellion now and then is a good thing, and as necessary in the political world as storms in the physical.” Maybe it is time to stand up and ask PCGS why their population reports are going up in higher grades? We should ask why NGC is concentrating more on gimmick holders than the coin in those holders? And are NGC’s population reports without reproach? I am sure we can find problems with their population reporting. What happened to ANACS? Did Taylor get too cozy with the television shopping networks to justify general feeling that their coins are better priced as raw? And what the heck happened to ICG?
Is this coin worth less because it is is in an ICG holder?
Rather than implicitly trusting these companies, collectors and investors may want to start questioning all of these companies about their practices. Otherwise, you may find that coin you paid MS-70 prices for is really not worth more than an MS-68, which was a better looking, to begin with!
PNG-ICTA 2006 Grading Service Survey
Read their 2006 press release below or on Scribd.
Fans of coins encased in plastic with special labels who also are baseball fans must be ecstatic that Fans of coins encased in plastic with special labels who also are baseball fans must be ecstatic that Numismatic Guarantee Corporation and Major League Baseball agreed to an exclusive deal that will allow NGC to reproduce team names, logos, and stadiums on labels used in NGC slabs.
NGC announced that they will “encapsulate the National Baseball Hall of Fame commemoratives and other legal tender coins with attractive certification labels that feature a range of popular MLB trademarks.” Aside from the Major League Baseball logo, the logos of the 30 clubs, and stadium images, it will also include logos of All-Star Game and those used for post season.
NGC says this is gives their customers “an exciting new opportunity to combine their passions for the sport and the hobby.” What it gives is NGC a new area for marketing and to extract money from the market.
I understand that NGC is a business and has owners that are concerned about the business generating revenues. But what this will do is increase their revenues at the risk of some of the protections they claim is good for the hobby by encouraging cracking slabs, thus making the population reports even less reliable than they are today.
Let’s consider that I am one of those odd people that happens to collect the coin but it happens to be in a slab to ensure that it is genuine and the grade is something agreeable. This is a really nice coin and it fits in with my collection. But the coin happens to be in a slab with the logo of the New York Yankees. I hate the Yankees. I despise the Yankees. I have hated the Yankees ever since my father, the Brooklyn Dodgers fan, taught me to say “Let’s Go Mets!”
Unlike the fans of plastic, I really consider the coin encased in the slab. It is possible that I may like a coin even with the consequence that the label inside that slab has a decoration I am allergic to. If I decide that the coin is worth purchasing even if I ignore the label, I will buy the coin, but that label will have to go. There is no question that when I bring the coin home, the slab will be cracked, the coin removed, and the label finding its way to an appropriate disposal fitting of my opinion of that team.
Once cracked out of the slab, I could send it back to NGC and just have them re-grade the coin an put it in a plain slab. I could send it to Professional Coin Grading Service to see if they will give me a more solid grade. If it is a Morgan dollar I can ask ANACS to attribute the VAM. I could also ust keep it as a raw coin. Since the vast majority of my collection is not slabbed, this is not a problem. Besides, I know it is genuine because NGC slabbed it and I could submit it later if I need it slabbed again for resale.
Frankly, how many people actually save the labels and report their crack outs to the grading services? In the few cases when I have cracked coins out of its plastic tomb, I have not reported the cracked out coin to NGC. They have been cracked out of the slabs from multiple companies and submitted to NGC at a time I was working on a registry set. I believe this will encourage cracking out of the slab and make the population reports less reliable than they are today.
Not only will this affect the grading service population reports but it could affect coins with Certified Acceptance Corporation stickers. My hatred of the Yankees will not have me think twice about cracking that plastic just because the CAC or anyone else put a sticker on the slab. If I am not telling NGC I obliterated their label, I am not reporting it to CAC either—especially since I am not exactly a fan of CAC.
I do not begrudge NGC for doing what they need to do to earn a living. But they need to explain how these gimmicks align with their uncompromising standards and a commitment to integrity. Just admit that these gimmicks are being used to improve revenues and that everything else is window dressing. I would respect the honesty.
Image courtesy of NGC.
As a member of the American Numismatic Association, I call on the ANA Board of Governors to open an investigation for the purpose of taking action regarding the violation of the ANA Code of Ethics by the dealers who caused the dangerous situations at the World’s Fair of Money, the Philadelphia Branch Mint, Denver Branch Mint, and the U.S. Mint Headquarters during the opening sale of 2014 50th Anniversary Kennedy Half-Dollar Gold Proof Coin.
From the raw video of people dashing across the street at the Denver Mint
The media reported that those waiting for to purchase the coins were not collectors. Most were being paid by dealers to be on the line in order to get around the U.S. Mint purchasing limits. As part of their attempt to game the system, these dealers put collectors and the general public in danger by handing large amount of cash to needy people who did not conduct themselves in a manner that is consistent with the ANA Code of Ethics. Since those behaving badly were being paid by the dealers, they are representatives of the dealers, making the dealers responsible for the action of those they employ.
In case those dealers have forgotten, according to the ANA Code of Ethics:
As a member of the American Numismatic Association, I agree to comply with the following standards of conduct:
- To conduct myself so as to bring no reproach or discredit to the Association, or impair the prestige of the membership therein.
This applies directly to the dealers whose action caused problems at the World’s Fair of Money. Since sales of the coin were made at the U.S. Mint’s booth on the bourse floor, this is a case where the dealers who participated in this discredited the Association by creating an environment that potentially jeopardized the security of the show. By putting the security in jeopardy and bringing this negative publicity to the World’s Fair of Money, the participating dealers impaired the prestige of the membership especially when they had to put the U.S. Mint and the ANA Executive Director in the position to have to act as a parent to dealers acting like impetuous children.
- To base all of my dealings on the highest plane of justice, fairness and morality, and to refrain from making false statements as to the condition of a coin or as to any other matter.
Although the launch of the 2014 National Baseball Hall of Fame commemorative coin during the Whitman Baltimore Expo was a success, there was a feeling that the sales format did not give collectors a chance to purchase the coin. In order to promote the broader sales of the coin, the U.S. Mint adjusted its sales requirement to limit over-the-counter sales in order to give more collectors the opportunity to purchase the new Kennedy gold coin. How could the U.S. Mint or the ANA know that the sales of a coin that does not have any mintage limits would cause problems when the sales of a commemorative coin with mintage limits went without significant issue?
Unfortunately, the intent of the U.S. Mint was impeded by some dealer’s plane of justice by their action. By immorally trying to get around the U.S. Mint’s sales limits by using questionable methods to unfairly stack the line against the collector, the dealers were making false statements to a government entity, and thus the public it represents, as to their eligibility to purchase the coin.
The appalling images provided by Denver television news (see below) of the behavior of those described as homeless on behalf of the dealers trying to get around the sales limits not only is not only unjust to legitimate purchasers and immoral, but as ANA members discredits themselves as ANA members.
Therefore, I am accusing ALL of the ANA members who hired these people that acted on their behalf of the ANA dealers with violation of the ANA Code of Ethics. The ANA Board of Governors must take action to restore the organization’s credibility by suspending those involved as per the ANA Bylaws!
Images of the shameful display caused by ethically challenged and greedy dealers courtesy of ABC 7News Denver
While the State Department’s Cultural Advisory Committee (CPAC) continues to kowtow the the whims of foreign government looking to use the Convention on Cultural Property Implementation Act (CPIA; 19 U.S.C. §§ 2601 et seq.) as some sort of virtual tool to attack the United States, little seems to be said by the foreign archeological supporters when a Paris court ruled for a French auction house allowing them to sell Native American artifacts.
The case involves the sale of 70 artifacts from Arizona’s Hopi Tribe by the Paris auction house Néret-Minet. Hopi tribe members and historians believe that the items were illegally obtained. Representatives from Néret-Minet claim that the items were purchased legally from a collector in the United States.
A visitor looks at antique tribal masks revered as sacred ritual artifacts by a Native American tribe in Arizona which are displayed at an auction house in Paris April 11, 2013. (REUTERS/John Schults)
Following the ruling, Néret-Minet went ahead with the auction. According to The New York Times, the auction generated $1.2 million in sales (with buyer’s premiums). Five of the 70 items did not sell and not sold for less than their estimated value.
According to The New York Times:
Before starting, the auctioneer, Gilles Néret-Minet, told the crowd that the sale had been found by a judge to be perfectly legal, and that the objects were no longer sacred but had become “important works of art.” He added, “In France you cannot just up and seize the property of a person that is lawfully his.”
So let me get this straight, religious objects that are allegedly protected by the same treaties as ancient coins and United States law can be sold as “art objects” while foreign governments confront a dealer on a bourse floor while the State Department does little to protect collectors and those who have legitimate claims?
If France can do this with items of religious and cultural significance to the Hopi tribe, then will happen to the coin collecting hobby? I know some people can take their hobby seriously, but it is not religion. Most countries already have examples of the coins in question, so why are additional examples “culturally significant.” Remember, it was reported that when a dealer was approached in Baltimore by representatives of a foreign government, they were only interested in the more expensive coins and not the common coins from the same country with a lesser value.
The State Department is not doing enough to protect the American people, whether it is to protect what is really culturally significant items like the artifacts from the Hopi tribe or the abuse of international law as demonstrated by the actions of the State Department’s CPAC and the confrontation in Baltimore. This is something that must be addressed by the president!
Please take action!
I renew my request that all of my readers to go to http://wh.gov/MD2O and sign the petition. Share it on social media. I made it easy—just see the widget at the top of the right column. Petitions require 100,000 signatures in order to be answered by the White House. So far there are five signatures (THANK YOU!). Let’s see if we can motivate the coin collecting community to add more before you will not be able to own any foreign coin older than 100 years old!
A French supporter of the Indian cause, who refused to give his name, left, holds a flag of the American Indian Movement and an American exchange student, member of the Arizona’s Hopi tribe, Bo Lomahquahu, right, stand outside of the Druout’s auction house to protest the auction of Native American Hopi tribe masks in Paris, Friday, April 12, 2013. A contested auction of dozens of Native American tribal masks went ahead Friday afternoon following a Paris court ruling, in spite of appeals for a delay by the Hopi tribe, its supporters including actor Robert Redford, and the U.S. government. (AP Photo/Michel Euler)
There are a people in the numismatic industry I like, but there are some I watch with amusement for various reasons. One of those I watch with a certain amount of amusement is Laura Sperber of Legend Numismatics from Lincroft, New Jersey. Sperber and Legend deals with a higher end segment of the market where their “lower-end” products cost more than $1,000.
There is nothing wrong with the high-end market, but most of the people I have associated with in numismatics that are not dealers look at $1,000 as being out of our budget. We are happy finding nice coins and putting together fun sets that may not be the type of coins that Legend and similar companies would sell.
While I respect Sperber for her views on the market, she acts and writes like it the view of everyone who participates in the market. Thus is the case with her Market Report regarding the recently ended Whitman Baltimore Coin and Currency Expo.
Sperber opens her tome noting that the show was “decent but quiet.” As with many June shows in Baltimore, it is not as active as the March or November shows and Sperber notes that the timing and the location works against this show. This is a fair comment and something the people at Whitman needs to consider in the future.
What is not fair is that her views are caveated at the beginning saying that the dealers she spoke with “on our level” was a few paragraphs before a section titled “When Dreck Rules.” On one hand she is saying that, “we know of a few smaller dealers who had nice coins and did VERY well.” Then a few paragraphs down she noted that, “[there] were few fresh and nice coins in anyones display case.” Which is it? Were there dealers with nice coins or where there few nice coins? It cannot be both.
Sperber also forgets that there are more aspects of the market than this “on [her] level.” Some of us are on a budget whose budget may not include paying thousands of dollars for coins. But we like to look and even learn so that maybe if that coin ever becomes affordable we can consider a purchase. She disparages some who she said were not serious buyers who “came to kick some tires and chat.” Using this logic, we are not to go to a high-end dealer to look, ask questions, and learn. Maybe, people did not like the quality of your coins; after all, you said that there were not enough “fresh and nice coins in anyones [sic] display case”
But according to Sperber, “we need cool and better CAC stickered coins” as if CAC stickered coins are the answer to her problems. It is hard to say whether CAC coins are the answer, but the concept of a coin having eye appeal and being entombed in a plastic slab stickered by someone else does not give the coin good eye appeal. In fact, a high grade coin, with our without the sticker, can be quite ugly. As someone who is not a fan of toned coins, I find many toned coins unattractive, yet I have seen a few with a CAC sticker that I would never buy even if offered as a raw coin.
What Sperber does not tell you is that she and/or Legend Numismatics have a stake in the CAC. That lack of disclosure in her promoting of the CAC is disingenuous, at best. In the future, Sperber should caveat discussion she is involved with about the CAC noting her association.
I understand that the good people at Legend Numismatics have to make a living, but it is time for Laura Sperber to show some respect for the entire numismatic community and not just those who can afford what her company sells. Sperber has demonstrated an interesting perspective on the market that could be respected if she does not come off as a Jersey-tuff person as she has done on other occasions. Even this Brooklyn-born blogger is turned off by that Jersey-tuff attitude. She must start to learn that there is room for everyone in the numismatics market including the tire kickers, looky loos, low-end buyers, and those of us having fun. Until then, if I should be looking for a coin of that caliber I will probably not purchase it from Laura Sperber or Legend Numismatics.
History tells us that the first coinage legislation was devised primarily by Secretary of the Treasury Alexander Hamilton with Secretary of State Thomas Jefferson. These fathers of the United States understood that the new, struggling nation needed its own monetary system that had to be accepted by the public. The eventual law became the foundation of our monetary system.
When Hamilton decided a decimal coinage system was best, he was looking at how the people were using the Spanish Milled Dollar (8 reales) and cutting it up for minor coinage. The pieces were called “bits.” He also saw the continued circulation of British copper coins. The highest denomination circulated in the colonies was a sixpence since the king used the lower coinage in an attempt to control the populace. These coins were used a decimal fraction of the Milled Dollar. It was a natural progression.
Jefferson and Hamilton proposed new United States coins that would be used along side their British and Spanish counterparts until the country could produce enough coinage to drive the foreign coins out of circulation. Jefferson proposed that the new United States coins be similar in size to the coins in circulation. Thus the bill passed by the first congress included a half-cent as the same size of the half-pence, the one cent as the same size of the one penny, the half-disme was the same size as the threepence, and so on.
Hamilton pursued the minting of the half-cent because he felt that if the cent was the lowest denomination, the prices for common commodities would have to be raised. About the half-cent Hamilton said that to “enable the porrer classes to procure necessaries cheap, is to enable them, with more comfort to themselves, to labor for less; the advantages of which need no comment.” The half-cent was also necessary to replace the half-penny and provide change for the bit, which is one-eighth of a Milled Dollar.
The half-cent survived until the passage of the Coinage Act of 1857 which eliminated the half-cent, approved the minting of the small cent, and demonetize foreign coins circulating in the United States. Since the half-cent was not a popular coin, the economy adjusted and found that half-cent pricing was voluntarily eliminated Also, without the bit being legal tender, there was no longer a need to make half-cent change. Within a short time, a few years by some accounts, both the half-cent and large cent were no longer being circulated.
In the United States, we hold our founding fathers in reverence because of how their work has survived. While these men were not perfect, their wisdom and foresight has survived wars, crime, corruption, economic crises, and terrorism for over 200 years. It is a self-correcting system that was designed to grow with the nation. During this evolution, economic concerns and support for the poor have been paramount in economic policy.
This might have changed on February 29, 2009, when the current Secretary of the Treasury Henry Paulson told Spike O’Dell of WGN in Chicago that the penny should be eliminated saying, “The penny is worth less than any other currency.” Paulson, who can turn a phrase as well as his boss, also shows that he is out of touch with the rest of America when he said, “I walk around with very little cash in my pocket, like everyone else.”
Apparently Paulson, the former chairman of Goldman Sachs, does not venture far from his office at the Department of the Treasury into southeast Washington or into areas of northeast where lesser advantaged people live who do not have a pocket full of credit cards. And with credit issues being at the center of the current economic crises, it is irresponsible for the government’s leading financial manager to pitch pennies for those who have to pinch pennies.
Those who want to end the production of the cent says that cash payments would be rounded. But at whose advantage? When there was an issue with the half-cent, the market adjusted on its own. So when the coin was eliminated in 1857, there was almost no economic impact. However, prices are not rounded, sales taxes are calculated in fractions, and the coin is used many transactions.
The United States has been striking one-cent coins every year since 1793. It is the most common coin, yet has produced some legendary coins like the Large Cent, the 1856 Flying Eagle Cent, 1877 Indian Head Cent, the 1909-S VDB, and the king of all errors the 1955 Doubled Die Obverse.
While the elite like Paulson and Richard Safire never consider the person who driving their limousines, the rest of us worry about the impact on the economy and the injustice its removal from the market would bring. All they consider is that the rising price of zinc and the production process of the United States Mint, it costs 1.6-cents to strike one coin, which allegedly affects the taxpayer.
What they do not tell the public is that the US Mint does not receive any appropriations from the Treasury General Fund. All of the operations of the US Mint (and the Bureau of Engraving and Printing) are funded through the Public Enterprise Fund. The PEF is a special account where the profits from the sales of coins, called seignorage, are deposited. Whether the sale is to collectors, or to the Federal Reserve Bank branches who pay face value for the coins, the difference from the manufacturing process and the purchase is deposited in the PEF. When congress determines the budget for the US Mint, the money used is withdrawn from the PEF. Congress then uses the balance for other purposes.
The Mint and BEP are manufacturers of money that are profit making organizations, and they have a very good profit record—better than any top ranked company. They have become self-sustaining agencies with a financial record better than most other government agencies. Unfortunately, that does not enter the discussion of the detractors.
Another area the detractors discount is the good that can happen from the penny. Remember the Penny Harvest Field that was on display in December at Rockefeller Center in New York City? While the pennies are being counted for the 2007 effort, the 2006 project collected over $643,000 for New York area charities. For a coin that allegedly has little to no purchasing power, that is a lot of money to support good programs.
Many of us who started collecting at a young age would either rummage through our parents’ change or worked cutting grass, delivering newspapers, and other odd jobs where the payment helped fuel that passion. Pennies were easy. We would buy the ubiquitous blue Whitman Folders and try to fill the holes with what we find. It was an inexpensive way to start a collection and have some fun. Today, there are companies that bulk lots from hoards that can be searched to create a nice collection of circulated coins. It is the same principle accounting for the economic changes since I started collecting 38 years ago.
Whether you are a collector, investor, or concerned citizen, I urge you to consider all of the facts. While the Ruppert Murdock-owned Wall Street Journal mentions the near dormant Citizens for Retiring the Penny whose only argument is that pennies cost too much to make, organizations like Americans for Common Cents looks to educate people with carefully constructed and referenced facts.
As a collector and taxpaying citizen of the United States, I believe Paulson and his ilk are wrong and should not be in a position of power with an attitude he has shown. As I type this, he will be in his job no more than the next 319 days!
I will leave you with one last thought: If the cent is obsolete and economically infeasible with little buying power, then why is the Federal Reserve ordering so many for circulation?
Numismatic publications have been writing about the case of Dwight N. Manley versus Donald Kagin. Manley is a sports agent who represents big-name NBA players is also a rare coin collector and investor. Manley is a major benefactor of the ANA. Manley accused Kagin of trying to broker a deal that involved a rare Blake & Company gold assay bar that was recovered from the S. S. Central America that was stolen from Manley’s home. Manley claims that Kagin knew the bar was stolen and failed to help in its recovery. Manley filed the complaint to have Kagin dismissed from the ANA for violating the ANA’s Code of Ethics.
Kagin runs the family’s firm in Tiburon, California. Kagin holds a Ph. D. in numismatics and is a member of the ANA Board of Governors. He asserts that the bar was not reported as stolen and when he was informed that it was stolen, he worked with Manley and the police to have the thief arrested. A public hearing was held on May 29, 2007, at the Long Beach Coin Expo.
The ANA released their findings the next day taking no action against Kagin but suggesting that he consider performing a bit more due diligence on future transactions. The following day, Manley’s attorney said that his client is considering further actions against Kagin.
Of all the evidence presented at the hearing was the one that said the bar was not reported stolen. Kagin claimed that he checked whether the bar was stolen through some sources, but did not find any information. Manley claims that Kagin knew Manley was the anonymous purchaser of the bar at an auction in 2000. He said that he sold many of the bars and has sold the bar in question shortly after its recovery.
So let me get this straight… Manley sold some of the bars, did not report that this bar was stolen, and expected Kagin to know that Manley still owned this bar that was bought six years prior? I do not understand Manley’s logic. Without a report that the bar was stolen, how was Kagin supposed to know?
The numismatic value of the Blake & Company gold assay bar has increased along with the price of gold. If Manley subsequently sold the bar at a higher price than it would have sold earlier, Manley was not what the lawyers call “injured” in this action. Manley probably benefited by the delayed sale.
By Manley and his attorney, Christopher L. Pitet, considering “further action” suggests that Manley does not respect the Code of Ethics that he accuses Kagin of violating. By continuing to pursue actions against Kagin, Manley is attempting to “impair the prestige of the membership therein.” Manley must “base all of [his] dealings on the highest plane of justice, fairness and morality, and to refrain from making false statements as to the condition of a coin or as to any other matter” as prescribed by the ANA bylaws.
I am not defending Kagin, but unless Manley can show that he was injured in any way by Kagin, which the ANA Board of Governors said he was not, then Manley should be thankful that his property was returned and move on. Going further will only injure Manley’s reputation with the ANA membership. Or as we said when I was younger: GET OVER IT!