Grading coins is essential for collectors and investors alike, as it determines the value and quality of a coin. However, several myths have clouded the practice, leading to misunderstandings that can hinder your success in the numismatic world.
Below, we debunk six common coin grading myths that may be holding you back, and explain the facts behind them to help you make more informed decisions.
6 Coin Grading Myths
1. Myth: Coin Grading Is Always Consistent
One of the most pervasive myths is that grading standards are uniform and unchanging. The reality is that coin grading can be subjective, and there is some variability, even within professional grading services. Several factors affect grading consistency, including:
- Different graders’ opinions: Coin grading relies on expert opinions, but since human judgment is involved, slight differences can occur between graders. A coin graded MS-64 today could receive an MS-65 tomorrow from a different grader.
- Market conditions: The standards for grading tend to loosen or tighten based on market trends, which can impact the value of your coins. Professional Coin Grading Services (PCGS) and Numismatic Guaranty Corporation (NGC) aim for consistent standards but admit that perfection in grading consistency is difficult to achieve.
Fact: Grading is subjective, and while professionals strive for uniformity, slight variations exist, making it important to rely on a variety of expert opinions before finalizing a purchase.
2. Myth: Coin Slabs Offer Complete Protection
Many collectors believe that encapsulating a coin in a slab (sealed holder) ensures it will remain in pristine condition indefinitely. Unfortunately, slabs are not foolproof, especially when it comes to certain types of coins.
- Deterioration of copper coins: Some metals, like copper, are particularly susceptible to environmental factors. Even when encapsulated in a slab, copper coins have been known to deteriorate due to exposure to air and moisture.
- Airborne contaminants: While slabs provide some protection, they are not entirely airtight, meaning that over time, gases and moisture can penetrate and affect the coin’s surface.
Fact: Coins, especially those made of copper, can still deteriorate in slabs. It’s important to store your coins in a controlled environment to reduce exposure to harmful elements.
3. Myth: Census and Population Reports Reflect Total Coin Availability
Population and census reports from grading services such as PCGS and NGC provide valuable insights into the number of coins certified at various grades. However, many collectors mistakenly believe that these reports show exactly how many of each coin are available in the market.
- Resubmissions skew data: Coins can be resubmitted multiple times in hopes of achieving a higher grade, leading to inflated population numbers. For example, a coin graded MS-64 may be resubmitted several times, appearing multiple times in reports.
- Incomplete picture: Population reports do not account for private collections or coins that have been lost, damaged, or removed from circulation, meaning the real number of certain high-grade coins could be much lower.
Fact: Population reports are useful but not definitive. The real availability of a specific coin can vary, especially if resubmissions or market factors are at play.
4. Myth: Higher Grades Are Always Better Investments
A common belief is that coins with higher grades are always the best investment choices. While it’s true that higher-graded coins generally command premium prices, they are not always the wisest investment, depending on various factors.
- Market volatility: High-grade coins are more prone to market fluctuations. For example, a Mint State (MS) 65 coin could see a dramatic price rise during a bull market, only to plummet in value during a market correction.
- Supply and demand: In some cases, a lower-grade coin may be rarer than its high-grade counterpart, meaning it could hold or increase in value more steadily over time.
Fact: Higher grades do not guarantee a better investment. Consider market trends, rarity, and demand when making investment decisions.
5. Myth: Certified Coins Are Completely Risk-Free
Many collectors believe that buying certified, or “slabbed,” coins eliminates all risks associated with collecting. While certification reduces certain risks, it does not make coins risk-free.
- Volatility in the market: Slabbed coins, like all assets, are subject to market volatility. A coin certified as MS-65 today may see its value drop significantly if market interest wanes.
- Overpayment risks: Even certified coins can be overpriced, depending on market conditions and the seller’s pricing strategies. It is essential to conduct your own research and consult price guides before making purchases.
Fact: While certification mitigates some risks, such as authenticity, it does not protect against market fluctuations or guarantee a coin’s future value.
6. Myth: Coin Grading Is a New Practice
Some collectors believe that the practice of grading coins is relatively new. However, coin grading has been around for decades, though it has evolved over time.
- Historical grading: In the 1940s, the Sheldon Scale was developed, providing a more structured approach to coin grading. Over the years, the scale and grading practices have become more sophisticated, leading to the professional systems we use today.
- Third-party grading revolution: The rise of professional grading services like PCGS and NGC in the 1980s transformed the numismatic market, creating a more transparent and standardized grading process.
Fact: Coin grading has a long history, and modern third-party services have greatly improved transparency and consistency in the hobby.
Key Differences Between Grading Myths and Facts
| Myth | Fact |
|---|---|
| Grading is always consistent | Grading can be subjective, with slight variability depending on graders and market trends. |
| Slabs offer complete protection | Slabs are not foolproof; coins, especially copper, can deteriorate even in encapsulation. |
| Population reports reflect availability | Population reports do not account for resubmissions and private collections. |
| Higher grades are always better investments | High-grade coins can be volatile and may not always be the best investment. |
| Certified coins are risk-free | Certification reduces risks but does not eliminate market volatility or overpayment. |
| Coin grading is a new practice | Coin grading has been around for decades and continues to evolve. |
Conclusion
Understanding the realities behind these six common coin grading myths will help you navigate the complex world of coin collecting and investing with greater confidence.
While grading plays a crucial role in determining a coin’s value, it’s important to consider other factors such as market trends, rarity, and long-term storage practices. By debunking these myths, you can make more informed decisions and build a stronger, more valuable collection.
FAQs
1. Can coins deteriorate inside slabs?
Yes, especially copper coins, which can still be affected by environmental factors even when encapsulated.
2. Are higher-grade coins always the best investment?
Not necessarily. High-grade coins are more prone to market fluctuations and may not always be the best long-term investment.
3. Do population reports accurately reflect coin availability?
No, population reports can be misleading due to resubmissions and do not account for privately held coins.
4. Is coin grading consistent across the board?
Grading can be subjective, with slight variations based on graders’ opinions and market conditions.
5. Are certified coins risk-free?
Certification reduces some risks but does not protect against market volatility or guarantee future value.
