HOW COINS ARE RUINED

HOW COINS ARE RUINED

By SCOTT A. TRAVERS

COPYRIGHT © 1994, 2003 BY SCOTT A. TRAVERS
ALL RIGHTS RESERVED.

First published: June 1994

Some people acquire rare coins primarily for pleasure,
others primarily for profit. Some regard themselves first and
foremost as collectors, others first and foremost as
investors.

However you view yourself and your coins, you’ll never
achieve your objectives unless you take care of those coins
— for protection and preservation are the common allies of
collectors and investors alike, and deterioration and damage
are the common enemies.

In 1985, a collector client came to me with a group of
coins that once had been — and still should have been —
truly incredible. The group contained a Liberty Seated half
dollar with spectacular cameo contrast and beautiful toning
… several highly desirable and scarce-date Indian cents,
including an 1864-L, an 1877 and a 1908-S … and a high-
grade, scarce-date Barber dime.

All of the coins were well preserved — or at least the
client thought they were, since all had been stored in nice,
soft vinyl flips. The trouble was, those flips were made of
PVC — polyvinyl chloride — and the coins had all corroded
while in storage.

The moral of the story is that a coin holder costing
just a couple of cents can easily ruin coins costing many
thousands of dollars.

Coin storage problems are a matter of utmost concern.
Whether you buy coins to hold for long-term gain or to sell
in a nearer term when the time is opportune, you stand to
lose a great deal of money if those coins deteriorate while
in your possession.

The preservation risk is a clear one. If you buy a coin
for $1,000 and drop it on the way home and the coin gets a
scratch on it, that $1,000 coin can plummet in value to $100
— even if you got good value in the first place — because
of the loss of condition.

Many collectors and investors have experienced similar
losses in the value of their coins — not because they
dropped them, but because they stored them in unsafe holders
or unsafe environments. Yet, in many instances, they haven’t
sought or received advice on how to avoid recurrences.
Clearly, there is a lack of appreciation for the seriousness
of the problems and a lack of education on how to combat
them.

Coin preservation is a never-ending struggle. Coins
begin to deteriorate the second they are produced. Every coin
you see — even the highest-grade mint-state coin — is in an
intermediate stage between having been completely brilliant
and turning completely black.

Coins are affected by a multiplicity of variables. Bern
Nagengast, a well-known authority on coin preservation who is
the principal of E&T Cointainer Company in Sidney, Ohio, says
the rate of a coin’s deterioration depends primarily on the
metal of which it is made, the atmosphere, the contaminants
on the coin’s surface and the handling of the coin.

As the owner of a given coin, you can exercise control
over a good number of these factors and thereby slow down —
and perhaps all but stop — the deterioration of your coins
and keep them in the same level of preservation over the
years. You owe it to future generations of collectors to do
so — to maintain your coins in the same level of
preservation when you store them. And if moral and
philosophical considerations aren’t persuasive enough, you
owe it to yourself–because if you don’t, you stand to lose a
whole lot of money.

Let’s consider the most important factors affecting a
coin’s long-term life.

The atmosphere surrounding a coin certainly can have a
significant effect on how well, or how poorly, that coin
holds up.

According to Bern Nagengast, normal pollutants found in
the air can cause serious long-term problems by combining
with oxygen to damage a coin’s surface. Artificial gases
produced while a coin is housed in a plastic holder, coming
from the plastic itself, also can cause major damage.

The atmosphere contains moisture and dust, and both are
dangerous to a coin, for both carry oxygen into intimate
contact with the surface of that coin.

Since we don’t have much control over the air around us,
the best way to protect a coin from the atmosphere is to
place it in a container that’s as airtight and inert as
possible. That way, impurities in the air will be kept away
and, at the same time, the container itself won’t contaminate
the coin.

The problem is, no coin holder yet devised is absolutely
airtight. Even coins that have been encapsulated in sonically
sealed, tamper-resistant holders by the major grading
services are not 100 percent impervious. These holders are
somewhat airtight, and the plastic of which they’re made is
chemically inert — but they’re not completely airtight, and
air does come in contact with the coins inside, though
admittedly at a greatly inhibited rate.

This is not to minimize the importance of safe and
effective holders. On the contrary, they can play an
invaluable role in safeguarding your coins.

Susan Maltby, a well-known preservation expert from
Toronto, recommends holders made of either Mylar,
polyethylene or polypropylene. All three are tough, stable
compounds — and unlike PVC, they won’t break down readily
into their chemical components.

As for PVC, Sue Maltby has a three-word recommendation:
“No, no, no!”

PVC “flips” gained wide popularity during the coin
market’s boom years of the mid- and late 1970s because they
are exceptionally clear and flexible. This seemed to make
them an ideal way to store and display rare coins. In time,
it became apparent that these relatively minor conveniences
came at a very high cost — for when heat and light act upon
PVC, it breaks down chemically and hydrochloric acid is
released. This, in turn, can cause chemical damage to the
surface of the coins that the holders are supposed to be
protecting.

Often, plasticizers are used to enhance the chemical
properties of PVC holders, and these can ooze out and form an
oily film upon the coins, greasing the skids for still
further damage.

The perils of PVC were publicized extensively in the
early 1980s, and since then there has been a noticeable
decline in the use of such holders. Obviously, though, not
everyone has gotten the message: Recently, the Numismatic
Guaranty Corporation of America (NGC) issued a press release
reporting that it has received a substantial number of coins
with PVC damage.

Those coins were submitted to NGC by dealers, collectors
and investors seeking to have them certified and encapsulated
by the company, which is one of the nation’s leading coin-
grading services. Instead, they got their coins back
uncertified, since NGC and other grading services make it a
policy not to grade damaged coins.

Mark Salzberg, NGC’s president, suggests that many of
the damaged coins now entering the marketplace may have been
set aside years ago, before the risks of PVC were fully
understood.

“Collectors and investors should check any coins they
have put away — in safe deposit boxes, for example — to
make sure the holders are chemically inert and the coins have
not been damaged while in storage,” Salzberg said.

Those who suspect that their coins may have been exposed
to PVC should remove them from their holders immediately, he
said, and take or mail them to a dealer familiar with how to
neutralize the chemical and, if possible, remedy any damage.

“We’re alerting NGC-authorized dealers to the problem
and advising them what can be done to deal with it,” he said.

Of course, PVC isn’t the only source of potential damage
to your rare coins. Other caustic chemicals, such as
compounds containing sulfur, can harm them, too. Even you
yourself could be the source of damage: If you chanced to
touch a coin with a perspiration-soaked thumb, for example,
that coin could end up with a thumbprint permanently etched
in its surface.

This, by the way, is another illustration of why
“slabbing” won’t necessarily guarantee the permanent safety
of your coins. If your sweat-soaked thumb came in contact
with a coin and the coin was then certified and encapsulated,
the chemical damage caused by that contact could continue to
develop even within the sonic seal of the “slab.” It might
take longer for the etching of that thumbprint to appear, but
eventually it would rear its ugly whorls.

Frequently, coins carry the seeds of their own
destruction — without any help from the atmosphere or other
external factors.

Bern Nagengast and Susan Maltby share the view that
however pristine they may look, coins are essentially dirty.
During production, the metal used in coins is rolled,
punched, annealed, die-struck and handled by various
mechanical devices. Even proof coins are contaminated with
metallic particles, and even the most meticulously preserved
business-strike coins suffer from a multiplicity of
contaminants: oil and grease … rag dust … bag dust — you
name it, they’ve been exposed to it.

After the coins leave the Mint, they’re further
contaminated by counting machines and handling. Even when you
simply hold a coin, you’re contaminating it — and sometimes,
the contamination can be devastating. If you eat a pastrami
sandwich over your proof Trade dollar, you’re contaminating
it. If you have dandruff, you can contaminate it. If you eat
chicken wings and then touch a coin, you can permanently ruin
its level of preservation. If you talk over a coin, the
saliva from your mouth can land on the coin and turn that
area black — and then actually penetrate the surface of the
coin.

How you hold a coin can be important, too. If you don’t
hold it properly by its edges and the mishandling causes
abrasions, you can ruin the coin. Likewise, a coin can be
damaged by coming into contact with other coins or rubbing
against some other foreign substance — even a velvet cloth.

Another crucial aspect of coin preservation is coins’
metallic makeup. Some coins are more prone than others to
chemical and environmental damage; some, by contrast, are
more resistant.

Gold retains its mint luster almost indefinitely —
although, as Sue Maltby notes, that depends on how pure the
gold is. Some gold coins contain copper — and in such cases,
the copper might cause them to break out in spots.

Silver is quite resistant to corrosion, but it’s highly
susceptible to tarnish, especially in the presence of sulfur
compounds and nitrates. And Bern Nagengast points out that
sulfur and nitrate compounds are frequent components of air
pollution today, so these are real concerns.

Copper coins are especially susceptible to damage from
airborne particulate matter, and can break out in spots
virtually without notice. For this reason, you should take
special pains not to store copper coins in a moist
environment.

According to Susan Maltby, vulnerable metal coins will
start to corrode when the relative humidity in the
surrounding air rises above 35 percent. Obviously, then, the
risk of corrosion is higher in a damp, humid place such as
Florida than it is in a drier climate — the kind found in
Arizona, for example.

To combat this risk, you need to create what Sue Maltby
calls a proper “micro-climate” — a neutral, acid-free
climate — for your coins.

One way to accomplish this is to treat the air
surrounding the coins — the air in your safe-deposit box,
for example — with a vapor-phase inhibitor. This is a
substance that changes the molecular composition of the air
to retard the process of tarnishing.

Sue Maltby reports that museums have used such products
for many years. She cautions, however, that vapor-phase
inhibitors tend to be specific for certain metals; in other
words, a “VPI” meant for use with silver might be of little
value in retarding damage to gold or copper coins.

Silica gel also can be beneficial, she reports. If
you’ve purchased a new camera or radio lately, you’ve
probably noticed a small packet of silica gel in the box.
Silica gel and silica are “very handy for maintaining a dry
environment,” Maltby says. Basically, they serve as sponges,
drawing all the moisture out of the air.

Sue Maltby also recommends dipping your coins in a
neutral solution, such as alcohol, before storing them. For
his part, Bern Nagengast advises that you treat them with an
evaporative freon solution such as trichlorotrifluoroethane.
This protects the surfaces of your coins from environmental
damage, yet is harmless itself to the coins.

Obviously, proper preservation is a lot more complex
than simply sticking your coins in plastic holders, tossing
those holders in your safe-deposit box, then walking away.

As with any other aspect of coin collecting, though …
or any other aspect of life in general … the more you put
in, the more you get out.

And if you don’t expend enough time and effort
protecting and preserving your coins, what you get out of
your safe-deposit box may prove to be a whole lot less than
what you put in.

[Note: Since this article was first published, new production
of trichlorotrifluoroethane, a highly evaporative freon, was
banned because of its destructive effect on the earth’s protective
ozone layer. And a superb new product designed to maintain and
protect coins, Intercept Shield, was introduced by John Albanese.]

THE 10 GREATEST MYTHS OF ‘SLABBED’ COINS

by Scott A. Travers

1869-S_50c_ms67_eliasberg “Independent third-party certification and encapsulation.” It’s quite a mouthful to say, and it’s every bit as important as it sounds.

Simply stated, “slabbing” has revolutionized the rare coin market, fundamentally changing the way people buy and sell coins.

Since its introduction in 1986 by the Professional Coin Grading Service (PCGS), slabbing–the encapsulation of coins in sonically sealed, hard plastic holders with tamper-evident holograms–has greatly diminished the grading controversy that plagued the market prior to that time. It also has eased the crisis of confidence that up to then was spreading insidiously through the marketplace. Today, there is widespread acceptance of the grades assigned to rare coins by PCGS and the Numismatic Guaranty Corporation of America (NGC). But while the Slab Revolution has been a tremendous blessing, it also has given rise to a number of misconceptions–some of them downright myths–among the coin- buying public. Some of these have even been perpetrated, or perpetuated, by members of the numismatic press–the very journalists whose knowledge, integrity and independence serve as security blankets for their readers. Some of these misconceptions are fairly obvious; others are much more subtle. But either way, a myth is as good as a mile.

Here, then, is my list of the 10 greatest myths about slabbing:

MYTH NO. 1: You can’t get ripped off when you buy a certified coin.
This is absolutely not the case: You can get a terrible deal on any kind of coin if you choose the wrong dealer. Certified coins offer important safeguards. First and foremost, they carry grades assigned to them by impartial experts–informed, independent assessments regarding their level of preservation–and these provide protection against overgrading by unscrupulous sellers. It’s up to the consumer to correlate this grade with a reliable price guide stating how much each coin is worth in the designated level of preservation.

In one recent case some years back, a coin dealership grossly overcharged customers for coins which had been certified by major grading services. The grading itself was fine, and many of the coins were extremely rare and highly desirable. The problem: The dealer priced the coins at multiples of their fair market value. Just because a coin is accurately graded, that doesn’t mean it’s fairly priced. Overpricing also occurred in connection with esoteric coins which have been certified–unusual pattern coins, for example. Often, these coins fall into gray areas and people have difficulty determining their value. You might have a coin of which only three examples have been independently certified–but that doesn’t necessarily mean that it’s worth a great deal of money.

You need to do your homework–your research–in order to establish the fair market value of any coins you’re interested in buying. Just because a coin has been independently certified doesn’t mean it’s a good value.The first step in protecting yourself as a consumer is to get the coin properly certified, and the second step is to pay a fair price at the correct time in the market cycle.

MYTH NO. 2: All slabbed Mint State-65 coins are created equal. Coin grading is performed on  a spectrum–on a continuum. Some coins are high-end for a given grade, some are low-end. Some coins graded 65 are magnificent–beaming with luster and shimmering in their allure, to the point where they might be just a hair away from meriting a grade of 66. Others are dingy, lackluster, spotted or lightly fingerprinted, and barely qualify as 65s. Still others are somewhere in between.

NGC recognized this early on by using the letters A, B and C internally in the grading room. Shortly after NGC’s founding in 1987, I worked there for three years as a part-time grader. If we looked at a coin that we believed was a high-end 65 (or a high-end coin of any grade, for that matter), we would use the letter
“A.” If we believed it was a low-end coin, we would use the letter “C.” And if we believed it was in between, we’d use no letter at all or the letter “B.” To add to the confusion (or at least to the complexity), there are A-plus and A-minus coins, C-plus and C-minus coins and so forth.

My discussions and explanations in public forums of this coin grading spectrum were relentless over many years. Despite David Hall, founder of PCGS, publicly disagreeing with my explanation, in 2010, he did an about-face and asked me to introduce PCGS’s new system of recognizing that coins are graded on a spectrum. PCGS introduced “plus” grading, and I cheerfully accepted the post of its paid spokesman in the rollout. NGC caught up quickly and joined the “plus” revolution, recognizing with PCGS that not all coins of the same grade are equal–at least not all coins bearing higher grades.

So whether the coin is graded with or without a plus, you should take a close look at any coin you’re thinking of buying, even if it’s housed in a slab. If it looks attractive to you, it might very well be attractive to someone else, as well. But if it looks ugly to you–if it looks as if you had taped it to the bottom of your shoe and tap-danced on it–then pass on the coin and tap-dance to the next deal.

MYTH NO. 3: Population and census reports tell you exactly how many coins are available. For a number of years, PCGS and NGC have been issuing
periodic population and census reports detailing how many
coins of each date, mint and type they have certified in each
of the various grades–and these can be extremely useful to
buyers and sellers. By no means, however, should these be
considered precise reflections of how many different coins
are actually available.
The problem is, these reports contain no consistent corrective
mechanism to account for resubmissions–cases where the same
coin is submitted over and over in hopes that it will receive
a higher grade the second, third, fourth or 50th time around.
A given coin might have been graded dozens of times because
the submitter thought it might be given the next-higher grade
and thus command a much higher price. In such a situation,
the population and census reports can be extremely
misleading.
Take the case of a coin worth $1,000 in Mint State-64
and $10,000 in Mint State-65. If it’s a very high-end MS-64
piece, its owner might crack it out of its holder multiple
times and keep resubmitting it, trying to get it upgraded to
65 and thus increase its market value $9,000. The population
and census reports do not correct for this irregularity.
*****
MYTH NO. 4: Slabbing has established a completely fixed,
totally consistent grading standard.
The grading services may indeed have striven for
completely fixed, totally consistent grading standards. But
the realities of the marketplace–and of the slabbing
business–have at the very least created the perception that
the standards have not remained fixed.
The Rosen Numismatic Advisory, an award-winning
newsletter published by market analyst Maurice Rosen,
conducts a “crystal ball” survey each year in which leading
professionals in the coin industry express their views on the
market. In the 1994 survey, virtually every participant
stated that since the mid- to late 1980s, grading standards
have loosened at both PCGS and NGC–despite representations
by the companies and their backers that the standards have
been fixed.
These experts could be wrong, of course–but even if
they were, complete precision and total consistency are
impossible in the real world. Almost any dealer who handles
certified coins will tell you that although the services’
standards are reasonably consistent today, they are certainly
not totally consistent–and it’s possible to take a high-end
65 one day, crack it out of its holder, and next day get a
grade of 66.
In the face of falling revenues caused by declining
interest in rare coins, the grading services might very well
be tempted to increase their business by loosening their
grading standards slightly.
*****
MYTH NO. 5: Slabbed coins protect you against volatility
and make better investments than unslabbed coins.
This statement is so fallacious that PCGS
warns consumers that this is NOT the case. In its
literature, it places the following
statement: “Certification by PCGS does not guarantee
protection against the normal risks associated with
potentially volatile markets. The degree of liquidity of
PCGS-certified coins will vary according to general market
conditions and according to the particular coin involved. For
some coins, there may be no active market at all at certain
points in time.”
If anything, the advent of certification actually has
created more volatility in the marketplace. And limiting your
purchases to certified coins isn’t going to protect you from
this volatility. Let’s say a Mint State-65 Saint-Gaudens
double eagle is worth $1,050 sight-unseen in a slab and
suddenly the sight-unseen price increases to $1,500 and then,
at the snap of a finger, plunges in a day down to $900. The
fact that the coin is certified will enable you to sell it at
its high when it’s $1,500 … or sell it quickly at its low
for $900–but won’t protect you against the market conditions
themselves. Anyone who thinks or says otherwise doesn’t
understand the nature of the marketplace or is
misrepresenting the way the marketplace works.
Buying slabbed coins helps to protect you against two
primary risks: the acquisition risk and the sale risk. The
acquisition risk is the risk that you might overpay when you
buy a coin. With a slabbed coin, the grade is established and
all you have to do is look in a price guide to be sure you’re
not overpaying. The sale risk is the risk that you might be
offered less than a coin is worth when you go to sell it–
that someone might offer you a Mint State-63 price for a Mint
State-65 coin. Again, with a slabbed coin, you know the grade
and thus can determine the value quite readily.
Certification doesn’t necessarily make coins a better
investment, but it does eliminate some of the acquisition
risk when you buy a coin and helps you maximize your return
when you sell that coin.
*****
MYTH NO. 6: A coin can’t deteriorate once it is
encapsulated in a slab.
On the contrary, the deterioration of coins–even when
housed in slabs–is a source of growing concern and
represents a problem that’s likely to occupy us increasingly
over the next several years.
NGC conducted some very intriguing age-acceleration
simulations in which coins that were sonically sealed in
tamper-resistant holders had their age accelerated by
decades. The results proved unsatisfactory, at least in terms
of copper coins: The coins actually deteriorated while they
were in the holders. I have seen a number of copper coins in
PCGS holders which actually broke out in spots while in the
holders.
There’s really no way that a coin can be completely
protected against environmental variables, whether it’s in a
slab or otherwise. We have seen a number of cases where
moisture in the air permeated the holders, as well as other
cases where coins made of highly susceptible and vulnerable
metals such as copper were, in a sense, choking in their
holders–trapped inside with airborne particulate matter
which was causing the coins to deteriorate.
Because copper coins are so susceptible to damage and
deterioration, NGC does not guarantee the grades it assigns
to them, as it does with coins produced in other metals. PCGS
does guarantee the grades of copper coins–but I have seen no
difference in the way these coins deteriorate while
encapsulated, whether the holders came from one service or
the other.
This is a real problem, one I sense we’ll have to
address more urgently over the next several years as coins
that are susceptible grow older in holders and their
deterioration becomes more apparent.
*****
MYTH NO. 7: Slabbed coins can always be liquidated at
Coin Dealer Newsletter prices.
Dream on! The Coin Dealer Newsletter (familiarly known
as the Greysheet) does not determine the marketplace; the
marketplace is supposed to determine the values that are
listed in The Coin Dealer Newsletter–and often, there’s a
great discrepancy.
To cite just one example, the monthly Coin Dealer
Newsletter listings for Mint State-65 Barber half dollars
early this year were, in my opinion, just about double what
they should have been. There were coins listed for $6,000
which my own company, Scott Travers Rare Coin Galleries of
New York, was offering to clients for half that much–$3,000
to $3,500. Many CDN prices are notoriously high. Conversely,
if you have one of these Barber half dollars and you see it
listed for $6,000 in the CDN Monthly Summary, don’t think you
can sell it for $6,000. You might be lucky to get $3,000 for
it. There are many similar examples, but this should suffice.
The Certified Coin Dealer Newsletter (or Bluesheet) is
more accurate, especially for generic, fungible coins–coins
which are available in great quantity and tend to duplicate
each other. The Bluesheet is certainly a better reflection of
market conditions than the Greysheet.
But once you start talking about truly rare coins
costing many thousands of dollars, the publishers of the
Bluesheet and Greysheet have greater difficulty determining
the levels at which these coins actually trade, and have
difficulty confirming transactions. As a consequence, the
price levels listed in these guides become less reliable for
such coins.
Just because a coin has a value of $20,000 or $30,000 in
the Bluesheet or Greysheet, there’s no assurance at all that
you can get that much for it if you sell it. The transaction
reflected in the listing may have occurred many months ago
and the market may have dropped 10 or 15 percent in the
interim.
*****
MYTH NO. 8: Slabbing has attracted billions of dollars
from Wall Street, and the money is here to stay.
The money that entered the coin market from Wall Street
sources, through limited partnerships, amounted to millions
of dollars, not billions. And to those Wall Street sources–
companies such as Merrill Lynch and Kidder Peabody–this was
really an experiment. On Wall Street, where stocks trade at
the rate of $40 million per minute, rare-coin funds totaling
$10 million apiece, or $20 million–or even $50 million–
don’t represent a major outlay.
The experiment proved to be unsuccessful; as a result,
the money left the coin market as quickly as it had arrived.
Given that experience, it’s highly unlikely that new Wall
Street money will be flowing into the coin market anytime
soon–and anyone who says it will return soon is either
misinformed or an outright liar.
*****
MYTH NO. 9: Inexpensive slabbed coins are always worth
at least as much as the fee you pay to get them certified.
This is a myth with special appeal to the unwary. Many
non-knowledgeable investors buying inexpensive coins feel
comfortable paying $40 or $50 apiece for these coins because
that represents such a modest markup over the certification
fee. They assume that since the slabbing fee was $25 and
they’re paying just $15 or $25 more than that, they must be
getting a good deal.
The fact is, coins can and do change hands for less than
the amount of the certification fee. When all is said and
done, you’re buying the coin, not the plastic, and you should
never pay more than the coin itself is worth. Many
inexpensive coins–common-date silver dollars and modern U.S.
coins, for example–are readily available for significantly
less than what it cost to get them certified.
*****
MYTH NO. 10: It’s easy to crack slabbed coins out of
their holders.
In reality, it takes a great deal of time and effort to
remove a coin from a slab–and it takes even more time and
effort, combined with practical experience, to avoid damaging
the coin in the process. These holders are sonically sealed,
and they’re meant to be permanent. Ease of removal wasn’t a
key concern in their design.
Dealers often do crack coins out of slabs in order to
resubmit them in quest of a higher grade–and even they have
trouble on occasion. If you go to a coin show, you’ll
sometimes see dealers trying in vain to remove such coins.
Occasionally, when an inexperienced person does the cracking,
you’ll even see coins fall to the floor as they’re being
removed.
This sort of thing can be traumatic, and I strongly
recommend that if you want some coins cracked out of slabs
and you’re not an expert yourself, you entrust the job to a
professional.
*****
There you have them: 10 basic myths about slabbing.
Do these misconceptions tarnish the achievements of the
Slabbing Revolution or diminish the contributions it has
made?
Not at all.
Third-party certification has been highly beneficial for
numismatics. But, like anything else, it needs to be put in
perspective. It needs to be viewed in a clear, bright light,
not through rose-colored glasses.
The truth–not the myth–is that even under a
searchlight, slabbing still looks very good indeed.

EVALUATING YOUR COLLECTION 10 WAYS TO LOOK AT COINS

EVALUATING YOUR COLLECTION
10 WAYS TO LOOK AT COINS

By SCOTT A. TRAVERS

COPYRIGHT © 1995, 2003 BY SCOTT A. TRAVERS
ALL RIGHTS RESERVED.

Looking at rare coins is one of the great pleasures of
our hobby. Every true collector delights in picking up a rare
and valuable coin–or even a more common coin with some
special characteristic–and studying it carefully and
lovingly.
There’s more than one way to look at a coin, however,
just as there’s invariably more than one side to every story.
And knowledgeable numismatists should–and do–look at a coin
in all these different facets before reaching conclusions
about that coin: whether to buy it, whether to sell it or how
much it is worth, for example.
The physical details are fairly standard. Every informed
collector knows enough to pick up and handle a coin only by
its edge. And I generally recommend that in looking closely
at coins, you use a 5-power or 10-power magnifying glass if
you’re making a general evaluation and a 20-power glass if
you’re zeroing in on some specific feature, such as a mint
mark.
For the most part, however, the different ways of
looking at coins are not so much physical as mental. What
makes these approaches different from one another isn’t how
you look at coins, but WHY–what’s going through your mind
while your eyes are on that coin between your finger and your
thumb.
With all this in mind, here’s my list of the 10 Top Ways
to Look at Rare Coins:

(1) Looking for beauty.
This may very well be the most significant way to look
at a coin, for beauty is really what coin collecting is all
about. In looking for beauty, you might be looking for a
certain type of toning … or a coin that’s extremely well
struck … or you might be looking for a coin which best
displays the artistic genius of the person who designed that
particular coin type.
Collectors who purchase coins for their artistic
significance are buying them for their beauty–and whether
you’re buying a Lincoln cent that grades About Good-3 or a
proof Morgan dollar grading 69 on the 1-through-70 scale, to
you each coin you purchase is beautiful in its own way.

(2) Looking for positive attributes.
In looking at coins they own, many people tend to feel
they’re in a higher grade than they really are. When
something is yours, it always seems better than when it
belongs to somebody else. It’s only natural that when you own
a coin, you’re looking for its positive attributes. And if
you have a coin to sell, it’s always going to seem nicer to
you than if you were trying to buy it from somebody else.
Looking for positive attributes is always a useful
approach, even when you’re buying, rather than selling–for
these are the characteristics that will give you pride of
ownership if you buy it, and truly enhance its value if and
when you later decide to sell it. Magnificent toning … a
needle-sharp strike … blazing mint luster–these are the
kinds of attributes you should look for.
At times, a coin’s positive attributes can blind you to
its flaws, and you need to be on guard against this danger.
Take the good features into full account, but don’t let them
overwhelm you.

(3) Looking for imperfections.
In purchasing coins, it’s only natural to look for
imperfections, because those may lower the price you have to
pay. If you convince the seller that a coin is not as good as
he or she first thought it to be, you might be able to buy it
for considerably less than the price first quoted.
Looking for imperfections is a good policy just on
general principles, aside from the edge in may give you in
your bargaining. After all, if you don’t look for
imperfections when buying a coin, you might not find them–
and then you’ll really get the short end of the bargain.

(4) Looking at both the strengths and the weaknesses.
You need to evaluate each of your coins as impartially
as you can. If a coin has been assigned a high grade, you
need to ascertain just what strengths went into that
determination. Conversely, if the grade is low, you need to
pinpoint the weaknesses that contributed to that rating. You
need to check for eye appeal, mint luster, strike and all the
other characteristics which, when combined, serve as the
determinants of the coin’s grade or level of preservation.

(5) Looking at a coin as if it were a clock.
This is an approach I explain in detail in my book The
Coin Collector’s Survival Manual™ published by
Bonus Books. Essentially, you view the top of the coin as 12
o’clock, then scan the coin in a clockwise direction (or
counterclockwise, if you prefer), tilting and rotating it as
you do so. You do this first with the obverse of the coin,
then repeat the procedure with the reverse.
I liken this technique to proofreading a letter. If you
simply skim a letter, you probably won’t spot too many
mistakes. But if you examine it closely, and in an orderly
way, you’re far more likely to pick up any errors. Similarly,
you may miss important details on a coin if you view it
simply as a whole, without scanning each sector individually
and in a logical sequence.
If you look at enough coins with the coin-and-clock
method, you’ll be able after a while to readily identify
their strengths and weaknesses and expertly determine their
overall grade and value.

(6) Looking for valuable varieties.
One of the most interesting–and potentially rewarding–
ways of looking at coins is to seek odd characteristics that
set certain coins apart from others. Whether you call them
“errors” or “varieties,” these coins hold undeniable
fascination. And, in many cases, that translates into very
substantial premium value.
A case in point is the current national treasure hunt
for 1995 doubled-die Lincoln cents–coins on which the word
LIBERTY and other obverse elements appear to be doubled.
These cents are now trading for well over $100 apiece, so
those who find them in pocket change, laying out just one
cent, are reaping enormous profits. They’re also deriving
tremendous satisfaction from the knowledge that their
investment consisted almost solely of time, rather than
money–and that the discoveries happened because of their own
keen wits and sharp eyes.
There are many worthwhile coins in pocket change and old
accumulations. I recommend that you get a copy of The
Cherrypickers’ Guide to Rare Die Varieties, co-authored by
Bill Fivaz and J.T. Stanton, published by Bowers and Merena
Galleries. This extremely helpful guide and handy reference book
will assist you in identifying and cherrypicking coins that otherwise
might escape your detection.
Often, people spend such coins without realizing their
value. And coin dealers sometimes have them in their
inventory–perhaps even in their “junk boxes”–without being
aware that they’re scarce and valuable oddities. Your
purchase of The Cherrypickers’ Guide will pay for itself
many times over if you’re able to find one of these
varieties.

(7) Looking for upgrades.
Many coin dealers earn their living by going through
boxes of coins which have been certified by the Numismatic
Guaranty Corporation of America (NGC), the Professional Coin
Grading Service (PCGS) or ANACS and picking out coins that
might be good candidates for a higher grade. And you can
improve the grades of your coins, too–as well as the level
of your income–by gaining the expertise to do likewise.
Let’s say you found a coin graded Mint State-64 by NGC
or PCGS which, if resubmitted, might be good enough to
qualify for a grade of 65. In some cases, the difference in
price between a 64 coin and its 65 counterpart is many
hundreds of dollars, even though the difference in grade and
appearance is slight.
Looking for upgrades may not be the No. 1 way to look at
rare coins, but it certainly could end up being the most
profitable way for you, if you’re able to spot the right coin
to upgrade.

(8) Looking for signs of wear.
Third-party grading services such as PCGS, NGC and ANACS
have given collectors and dealers a strong sense of security.
They trust the services’ grading–and, in most cases, that
trust is merited. Unfortunately, though, this also has caused
many hobbyists to let down their guard and relax their former
vigilance in checking each coin closely when they buy it. A
lot of them just don’t bother to look for signs of wear
anymore, as long as a coin has been certified and
encapsulated by one of the leading services. And this is very
unwise.
The fact is, even the experts at the grading services
can–and do–sometimes overlook things as fundamental as
wear. You absolutely can find coins in holders bearing grades
such as MS-61, MS-62–or even higher–and discover, on close
inspection, that those coins have wear or friction on their
very highest points. Even though a grading service says a
coin is mint-state, it may have wear. And, if it does, it
isn’t mint-state, no matter what anybody says.
In looking for strengths and weaknesses on their coins,
people tend to look for obvious things such as flaws or
scratches or signs of coin doctoring. All too often, they
don’t examine the high points for signs of wear. Or, if they
do, they conclude incorrectly that the high points’ lighter
color is just part of the toning. In fact, it may be good,
old-fashioned wear.
Looking for signs of wear, and learning how to recognize
those signs, can be extremely valuable to you, and I
certainly suggest that you make this an integral part of your
coin-evaluation procedure.

(9) Looking for a specific type of toning.
Many collectors like sets of coins that are matched–and
when it comes to coins of the same metallic composition, they
like those coins to have similar toning. For instance, some
collectors like silver coins with concentric-circle toning–
perhaps an ocean-blue periphery which fades into a sunset-
golden center. And when they purchase silver coins, they try
to find coins with that kind of toning.
Matched sets tend to be more aesthetically appealing,
and therefore more valuable, than unmatched sets. They
bespeak a higher level of care on the part of the collector
who put them together. Thus, this would be a good way for
anyone–you included–to look at coins.

(10) Looking for signs of deterioration.
This recommendation is last, but it definitely isn’t
least. Looking for signs of deterioration is very important.
You could put a coin away for two or three years and find,
after taking it out, that its surface has been under chemical
attack–even if that coin is resting (supposedly safely) in
the holder of a leading grading service.
You need to look at your coins on a regular basis to
make sure they haven’t deteriorated–that they’re still in
the same level of preservation as they were when you
purchased them.
Incidentally, if you do find signs of new damage–say, a
greenish area–on a coin, that doesn’t necessarily mean the
coin’s grade has been permanently lowered by two points.
In many cases, it is a good idea to neutralize or degrease such
a coin in either denatured alcohol or E&T Kointainer’s Koinsolv.
Removal of polyvinyl chloride from the surface of the coin can
help maintain the grade and prevent serious loss of value. The
key is to check your coins–look at them closely–on a regular
basis, even if they’re stored in a place that is supposedly secure.

There you have them: the 10 Top Ways to Look at Rare
Coins. Follow these steps on a regular basis, and you’ll find
that your coins are looking better than ever.
Here’s looking at you, kid–and here’s looking at them!

PREMIUM QUALITY EQUALS QUALITY PREMIUMS

PREMIUM QUALITY EQUALS QUALITY PREMIUMS

By SCOTT A. TRAVERS

COPYRIGHT © 1999, 2003 BY SCOTT A. TRAVERS
ALL RIGHTS RESERVED.

Minding your p’s and q’s is a sign of good manners and
common sense.
Minding your PQ’s can be a sign of extremely good
judgment–and uncommon investment sense–when it comes to
rare coins.
“PQ” is shorthand for “premium quality”–and frequently,
it translates into very substantial profits for those who
pursue and obtain it in their rare-coin acquisitions.

SHOWN ABOVE: This Premium Quality, hairline-free 1886 Proof Liberty head
double eagle might well re-grade PR65DCAM or higher. It was hand-picked
and sold by Scott Travers to a collector.

In 1989, when the coin market was experiencing
unparalleled increases on a weekly–and even a daily–basis,
premium-quality (PQ) coins were selling for significantly
more than ordinary pieces. This led some market analysts to
question whether the extra cost was justified, or really
would prove worthwhile with the passage of time.
Those doubts were demolished at two recent auctions
where PQ coins took center stage. They changed hands for
prices far in excess of current market levels for ordinary
coins of the same grades–far more percentagewise, in fact,
than the price differentials at the time they were acquired,
which, in many cases, was at or about the last big market
peak in 1989.
The term “premium quality” was coined by Q. David
Bowers, one of the nation’s best known and most respected
coin dealers for more than 40 years. It describes a coin that
is better–often much better–than typical examples in the
assigned grade for the date and mint.
Some words of explanation are in order.
Coin grading is performed on a spectrum or continuum.
Not every Mint State-65 or Proof-65 coin is equal. Some coins
graded 65 on the 1-to-70 scale are high-end 65s–almost 66s.
Other 65s are low-end 65s–not much better than 64s. And many
other 65s are right in between, making them solid 65s on the
spectrum or continuum.
Some years ago, I served as an occasional grader for the
Numismatic Guaranty Corporation of America (NGC), a leading
coin certification service located in Parsippany, New Jersey.
During the time I was there, we used the letters A, B and C
internally to designate whether a given coin was high-end for
its grade, low-end or right in the middle. These designations
did not appear on the tabs that accompanied the coins when
they were encapsulated (or “slabbed”), but the company did
incorporate them in its computerized records.
A high-end or premium-quality coin was referred to by
the letter “A,” a typical coin of the given grade was labeled
“B” and a low-end coin was said to be “C.”
In the late 1980s, “A” coins–those that almost
qualified for the next-higher grade–commanded impressive
premiums.
Let’s say the going price for a typical Mint State-65
example of a certain coin was $1,000 and the Mint State-66
price was $5,000. A premium-quality Mint State-65 specimen
easily might have sold for $2,000 at the time–possibly even
$3,000. In other words, it might have brought two or three
times as much as an ordinary coin of the same grade.
There was considerable debate at the time as to whether
it was prudent to buy coins for $3,000 or $2,000 or $1,500
when those prices were sharply higher than the figures
reflected in standard price sheets–figures that corresponded
to ordinary coins of that grade.
There were persuasive advocates–and arguments–on both
sides of the issue. For my part, however, I always considered
premium-quality coins well worth the extra cost, and I always
encouraged my clients to seek out PQ coins and pay the
additional money.
Some of those clients were glad they did, for when their
PQ coins crossed the auction block in late 1998 at two sales
held–appropriately enough–by Bowers’ firm, Auction by
Bowers and Merena, they realized exceptional prices.
Among the clients consigning coins to those auctions
were Dr. Craig M. Morgan and Dr. Leonard J. Torok, two
physicians with highly discriminating tastes in rare coins
and a shared commitment to buying only the best.
Another client-consignor, who prefers not to be
identified, assembled what I called the “Time Capsule
Collection” because it consisted of high-grade certified
coins–premium-quality coins–that were encapsulated, for the
most part, in the early days of NGC and the Professional Coin
Grading Service (PCGS), when grading standards at both firms
were unusually strict.
Dr. Torok’s collection was sold at an auction in early
September, while the Morgan and Time Capsule collections both
came under the gavel at the same Bowers and Merena auction in
mid-November.
Consider these examples of the prices that were achieved
by premium-quality coins:
An 1877 Liberty Seated quarter graded MS-65 by NGC,
purchased around 1989 for a relatively modest premium over
the Bluesheet price at the time, brought $3,335–nearly four
times the 1998 Bluesheet price of $950.
A 1912 Barber quarter graded Proof-69 by NGC–a
premium-quality Proof-69, if such an animal exists–realized
almost $50,000, at a time when Proof-69 Barber quarters
generally trade for 18 or 19 thousand dollars.
An 1863 Seated Liberty dollar graded Proof-65 NGC went
for $20,700–more than twice the Bluesheet price of $9,250
for a similar coin without the premium quality.
An 1879 Trade dollar graded Proof-66 by NGC sold for
$25,300–more than three times the Bluesheet price of $7,850.
One of my favorite examples was a different Trade
dollar, an 1875-S graded Mint State-66 by NGC. We put a
reserve of about $10,000 on that coin–or the Bluesheet price
for an MS-66 coin of this type, year, mint and grade with NGC
certification. If that coin were perceived to be full MS-67,
its Bluesheet value would be about $30,000. But it ended up
realizing even more than that: an eye-popping $46,000.
A cornerstone of the books I have written, in particular
The Coin Collector’s Survival Manual™, has always been to
advise people to buy premium-quality coins–coins that on
that grading spectrum or continuum appear to be the next-
higher grade, coins which are absolutely magnificent.
In the revised third edition of The Coin Collector’s
Survival Manual™(Bonus Books Inc., $14.95), I wrote as
follows:
“If you came across a magnificent PCGS or NGC MS-65 in
the 1980s, it would have cost you 20 percent to 40 percent
over published bid levels. But in 1994, when this third
edition is being written, the premium on these coins in the
$500 to $1,000 price range is nominal–in some cases, 20 to
40 dollars. It appears that this premium cost factor
fluctuates with market conditions. Also, a number of premium-
quality coins for which you may have paid the 20-percent to
40-percent premium qualify today for a grading service
upgrade. NGC and PCGS graded very strictly during their early
months of operation.”
I then went on to quote a coin dealer who said the
following:
“MS-65 today does not mean what MS-65 meant five years
ago. And in five more years, it could mean something else
altogether. That is why wise coin buyers do not buy coins as
certified products. They buy coins as raw coins that happen
to be accompanied by certification. With a premium-quality
piece, you have a rare-coin investment. With a generic-
quality piece, you have an investment in a certified product.
Grading services have yet to prove their longevity. Rare coin
investments have decades of strong appreciation behind them.”
PQ coins possess inherent potential for enhanced price
appreciation–potential to rise in value faster and more
sharply than typical coins of their grade level simply
because they are, in and of themselves, better coins.
Beyond that, however, two other factors have been at
work in recent years to give them even greater potential.
Those factors are a perceptible softening of grading
standards and a change in market attitude toward coins that
are toned.
Grading standards today are unquestionably softer than
they were in 1989–so much so that significant numbers of
coins that were certified in 1989 at one grade would qualify
today for a grade one point higher, possibly even two points
higher.
I interviewed John Albanese, the founder of NGC, for the
third edition of The Coin Collector’s Survival Manual™, and
he told me that at the very inception of the third-party
certification services, during their first six months of
operation, grading standards at both PCGS and NGC were too
tight.
I interviewed David Hall, PCGS’s founder and president,
on a radio show I had some years ago, and he conceded that a
small percentage of coins graded 66 and above during PCGS’s
first several years might grade higher today upon
resubmission.
For the most part, the coins that were graded too
conservatively in those early days were premium-quality
coins. So PQ coins dating back to that early period are
getting a double-strength booster rocket today as the overall
marketplace gathers momentum.
Changed attitudes toward toning can be viewed as a price
deterrent to toned PQ coins today–but, on the flip side,
it’s a major plus for untoned PQ coins.
During the early years of the Grading Revolution, coins
with attractive toning were graded somewhat more loosely–and
favorably–by both services than brilliant untoned coins. Put
another way, the brilliant coins were graded more tightly.
Today, the pendulum has swung the other way and toning tends
to be viewed more as a possible problem than as a plus.
If you have (or come across) brilliant PQ coins that
were graded in 1986 and 1987 by NGC and PCGS, in particular
by NGC, you might find it extremely advantageous to remove
them from their holders and resubmit them. Coins of this type
that received grades of 65 and 66 during that period might
very well be regraded today as 67 or even 68.
Some of the coins sold by my clients in the two Bowers
auctions were looked upon by prospective buyers with changing
standards and attitudes in mind. And some of those would-be
buyers calculated in advance that the coins would be regraded
not just one but two levels higher–and they factored this
into their bidding. That anticipation does much to explain
why a coin with a Bluesheet value of $10,000 would instead
realize close to $50,000.
The moral of the story is that premium-quality coins do
pay, as long as you end up selling those coins in an upbeat
market.
In a bull market, grading standards loosen. In boom
times, people’s perceptions of coins and the grades of those
coins are not as strict as they are during bear markets or
business-as-usual markets.
In the rip-roaring bull market now under way, my
clients’ PQ coins brought two times–and in some cases three
times or more–their Bluesheet levels.
It pays to buy the best. And when it comes to PQ coins,
it’s well worth the premium to get the extra quality.

DIFFICULT COINS TO GRADE – A GRADER’S TOUGH TEN

DIFFICULT COINS TO GRADE
– A GRADER’S TOUGH TEN

By SCOTT A. TRAVERS

COPYRIGHT © 1988, 2003 BY SCOTT A. TRAVERS
ALL RIGHTS RESERVED.

Coin grading is a subjective process of evaluation —
but it is a consensus of subjectivity which makes it somewhat
objective.
To an outsider looking in, the grading process at
leading grading services is scientific. Graders examine
submitted coins in a circular, computerized room reminiscent
of the Starship Enterprise. A grader can view a coin under a
halogen lamp or under a stereoscope.
The desired result is a consensus grade. And, for a
grader to enter his grade into the computer in order to be a
part of that consensus, he has to carefully scrutinize every
coin that comes his way. Each and every aspect of a coin’s
grade has to be carefully considered. Strike. Luster. Toning.
Surfaces. Eye appeal.
Some coins have to be scrutinized more carefully than
others. At one grading service I worked at, it’s recognized that
coins are graded on a continuum. There are high 65s, low 65s and
right-in-the-middle 65s. At that service, an internal coding is used to
differentiate among these grades. For example, a high-65
would be referred to as MS-65A; a low-end 65 as 65C; a right-
in-the-middle 65 as 65 (or 65B). Sometimes, my 64A is another
grader’s 65C — or vice versa.
This intense scrutiny of each and every coin submitted
to that service and this service’s striving for accuracy and
consistency have made it clear to graders that at that service, all
coins submitted are treated equally. It’s just that some
coins are more equal than others.
Certain specimens are every grader’s nightmare: coins
that could be either 65C or 64A; incuse-design gold coins
that could be either 63A or 64C (with a price difference
between the two of $5,000); and coins that realized mind-
boggling prices at auction but don’t deserve grades
commensurate with those prices.
The 10 types listed here are among the most difficult
coins to grade.

(1) LINE COINS. When a grading service is popular, its
65-or-better grade (or even 64-or-better grade) is
highly coveted. But in order to maximize his profit, the coin
trader likes to pay a 64 price for a coin and send it in
for encapsulation as a 65. Most traders can’t do this, but
some inner-circle high-volume traders can — and do. Some of
these traders have the finest grading minds of our time. And
they use their minds to find and send “line coins” to be
graded.
Line coins are coins that qualify to be graded, say, MS-
64A or MS-65C. Either grade would be fair, but many traders
have paid a price commensurate with the lower grade and are
hoping to receive the higher grade from the service.
On business strikes, it usually comes down to the
quality of the surfaces; this is what determines whether a
line coin gets the next highest grade — although impaired
luster can reduce the coin’s chance for the next grade.

(2) LAW-BREAKERS. If you were to assign a technical
grade of MS-67/64 (the obverse being a 67; the reverse
being a 64) to a coin, any old-timer would tell you that the
overall grade would have to be MS-64, for conventional wisdom
used to be that a coin couldn’t be assigned an overall grade
that was higher than the lowest grade of any one side.
Wrong. The overall grade might well be MS-65. The
obverse can “carry” a coin. But if it were the other way
around — MS-64/67 — the final grade probably would be MS-
64.
An MS-65/65 coin with some weakness of strike might be
graded MS-64 — or lower — to reflect marketplace
standards. The service I worked at grades in such a way that coins
can be traded sight unseen — without offer-makers even looking at them.
And a weakly struck coin graded MS-65 could restrict the
fluidity of the system.

(3) SUPER COMMON COINS. Some unscrupulous dealers have
been attaching hefty price tags to coins which are
common but have high grades. For example, I saw one dealer
at a show with a 1964 Kennedy half dollar graded Proof-67 by
a leading rading service for which he was
asking $500! The coin is worth a mere fraction of that price.
When someone sends in a common coin worth $4 — and has
paid $20 to get it graded — that modern coin with a 67 or
68 grade is not going to be sold for $5 or even $25; often,
the asking price is going to be in the hundreds!
I resent giving these modern, common coins wonder-coin
grades — even if they are deserving of them.

(4) INCUSE-DESIGN GOLD. Coins with incuse designs are
difficult enough to grade. Gold retains its mint luster
indefinitely, and these gold coins have characteristics that
make it difficult to tell whether or not there is wear on the
high points.
But let’s say you’re looking at a $5 Indian submitted
for grading. You examine it carefully and are certain it has
no wear. In fact, it looks like a 65. You’ve seen many
dealers pay 65 money for coins identical to this one, but you
wouldn’t want it for 65 money. It grades 64A or 65C. You
think the 65 grade is probably fair. Then you think about the
economic consequences: The 64 price is $5,400; the 65 price
is $15,500!

(5) COINS WITH SENSATIONAL EYE APPEAL. If you have a
magnificent proof Barber quarter — one with a cameo
contrast between its watery fields and snow-white devices —
but the coin has a tiny hit on the obverse, can you still
grade it Proof-65? Probably. Personally, I don’t like seeing
the 65 grade assigned to such coins, but it’s the consensus
that rules.
If you have a proof Liberty Seated half dollar with
light hairlines that make it a technical 63A, can phenomenal
toning make it a 64? Yes, as long as the eye appeal isn’t
counted for more than one-quarter of a point.

(6) RARE DATES. If you come across a shimmering 1936
Walking Liberty half dollar in proof (a relatively rare
coin) and it is identical in every respect to 50 1942 Walking
Liberty halves which were just graded Proof-64, does the 64
grade apply to the 1936, too? If the ’36 is a technical 64A,
compensation for the date by one-quarter of a point is
acceptable. Thus, the Proof-65 designation is acceptable.
Compensation for rarity is satisfactory, as long as you
don’t go overboard and upgrade a technical MS-62 coin to MS-
65.

(7) SMALL COINS. Graders spend more time examining
small coins than any other kind. We have to be extremely
careful about looking for imperfections, and even have to
exercise more care in holding these coins. This is not to say
that larger coins don’t get complete consideration; it’s just
that smaller coins require closer scrutiny.
A tiny mark on a three-cent silver piece is weighted
differently from a mark of the same size on a Morgan dollar.
The three-cent silver is tiny itself, and even a tiny mark
can be a considerable detraction.

(8) AUCTION COINS. A public auction serves as an
important symbolic representation of the concept of
consensus grading. If a dozen major players all are willing
to pay the MS-65 price-guide level for a given rarity,
chances are that its marketplace grade is MS-65.
But what happens if that MS-65 looks like an MS-64A?
Personally, I would grade it MS-64, even if I knew what it
brought in the auction. But auction prices realized can and
do have an effect, even if it’s a subconscious one, on the
grader’s judgment.

(9) PROBLEM COINS. Coins with PVC on them or coins with
imperfections or coins that are bent or tampered with —
these are “no-grade” coins.
Sometimes, however, it becomes a problem to determine
whether a coin is, in fact, a no-grade, or whether it simply
should have its grade lowered to reflect the imperfection.
For example, a Morgan dollar which under normal circumstances
would grade MS-64 might be assigned the grade of MS-62 or MS-
63 because of a rather eye-catching ding on its rim.
But a Walking Liberty half dollar which normally would
grade MS-67 but has a deep gouge on the obverse — a gouge
so deep that it nearly travels through to the other side —
would be no-graded.

(10) PERSONAL COINS. Some dealers who have graded at
grading services say they know the grading standards are tight, but
they have no problems with the grades assigned — except the
grades assigned to the coins which they themselves submit
(which they, of course, are not allowed to grade).
It all comes down to the old axiom: If it’s yours, it
appears just a bit nicer than the coin which belongs to
somebody else. But the grading process at the leading services is
designed to maximize the use of idependent, arm’s-length
grading to assure fair and just grading opinions for everyone.

THE 10 MOST IMPORTANT GRADING TIPS

THE 10 MOST IMPORTANT GRADING TIPS

By SCOTT A. TRAVERS

COPYRIGHT © 1994, 2003 BY SCOTT A. TRAVERS
ALL RIGHTS RESERVED.

With the advent of independent third-party
certification, many coin buyers and sellers thought all their
grading worries were over.
No longer would they have to scrutinize each coin they
bought and sold to determine its level of preservation. No
longer would they need to concern themselves with grading
pointers, grading tips, grading advice–these mattered now
only to the experts at the leading certification services.
From now on, all Mint State-65 coins would be created
equal, as long as they got those grades from the Professional
Coin Grading Service (PCGS), the Numismatic Guaranty
Corporation of America (NGC) or ANACS.
In short, buyers and sellers no longer would need to
think for themselves and exercise their own common sense.
This is not entirely true.
Certification services have made–and are continuing to
make–tremendous contributions to standardizing and
stabilizing coin-grading standards. In the process, they have
dramatically reduced the risk that buyers might suffer
significant financial loss because they purchased coins that
were overgraded.
But certification services aren’t infallible. And though
they strive mightily for consistency, they–like the coins
they grade–inevitably fall short of total perfection. Some
coins graded Mint State-65 by PCGS, NGC or ANACS are indeed
better than others; some might even qualify as Mint State-66.
Others, by contrast, might get a lower grade if broken out of
their holders and resubmitted.
Over a period of time, subtle shifts in standards or in
their application can result in the existence of whole groups
of coins that are undergraded or overgraded relative to the
rest of the coins from a given grading service.
For example, in 1994, David Hall, founder and president
of PCGS, admitted on my radio program–a weekly talk show
called One-Hour Coin Expert–that during its early years,
his company was reluctant to assign the grade of Mint State-
or Proof-68. He candidly agreed that a number of the coins
graded Mint State- or Proof-67 by PCGS during that early
period might well receive a grade of 68 if submitted today.
And that could increase their current market value by many
thousands of dollars.
Just because a coin is in a holder and just because that
holder carries a grade assigned by a certification service,
there’s no reason why you–as a buyer or seller–can’t and
shouldn’t resubmit that coin to your own personal grading
service … your own common sense and your own store of
knowledge … and render an expert judgment of your own.
Knowledge is more than power; in the case of rare coins,
it also can mean enormous profit.
With that in mind, here’s my personal list of the top 10
coin-grading tips of all time:

(1) Check the high points for wear.
Even if a grading service certifies a coin as Mint
State-63, that doesn’t mean it won’t come back with a lower
grade–possibly even AU-58–if you resubmit it. A coin should
stand on its own merits; you should buy it for itself and not
for the plastic.
Look at the very highest points of the coin. If they’re
lighter in color than the rest of the coin, or if you see
friction, the coin may not be mint-state; it may be about
uncirculated.
Telltale signs of wear are indicated by the color of the
high points. On coins made of copper, the high points after
friction are dark brown. On coins made of nickel, the high-
point color after friction is dark gray. On coins made of
silver, the color is dull gray. And on coins made of gold,
the high-point color after friction is dull, dark gold.

(2) If it’s ugly, don’t buy it.
Use your common sense. Blotchy toning, obvious scratches
and spots which penetrate the surface of a coin are
unattractive. And if a coin appears unattractive to you, it
probably will appear that way to other people, too.
Therefore, you should stay away from it.
Even coins with very high grades–coins which have been
certified as 67, 68 or 69 by a major certification service–
are subject to personal taste, and you should always rely on
yours. Rare-coin grading is subjective, and so is the beauty
of coins.
Among the few characteristics which is universally
attractive is concentric circle toning. If you observe this
on a coin, you should view it as a highly positive feature.

(3) Examine grade-sensitive areas.
Some flaws are more obvious than others. On Morgan
silver dollars, for example, a scratch on Miss Liberty’s
cheek is immediately apparent because that part of the coin
is so smooth and open. By contrast, a scratch in her hair
wouldn’t be noticed as readily because it would be
camouflaged by the intricate details in that portion of the
design.
High, exposed areas such as Miss Liberty’s cheek are
said to be “grade-sensitive,” and you should be more hesitant
to purchase any coin with an imperfection there–even though
that coin may carry a grade of Mint State-65 or Proof-65 or
above from PCGS or NGC.
If you have a choice between one coin graded Mint State-
66 with a scratch on the cheek and another coin in the same
grade without that scratch on the cheek, always opt for the
latter. Everything else being equal, it’s always best to
purchase coins whose flaws are in non-grade-sensitive areas.
Grade-sensitive areas for all the major U.S. coin series
are identified and illustrated–with color grading maps–in
an excellent book by James L. Halperin called How to Grade
U.S. Coins. To underscore my enthusiasm for this book, I
wrote its introduction.

(4) Look beneath the toning.
This is probably the most important point of all. It’s
also the easiest way to determine whether a coin has
artificial toning.
Toning can cover up a multitude of imperfections–
scratches, hairlines, tooling, thumbing and chemical
alteration, to cite just a few. Many times, coins with
imperfections are artificially retoned to conceal these
flaws. By examining these coins closely under a magnifying
glass, you can detect not only the hidden imperfections but
also the artificial toning.

(5) Examine every coin under a halogen lamp or a high-
intensity pinpoint light source.
When looking beneath the toning of a coin or otherwise
searching for imperfections, it’s essential that you use the
right kind of lighting. I first pointed this out in an award-
winning article published in COINage in 1979. I later
elaborated on this in my best-selling book The Coin
Collector’s Survival ManualTM.
A halogen lamp is especially beneficial when looking at
proof coins. It will help you spot hairline scratches, which
can detract considerably from a proof coin’s overall grade. A
tensor light is adequate for mint-state business-strike
coins.
Ordinary light sources such as floodlamps or bare
filament lights–the kind commonly used in chandeliers–make
coins appear more attractive than they actually are. For that
reason, if you’re looking at coins at an auction-lot viewing
session, you should always make sure there’s a halogen lamp
or a tensor light source nearby.

(6) Resubmit upper-end coins–coins which are high-
quality for the grade–and coins graded 67 by PCGS.
You stand a reasonably good chance of getting a higher
grade if you resubmit such coins–especially if you acquired
them in 1986 and 1987, when the grading services were
extremely tough in assigning grades.
As I mentioned earlier, David Hall has publicly admitted
that a number of PCGS coins graded 67 a few years ago might
well come back today at a higher grade. The difference in
price between a 67 and its 68 counterpart can be tens of
thousands of dollars–so this could represent a $20,000 gift
for you, just for taking the trouble to crack a coin out of
its holder and resubmit it.

(7) “Read” every coin.
This is a point on which I elaborate in the The Coin
Collector’s Survival Manual™. Looking at a coin is similar to
proofreading a letter. And individuals who possess book
knowledge combined with practical experience at buying,
selling and trading coins have learned how to look
at a coin and size up its flaws rather quickly, just as
expert editors have learned how to scan a manuscript for
errors and typographical mistakes.
Often, a coin’s imperfections won’t be noticeable at a
glance, or even after somewhat closer perusal by an unskilled
observer. This may happen, for example, when a coin has one
feature so overwhelmingly attractive that it causes you to
lose sight of everything else. Let’s say you’re shown a
Saint-Gaudens double eagle with blazing golden luster; the
luster may be so intense that it causes you to overlook a
bump or a ding on the rim, which in turn might cause the coin
to be downgraded.
You should learn how to read all the key information on
every coin you handle and properly identify all the
imperfections. Don’t be dazzled by any one feature of a coin,
no matter how attractive it may be, to the point where you
miss important details in the “fine print.”

(8) Look for hairlines.
A proof coin with overwhelmingly beautiful toning can be
powerfully appealing. And, to the naked eye, its surfaces may
appear pristine and original. But even on gorgeous proofs
such as this, and even on coins in very high grades, you may
very well find hairline scratches–and the number of hairline
scratches is a very important element in determining the
grade of a proof coin.
Once again, I suggest that you consult The Coin
Collector’s Survival Manual™. The book contains excellent
photographs illustrating hairlines on a proof coin. These
photos, which noted numismatic researcher and author Kenneth
E. Bressett was kind enough to provide to me, are the best of
their kind I’ve ever seen.
Spotting hairline scratches is easier on brilliant
modern proofs–proof Mercury dimes, for example. It’s
somewhat more difficult on older coins with heavier toning–
say, Liberty Seated half dollars from the 1880s with
concentric-circle toning. On coins such as these, the toning
may cover the scratches.

(9) Beware of the rub.
Checking for wear on the high points of a coin is
relatively easy–and that’s a good thing, since wear, after
all, is the single most crucial factor in determining grade.
Detecting rub on a coin is considerably more difficult, for
rub is far more subtle. It’s also far more hazardous to the
health of that coin.
As the term suggests, a “rub” is a small area on a coin
–possibly no bigger than a thumbprint (and possibly caused
by a thumbprint)–which bears evidence of friction, showing
that the coin has been rubbed. The effect of such a rub can
be devastating. Suppose you had a gem, pristine, magnificent
coin, blazing with luster, and just one time a perspiration-
soaked thumb rubbed ever so slightly across its surface. Even
if the coin otherwise might have been graded 65, 66 or 67,
that rub could knock it all the way down to AU-58.
To identify rub, you need a good, solid tensor or
pinpoint-light source, and you have to tilt and rotate the
coin under that lighting. You then need to envision a pencil-
drawn circle fully formed. If the coin reflects light in a
fully circular pattern, it’s probably mint-state. But if it
reflects light in a generally circular pattern but the
pattern is disturbed in any way, then the coin may have a
rub. Using the same analogy, that pencil-drawn circle would
have just a couple of segments erased. The Coin Collector’s
Survival Manual™ illustrates this with excellent photographs.

(10) Remember that grading standards have changed since
the early 1980s.
A lot of people still own coins which they purchased in
the early 1980s and which were graded at that time by
reputable dealers or by the ANA Certification Service. But
many of these people tend to forget–or never even knew–that
grading standards have tightened since then and become more
consistent.
Even coins purchased from reputable dealers in 1981,
1982 and 1983 may not meet the rigorous, consistent,
impartial standards established in the late 1980s and being
observed today by NGC, PCGS and ANACS.

There you have them: my 10 top coin-grading tips. They
may not make you rich, but they’ll go a long way toward
helping you avoid losing your shirt!

GET CRACKING ON ‘CRACK-OUTS’

BY SCOTT A. TRAVERS

COPYRIGHT © 2006, 2007 BY SCOTT A. TRAVERS
ALL RIGHTS RESERVED.

Safecracking can be highly lucrative for skilled professional burglars. A different kind of “cracking” can be equally as profitable for knowledgeable professional numismatists who understand the finer points of grading rare coins – and unlike the kind involving safes, this one is perfectly legal.
“Crack-out” is a term of art that refers to getting certified coins upgraded by either removing them from their plastic grading-service holders and resubmitting them as uncertified or sending them in while still in their holders under a variety of grading service tiers in anticipation of upgrades.
The “crack-out game” was spawned by the Grading Revolution of the late 1980s, when encapsulation – or “slabbing” – of rare coins first became a force for dealers and collectors to reckon with. We soon discovered that by removing certain coins from their grading-service holders and resubmitting them to the same service or a competitor, we could get them recertified at a higher grade level, increasing their resale value by hundreds, even thousands of dollars. There were – and are – risks, of course, to removing a coin from its holder. It could get a lower grade the second time around, resulting in serious loss instead of gain. Or, horror of horrors, it could get body-bagged and permanently “no graded” as a result of doctoring the grading service did not notice the first time around-and that we didn’t recognize before cracking the coin out for resubmission. But those of us who have mastered the game play it extremely well, and our miscalculations are more than compensated for by upgrades.
The most obvious type of crack-out – and the one that gave the crack-out game its name – is to pry open a grading-service holder, remove the coin inside and resubmit it as a “raw” coin, as if it had never been graded in the first place. My personal experience suggests that this is the best way to maximize many potential upgrades. It isn’t without significant risks, and it also isn’t the only way to play this game.

CROSSOVERS AND REGRADES AT NGC AND PCGS

Another approach is to leave a certified coin in its holder and take advantage of one of the “crossover” or “regrade” programs offered by the major grading services. The Professional Coin Grading Service (PCGS) and the Numismatic Guaranty Corporation of America (NGC) both provide such programs.
NGC and PCGS offer a “crossover” service that lets you send either entity an encapsulated coin graded by another grading service. (Other grading companies offer this as well.)
NGC writes: “Coins will be removed from their holder[s] only if they can be graded at the same or higher than your specified minimum grade[s]. You may not request a higher minimum grade than is on the current holder.”
According to PCGS: “We will grade the [coin] and put [it] in a PCGS holder only if the PCGS grade meets or exceeds the other grading company’s grade (unless specifically instructed differently by you). You cannot specify a higher minimum grade. If the PCGS grade is lower than the other grading company’s grade, we will return the coin to you in the original holder. You will be charged the full grading fee even if your coin does not cross.”
NGC and PCGS also offer a “regrade” service for coins graded by each respective entity that you would like to have regraded at a higher grade, but not risk having downgraded: You may submit NGC coins in their holders to NGC and PCGS coins in their holders to PCGS.
I have heard favorable comments about the crossover and regrade programs. Submitters using these programs report success in getting coins upgraded. It’s essential to choose coins that are candidates for upgrades – meaning either undergraded or premium-quality coins within the original grade level. A coin that ranks near the top of the spectrum for Mint State-64 might well come back as MS-65.
Certain series have idiosyncracies that make them hard to grade. The Indian Head Half Eagle and Quarter Eagle fall under this heading because their incuse (or recessed) designs require an entirely different approach to grading from normal raised designs. Those of us with expertise on grading these two series have a good chance to reap a windfall by taking advantage of inconsistencies by the grading services. After all, these coins pose a major challenge for their graders, too.
Despite the satisfaction some have expressed with crossovers and regrades, both of these programs provide less potential for achieving an upgrade – especially a significant one – than removing a coin from its holder and resubmitting it “raw.” They also entail virtually no risk, and the only downside is the grading fee – typically $100 when done on a walk-through basis at a coin show – and this would be recouped many times over if even one of the “right” coins were upgraded.
In theory, the graders at PCGS and NGC are supposed to disregard the number on a holder – even make an effort not to look at it at all. However, because they can’t see a coin completely through the plastic in the holder, people tend to be gunshy about raising the grade too much – maxing it out, so to speak. Either they’re just not confident about missing a hard-to-see flaw, perhaps on the rim, or they prefer to play it safe and err on the conservative side. Either way, the temptation is great to sneak a peek at the coin’s original grade.
Dealer Steve Contursi says he is “confidently certain” that grading services sneak a peek at the original grades of coins submitted in slabs. Contursi certainly must believe that because he recently returned to PCGS 13,535 of its inserts, representing hundreds of millions of dollars’ worth of high-end coins he cracked out of slabs since 1986. Among the inserts from PCGS coins that Contursi returned were: 42 certified 1879 and 1880 $4 “Stella” pattern Gold pieces with a combined estimated value of over $5 million; 130 Round and Octagonal 1915-S Panama-Pacific International Exposition $50 Gold Commemoratives valued at over $5 million; and 168 High Relief 1907 Saint-Gaudens Double Eagles valued at over $3 million.
The returned inserts were part of a philanthropic promotion for the American Numismatic Association, and PCGS used the opportunity to improve the accuracy of its population reports in the process.

CRACKING COINS OUT OF SLABS

Most of the coins I know of that received substantial upgrades were physically cracked out of their holders before resubmission. In some cases, the same coins have been resubmitted both ways – in and out of their holders – and did much better as crack-outs than as crossovers and regrades. In one case, one of my clients had a truly magnificent 1881-S Morgan Dollar – a coin with beautiful toning – that had been graded MS-64 by NGC in 1987, when grading standards were very strict. The client didn’t want to crack it out and resubmitted it for an upgrade in the holder. It was upgraded to MS65.ÿSubsequently, I cracked it out of the “65” holder and resubmitted it again as a raw coin – and sure enough, it was then upgraded again to MS67.ÿThis helps explain why I favor playing the crack-out game the traditional way – by cracking the plastic.
Several years ago, I learned informally of a passive form of crack-out that also resulted in an upgrade. I had sent a group of coins to PCGS for reholdering because their “slabs” were damaged or scratched, and one of these coins, in a cracked holder, caught the eye of a grader who felt it was undergraded. Even though I never submitted that coin to be upgraded, it came back in a higher-grade holder.

The crack-out game has gotten tougher and it would be a serious mistake to think that you can get a coin upgraded with little or no trouble and make yourself a quick return of several thousand dollars. For one thing, coin “doctoring” is much more prevalent today, so doctored coins – those artificially enhanced to look better than they really are – turn up in coin holders more frequently than in the early days of certified grading. Then, when such coins are removed from their holders and examined more closely, the coins may be not only downgraded but no-graded.
The greatest downside of cracking out a coin today is that you might never be able to get it back into a holder. In the days before doctoring became so widespread, there was really only a one- or two-point downgrade risk. Today you may crack a coin out of a holder in hopes of getting it upgraded and end up never being able to get it graded again at all.
Jim Halperin is one of the most successful dealers in the nation at getting coins upgraded. He and Steve Ivy, his fellow co-chairman of the board at Heritage, together own 24.254% of non-voting NGC stock. (That number is current as of February 15, 2005.) This chart lists samples of Halperin’s favorite upgrade coins. Halperin says in cracking out a coin, he considers the downside as well as the upside.

Upgrade Winners

Downgrade

Target Buy

Target Upgrade

Coin

Service

Grade/Bid

Grade/Bid

Grade/Bid

1923-S $1

NGC/PCGS

MS-63 $55

MS-64 $255

MS-65 $4,500

1924-S $1

NGC/PCGS

MS-63 $450

MS-64 $1,250

MS-65 $7,200

1928-S $1

NGC/PCGS

MS-63 $455

MS-64 $1,190

MS-65 $14,250

1883-S $20

NGC/PCGS

MS-60 $645

MS-62 $1,500

MS-63 $9,500

88 CRACK-OUTS

Maurice Rosen, publisher of the Rosen Numismatic Advisory, agrees that the greatest upgrades come from actually cracking coins out of their holders – especially NGC and PCGS holders from the late 1980s, when standards were tight, resulting in many coins that were seriously undergraded by comparison to most coins graded later.
This spring, Rosen submitted a group of 88 common-date Saint-Gaudens Double Eagles to PCGS for regrading, and achieved remarkable success. More than half the coins were in PCGS holders, while the rest had been graded by NGC. All were cracked out of holders for certified coins graded in the late 1980s, so they not only were graded strictly but also weren’t subject to the same doctoring risk as coins that were graded more recently.
The coins, dated 1924 through 1928, received upgrades averaging 1.52 points. Here’s a brief summary:

Two MS-61 coins ($635) made MS-64 ($855) total increase in Bid: +$440

Two MS-62 coins ($685) made MS-63 ($740) +$110

Fourteen MS-62 coins ($685) made MS-64 ($855) +$2,380

Two MS-62 coins ($685) made MS-65 ($1,230) +$1,090

Two MS-63 coins ($740) remained MS-63 ($740) unchanged

Thirty-six MS-63 coins ($740) made MS-64 ($855) +$4,140

Twenty-six MS-63 coins ($740) made MS-65 ($1,230) +$12,740

Four MS-64 coins ($855) made MS-65 ($1,230) +$1,500

Nothing was downgraded +$22,400

HOW TO CRACK-OUT COINS FROM SLABS

When cracking a coin out of its grading-service holder, always use caution, and wear goggles to protect your eyes. Crack-out practitioners are careful to also protect their fingers. Remember, too, that you can always crack a coin out, but you cannot put it back into a holder once it has been cracked. So be absolutely certain in advance of cracking any coin out of its holder that this is what you want to do.
A heartbreaking mistake can result from cracking an older holder, when you assume the coin is undergraded, only to find that the services will no longer grade that coin because it was doctored in a manner that is recognizable today, but wasn’t back then. So you will have not only lost the advantage of the old holder premium, but you will have a coin that is now ungradable.
An NGC holder comes apart after a solid hit by a flat hammer on each edge. After no more than two twists, the holder should easily separate.
PCGS holders can be opened by using sheet metal nippers-a pliers-type tool with the cutting edge perpendicular to the handle. Cut the holder on the edge across from the coin, and the holder breaks in two. The insert ring with the coin will then slide out.
For removing coins from any type of slab, a bandsaw can be used. The coin is left sandwiched in the holder so you don’t have to handle it. Persons who use this method make a few straight cuts away from the coin. This leaves small squares of plastic on each side of the coin which lift off.
The crack-out game is no sure thing, and playing it requires a high degree of skill, savvy and guts. But while winning may be harder than it used to be, the fruits of victory can be very sweet indeed.
Remember, there’s more than one way to skin a cat or crack a coin!