What are Some Coin Dealers Going to do?

May 25, 2009

When I attended the recent 2009 Brisbane ANDA Coin and Banknote Show it became clear to me that some coin dealers are going to be in some serious trouble if or when slabbing Australian coins becomes the de rigeur of the Australian coin market. The reason I say this? Well mainly because the 'old' practices of 'improving' the eye appeal of coins by cleaning them will simply become unacceptable by the market. While I was in Brisbane I saw many, many, coins that were labelled as uncirculated, almost uncirculated, or extremely fine that had clearly been 'improved' by someone in the coins life. Very few dealers had clearly labelled coins as cleaned, and the majority that were labelled as cleaned were so obviously cleaned that it would be sheer folly to NOT admin they were cleaned. Some examples of 'improved' coins that I saw in dealers stock in Brisbane included:

  • Dozens and dozens of Australian pre decimal silver coins with original reverses and strongly wiped obverses.
  • A distinct lack of toned silver coins. A 70 year old worn silver coin SHOULD have some toning or debris accumulation. This is a sign of dipping.
  • Copper coins with even toning but lighter toned circular spots on them. When examining the lighter toned spots there was a tiny much brighter spot at the center. This is usually sign of a verdigris spot being removed with some sort of solvent such as olive oil and then using a toothpick.
  • Copper coins with odd accumulations of debris around the legends and nowhere else but still graded as uncirculated. These coins just look wrong, and are perhaps a sign of dirty uncirculated copper being treated with an old time solvent like blue ribbon, but not treated for long enough.
  • Lots of silver coins that may have been labelled with higher grades but showed cloudy fields, breaks in the lustre, and sometimes still even accumulations of PVC green slime. These coins had clearly been stored directly in PVC album pages or in 2x2's in PVC album pages and had been damaged.

All of this was extremely dis-heartening. Even more dis-heartening was one dealer who was trying to sell a possibly cleaned $1000 coin and when the cleaning was pointed out he went on to say that cleaning to improve eye appeal wouldn't effect the value of the coin. He went on to mention that one of Australia's leading coin dealers and grading expert believed that some cleaning was perfectly acceptable. Now having bought a couple of cleaned coins from the expert in question and having lost more than 50% of their value when selling them I vigorously disagreed with the idea that cleaning wouldn't effect the value!. Needless to say the $1000 coin in question was not purchased.

I suppose what I am getting at here is that if slabbing does become the accepted method of collectors purchasing their coins then some dealers are going to be in some serious trouble. Their stock will be rendered essentially worthless, cleaned 'uncirculated' QE2 florins that they want $30-40 for will be worth $10 or less. 'Improved' gem graded pennies QE2 pennies that they want $200 for will be worth $20. I think you're seeing this sort of phenomenon on Ebay right now. 'Uncirculated' 1960's florins from non reputable dealers are gettting 1/3 to 1/2 the price of PCGS slabbed material. Note that I'm only talking about low dollar material here, I cringe to think of gem graded coins worth thousands that have been tinkered with, it will simply become harder and harder for dealers to shift these coins. And as more and more PCGS and NGC graded coins of the same type enter the market the raw coins will just get harder to sell. Prices for raw coins will need to drop accordingly.

This situation will only become worse as newer younger collectors enter the hobby who are less set in their ways and looking to establish relationships with dealers, slabs are an easier way for a collector to enter the hobby with some certainty. Older dealers used to the old 'tricks' can build a fort and fight against it, but in the long term this going to be futile. Time and ideas move on. I can tell you now that while I am no slabbing evangelist there are certain Australian coin dealers I will not buy unslabbed coins from again. And if I have taken that standpoint then I can only assume that other collectors have done the same. Dealers had better prepare for a change or one day they'll wake up and find that a lot of their stock is worth 50%, or 40%, or even 10% of what it was just a few months before.

Posted by mnemtsas at May 25, 2009 9:55 AM
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