Given that we are in the midst of a major bull market, wouldn’t it make more sense to introduce CAC under normal market conditions?
While it’s true that many coins have experienced phenomenal gains in the last 5 years, many important segments of the market have not participated. For example: in January 2000, gold traded at $280 per ounce. Recently, though it had risen to over $800 per ounce, during the same period the Grey Sheet bid for an MS 65 1922 $20 Saint fell from $3120 to $1650. Coin collectors and investors had been told that the best way to participate in a rise in the price of gold would be through rare gold coins, as they would increase in value by a greater percentage than gold bullion. This proved to be true with a number of especially rare gold coins, but not for the MS 65 1922 $20 Saint and a multitude of other coins. Clearly something is amiss. CAC can help address this anomaly.
What happened in the market to cause the anomaly between the rise in the price of gold and the decline in the value of MS 65 1922 $20 Saint gold coins?
One of the main reasons for this recent phenomenon has been an increasingly knowledgeable and sophisticated collector base. While the full-time numismatist used to have a big advantage, the collector/investor has narrowed that gap by accessing a huge amount of information in recently published books, as well as articles and information available on the Internet. In fact, there are many collectors who spend more time researching numismatics than rare coin dealers do. Today, the highly informed collector rules.
As sophisticated collectors have continued to cherry-pick the best coins available for each grade, the overall quality of the remaining coins on the market has gradually lowered. In addition, as third-party grading services have certified millions of coins, inevitably, large quantities of low-end and over-graded coins have appeared. CAC believes that low-end and over-graded coins constitute at least 10% of existing certified populations, yet they probably represent 50% of the coins available in today’s marketplace. So it is no surprise that over time, dealers have continued to lower the prices they are willing to pay for these coins. This, in turn, has resulted in the steep decline in the Grey Sheet bid for the MS 65 $20 1922 Saint mentioned above, as well as for numerous other coins. Unfortunately, it seems as if the low-end coin is now wagging the nice-quality dog.
If a coin doesn’t receive a CAC sticker, does this mean CAC believes the coin is over-graded?
Absolutely not. There are many coins that are certified accurately for their grade. Unfortunately, it is an inescapable reality that many are at the lower end of the quality range for the assigned grade. CAC’s rejection of a coin does not necessarily mean that CAC believes the coin has been over-graded. It simply means that there are other coins with CAC stickers that are of higher quality for the grade. CAC will eventually reject tens of thousands of accurately graded coins. Many of these rejected coins will be acceptable to numerous dealers and collectors and will continue to be available in the marketplace. For quality-conscious collectors and dealers, a coin with a CAC sticker will have significant meaning.
How will coins with CAC stickers be priced?
Ultimately, the free market decides the value of coins. It will be influenced by how many coins in a specific grade are considered low quality. For example, an MS 65 1922 $20 Saint with a CAC sticker might have a large bid price premium over market-acceptable non-stickered examples, because perhaps only 20% of those submitted will meet or exceed CAC’s high quality standards. A 1923-D $20 Saint could be a very different story, because there are a fairly large number of nice quality 1923-D Saints in MS 65 holders that should qualify for a CAC sticker. As a result, they will almost certainly trade at a smaller premium over the market-acceptable non-stickered coins.
It is CAC’s goal to recognize and give deserved credit to quality coins. It is our hope and strong belief that this process will minimize the unfair negative effect on quality coins by decoupling them from their lower-end counterparts. One can only wonder what the price of an MS 65 1922 $20 Saint would be today if the CAC stickering process had been in place five years ago.
CAC is currently working on an exchange for certified coins and other numismatic products. We expect that there will be enough activity on the new exchange to justify published CAC Values sometime in 2008.
I noticed that CAC uses the term “premium quality” to describe coins that receive a CAC sticker. How does CAC define premium quality?
For many years, coin dealers and advanced collectors have used the letters A, B, and C among themselves to further describe coins. C indicates low-end for the grade, B indicates solid for the grade, and A indicates high-end. CAC will only award stickers to coins in the A or B category. C coins, although accurately graded, will be returned without a CAC sticker.
Why can’t I use the CAC Verification Search to look up a PCGS or NGC graded coin that has no CAC sticker to find out if it has already been reviewed by CAC?
Many coins that CAC has reviewed, but did not sticker, have been accurately graded by PCGS or NGC. However, CAC stickers only coins that are solid for the grade, often referred to as B quality coins, and those that are considered high-end for the grade, which are often called A quality coins. Those that are accurately graded by PCGS or NGC, but are considered low-end for the grade and often referred to as C quality coins, are not stickered by CAC.
Furthermore, CAC wishes to protect the interest of an owner of a coin that has been reviewed by CAC but did not receive a sticker. Therefore, CAC does not want to compromise the value of such a coin by disclosing a negative review by CAC.
Are the serial numbers of PCGS or NGC coins submitted to CAC for verification recorded? If so, are coins automatically rejected by CAC that have previously been submitted but were not stickered?
The serial numbers of all PCGS and NGC coins that are submitted to CAC are recorded at the time they are entered into the CAC system.
All PCGS or NGC coins that are submitted to CAC are reviewed for CAC verification whether they have previously been submitted to CAC or not. Occasionally a coin that has previously been rejected for CAC verification is reconsidered by CAC and stickered.