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NumisMedia Monthly
December 2016
Are Resubmissions Diluting the Coin Market?
An issue that has been infrequently discussed in the coin industry is the growing population of many coins in specific grades. The practice of resubmitting certified coins for a higher grade is one way the market has been watered down and thus creating uncertainty in values. While upgrades have been an integral part of certification for countless years, it is now reaching the point where many of the coins capable of being upgraded have reached their maximum grade. The true premium quality coins are now being certified with a + designation and/or possibly receive CAC approval; dealers and advanced collectors know these are the coins that are bringing premiums in today's market. But for the rest, the dilution in the coin market is causing values to decrease, especially in this down cycle.
The main point to focus on here is that many buyers are looking for coins that can be resubmitted for the higher grade where the increase in value can be very significant. Of course, not all coins resubmitted are qualifying for the higher grade, but enough are so that the populations of the higher grades are increasing sufficiently to cause the values to drop.
In a very recent sale by Heritage Auctions, at least twenty-five 1926 $2.5 Indian Gold coins were available. The prices realized ranged from $517 to as high as $1,880; however, the two that sold for the higher price also had the + designation. The current FMV for the MS64 coin is $680 and the MS65 is $1,590. Not only did two coins sell above the MS65 FMV, there were two 5 coin lots that averaged $799 per coin, well above the MS64 FMV. However, the buyers are potentially in for a nice profit if any of them upgrade to MS65 upon resubmission, but it would also add another coin or coins to the population; and when this occurs multiple times, the FMV could fall. The current population of the 1926 $2.5 Indian in MS64 is 6,362 coins from PCGS and NGC combined; there are also another 253 coins with the + designation, the MS65 grade has a total of 1,369 coins.
In this current market, we have seen the FMV of the MS65 drop from $2,360 in early 2014 to the current $1,590. If the market continues to struggle, adding coins to the population will force the price to fall even further. Of course, this also presents opportunities for buyers to jump in at these lower levels in anticipation of the next bull market. Keep in mind this did not just happen with the 1926 $2.5 Indian, this has occurred with many of the other dates in this series including the 1925 D, 1927 and 1928.
Over the past year we have seen hundreds of sales for the 1909 S VDB Lincoln Cent in all grades and price ranges. The Red MS64, MS65 and MS66 are all lower today from their 2010 FMV. At current levels the downside is probably minimal since much of the profit taking has already occurred. While there are 1,064 coins certified in MS65 Red with another 22 owning the + designation, it is important to note that the spreads between MS65 and MS66 is substantial; an 'old holder' upper-end coin in MS65 that has the potential of hitting the MS66 grade could bring a profit of $6,530 comparing today's FMV prices. It is also important to note that there are only 249 coins in MS66 Red certified by PCGS and NGC, and another 18 with the + grade. Also there are 16 coins in MS67, and two of these have the CAC sticker. Keep in mind that this is one of the two most important key dates (the other is the 1914 D) of this very popular series. The population reports show only 2,670 coins in all grades of MS64 and above in the Red category. Of these 56 have a + designation and 207 have been approved by CAC.
Another way to look at these prices, especially if you are looking to add any of them to your holdings is how much you have saved from the top of this current market in 2010 by waiting to purchase now. A further study of the FMV shows that the 1909 S VDB Lincoln Cent in Red MS65 has fallen from $6,960 in 2010 to the current $4,720, while the MS66 has dropped from $16,840 to today's $11,250. Also, when prices begin to rise, they tend to move rather swiftly.
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