| Anty Ep |
07-26-2007 02:27 PM |
on sleepers and crackouts
good article from coins magazine
Quote:
The secret to finding �sleepers�
By Mike Thorne
http://www.coinsmagazine.net/Portals.../CM0807E1f.jpgTo hear most coin collectors tell it, the �good-ole-days� were back when they started collecting. It was a time when scarce coins were easy to find in circulation, prices were incredibly low, and bargains abounded at virtually any coin show.
The 1892-S Morgan dollar is an example of a condition rarity. It jumps considerably in price from an AU grade to an MS grade.
Nowadays, of course, the same collectors will tell you that none of the above are true. Prices are �through the roof,� you can�t find anything in circulation, and bargains at coin shows don�t exist.
Obviously, if I agreed with these collectors, then I would have nothing more to write about in this article. Not only would the editor of this magazine think that I had lost my mind, but, as I�m paid by the word for my submissions, the pay for this submission would also be a check that wasn�t
worth cashing.
http://www.coinsmagazine.net/Portals.../CM0807E1b.jpgSo what I�m going to tell you about in this article are �sleepers��coins worth considerably more than you�ll have to pay for them. These are coins that are unrecognized (for what they are) and unappreciated by their present owners. All of these sleepers have one thing in common: They are undergraded in the sense that their grade is less than it should be.
Of course, as you probably realize, countless articles and even books have been written about the opposite problem�overgrading. Overgrading can be defined as assigning a higher grade to a coin than it deserves.
To a certain extent, the growth of the certification services has diminished the problem of overgrading. The major services, in fact, have a tendency to undergrade rather than overgrade, and this can be used to your advantage.
That is, one source of undergraded coins can be found in slabs produced by the major grading services. The secret to finding these sleepers lies in being an expert grader yourself.
In other words, if you tend to accept the grade on a Professional Coin Grading Service holder, for example, as sacrosanct, unimpeachable, the gospel, then you�re not going to be able to find any undergraded sleepers. Note that I don�t mean to be critical of the major grading services: I think they do a wonderful job for the most part. It�s just that they aren�t perfect.
The next time you go to a coin shop or show, look carefully at the certified coins. Concentrate on a series you�ve had a lot of experience with and are pretty sure that you know how to grade. I�m confidant that you�ll find that many of the coins are �right on� and don�t qualify as sleepers.
You might think that a few are overgraded. For example, you might see a coin in a major service�s holder that has an unnatural (cleaned?) appearance, or one that has more crud than you would like to see, or even one with a bit more wear than you would allow for a particular grade.
From my experience, the coins that are sometimes overgraded tend to be key and semi-key coins, coins that are both scarce and pricy. I think that there�s a tendency on the part of many people, including expert graders at the certification services, to stretch the definition of a grade for a scarce coin and give it a higher grade than they would give to a common date in the same condition. For example, I�ve seen certified 1901-S Barber quarters with grades of About Good-3 and Good-4 that I don�t think would have received those grades if they had been 1901s instead. Obviously, overgraded coins are not going to be sleepers.
Finally, I think you�ll find a third group of certified coins, ones that appear to have been harshly undergraded, in other words. Examples might be MS-62 (or -64) Morgan dollars that seem remarkably clean for the grade they�ve received, Very Good-8 (or -10) Barber dimes with all the letters visible (but not sharp) in LIBERTY, or 1932-D Washington quarters with more detail in the eagle�s breast than is required for their assigned grade of Extremely Fine-40.
These are candidates for �crackout� bargains. If you buy one of these coins according to its assigned grade, then you may be able to take it out of its holder (hence the term �crackout�) and resubmit it to the grading service in the hope of receiving a higher grade the next time around.
Of course, in order for something to be worth resubmitting for the possibility of a higher grade, there must be a major jump in value between the grade it now has and the next higher grade. Fortunately, this is often true for key and semi-key coins.
For example, if you find an 1893-S Morgan dollar graded VG-8 by PCGS that you really think qualifies for the grade of Fine-12, there�s enough difference in the coin�s value to make it worth your time and expense to crack it out and resubmit it. The current Coin Dealer Newsletter value of an 1893-S in VG-8 is $3,250; in F-12, it jumps to $4,100, a difference of $850.
This kind of price differential is not the case for some key coins, so don�t waste your time looking for crackout bargains for coins such as the 1909-S V.D.B. Lincoln or 1928 Peace dollar. In both cases, the jumps in value from one grade to the next are small and wouldn�t be worth the expense of resubmission.
A huge price differential is often the case for coins considered condition rarities�common in lower grades and decidedly uncommon in higher grades. Obviously, these would be coins to look for in your search for crackout bargains.
One classic example of a condition rarity is the 1892-S Morgan dollar. A $1,500 coin in About Uncirculated, the 1892-S jumps to $26,000 in MS-60!
It would definitely pay to examine closely any certified AUs. The coin also makes huge value leaps between different levels of uncirculated, so an 1892-S certified as MS-60 or -61, if it looks much better than that, could be worth a lot more money after resubmission.
Another well-known condition rarity is the 1927-S Standing Liberty quarter. This date goes from $750 in EF to $2,075 in AU. Such a leap invites cracking out of high-end EFs.
Crackout experts have also learned to look for coins in �old� PCGS holders. The reason for this is that certified grading has been stricter at some times than at others, and the standards have sometimes changed within a particular service over time. Apparently, coins in the early, smaller PCGS holders are more likely to be undergraded than coins in more recent holders.
Although the use of numbers in grading, and particularly the use of several numbers within a grade, give the appearance of precision, such precision is often more apparent than real. That�s why you�ll sometimes hear that coin grading is more of an art than a science.
I�ll give you just a couple of examples from my experience to illustrate the point. The first involves an 1847 large cent.
I bought this coin raw (uncertified), and the seller graded it gem uncirculated. The coin certainly looked nice to me, so it was a shock when I got it back from an early version of ANACS with a certified grade of AU-55.
Being fairly confidant of my ability to tell the difference between an uncirculated coin and one with circulation, I sent the 1847 back to ANACS with a letter requesting them to tell where I should look on the coin for signs of wear. This time the coin was returned to me with a grade of MS-60!
Now, this large cent, which I still own, by the way, is remarkably clean. There�s no way it could be uncirculated but only receive a grade of MS-60. If it�s uncirculated at all, then it deserves a much higher grade. Thus, I was totally unsurprised when it came back from PCGS with a grade of brown MS-64. It�s got a lot of mint luster around the rim and in the crevices, by the way, and I would call it red-brown, but I�m not going to resubmit it.
My second example involves an 1883-CC Morgan dollar. This was a coin I was lucky enough to purchase from the famous General Services Administration�s sales many years ago. The piece was in the �discard� category of CC dollars that were considered too faulty to be sold for full price at the time. Actually, many of the coins in this category just had toning, and this particular piece is mostly white on the obverse and beautifully toned on the reverse. If anything, the toning enhances its value rather than lowering it.
At any rate, I sent it to an early version of ANACS, back when they assigned separate grades to a coin�s obverse and reverse. It came back with a grade of MS-63/63, which I thought at the time was overly critical.
Many years later Numismatic Guaranty Corp. began to grade GSA dollars without taking them out of their original holders, and I submitted the two GSA dollars I had kept out of the 10 or so I had originally bought. One, of course, was the 1883-CC. The other was an 1881-CC that I had always graded MS-61 or -62.
When I opened the package from NGC, I got a shock: They graded the 1881-CC MS-64. However, that shock was nothing compared to what I experienced when I looked at the 1883-CC. They called it MS-66 Prooflike!
Again, my point here is not to overly criticize the grading services. For the most part, the major services do a good job. It�s just that they�re not perfect, and this lack of perfection can work in your favor in finding sleepers.
Another thing you�ll find as you study the coins certified by the major services is that for certain coins, the certification services are more liberal than many old-time collectors and dealers. For example, many of us who learned to grade by such grading guides as Photograde believe that a Very Fine Buffalo nickel should have a full horn on the buffalo.
If you look at the description of VF-20 in the current version of Photograde, you�ll find, �There will be a full horn but the top may not be well outlined.� In the American Numismatic Association grading guide, you�ll learn that for a VF-20 (typical) Buffalo nickel, �Point of horn is not always visible.�
Obviously, there�s some leeway here, and the grading services will typically certify some dates known to be weakly struck as VF-20 (and even higher) when the buffalo doesn�t have a complete horn. For several years, I�ve been looking for a certified VF (20, 30, or even 35) 1924-S or 1926-S with a full horn. They�re just not to be found.
How can you use this information to your advantage? Well, if you ever have the opportunity to look through an old-time dealer�s stock of raw Buffalo nickels, check to see if he has any 1924-S or 1926-S nickels graded VF that have full horns. If he does, buy them if they�re even halfway reasonable. I can almost guarantee that the major certification services will slab them as VF-35 or EF-40. In the current CDN, the price for a 1926-S goes from $330 in VF-20 to $660 in EF-40. That�s enough of a gap to make an undergraded example worth your while to purchase.
Better yet, look to see if he has any 1924-Ss or 1926-Ss graded F that have close to a full horn. If so, these are likely to come back in VF-20 (or better) slabs from the major grading services. In F-12, a 1924-S is worth $70, whereas a VF-20 fetches $340. Obviously, you could pay a retail F-12 price for an undergraded piece and still make a bundle on regrade.
Another change in grading that might be worth looking for occurs on Barber dimes. In Photograde, the main grading cue is the word �LIBERTY,� and in order for a coin to be VG-8, it needs to have three letters visible. This can be three complete letters or two full letters and two half letters. The ANA guide, on the other hand, specifies �Some letters in LIBERTY are clear.�
It�s possible that some old-time graders, looking for three complete letters in order to grade a Barber dime VG, have some coins in their stock that they have graded G that the grading services will classify VG.
The key will be to look for dimes that have a major difference in value between G and VG. Fortunately, you�ll find this to be the case for most of the keys and semi-keys. For example, the 1895 doubles in value between the two grades, with a G wholesaling for $65 and a VG for $130. The 1896-O jumps from $58 to $115 in the two grades, and the 1901-S goes from $60 to $110.
The same grading cues apply to Barber quarters and halves, and you�ll find major increases in value between G and VG for most of the better dates in Barber quarters but not in Barber halves. In Barber quarters, for example, the 1901-S more than doubles ($4,350 to $8,750).
The bottom line on this article is that if you learn to be an accurate grader, you will find that you can use this ability to find �sleepers.� These are coins that the seller (or a certification service) has undergraded. Good luck in your search.
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