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"Slabs are here to stay..."



The below post was written by an anonymous writer on an internet coin board. It has been reproduced here verbatim with the author’s permission.

"Slabs are here to stay..."

These are the words I've seen written with increasing frequency by non-US dealers. So, what does this mean?

Like it or not—and, yes, I am not anti-slab, but I am also quite comfortable with it—some significant element of our industry finds slabbing useful. So I think it behoves me to define some terms now.

"Slabbing" in this context is not merely to put a coin inside a protective plastic case; rather, it means to have a coin graded by a reputable Third Party Grading Service (TPG), such as PCGS or NGC, and then encapsulated it in a tamper-proof, inert holder.

PCGS NGC

PCGS and NGC are the two major third-party coin graders in our industry.

I also used the word "industry". Most of us are hobbyists, but I think a good portion of us recognize that there is more to coins than a mere hobby. In this context, "industry" refers to the infrastructure, the machinery, the commercial and academic side of what we do. Academic societies, trade groups, auction houses, established venerable dealerships, veteran dealers who operate on their own, small part-time dealers and even social media venues with a commercial element—these are all part of our industry.

Group of PCGS coins

A group of PCGS-graded coins. These special holders are known as "slabs".

So, back to what I mean by "slabs are here to stay..." To me, this means that the commercialisation of our beloved hobby is an inexorable force. It means that there is profit in the US habit of micro-grading, where a minute difference at the upper end of the grading scale can make a material difference in value and, thus, profit for someone who is good at the grading arbitrage game.

PCGS certificate

A PCGS certificate of authenticity and grading.

Do I think that every coin will be graded? No. Even in the TPG-dominated US market, this is not the case. Not every coin will benefit from grading—slabbing is not cheap. If it costs $25 to slab a coin, then no one would do so for an average circulated common coin from fifty years ago.

Do I think the non-US markets will be dominated by the TPGs? I have no crystal ball. But I am fairly confident that a super-pristine proof Gothic Crown with beautiful patina will likely end up at a TPG. Or a superb choice Commonwealth Unite with lovely orange-peel toning as well.

So why am I posting this—besides having too much time on my hands from self-isolation? As we encounter more and more desirable (or seemingly desirable) coins in TPG slabs, we can also run into the dark side of this aspect of the industry. For example, a seller can add a "slab tax" to the price of a modestly valued coin. Or, if a coin's true grade is an in-between one, and the TPG got generous that moment and there is a material price difference as a result. (In the US TPG-dominated market, many times a coin has a large price jump between, say, MS64 and MS65—but the coin is not quite a solid 65 so it's a toss up how the TPG will slab the coin. This is a downside to try to fit a continuum of grades into a discrete scale.)

2005 Twenty Cent

A high-quality PCGS image that can be used to verify a purchase.

Or, even worse, if a dealer tries to sell a slabbed coin that is blatantly wrong but not indicated so by the TPG. For example, there is evidence of prior mounting, or repair, or whatever—but the TPG missed it. Or perhaps the slab is counterfeit, or the coin itself is counterfeit. There are warranties, and there are warranties. Not all warranties are the same; in any case, it is unpleasant at a minimum to have to think about warranties.

My final words on this matter for this post: Do not get emotional about slabbing; no one is making you get your coins slabbed, no one is making your keep a slabbed coin in its slab; and no one is making you buy slabbed coins. But if you do find yourself having to deal with this aspect of our industry, do so with a clear head and eyes wide open. And above all, don't let the industry lessen your enjoyment of the hobby.

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