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Grey Sheet Pricing vs. Market Values A Personal Perspective By Joe Kaminski Kaminski Coin Company Wis. Dells WI
In this perspective, I will explore Grey Sheet pricing and market values and offer a factor framework that I utilize to determine coin values. I feel this is an area at times that can bewilder even the most experienced collector/investor/dealer (“CID”). “How do we determine what monetary value a coin should have?” “Where do we even begin?” To help make this task a little easier, I use a reference framework of factors to determine the value of a given coin. Many different terms come to mind when thinking about a coin’s value. Let’s start out with developing a framework for circulated coins. Factors including, but not limited to: cleaned, whizzed, rim bruised, toned, altered surface(s) tooling, originality, corroded, artificial color are examples that come to mind. The Grey Sheet is an excellent tool and source of information for the CID and perhaps most importantly, a good “starting point” to determine the value of a coin. It is well worth noting that here the pricing structure has just begun.} There are many periodicals in the “industry” that give great and varied reference points to a coin’s “value”. The CID must understand explicitly that just because a coin has a printed value of $65 does not mean all of the coins in that category will trade at $65. Each individual coin has its own unique value depending on many factors. Some coins will indeed trade at the $65 level, some will trade below and some will trade above that level. Next, the question is “What determines the value above or below Grey Sheet levels?” Let’s start with the lower end of the spectrum. Our given example coin has a Grey Sheet value of $65 in VF, but this coin is corroded and pitted. Will that coin trade at the Grey Sheet printed price of $65? Of course it won’t (or at least one would certainly hope it should not). How much under that price depends on the degree the coin is corroded and pitted. This same scenario can relate to any coin that has been altered or damaged in any way. Then, what about cleaning or dipping a coin? Altering the coin from its original state, and depending on the amount of altering, will affect the price of the coin! If we continue to use the same given original coin with no problems, just honest wear, we see the coin trading around $65. Take into consideration original coins by definition have not been altered or tampered with in any way; no rim bruising, tooling (where a metal object has altered the surface of the coin to remove a blemish) or cleaning. The coin is simply in its original state of circulation. Coins may trade above the Grey Sheet level of $65, demanding a premium if it has virtually no contact marks; pristine surfaces; beautiful iridescent rainbow book toning; or any eye appeal that just says “WOW!” Remember: “A coin is only worth what someone is willing to pay!” Periodicals and publications, such as coin magazines, are great starting points for determining prices and well worth the subscriptions, but they are not an ends in and of themselves. Just because a book, newspaper or periodical has a published value of $65 does not mean the coin is worth $65. As I stated earlier, each individual coin has an individual value determined by the factors present or not present in that particular coin. A CID who is knowledgeable in the factors and conditions of a coin will have a reasoned methodology to determine whether that coin will trade at, above or below published levels. I also believe this method of analyzing coins contributes to a better understanding and appreciation for the given coin (besides making th whole “valuing” process a bit more fun). Uncirculated coins can be seen in much the same way. With circulated coins, as well as uncirculated coins, the grading services have done much to “even out the playing fields” for everyone to get a “fair shake”. We will look at the 3 major services; PCGS, NGC and ANACS, when discussing uncirculated coins and whether the given coin will trade at a premium above the periodical’s published values, around the published values or at the discount to the published values. These services do an excellent job at grading and authenticating coins. All of our examples are graded accurately by the respective grading services, but we need to go beyond the number assigned to a specific coin to find out what value the coin may or may not have according to published prices in magazines, newspapers, the Grey Sheet and other periodicals. Each coin has an individual value according to the grade on the slab, but you have to look at the coin to go any further when deciding whether to buy or sell the coin at a premium, at current published market values or a discount. MS64 Morgan Dollars will be used for this example’s “coin”. The coin chosen could be any other denomination or type. These coins have been chosen because they are large and the differences can hopefully be more easily seen with these examples. I will start with coins that bring premiums above published market values and discuss why these coins have a higher monetary value above the published periodical pricing. (See Example Sheet #1A, 1B, 1C at the bottom of this page.) Each one of these examples has a different type of toning. The PCGS coin, example 1A, has vibrant rainbow toning encompassing 1/2 of the obverse. The toning blends from color to color and is evenly dispersed. Coin 1B, graded by NGC, has attractive rainbow toning gradually blending from color to color to encompass the entire reverse of the coin. Coin 1C, graded by ANACS, has beautiful eye appealing natural rainbow toning. All beautiful coins, but “what factors determine a coin is a premium, above Grey Sheet?” The following criteria can be applied to any coin, whether a Morgan Dollar, a Type Coin, or any individuals choice. There has to be a unique characteristic or set of characteristics that this coin possesses that the “average” coin does not possess. So “what needs to be something different or special about a specific coin to command a premium?”! Depending on how different the specific attribute is, or stated another way, the degree of presence or lack of presence of a given factor to that coin, will determine how much premium it will command. Eye appeal, originality, rarity and variety are each key factors when determining the premium of a coin. Let’s explore each in turn. 1) Eye appeal may include vibrant rainbow toning. Depending on the depth of the tone and/or the amount of coverage on the coin, the complexity, etc. these will determine the premium. However, a coin may be toned in a unique pattern or coloration; it may be especially frosty with a unique look. If a coin has the “WOW” factor, it will have a premium. 2) Originality is always a major factor! If a coin is original and has not been cleaned, tampered with or artificially toned, it has a better chance of bringing a premium. 3) Rarity also plays a key factor in determining the premium of a coin. Generally speaking, the key dates of a series will bring a premium if they are original and have eye appeal. 4) Varieties of coins command premiums. Ex. Overton varieties for bust halves, VAM varieties for Morgan Dollars and Sheldon varieties for Large Cents can all bring a premium depending on the rarity value of the coin. R.3 and above generally start to bring the premiums because of the rarity value, but it depends on eye appeal and originality. A vibrant rainbow colored R.1 can trade for a higher premium than an ugly R.4. By now it should be quite obvious that these factors co-mingle towards determining the individual uniqueness of a coin. There are many other considerations for determining premiums on coins that I will discuss at this time, but each contributes an important part. Coins that rarely trade hands will bring premiums due to the Supply and Demand factor (little supply, big demand, the higher the price). Populations, pedigrees and registry sets all play a key roll in determining premiums on certain coins. The grading services have done a tremendous job to help the industry in this area and should be recognized as such. All of this encapsulated in the ebb and flow of a world economy. An additional question is “What determines whether a coin will trade at published values?” Factors that impact coins that trade at Grey Sheet or published periodical prices are; common, large supply, no problems and original. There are many more factors that could be used, but we will focus on these terms and apply these as a group to our example coins. (See example 2A, 2B, 2C at the bottom of this page.) We have 3 common date Morgan Dollars graded by the 3 major services that are accurately graded, original, have good eye appeal with no problems. One of the main focal points of coins like these is the word common. Nothing stands out to give the coins a “WOW” factor, yet, nothing detracts from any of the coins either. They are available in abundant supply and trade daily. These are solid coins for the collectors who may be putting sets together or whom like quantity rather than something rare. For the investor, realize they generally follow bullion values or market swings and will go up and down accordingly. This type of coin is in large supply and is readily available in the market place. Examples of coins that would fit into this category are $5, $10, and $20 Liberty gold pieces in circulated grades up to and including some mint states. $20 Saint Gaudens gold pieces from circulated grades through some mint state grades generally up to MS65, and most Morgan Dollars through the MS66 grades. Finally, “What determines whether a coin will trade at a discount to published values?” Factors that come to mind when thinking about discounts are spots, ugly toning. Dark toning, pin scratches, rim bruises, alterations, cleaning and the list could go on and on. Even at an intuitive level, the factors themselves sound badly for our coins value. Examples 3A, 3B, and 3C are all examples of coins that have spots on them. The coins are original, they are accurately graded and yet they trade at a discounted price. Why? One of the issues that CID’s across the country face is determining a value for an ugly coin. The first thing noticed on a spotted coin are the spots! It does not matter what factors reside in the rest of the coin-- it goes out the door and all that is remembered are the spots. The coin definitely has value, but what value compared to Grey Sheet price? The value depends on the spots, the concentration, where they are located and to what extent they cover the coin, combined with whatever other factor the coin possess’. Then, it is a guess. However, the utilization and application of the factors discussed above can lead to a more reasoned justification for the value. A caution here, do not clean your coins—EVER! Cleaning a coin, will take away much, if not nearly all of the remaining value of the coin even if it has spots. Examples 4A, 4B, and 4C are coins with dark ugly toning and can be looked at in much the same way as coins with spots. The problem is not the originality or the grade of the coins, the problem is the coins. They’re ugly and very tough to resell. These coins have no eye appeal. People will not stop and look in your case because nothing draws them to these types of particular coins. They’re overlooked, no appeal, no drawing power or “WOW” effect. These coins do not have a rarity factor and are common, thus overlooked and bypassed so they sell at a discount to get them out of inventory. (Some CID's do like darker toned coins, we are using these example's as a generality and realize there are exceptions.) Other factors in determining discounts for raw coins that cannot be slabbed because of problems are pin scratches, rim bruising, alterations and cleaning, just to mention a few. As a general rule, any coin that has been altered in any way will not bring a premium, and in most cases, will not trade at Grey Sheet levels. These types of coins are problem coins and the problems will always be there. The coin cannot become original and stand a chance at trading at current periodical prices or even a premium unless something is artificially done to alter it. If a coin has been altered, it is not in its original state and thus should be discounted. Coins that have been cleaned or altered do not bring a premium! This is a statement to remember. An altered coin is altered for a reason, generally to cover up something that someone wants to hide. Average will always be average. It is my hope that CID’s will now have a more workable methodology by which to determine the uniqueness of an individual coin by usage of this factor framework. Each coin has unique factors that give it value or take away from its value. Understanding these factors will help CID’s purchase and sell coins of a known multi-dimensional quality, with concrete reasons to understand each and everyone as the unique piece it is. I hope that I have helped you in understanding some of the reasons coins trade at premiums, market levels, and discounts. If you have any questions please feel free to contact me. Click on pics to enlarge photographs. Premiums Above Market Values Published Market Values 1A.
Discounts Below Market Value "Spotting" Discounts Below Market Value "Dark Ugly Tone" 3A.
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