Coin grading: Why CAC matters in todays era of slabbed coins
By Douglas LePre, Senior Portfolio Manager at Blanchard and Company, Inc.
Over the last 30 years, the coin market has changed dramatically. Initially this market was primarily for collectors who built sets as a hobby there were no grading services and very few auctions where coins sold for six figures, let alone seven. Its truly impressive to see how this market has matured.
One of the more recent additions to the market has been Certified Acceptance Corporation, or CAC. This firm was established in late 2007 by John Albanese, who also founded the Numismatic Guarantee Corporation (NGC) in 1987. The reason I refer to CAC as a recent addition even though it is nearly nine years old is that only in the last three or four years has CACs effect on the market really become apparent.
The two primary grading services, Professional Coin Grading Service (PCGS) and NGC, had not entered the market until the late 1980s, and prior to their existence it was far harder to accurately determine a coins grade or value because grading is a subjective science one dealers MS64 could be another dealers MS63, which could have easily been another dealers MS65.
Oddly enough, prior to the grading services, all of these varying dealers opinions would have had a legitimate leg to stand on because they would each have diagnostics that led them to their conclusion. Its for this very reason that the grading services helped to create a stable market environment for both buyers and sellers.
PCGS and NGC have done for the coin market what PayPal has done for secure online purchases. The grading services have created nonpartisan intermediaries that dont have any monetary interest outside of their service fees, therefore creating a completely objective environment in which coins can be graded.
In their early days, the grading services were very conservative in their grading practices, which makes sense as they were new to the industry and had to be extremely careful as they built their reputations and proved their value to a skeptical market.
Over time, grading standards have matured and established an equilibrium in the current day marketplace, but as most collectors know, there are really pretty MS64 Morgan Dollars and there are unattractive looking MS64s as well. This is where CAC has found its place in todays market as an asset to coin enthusiasts and the industry as a whole.
CAC has created a means of earmarking coins that are of superior quality by using a holographic sticker bearing its initials. Like the grading services, CAC also keeps an updated population report of the coins it has certified as well as offering a means of verification by using the unique data located on every coin graded by either PCGS or NGC. CAC, unlike the grading services, has a system in place that prevents the same coin from being submitted repeatedly with the hope of a recognition of premium quality. Once a coin has been submitted to CAC and doesnt meet their standards, it is earmarked in their system and turned away should it be resubmitted.
When first entering the numismatic market, there were many that doubted the need for such a service, but the market has spoken and proven the naysayers wrong. Today, CAC is considered another layer of pedigree that collectors and investors pursue and prefer to own.
CAC coins generally carry a premium over their non-CAC counterparts, but in the long run CAC coins tend to appreciate better and have a higher liquidation price in the marketplace.
Another noteworthy fact is that CAC adds an additional layer of rarity to already rare coins. For instance, if a coins total graded population is 100 coins, one example represents 1 percent of the entire market. However, if CAC has only earmarked ten of those coins and a collector owns a CAC example, then that one coin represents 10 percent of the superior quality market.
I think you will agree that with the trend in this market having turned toward quality over quantity, CAC can only add value and peace of mind to your numismatic purchases and in the long run make your coins more desirable!