Q. David Bowers
The Commemorative Market
1981-1985
In 1981 a bright star appeared in the firmament of numismatic literature, The Encyclopedia of U.S. Commemorative Silver & Gold Coins, by Anthony Swiatek and Walter H. Breen. The authors distilled a lot of information between the covers of the book, and for the first time a single volume on commemoratives had in-depth discussions of some of the less well-known aspects of the field such as the types of holders and folders in which commemoratives were first distributed, die characteristics of limited-edition Proofs, and telltale features of counterfeits-all included together with a lot of basic information on commemoratives in general. Tens of thousands of copies were sold, and eventually the book went out of print. (With a new appendix by Walter H. Breen, who updated the work with information on commemorative issues of the 1980s, the book was reprinted in 1990.)
The market continued to drift downward in 1981, touching bottom in 1982-1983, continuing until early 1984. (The Coin World Market Index of all MS-65 coins (primarily regular issues, not commemoratives), charted by Keith Zaner, suggests that the very bottom of the market was achieved in January-February 1984.) At the time, certain dealers in the investment sector sought to maintain the appearance of market strength by placing strong "bid" prices on the Teletype trading system, listing what they would pay for MS-65 commemoratives (and other coins). Cash was in short supply, and these same dealers became very "picky" about quality. A coin had to be a "very special" MS-65, or else it was sent back. In one instance a dealer who aggressively placed high "bid" prices for Arkansas half dollars was asked how many coins he had been able to buy at his prices. He replied, "None; I have not found any Arkansas half dollars which meet my standards for MS-65 quality." Over a period of time grading underwent a transition. Dealers continued to be reluctant to honor the "bid" prices listed on Teletype trading circuits (and published in The Coin Dealer Newsletter) unless a particular coin was a truly outstanding example.
The early 1980s saw the first new commemorative issues since the Carver-Washington half dollars had been discontinued in 1954. To observe the 250th anniversary of George Washington's birth, 1982-dated commemorative half dollars were struck at the Denver and San Francisco mints. The distribution program, conducted this time by the United States Mint itself, was a great success, and millions of coins were sold. This set the pace for many other new commemoratives to be issued during the rest of the decade of the 1980s including gold commemoratives first issued in 1984.
Events of 1986
After a while a representative coin bought and sold as MS-65 in the early 1980s became a lower grade. Early in 1986 the ANA Board of Governors declared that a typical coin the ANA Grading Service officially certified as MS-65 earlier was now in 1986 graded MS-63 or lower in some instances. (The ANA Grading Service had been in operation since the late 1970s and while it did not encapsulate coins yet, it provided a grading opinion printed on a certificate. Most collectors and dealers looked to the ANA Grading Service for grading leadership.) Collectors, dealers, museums, and others downgraded their coins accordingly. A 1900 Lafayette silver dollar, 1936 Bridgeport half dollar, 1915-S Panama-Pacific quarter eagle , or just about any Uncirculated coin which would have been bought and sold as MS-65 a few years earlier, was now under the stricter ANA interpretations likely to be MS-60 to MS-63.
In 1986 David Hall and a number of associates founded the Professional Coin Grading Service, which for a fee would render an opinion on a coin, sonically seal it in a plastic holder ("slab"), and imprint its numerical grade on the holder. The new, conservative grading interpretations were used, and many coins certified by PCGS in the range of MS-60 to MS-63 were coins which would have been designated as MS-65 in the marketplace a few years earlier. If anything, PCGS standards seemed in many instances to be even stricter than the newly tightened ANA interpretations. This wrought great changes in the pricing structure of commemoratives (and other coins). The watershed year 1986 signaled the end of the old grading interpretations and the beginning of new, stricter rules all across the board. It was not (and is not) possible to compare an "MS-65" listing printed in a quotation sheet, advertisement, or anywhere else in late 1986 with an "MS-65" listing of a few years earlier. The actual grades are not the same.
The Market From 1987 to Spring 1990
Subsequently, the Numismatic Guaranty Corporation of America, ANACS, l and other encapsulation services were formed, although PCGS retained the lion's share of the business.
PCGS and other services used the ANA Grading System, modified from the Sheldon system, with numbers from 1 to 70 including all numbers from MS-60 to MS-70 in the Uncirculated range. The only information put on a slab was the numerical grade, and other determinants of a coin's value were ignored. These overlooked aspects included quality of strike, appearance of lustre, brilliance or toning, and overall aesthetic appeal. A coin in a slab (or outside of a slab, for that matter) marked "MS-65" could be in that grade from a technical or numerical viewpoint but could be stained, spotted, or otherwise ugly, and worth considerably less than an MS-65 which was sharply struck, was lightly toned in an attractive manner or brilliant, and had superb aesthetic quality.
In recognition of this some sellers designated coins as "low end" for a poor-appearing coin to "high end" or "premium quality" for an outstanding piece, a practice discouraged by the grading services themselves, for they wanted to maintain the fiction that one slabbed MS-65 or other numerically graded coin was absolutely identical in value to another coin bearing the same number. There was (and is) no consistency in the application of these unofficial terms; and, what one seller calls "low end" (usually privately; this designation almost never appears in print), another can call "premium quality." I was told that a major telemarketer of coins informed its employees that any coin could be designated as "premium quality" if that would help sell it!
The advent of slabbed coins made possible a greater ease of trading, for no longer did a coin dealer have to know anything about how to grade; all he had to do was read the number printed on the slab, look at a list of "bid" and "ask" prices, and, presto, he was a "professional numismatist." Mike Gumpel, advertising director for COINage magazine, told of seeing a freshly-created dealer who knew nothing about coins buy and sell $50,000 worth of slabbed coins at a convention, using an electronic screen. Now stockbrokers, financial advisors, and anyone else could be coin dealers and, provided they kept paying their advertising bills, could run large and flashy notices stating that they were the biggest, most important, most highly respected, etc., firms with which to do business. Fresh-faced investors coming into the coin area didn't know the difference, and such exploitative sellers raked in millions of dollars' worth of sales and profits. In the meantime, established professional numismatists were scratching their heads in amazement at what was happening to the traditional marketplace.