Collecting Gold Coin Slabs

The word "slab" is numismatic slang for a tamper-resistant holder used to hold coins graded by third-party grading services. Third-party coin grading services came into existence to answer a market need in the 1970s and early 1980s. Many investors had become aware of the impressive appreciation of certain coins. Coin values were generally on the rise, and the total population of people suddenly calling themselves coin dealers was on the rise too. Many of these new dealers actively promoted coins as investments. With so many inexperienced customers and dealers entering the market suddenly, it became apparent that there was a dearth of knowledge. While few in the investment market were concerned about whether the academic numismatic knowledge was being passed along, they were very concerned about properly grading the coins. Thus a neutral arbiter was needed: the third-party grading service. These firms examine coins and seal them in small transparent rectangular holders containing that firm's opinion of the grade. The holder does not damage the coin as embedding in Lucite would. The coin is fully removable, but any attempt to remove it will cause the holder to exhibit evidence of tampering, thus preventing anyone from placing a low-grade coin in a holder indicating a higher grade.

There are obvious advantages to having someone without a vested interest in the answer determine the grade of a coin, but there are disadvantages as well. While the criteria applied to coin grading - particularly to the United States and Canadian coins - are fairly clear and objective, no two coins were in exactly the same manner and two individuals will not necessarily evaluate a coin in precisely the same manner. It is quite common to send the same coin to different grading services and get significantly different answers. Sometimes this differs even in resubmitting the same coin to the same grading service. As a result it has become common practice for dealers to review the lots of coins sent into the grading services on their return. Those coins graded too conservatively are usually broken out and resubmitted in hopes of achieving a higher grade. Those receiving grades that the dealer believes to be higher than he would have assigned himself are left in the holders and sold as third-party-graded coins. It is easy to see here that, simply by means of attrition, the populations of third-party-graded coins gradually becomes more and more skewed towards liberally graded examples. This does not mean that third-party coins are miss-graded, because there are always the "middle of the road" grades coming back from the services, which often are left intact. It does mean that no collector (or investor or dealer) should blindly accept the grade printed on a plastic holder as gospel. There is no substitute for study, experience, and examining enough coins to the point where you can make your own judgments.

There is, nevertheless, a market for "sight unseen" coins encapsulated in slabs. The values of such coins are determined by what the market perceives as the relative accuracy of the grading service in whose capsule the coin sits. The Coin Dealer Newsletter (or "Greysheet") rates the relative merits of these grading services on a weekly basis. While most buyers do not pursue the sight-unseen
market, this quantifiable information is useful in determining which grading service to select for coins you are about to either buy or sell.

As reflected in the market, some grading services are statistically more liberal at applying grading standards than others.  Both the Coin Dealer News Letter and the Professional Numismatists Guild have attempted to survey how accurate the coin-dealing community regards various services.  One outgrowth of the certified-grading phenomenon is "population reports."  Some services maintain a record of the quantity of specimens in each grade for each coin that passes through their hands.  In theory this will indicate to the potential coin buyer how rarely a coin occurs in certain high grades.   These reports should be viewed with some caution.  While it is officially expected that a dealer submitting a previously graded  coin for re-grading will indicate that it is the same coin, most do not.  Hence one specimen can easily end up on the population reports as two different coins.

 A peculiar reaction to the proliferation of slabs is "slab aversion" by pure collectors who have no interest in investment.  There are numerous instances where collectors have reused to buy needed coins at a grade and price that please them simply because the coins were in slabs.  While there is no logical support for such behavior (obviously anyone who finds the holder odious can throw it out) this is a rear, but observed, fact.