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Question of the Day: CAC

Originally published on June 9 and 13 2018

Question: I know that CAC indicates "premium for the grade". How important is eye appeal, toning and strike to CAC when they rate coins? Are those two characteristics taken into consideration and if so how much? Actually it's two questions rolled into one with probably one answer. I ask this because there's so many different strike issues with the Liberty Seated issues.

GFRC Response:This is an excellent question for those of us who collect early silver type coins where strike variations are a substantial issue. Collectors of Draped Bust and Capped Bust coinage must have a working knowledge of strike variations in order to properly grade. For Liberty Seated coinage, the issue is not as acute due to improved minting technology that appeared starting 1837. However, strike variations continued to plague certain hub designs, for example, Liberty Seated dimes with the Gobrecht-Hughes With Stars obverse. Liberty Seated quarters struck at the New Orleans mint with the Drapery obverse hub design are also subject to wide striking variations.

The short answer is that CAC validates that approved coins are accurately graded at a minimum. CAC requires that the TPG accurately grade coins inclusive of striking issue. A marginally struck coin with accurate grading and perfectly natural surfaces is a candidate for CAC approval. However, many marginally struck coins also have other post mint issues that hold them back. One cannot look at only one of the three CAC criteria (eye appeal, originality, accurate grading) for assessing whether a coin is a potential candidate for approval. All parameters come into play. I see strike being an issue within the accurate grading determination.

Accurately grading is a key point that many collectors fail to understand when questioning why a perfectly original coin with excellent eye appeal does not receive CAC approval. The issue is that the coin is overgraded in its present holder and does not satisfy the accurately graded requirement. One often sees this issue on recently graded mint state coins where gradeflation is at hand. Perfectly original coins are not receiving approval due to inflated mint state grades. Marks, hairlines and insufficient luster are common issues. For examples, hairlines and surface marks were penalized prior to the 2000ish timeframe. Today's standards are less stringent. I've grown tired with auction lots previews since seeing so many mint states graded coins without CAC approval. One sees too many coins with subtle issues. Hairlines on larger denomination Liberty Seated coinage with assigned MS64 grades are quite common these day. These coins do not warranted CAC approval, again, because of shifting grading standards.

Toning is much more straightforward. Original unmolested silver coins come with similar toning characteristics. Identifying crusty gray, brown and old album bullseye toning on dull silver surfaces, for coins graded between Good and EF, should be easy to master. For coins graded at the AU level, one must learn the characteristics of natural silver luster and thin original natural patina.

Eye appeal is of course, subjective. A dull lifeless silver coin with thick crusty toning offers little eye appeal and probably will not be considered as a premium piece. On the other hand, a wildly rainbow colored coin may have huge eye appeal but the question of originality comes into play. If a coin looks too good to be true, then it was probably enhanced and not worthy of CAC approval.

Remember that premium coins must be premium coins. The perspective of what is premium depends on how many coins are viewed and the venues where premium coins are offered. For those among us who are armchair buyers shopping online on eBay, or even GC, and searching for "value", then its is very difficult to learn the attributes of a premium coin during a collecting career. If attending several major coin shows per year and conducting auction lot viewing and inspecting CAC approved coins at major dealer tables, then the understanding of premium will be much more sophisticated.

Hopefully this response helped.

A West Coast customer and consignor took advantage of requests for numismatic topics to be explored in the Blog. Following are several excellent questions for those among us who have not been fully connected to the CAC transformation in our hobby. His questions surround three main themes and will be responded to in that manner. Please remember that my responses are from a singular perspective; early type coins in the $200 to $10000 price range. Other dealers, who service a different market space may have different viewpoints.

Question: I missed the CAC evolution as it occurred during one of my "out" periods. How frequently does CAC change its mind on a previously examined coin? Other than the obvious basis of apparent condition and grade, are there other factors to consider? Such as who the seller is and whether they seem to have a fair amount of other CAC coins? The value of the coin?

GFRC Response: I'm aware of several friends resubmitting coins to CAC for a second go at approval with limited results. Yes, there are certain coins that may be on the edge for approval and a second or even third review might win a green bean. Personally, I've resubmitted certain high priced Liberty Seated dimes with a note asking for reconsideration and explaining why I believe the coin is worthy of approval. I've had a few stickered in this manner while others were rejected. In hindsight and as my experience grows, it is becoming easier to segregate those that will obviously not sticker and those that obviously will sticker. The challenge is sorting through those in the middle of the pack. Remember that TPG grading must be accurate or conservative plus strict originality and substantial eye appeal being there. If you have doubts about any one of these three parameters, then there is reasonable chance that the coin will not be stickered.

Note that I've highlighted as my experience grows... I cannot stress this point enough. Most collectors and many dealers do not viewed enough premium coins to have calibrated eyes for high CAC approval rates. If surrounded by value coins in a collection or dealer inventory, there is no basis for learning the characteristics of premium coins.

For the last questions, I suggest that you evaluate your favorite dealers in terms of the % of CAC approved coins against total inventory. GFRC has 277 CAC approved coins in current inventory out of 1076 PCGS and NGC certified listings. That is 26% and higher than most other dealers.

Question: Or for that matter the value of the coin as it relates to even submitting to a grading service (a local dealer says "at least $300"). It would appear that none of the coins shown on today's blog have CAC stickers----whether they be Crazy Joe's or whether they be yours. What assumptions are generally valid for a buyer to make given the absence of CAC stickers?

GFRC Response: On lower priced coins, say $300, CAC approval provides little incremental premium and is not worth the effort. Remember that John Albanese started CAC to resolve grade inflation on high priced coins. CAC's success has resulted in lower priced coins being submitted and collected for their CAC stickers. My advice, for lower priced coin, is stay focused on the coin and not the CAC sticker.

Question: Can we assume that as CAC covers most of the waterfront in terms of examining coins, that it will reject more and more and people will become more discouraged to submit with CAC thus losing its business model or can we assume that CAC will go the way of PCGS and NGC and loosen its standards in order to encourage its submittal, its survival, and its revenue. CAC green or CAC gold can't simply be the end of evolution. Will it be CAC blue? Any thoughts? Can we assume that most of the really good coins have been submitted to CAC?

GFRC Response: I don't see John Albanese loosening his standards. The TPG and CAC business models are entirely different. PCGS and NGC must continually slab coins to stay in business. CAC is just the front end for John Albanese's ongoing numismatic business. He is primarily a dealer who handles large volumes of CAC approved coins at a certain profit margin. His profit point results for dealing in coins and not front end evaluations. John is also a huge advocate for the numismatic industry and started CAC to resolve a rampant issue; grading inflation by the TPGs that was becoming dangerous for the long term stability of the hobby. Please remember that the TPGs operate with a fundamentally flawed business model and must be "creative" to maintain and expand submission rates.