Limitations of Grading Service Population Reports

One major factor that determines value of numismatic items is rarity. Mintage figures are an important initial indicator of relative scarcity, but it is not the entire story.

As collectors of U.S. coins and currency know, there have been major government meltdowns of silver dollars and U.S. gold coins. Paper money issues have much shorter circulation lives than coins and are mostly withdrawn within a few years of usage. Almost no statistics are kept by the government of the dates and mintmarks of coins it has melted or of the series and denominations of notes retired.

Active numismatists can get some sense of the availability and rarity of coins and currency by asking dealers and other collectors, consulting auctions, reference catalogs and dealer price lists, performing internet searches and examining inventories dealers offer at coin shows. Other useful tools, with limitations, are the population reports published by third-party grading services.

The first publicly available population reports for coins were published by the Professional Coin Grading Service (PCGS) shortly after it began operations in 1986. As more coin grading services began operation, and then currency grading services, a growing percentage of valuable numismatic items are being tabulated into population reports. With up to 37 years of population reports, a lot of useful data is available to get a more precise idea of the relative rarity of coins and currency of high enough value to warrant the cost of third-party certification.

But, the population reports have limitations that numismatists need to keep in mind.

First, not all surviving coins and currency are reflected in the population reports. A higher percentage of more valuable coins have been graded compared to lesser value pieces, but there are still massive quantities of treasures that have yet to be certified. As an example, the 1881-S Morgan dollar is the most common of the series in high grade. Because it is so common, few low-grade specimens are submitted to the grading services.

In contrast, the 1893-S Morgan dollar is scarce in any condition. Consequently, even problem-free, low-grade specimens are sent for third-party grading. When I checked this week, PCGS and the Numismatic Guaranty Company (NGC) together had certified 12 specimens of the 1881-S Morgan in Very Fine-20 condition and 650 of the 1893-S date in the same grade. If a collector consulted only that data, they might be under the wrong impression that the 1881-S is the rarer coin.

Second, many coins are submitted multiple times to the grading services, which overstates the population data. Years ago, the company where I work sold a high-grade Mint State 1887/6 Morgan dollar to another dealer, who submitted this coin to grading services 16 times before giving up on the possibility the coin would receive a higher grade than stated on the holder in which we sold it. The grading services do back out from the population data the certificates sent back to them, but not all dealers and collectors of these cracked-out coins bother to return the certificates.

Third, population data is always out of date to some degree. At the Central States Numismatic Society convention in Schaumburg, Ill., in late April, the company where I work purchased a U.S. $5 Federal Reserve Bank Note star note (Fr-784*) of which no previously known surviving specimens were known. This note was already graded by Paper Money Guaranty (PMG), but as of earlier this week the note is still not included in the PMG population report. If a hoard of a specific rare coin or piece of currency has been freshly graded, a potential buyer might see population report data that does not reflect the addition of the hoard – and think the item is scarcer than it really is.

Fourth, there can be deliberate market manipulation of the population report. A number of years ago, I saw a high-grade rare U.S. coin in a dealer’s showcase at a show, alongside three other grading certificates of that coin in the same grade. The dealer explained to me that this coin was the finest known at the time, but that the combined PCGS and NGC population reports stated there were a total of four coins in that grade. So, that dealer needed the three loose certificates to verify that there really was only one specimen in that grade to justify the high price he placed on the piece. However, another person might have an example in the next lower grade and consider their example was less valuable because of the reported combined population of four in the higher grade.

Fifth, there are also typographical errors in population reports, plus the coins that are erroneously encapsulated with the incorrect date or mintmark (we see a few every year) that can distort the totals.

Sixth, another factor to consider when reviewing population reports beyond the total for the specific grade of the item you are checking is to also refer to the total certified in all grades plus how many are of higher grades. As an example, two different issues of the same series with an identical grade, and the exact or very close population for the grade, could have much different values if one has only five specimens certified in higher grades while the other has 500 nicer quality pieces.

Seventh, when consulting population reports, it makes sense to check more than one of them. A coin may have a population of one with none finer at one third-party grading service, but another service may have graded several examples plus a few in higher grades. If a seller only provides population data for the service that graded a coin or currency, that is very much a sign to check other services.

With multiple decades of accumulated data, population reports can be extremely helpful in judging relative rarity. Still, keep in mind the limitations of this information.

Patrick A. Heller was honored as a 2019 FUN Numismatic Ambassador. He is also the recipient of the American Numismatic Association 2018 Glenn Smedley Memorial Service Award, 2017 Exemplary Service Award, 2012 Harry Forman National Dealer of the Year Award and 2008 Presidential Award. Over the years, he has also been honored by the Numismatic Literary Guild (including in 2021 for Best Investment Newsletter), Professional Numismatists Guild, Industry Council for Tangible Assets and the Michigan State Numismatic Society. He is the communications officer of Liberty Coin Service in Lansing, Mich., and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at www.libertycoinservice.com. Some of his radio commentaries titled “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 a.m. Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio archives posted at www.1320wils.com).