What Is The Slabbing Method?

What is Slabbing?

Slabbing refers to the process of encapsulating a coin in plastic for the purpose of authentication, grading, and preservation. The plastic casing is often referred to as a “slab”. During the slabbing process, the coin is examined and graded by professional coin graders. Once graded, the coin is sealed in an airtight, tamper-evident plastic holder along with a label indicating the grade, certifying company, and other details. This encapsulation protects the coin from handling and environmental damage. Slabbed coins are preferred by many collectors since the plastic casing authenticates the coin, provides an official grade, and keeps the coin in pristine condition. The two major third-party grading services that slab coins are Numismatic Guaranty Corporation (NGC) and Professional Coin Grading Service (PCGS).

History of Slabbing

The practice of slabbing coins first emerged in the 1980s as a response to rampant counterfeiting and alterations of rare coins. In 1986, the Professional Coin Grading Service (PCGS) became the first company to offer sealed plastic holders graded and authenticated by expert numismatists.

This new method helped combat fraud and provided an easy way to verify the condition and authenticity of coins. It gave buyers more confidence in the integrity of their purchases. Soon, other third-party grading companies entered the market like the Numismatic Guaranty Corporation (NGC) in 1987.

By the early 1990s, slabbed coins became prevalent and changed the way coins were bought and sold. Major coin auction houses like Heritage Auctions began adopting slabs. The slabbing revolution led to more collectors participating in the market and drove up prices for rare coins as they could now be traded sight-unseen.

Over the decades, the leading graders have refined their processes and expanded internationally. Millions of coins have now been certified and encased in plastic holders with detailed labels indicating the grade, variety, and other attributes. Slabbed coins have become the preferred method for buying/selling rare and valuable coins.

Why Slab Coins?

There are a few key reasons why coin collectors and dealers choose to slab their coins:

Preservation and Protection

Slabbing encases the coin in hard plastic or acrylic, protecting the coin’s surface from damage, wear and tear. This preserves the coin’s condition so it maintains its grade and value over time. The tamper-evident slabs prevent undetectable alterations as well.

Authentication

Reputable slabbed coins come with a certification from the grading company that the coin is genuine. This provides buyers with assurance that the coin is not counterfeit.

Increased Value

A slabbed coin certified by a top grading company can significantly increase the coin’s market value, over an equivalent raw coin. There is increased demand for certified slabbed coins from buyers.

Popular Slabbing Companies

There are several well-known and reputable companies that provide professional coin grading and slabbing services. The main players in the industry are:

NGC (Numismatic Guaranty Corporation)

NGC is one of the leading and most respected third-party grading services for coins, tokens, and medals. Founded in 1987, NGC has graded over 52 million coins with a declared value of over $31 billion. They utilize a numeric grading scale from 1 to 70 along with strike, surface, and eye appeal designations. NGC slabs feature the coin grade, description, and certification number on the label. Many collectors and dealers prefer NGC for grading classic U.S. coins.

PCGS (Professional Coin Grading Service)

PCGS is NGC’s biggest competitor and also highly regarded in the numismatic community. Launched in 1986, PCGS has certified over 46 million coins to date. Their iconic plastic slabs with green labels are popular among collectors. Like NGC, PCGS uses a 1-70 numeric grading scale. They also indicate strike, surface quality, and eye appeal on the label. PCGS dominated early on but now splits the market with NGC.

ANACS (American Numismatic Association Certification Service)

ANACS is the official grading service of the American Numismatic Association. Founded in 1972, it is the oldest third-party grading company. ANACS uses both numeric (1-70) and adjectival (Poor-MS70) grading scales. Their traditional blue slabs with gold lettering are less common today but still sought after by some collectors. Many early slabbed coins were graded by ANACS.

ICG (Independent Coin Grading Company)

ICG is a lesser known grading service launched in 1998. They use a 1-70 numeric scale similar to NGC and PCGS. ICG slabs have an angular shape with black inserts. While not considered one of the market leaders, ICG does provide an affordable alternative grading option.

The Slabbing Process

The slabbing process refers to the steps a coin goes through when being encapsulated in plastic by a third-party grading service. Here is an overview of the main stages of the slabbing process:

Submitting Coins

The process begins when a coin collector or dealer sends their coins to the grading service. The coins are packaged securely and shipped with a submission form that provides details about each coin.

Grading Coins

Once received, expert graders carefully examine each coin under magnification. They analyze the coin’s luster, surfaces, strike, eye appeal and other attributes to determine its precise numeric grade on the established grading scale.

Sealing in Slab

After grading, the coins are encapsulated in clear, hard plastic slabs that protect them from wear and tear. The slabs are sonically sealed with only a small opening to insert the coin initially.

Labeling

Each plastic slab is labeled with the coin’s description, grade, unique certification number and other details. A barcode is added for security and tracking purposes.

Returning to Owner

Finally, the encapsulated coins are shipped back to the submitter along with a certification paperwork and invoice. The owner can now enjoy their officially certified coin protected in its tamper-proof holder.

Grading Scale

When coins are graded and encapsulated by third-party grading services, they are assigned a numeric grade according to established grading scales. The two most popular grading scales used today are the Sheldon Scale and the Universal Numerical Scale.

The Sheldon Scale runs from 1 to 70, with 70 representing a perfect mint state coin. On this scale, a grade of 60-70 is uncirculated, 50-58 is choice AU, 45-49 is almost uncirculated, and 1-35 refers to circulated coins in Good to Fine condition. The Sheldon Scale formed the basis for the Universal Numerical Scale.

The Universal Numerical Scale introduced by PCGS in the 1980s runs from 1 to 70 like the Sheldon Scale. However, it breaks down as follows:

• MS/Mint State (60-70): No wear, perfect luster
• AU/About Uncirculated (50-58): Virtually no wear, only slight friction
• XF/Extremely Fine (40-45): Light wear on high points
• VF/Very Fine (20-35): More significant wear but major details visible
• F/Fine (12-15): Moderate wear, letters and details partially worn
• VG/Very Good (8-10): Well-worn, outlines visible but partially smooth
• G/Good (4-6): Heavy wear, barely identifiable features
• AG/About Good (2-3): Worn almost smooth
• Basal or Poor (1): Barely any features identifiable

This universal 70-point scale allows collectors to easily assess and compare coin conditions across grading companies.

Cost of Slabbing

The cost of having a coin professionally graded and encapsulated varies between the major third party grading companies but generally includes fees for submission and membership discounts are available.

NGC and PCGS charge a per coin fee that varies based on the value of the coin. For modern coins of low value the fee can be as low as $12-15 per coin but for rare vintage coins the fees can be over $300 per coin. Both companies offer various membership levels that provide submission fee discounts. For example, at NGC, the Platinum membership level reduces grading fees by 15%.

ANACS has a more straightforward fee structure charging $18 per coin for submission. However, they also offer membership levels with submission discounts. ANACS members receive $5 off per coin submitted.

Overall NGC and PCGS tend to be more expensive than ANACS for higher value vintage coins. However, for modern mass-produced coins, the companies are fairly comparable in cost. The membership discounts reduce costs the more coins you submit in a year.

Criticisms of Slabbing

While coin slabbing has many benefits for collectors, some criticisms and controversies have emerged around the practice over the years:

Subjectivity of Grades: One common complaint about slabbing is the subjective nature of the grading scale. While companies have grading guidelines, there is still room for interpretation and disagreement among graders. Some feel grades are inconsistent or biased at times. Dealers or collectors may resubmit a coin repeatedly in hopes of getting a higher grade.

Potential Damage During Process: There is a small risk that coins may become damaged or altered during the removal from old holders, cleaning/preparation, or re-slabbing process. Hairlines, scratches, or edge nicks can occur if technicians are not extremely careful. This damage can significantly reduce a coin’s grade and value.

Over-Focus on Grades: Some numismatists argue slabbed coins encourage collectors to focus too much on grades and “perfect” specimens. This shifts attention away from appreciating coins’ history and beauty. An MS-65 graded coin may be valued far higher than an aesthetically pleasing MS-64 of the same type.

Tips for Submitting Coins

When deciding which coins to submit for slab grading, focus on rarer, older coins in the best condition. More common, lower value coins usually won’t increase much in value from receiving a high grade. Carefully inspect each coin under good lighting and magnification to judge eye appeal and surface quality. Avoid obvious problems like major marks, scratches, corrosion, and weak strikes.

Always handle coins properly to avoid damaging surfaces and edges. Hold by the edges, wear cotton gloves, and avoid touching the main design surfaces. Store coins in capsules or folders, not touching each other. Cleaning coins will lower the grade and value, so never attempt to polish or wipe off dirt.

Choose the slabbing tier based on the value and rarity of the coin. Higher tiers provide extra scrutiny and more detailed labels, for certified coins likely headed to auction. Lower tiers offer adequate protection for most collector coins. Select relevant attributes like First Strike or registry sets. Weigh costs versus expected increase in the coin’s value.

Future of Slabbing

Slabbing has come a long way since its beginnings in the 1980s, and is poised for even more growth and improvements in the coming years.

One area we’re likely to see advancement is in the grading technology and processes used by the major companies. As imaging, scanning, and AI capabilities continue to progress, slabbers will be able to leverage these tools to bring more precision, accuracy, and consistency to determining grades. This could help further legitimize slabbed grades and valuations.

In addition, as the market for collectible coins expands globally, we’re likely to see more growth in the absolute number of coins being submitted for slabbing every year. Major companies like PCGS and NGC will need to continue scaling up their operations and capacities to handle this growing demand.

Lastly, while the “Big Two” have dominated up until now, we may see more competition emerge in the slabbing space from new players. Existing grading companies like ANACS or ICG could potentially gain more market share, or entirely new entrants could disrupt the status quo. More competition could spur further innovation in grading methodologies or customer service.

In summary, with improvements in technology, market growth, and potential new entrants, the future looks bright for third-party coin slabbing and graded collectible coins.