How are problem coins valued?

I’ve discussed many times the process in which how nice coins are assigned price levels. But how are problem coins valued? This is an interesting question and one which is becoming a bit easier to answer since NCS coins have become a well-accepted part of numismatics. (Before I begin, I should state here that NCS or Numismatic Certification Service is a division of NGC that certifies and encapsulates “problem coins” which NGC does not see fit to put in their regular holders. This includes coins that are harshly cleaned, polished, heavily scratched, rim filed, etc. NCS only uses adjectival grades—i.e., they would call a coin “AU details” as opposed to “AU55 details.”)

The reason why non-problem coins are easier to value than problem coins is, well, because they don’t have problems. There is a greater degree of consistency of appearance between an 1830 half eagle in PCGS AU55 (or NGC AU55) than there is with this same issue when it has the details of an AU55 but it has been cleaned.

Let me explain what I mean by this. If you were to call me up and offer me an 1830 half eagle in PCGS AU55, I would have a decent idea of what to expect. I’m figuring that it has light wear, a decent amount of remaining luster, maybe a few scattered marks in the fields and probably a pretty good overall appearance. But if you call me an offer me an 1830 half eagle in an NCS holder that states the coin has “AU details” but has been “cleaned,” I’m not sure what to expect. Has it been lightly cleaned or harshly cleaned? Does it have an acceptable appearance or does it look overly shiny from having been polished or perhaps whizzed?

From my experience with viewing NCS coins, there is a very wide range of coins in these holders.

I’ve seen coins that NCS has called “cleaned” that look pretty acceptable to me; not very different, in fact, from coins encapsulated by both NGC and PCGS. I’ve also seen coins placed in NCS holders that had planchet flaws or mint-made surface that, in my opinion, could just as easily be in “normal” NGC or PCGS holders.

But back to cleaned coins and how to value them. As a general rule of thumb, I think that if a coin has been lightly cleaned it is worth around half of what a non-cleaned example would be worth. The NGC or PCGS AU55 1830 half eagle that I mentioned above is a $60,000 coin if it has a decent, original appearance. In an NCS “AU details—cleaned” holder it’s more likely worth $30,000 or so. And if it’s a very harshly cleaned AU coin with some damage as well it is more likely worth in the area of $15,000-20,000.

This brings me to a philosophical question. Would I, as a collector, want to own a very rare but very ugly coin that costs $20,000 or $30,000? I do not personally like problem coins even though I can understand their value and why certain collectors would want, say, an “affordable” example of a desirable coin like an 1808 quarter eagle. But I would rather spend my $20,000 or $30,000 on a coin that was less rare and more aesthetically pleasing. If my budget for a very rare coin like an 1808 quarter eagle was only $20,000-30,000 I would re-examine the “need” for this issue to be in my collection and would spend the money on something nicer.

Remember what I said above about the varying degrees of “cleanedness” or damage seen on NCS coins? I might actually not mind owning an NCS encapsulated 1808 quarter eagle with VF or EF details that had been lightly cleaned and which had a good appearance. The thing to consider, though, is that many other collectors feel the same way and such a coin might actually sell for a value level not much less than a VF or EF that was in a regular NGC or PCGS holder. The real question is would I want to own an 1808 quarter eagle that looked like it was run over by the proverbial train. And if I did, what would I pay for it?