• seperator

Slab premium rules marketplace

I am just back from the annual paper money show in Memphis. It is the premier paper money event each year and experiences there tend to inform my editorial decisions in the following months.

If you are a veteran of the coin market from the mid 1980s, what is currently going on in the paper money field will be familiar to you.

Slabbing is affecting the business in a big way. Third-party authenticators and graders are slugging it out for market share. The reluctance of the hobby to embrace slabbing is now almost entirely gone. There is too much money to be made by feeding the trend and participating in it rather than opposing it.

Notes in slabs are tending to bring more money than identical notes not yet in slabs. Call it the slab premium. Why? It is a simple concept.

The owner of the very first note in a slab can truthfully tell one and all that there is no other one like it. Some buyers attach great importance – too much importance – to this statement. However, it takes a while for the grading services to saturate the market, so slabs can seem scarce. Scarcity might be real because a note is truly rare, or it might simply be that the grading services have not yet turned out a sufficient supply to satisfy market demand.

The lesson of the coin market is that it can take years to fully satisfy the demand for slabs. However, once this process is done, the slab premium will disappear. Any current paper money buyers who are paying premium prices for slabs might find themselves less pleased with their purchases when more slabbed notes become available.

How much longer can this present slab scarcity last? Good question. It will last as long as new buyers can be found to keep prices rising and to maintain the perception of scarcity. How long will that be? If I knew that, I would be out there trading like mad, now wouldn’t I?

Let’s just say that the summer slump has not been particularly evident in the paper money field. That should mean a strong start to the autumn.

I write  the word “autumn” here because in a conversation at the convention hotel with a market participant yesterday I said it looked like we will have a “strong fall” and his startled reaction indicated that his first thought wasn’t about the season.

This entry was posted in Buzz. Bookmark the permalink.

One Response to Slab premium rules marketplace

  1. Pierre Fricke says:

    I agree….however, I believe this is focused more in Federal paper money and less well received in CSA and obsolete (though it is gaining some traction in CSA for some). I liken Federal paper money to Morgan Dollars and CSA to Large Cents. So, in CSA there are already two schools – collector (read EAC style) grading and market (read ANA/slab). And the "market" grading is all over the map.

    In my Type Edition for CSA I will present a photo grade guide kinda like James Ruddy did for coins in the 70s with the added feature of showing collector, market and slab grading.

Leave a Reply