Posted By:
identify7Here is my take on some of those questions:
Coin grading companies have been around since the eighties (if anyone knows when that was) and they are mainly the same companies which we have: PSA & SGC.
Following the start of the grading of coins, prices increased. And the liquidity of coins was viewed as improved. So much so, that the consensus was that they could trade sight unseen, by slab grade only, with minimal vig. Like gold, pork bellies and other commodities. And they did, up to a point.
Collectors soon realized that attractive coins could grade equivalently with others that exhibited less desireable characteristics (toning, for example). At approximately that instant, investment companies decided that coins liquidity made them a good investment vehicle, and the upswing in the market would likely be prolonged. These companies sunk significant dollars into the coin market, choosing mainly the highest graded examples of each issue. Pricing went through the roof, and peaked around 1989. Collector's preferences did not support sight unseen trading with minimal vig. A sizable prolonged correction followed.
I believe that independent grading population reports defined the 1881S silver dollar as the coin which was as common as all other dates and mintmarks combined. Prices on that coin plummeted right away.