Scarcity of Grade

It looks like most of us have a very difficult time defining what kind of collectors we are; we seem to be opportunistic and have erratic buying habits. If we can’t be more focused on what we buy let us at least try to be smarter when we buy. I hope the following can help.

I’d like to switch focus over to a common and avoidable mistake I’ve seen buyers make countless times over the years. The topic is a bit technical and may not affect your type of collecting but bear with me, I want to explore as wide a range of topics as possible with these posts.

Scarcity is a very important value driver in comic book collecting: it lies on the supply side of the supply and demand equation and it is not just limited to the total number of copies available.

Variations of scarcity include regional scarcity; the Canadian Price Variants (CPVs) of the 1980s are an obvious example of regional scarcity. Most of the supply has been in Canada and once a collecting community evolved for these CPVs and increased their demand regional scarcity (lack of available copies in the USA) drove prices higher. Another variant of scarcity is local scarcity. Just think about the old Mile High Comics model: they’d have as many books as possible available at any time but at a price much higher than the price you’d pay locally. But who’s got time to dig through bargain bins for a $1 copy of alpha Flight #53 (that you need to finish your run); it’s easier to “buy it now” at eight times the local price. Local scarcity happens because nobody has their Alpha Flight #53 available for sale. It’s way easier to go to a local con or a local comic book shop and pick up a Spawn #1 than it is to grab an Alpha Flight #53.

I’ve included the two variations of scarcity above to highlight some of the different forms it can take. Another form is scarcity of grade and it’s the topic I want to discuss in-depth right now. Scarcity of grade has been around for as long as I’ve been in the game and goes back even further to the very beginnings of comic collecting. It has always been a given that we pay more for a nice crisp, clean and glossy copies of comics we want. I remember back in the 80s when upgrading copies in one’s collection was serious business: we’d trade in our VG for a VF and pay some sort of difference that the Overstreet Price Guide had us convinced was fair. We knew that the VF was nicer to look at but we also knew that it was way harder to find. Scarcity of grade was this concept that we could not quantify back then but we knew it was real and we were willing to pay extra for it.

With the advent of grading companies like CGC, scarcity of grade became a quantifiable thing thanks to the CGC Census. With the CGC Census, we had a tool that told us just how scarce a high-grade copy of a specific issue was. Quickly a pattern developed where buyers got themselves into trouble because they were adhering to the CGC Census data. The problem is that the CGC Census data is not static; it is in fact very dynamic. Back in the day when we were upgrading from a VG to a VF, we gauged scarcity by feel, by how many copies of the issue we saw around. Yes, there were some fluctuations between issues due to black covers, other aesthetic factors and distribution but this was mitigated a bit by the fact that we grouped high grade into one or maybe two tiers. Today there can be eight tiers of high grade depending on the era.

Let’s get back to the dynamic CGC Census. Back in 2010, I bought a nice clean copy of X-Men #94 off a shop in New York: the guy had $1,000 on it and I talked him down to $800. CGC grading was relatively new at the time and not all shops were using the service. By this time I was a pretty good grader and I thought my new acquisition could score a CGC 9.4, a grade that might net me almost double what I paid – if I lucked into a CGC 9.4. I sent the book down and it came back a CGC 9.8 White Pages. Mine was the fourth 9.8 on the CGC Census. GPAnalysis was just starting up back then and excitedly I jumped on to see what CGC 9.8 X-Men #94s were getting, CGC 9.4s got about $1,500 and I was hoping maybe triple that. I almost fell when I saw the last sale was $29,589. I sent my copy down to an auction house and my copy closed at $26,500. Damn, that was easy! I told myself I had to do that just once a month and I’d be fine. Fast forward three years to 2013. There were three sales that year for X-Men #94 at CGC 9.8: the first got $9,501, the next one got $8,089 and the last one got $6,988. Yikes. What happened? There may have been a slight drop in demand; I’m not sure of what the movie release schedule for X-Men movies was back then so I can’t speak with certainty about demand. I can tell you that supply did grow causing the scarcity of grade value driver to greatly diminish. Today a copy can get close to $15,000 which is a nice correction from 2013 and as of this post, there are 33 copies graded Universal blue 9.8 on the CGC census.

X-Men #94 can actually serve as a dual example for my argument since it is showing some relative scarcity compared with say Giant-Size X-Men #1 (173 CGC 9.8s as of this post), a fact that explains why a much less important book (X-Men #94) can be worth more money than a key first appearance (Giant-Size X-Men #1).

The buyer reacted to the scarcity of grade that was highlighted by the CGC Census, the strong sales result for the book spurred owners with nice copies to sent their copies in for grading. The book now has over eight times the supply and is worth less than half the sale that came before mine even in one of the greatest decade of price increases ever seen in comic collecting. The lesson, of course, is to not treat the CGC Census as static: it is a very, very dynamic thing.

Thankfully we’ve now had two decades of CGC comic grading with millions of books graded, and the other grading companies CBCS and PGX have added to the inventory. You’d think that misinterpreting the Census was a thing of the past but it still happens, all the time.

Interpreting the CGC Census data is not an exact science and sometimes we have to “read the tea leaves” when making decisions. I’m relatively confident when I look at data for books like Amazing Fantasy #15 and Hulk #181, these books and books like them that have been valuable since the beginning of the grading era and have lots and lots of data we can examine. We can count the number of copies being added each year and spot patterns and trends that will help us with a long term picture. We can also look at the grade distribution within the issue we are looking at and make statistical assumptions, and maybe even CGC corporate mandate assumptions. Grade distribution assumptions are very important to our scarcity of grade topic. Giant-Size X-Men #1 has 173 CGC 9.8s out of a graded population of 7,780, 2.2% are 9.8s. From this data, I can make a statistical assumption that for every 1,000 new copies being sent in to get graded only 22 will come back 9.8.

I mentioned above that we’re still getting sucked into overpaying for scarcity of grade. It’s happening too much and one of the biggest causes is the instantaneous demand created by new movie announcement, actor casting announcements, unexpected demand for new comic issues etc. In these situations, there is a massive lag between demand and supply, especially in very high-grade CGC graded copies. Let’s just pretend that Marvel’s Tomb of Dracula #5 has the first appearance of some minor character, as of this post there are three CGC graded 9.8s, all likely belonging to collectors seeking out the run in high grade. Now let’s pretend that tomorrow news hits that this minor character is going to be the big villain in a new Marvel Studios Dracula movie. Gah! If I had one of the CGC 9.8s I’d be putting it up on an eBay auction that day. Massive demand for the book now exists and my CGC 9.8 copy is the poster child of scarcity of grade. I’ll do very well with that sale and once I do you’ll see what I got and send yours down for grading. I can’t tell you how many times I’ve seen this play out over the last ten years. So how can I know where Tomb of Dracula #5 will settle in scarcity of grade wise? With this example, I’ll look for an adjacent key issue, one that’s been an expensive key issue for a very long time and one that can give me some data I can look at. I’d look at the Tomb of Dracula #10 and see what’s going on with that book: Tomb of Dracula #10 is a key first appearance of a major character, Blade, that has been worth sending down for grading since there was grading. How many CGC 9.8s are there of Tomb of Dracula #10? What percentage of the total population is getting CGC 9.8? Time for some more “tea reading”. Take a look at Tomb of Dracula #5: does it have a black cover or anything else that might make it even more scarce than the tomb of Dracula #10?

Scarcity of grade is even more tricky in the already scarce Golden Age of collecting. A CGC 7.5 may be the highest grade in existence of a Golden Age book and the price it gets at market is not determined by its grade but by the fact that it is the nicest copy that exists graded. When a surprise copy pops up at CGC 9.2 the ultimate scarcity of grade that gave the 7.5 its value disappears and the price will drop dramatically the next time it sells. Surprisingly the CGC 9.2 usually does not get a lot more than the old 7.5 got; the value of highest graded can bring the book to a point but not much further, perhaps the insurance of a 9.2 grade is worth more than the insurance of a 7.5 grade when hedging that there won’t be a nicer copy coming around.

I’m rambling now so it’s time to stop. Scarcity of grade is a thing and it can make your comic worth a lot of money especially if there is any sudden uptick in demand. Be careful when buying based on scarcity of grade: does the scarcity look safe and sustainable?

Have you been bitten by this? Have you made a big score thanks to scarcity of grade?

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Walter Durajlija
Walter Durajlija is an Overstreet Advisor and Shuster Award winner. He owns Big B Comics in Hamilton Ontario.
Articles: 1589

10 Comments

  1. Excellent article Walter ! I especially liked the part where you discussed the scarcity of CPV’s (Canadian Price Variants)

  2. Walt, I will blow my own horn a bit and say that I touched on many of your points in my comments to your Undervalued Spotlight posts, but it is a good service to have them all in one place in a headline post.

    Before commenting on your piece specifically, I want to point out that dealers go both ways on these kinds of transparency efforts. In the context of arguing about GPA data, I have seen a dealer assert that it is better for him not to report data because this is “hard earned” and helps him make money. While not everyone will be a winner from taking the opposite approach, time after time it is clear that the overall market is a winner from better information, and that includes most market participants. Some market participants, particularly those who every now and then want to make a “quick kill” by selling a “rare” graded book at a high price due to a recent demand spike, will be hurt by sensitizing the less sophisticated to this dynamic. However I think that even these participants are likely to benefit more from an “unstung” customer base that isn’t wary of a dealer community that is hiding information. In broader context this is the usual free trade idea that is far from settled in the public’s mind, so I can’t say it is a “fact” that it is better to distribute this kind of information, but in my mind it is at least mostly better.

    I really, really liked your point about the pre-CGC days and the “sense” of how rare things were in grade, and your wording “the Overstreet Price Guide had us convinced”. I am pretty sure that you weren’t “convinced” after a short period, but a key piece of noise in the market for that very long time (about 1970 to 2002) is that many collectors were convinced – at least until they tried to sell to a dealer. So while the CGC dynamic looked and continues to look weird to some degree (“Only one 9.8? I see high grade copies of that all the time!”), the old dynamic was equally problematic (“Guide says VF is worth 10x VG – what do you mean you will only give me…?”). In my opinion the CGC “problem” is really quite limited relative to the old Guide “problem”. (To draw an analogy with the financial markets, the old Guide world is like the old muni bond market, while the new CGC world is like the current muni bond market.)

    I think the market has adjusted a lot to the CGC dynamic. I just got back into collecting in 2014 so I missed the initial problem. I just shake my head when I see some of the sales that occurred pre-2005 or so. Heritage Auctions very nicely keeps all of their original listings online. (I believe they deserve tremendous credit for this service to the market – and to my point above, I think it has really helped their business.) You can read many many “One in 9.6, none higher” listings from the early 2000s, when now there are ten 9.8s. At this point the earlier naivety seems mind-boggling, but I guess at the time there was just massive misjudgment. (From my past life I find the transition fascinating – it was like this was a “phase change” where these too-high 9.6 sales “nucleated” the grading of all of the 9.8s and 9.6s.) At this point I think the CGC “problem” mainly hits unsophisticated collectors who get excited about a “new” key and don’t understand the multi-year time scale of fleshing out the graded population for common books.

    Looking at common Silver to Modern, your process follows what I had written about in my Undervalued comments. I would emphasize two points:

    – Very high value keys from these periods serve as good touchstones for total outstanding populations and the distribution in the population (like your point about GS X-Men #1). Good examples are Hulk #181 and ASM #129. Other books from this time period were generally targeted by the same collectors, so it could be expected that there are similar numbers/distributions outstanding, mostly ungraded. Judicious adjustments need to be made for:
    — Title popularity – there are going to be proportionately more ASMs than many other titles because there were more collectors of ASM
    — Cover “hardness” – there would be fewer ASM #129s in 9.8 if the background were black
    — “Shrinkage” – ASM #129 has been worth money for a very long time, so it has been preserved. Books that have been worth little forever generally get treated much more poorly. An example that strikes me is Demon #1. When I was young the bins were full of this book. It was a Kirby #1 and people had bought reams of it, and they couldn’t sell it for cover price. My sense is that over the years these books were nearly entirely ruined, and even people who had kept nice perfect copies for years finally threw in the towel and gave them to kids as readers. Thirty years on, it becomes collectible and there are relatively few perfect copies remaining. This effect should be considered when evaluating the scarcity in very high grade of a “new” key.

    – Good information can be derived from the current distribution of CGC grades. If the population peaks at, say 9.4, this tells you that there are many more 9.4s out there, and below this peak the population continues to expand. That is, while there are fewer 9.2s than 9.4s in the census, there are actually more ungraded 9.2s than 9.4s in existence. Therefore pricing should be adjusted to take this likely ungraded population into account. More or less you see this in the market. My personal bias is to avoid anything at or below this peak in graded condition. The only value of the grading for these, for very high demand books, is to confirm no restoration or defects.

    I take some issue for your paragraph on Golden Age. Here I think the market is fairly savvy. I don’t agree that “highest graded” is grade insensitive, and I can point you to numerous examples. Especially good examples are the truly rare mid-1950s DC core hero books. Even in cases where there are around ten graded copies and the highest graded is around 7.0, nobody seems to want to pay more than about a thousand dollars for the highest graded copy. However, if instead the highest graded is around 9.0, that could fetch over two thousand. I observe that the “insurance” you note is well-valued. In some cases I think the market is off on this, because I think that in some cases the likelihood that that any much higher-graded copies emerge is vanishingly small, but that’s where you can speculate if you want.

    Finally – I have been bitten, but only by playing the Golden Age odds. As long as you don’t put all your eggs in one basket this won’t hurt you much. Also, my approach is to try for books scarce in any grade, and not worry about getting the highest graded. In my experience in that area, in the rare case that a copy in a higher grade appears, it is not a significant driver of value across the population. At this point I think Planet Comics are good examples of this finding.

  3. A few comments…

    I remember when Overstreet assured us all that the CPV and the regular price would never differ in future value as some collectors were telling retailers that they didn’t want the CPVs for fear of future devaluation. Funny how it went the other way and CPVs are now worth more.

    When I first bought a guide, there were 3 grades, good, fine and mint. You did your own calculation for VG etc. It was a simpler time then. I still can’t get the numbering system which chased me away from coin collecting years ago.

    Lastly, Chris Meli, do you work? It took me over an hour to read and digest your breakdowns. It must take you hours to compose and write each of your comment posts. I don’t know where you find the time. ☺

  4. Great article and follow ups! The second part of of your statement however is more geared at speculation as opposed to collecting… can a book be graded and turned for a profit. This isn’t necessarily a criticism however. As an aging collector this information becomes more important because at some point a collection will have to find newer hands.
    Tour example of X-Men 94 struck me as I purchased a very nice copy at a store that had an annual half price sale a couple years before CGC started… I believe I paid about $45… meaning it was selling regularly at $90. This shot up with the CGC! We can assume this is because we now know how many high grade copies there were! Did that in it self make it more desirable?
    Condition vs scarcity…
    I have a Worlds of Fear 10 in presentable but lower grade! Sellers still reference Gerber scarcity index to sell this book based on 50 or fewer copies available. However the index was established long before CGC or the internet were around… do those indexes still hold true?
    Finally, about CGC and selling. This is more of a question I suppose to all of you more knowledgeable… I have a copy of Nedor’s America’s Best Comics #1. From what I can gather on the CGC website I may have the second best or better copy of this book…should it be graded simply to increase my profit margin should I decide to sell? Does that turn me into a sepeculator?

  5. Klaus – most of this is stream of consciousness and doesn’t take that long. To paraphrase Samuel Johnson, when a man has money riding on something, it concentrates his mind wonderfully.

    Gerald:
    – I think the point about increases with the CGC is interesting. I was not in the market at that time but I think this is in line with my point about market transparency. As people became able to more reliably trade high price books remotely (without having to worry about most condition problems), the market expanded and demand increased.
    – Gerber remains of some use and has been the subject of some targeted investigations. My sense is that books that Gerber called rare are at least scarce, but that he assumed many books were common that were actually far scarcer. Those mid-fifties DCs that I mentioned are an example. I have the sense that he kind of assumed “Everybody has Action!” and moved on. In fact I have seen a lot of Gerber 7s that show up far more often than these supposedly common DCs. There are probably other examples of this bias in there.
    – I don’t think it is worthwhile to distinguish “speculator”, it is hard to define and impossible to determine anyone’s true motivations. Instead I think we can agree that almost always we would like to sell for the best price we can get. I don’t think there is a blanket answer for graded vs. ungraded, but for a very high-end book like America’s Best #1 in something like 8.0, I can’t imagine that selling it raw would be a good decision. I am always suspicious that these kinds of books, if offered for sale ungraded, hold some kind of hidden problem.

  6. That last point is an important one in a market now using CGC or graded books in general as the benchmark.

  7. You’re right Chris, in this column I’ll be bundling up some topics touched on repeatedly in comments over the years. I used to do a Collecting and Investing tips column way back and I’ll be “dusting off” and updating some of those arguments as well. Your comment is exactly why I’m posting these weekly topics, its an excellent critique and if what I’m writing is to be of any use it needs to be put to the test against other veterans in the field. I have not done a lot of data analysis on the Golden Age “highest grade” argument but over the years several examples of a new higher graded “highest grade” under performing when measured against those grade gaps for more common books have left an impression.

    Gerald, it is not a travesty nor is it sacrilege to grade your America’s Best, its just common sense if you plan to monetize your book.

    I remember when the Guide added a VF column Klaus, at that time I was a back issue dealer at cons and I remember specifically going to old dealers and buying up their Fine + books because they were not nice enough for those old timers to call then Near Mints! Good times.

  8. Yes…I am understanding the common sense rule here Walt. Interestingly, when I originally purchased said book the shop called it near mint and wouldn’t discount it despite my pointing out some flaws… but we are talking over 50 years ago.

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