I’ve noticed something particularly disturbing in the market of graded cards that I would like to share. This may be old news to the veterans out there, but I believe everyone has a right to know this before they lose big time.
I’ll briefly share some of my background and biases. Like many kids in the 90s I became disillusioned with collecting after realizing that Beckett’s inflated Price Guides didn’t pan out when I took my cards to the shops. No surprises there. Today the market is much different than it was in 90s, but I’ve found it’s still built on encouraging inflation, misconceptions and miscalculations.
So I’ve been collecting many of my favorite 1st Edition Pokemon cards and opting for the PSA 9s over the 10s because, as many of us know, the visual appeal between a 9 and a 10 is usually insignificant and we’ve all heard stories about 9s being cracked, resubmitted and returning as a 10. Grading is done by humans and is still a subjective process. How good of a day your graders are having and what time it is often makes the difference between a 9 and a 10. So I thought, 'no point in paying 4x the price for a 10 over a 9. Also my 9s will appreciate along with the 10s over time.
That last sentence is a totally flawed assumption. I couldn’t have been more wrong.
Awhile ago I took a break from vintage Pokemon and checked on some hall of fame football rookie cards. 1984 Topps John Elway, in particular. I’ll use this card to illustrate my point, although take about any other valuable and circulated card this old and and you’ll find the same trends. Guess how much these are selling for in PSA 10? $2k! Awesome. Out of the price range for most responsible working adults, but awesome nevertheless. But here is where I became horrified: I spotted a PSA 8. How much was the PSA 8 selling for?
Wait for it… Feel free to take a guess before reading further.
Now how much? Wait for it… Wait for it… twenty dollars. What? Yes, that’s right. Only twenty measly dollars, and the seller was even accepting best offers. That can’t be right, I thought. I checked the PSA sale records, and sure enough, it checked out. But how can two grades have a price difference of $1,980, a staggering 10,000% price jump? It makes no sense, coming from Pokemon, where differences in grades are stillreasonably proportional. So I investigated further.
The value of an Elway Topps 1984 PSA 9 is around $135. That’s not 25% of the value of a PSA 10, as you’ll find and have come to expect in most vintage Pokemon right now. That’s 6% of the value of a PSA 10. That means PSA 10s go for 16x as much as PSA 9s in 1984 Topps Football (John Elway and Dan Marino being the two stars in this set). In other words, you can have 16 marginally inferior rookie Elways (PSA 9 – mint condition), for the price of one PSA 10. Total insanity? The gap only continues with time.
‘So what,’ some might say? You don’t think this applies to Pokemon? This is the future of Pokemon. Yes, of course there are differences between football and Pokemon. The two are fundamentally different. But the fundamental problem lies with PSA’s population reports, coupled with unhealthy market practices, and I believe Pokemon will follow the same trends that older sports sets have already seen.
‘Oh, but the population reports of 1984 Topps justify the drastic price difference,’ I can already hear the naysayers chanting. This is where they would be wrong and here’s why:
When a PSA 9 is worth 6% of a PSA 10, it makes perfect financial sense to crack open every PSA 9 you have and resubmit it 16 times until it comes back as a 10 (sans shipping and processing costs, so let’s say only resubmit it 10 times). Some can cry about how this is immoral, blah blah blah, but that doesn’t really matter here. People are doing it and people will do it as long as it is profitable. The market unintentionally encourages this to happen. That is why I believe the market is fundamentally unhealthy. PSA has no way of knowing if a card has been cracked and resubmitted, though of course they know this happens. Therefore the population reports are inaccurate and will always be inaccurate. The fact that these population reports are used as a pricing reference is almost as laughable as my 1999 Beckett Price Guide telling me my non-rookie regular cards were worth $1 and up.
Over time, as long as PSA 10s are more than 16x the value of PSA 9s, the population reports of 9s will increase exponentially as people crack their 9s and resubmit them. Most of these will come back as 9s again, inflating the population of 9s, and making the market think there are more lower grades then there really are. The greater the gap increases, the more incentive there is to continue the trend. Using inaccurate population reports as a basis for pricing leads to market madness and bizarre outcomes like a 10,000% price jump between a PSA 8 and PSA 10 rookie Elway – coming to a Charizard near you.
Every rational financial instinct in my body tells to avoid these cards like the plague, yet I am under the spell. We all are.
Give this trend a few decades. Eventually vintage Pokemon will have population numbers like 1984 Topps John Elway: 8,000 PSA 8s, 2,500 PSA 9s, 200 PSA 10s. Who knows how many times over those 8s and 9s have been cracked and resubmitted? And do you think resubmitters will have the courtesy to send in their cracked tags? Absolutely not, because that is inconvenient, costs time and money, and would let PSA know you are habitually resubmitting because you can’t mail anonymously and the ID tag can be traced back to your account. The artificially inflated population of 9s and lower coming from resubmitters will decrease the value of PSA 9s until they are worth 6% or less than the value of PSA 10s.
In the future your PSA 9s will not have appreciated; they will have depreciated.
The only solutions to this that I can fathom would be if PSA marked their graded cards with invisible ink to detect resubmission, but I don’t like the idea of my cards being marked with any ink, invisible or not, and I assume most collectors would agree. So then scan each card to an incredible degree of detail and use a machine learning algorithm to “fingerprint” each individual card (could this even be possible AND economically feasible?). The only real solution is for the market to act rationally, which it does not. The value of a PSA 10 should be 10% greater than a PSA 9, not 10x greater than a PSA 9, being that the cards are graded on a scale of 1 to 10. This would make it unprofitable to crack and resubmit cards. Not like that’s ever going to happen, though. The way it actually works is that each grade sells for exponentially higher than the previous grade. It’s a scam that’s worse than the old inflated price guides, but it’s one that we bring on ourselves by putting such a premium on “perfection.”
TLDR:
In conclusion, many collectors like myself may assume they are getting good value by buying PSA 9s instead of 10s. I no longer believe this is the case (and this is by no means a claim that PSA 10s are therefore worth their current price points). Over time PSA 9s will significantly depreciate as collectors resubmit in the chase for higher grades and exponential returns. As long as PSA 10s are bought for exponentially higher prices than 9s, it will be profitable and inevitable that consumers will crack cases and resubmit cards until they receive a higher grade, leading to PSA 9s being worth less than 6% of PSA 10s in the long term. Yes, this is unhealthy, but this is what an unhealthy market encourages.
