We all know that graded comics sell for much higher prices than equivalent raw copies.

In this post I want to answer the following question: Have the grading companies blown up the value of our books to dangerous levels or was the standardization of professional grading criteria merely a natural progression in the hobby?

In other words, have the higher values on comics we see today arisen mainly because of the presence of third party grading? That’s the topic that I’ll explore here.

To start, what effect have the professional grading services (mainly CGC, CBCS and PGX) had on the price of comics since the early 2000s?

Obviously, prices have gone up on all older comics in relation to their prestige and rarity.

One problem with answering the question of increasing value is getting clear on what causes price inflation in comics in the first place.
Some assume that there exists an ‘objective’ value for comics, i.e. something like a ‘natural price’. Well, if that were so, then what would determine it? Is it the cover price?

I wish.

I’d love a copy of Amazing Fantasy #15 for 12 cents.

This doesn’t seem like a credible account of how prices are established.

Generally, in an advanced economy, prices on all goods arise as a consequence of market forces.

Remember that economics, as a whole, is basically about scarcity. Think of it this way: if nothing were scarce, and everything was abundant, we wouldn’t need to economize.

Since many goods are perishable and limited, we do need to economize - starting with resources and extending to tools and technology, commodities and other goods. Comics are obviously not essentials or primary goods or resources. They are basically ‘alternative investments’, i.e. collectibles (see my posts on this starting with Notes on Collecting Comics (Pt. I)). By definition, a collectible is “an item that is worth far more than it was originally sold for because of its rarity and/or popular demand.” (see here).

The key word here is “demand”. Demand, or what someone is willing to pay, is ultimately the ONLY thing that determines the value of your comic.

Enter the grading companies.

The main reason people grade might very well be preservation. Maybe, some people want to keep their comics, especially the older ones, in higher condition than would be possible without slabbing (i.e. certifying a book and encasing it in plastic). Another reason might be aesthetic or psychological. Some collectors like to display their high grade comics: they think it looks cool to own 'slabs'.

Ruling out the latter two groups as a small portion of those who submit comics for professional grading, I would argue that the vast majority of people get their books graded because it helps with selling and exchanging.

Think of grading like an insurance policy. If you are buying an expensive book, and the seller is telling you that the grade is a 7.5 without restoration, it helps to have a third party grading company (like the Certified Guaranty Company [aka: CGC] - the most popular) substantiate that. Else you’d have to take it on faith that the seller’s grading and description is accurate.

Unfortunately, we all know that our idea of a comic’s grade can vary dramatically. Interestingly, we tend to grade a book much higher when we want to sell it and much lower when we’re buying.

Grading, in short, simplifies the buying and selling of books.

Professional grading has certainly played a role in raising the prices of books, but I would argue that it has not been the only factor that has led to rising prices. It certainly hasn’t ‘artificially’ raised prices beyond what they really should be– whatever that might mean.

In effect, grading leads to the simplification of the exchange process - another essential aspect of economics in general.

As the exchange of goods is simplified this usually leads to the increased commodification of goods. This, in turn, sends a signal to buyers [in the form of a price] that those goods are what they portend to be and widely or not widely available.

In the case of comics, the commodification process can help make them a viable investment asset since it simultaneously increases the confidence of buyer’s regarding what they’re getting and in that way leads to people feeling comfortable paying larger sums of money for obtaining the genuine thing.

Comics, in this way, can even become an attractive investment.

Have the grading companies increased the value of books? To an extent. Sellers have certainly passed on the cost of grading and slabbing to buyers. However, I don’t think the grading process is the only factor behind the rising value of comics. What grading companies do, rather, is facilitate the commodification of comics.

Graded comics are more liquid: easier to sell and buy. This, in turn, increases their appeal as investments and places a stress on older comics as worth more because of their limited numbers.

That said, grading also introduces a micro-managed price scale- slight differences in condition, ignored in earlier times when “Near Mint” was adequate for charging top-prices, have become stressed. In effect, subtle refinements of condition come into play and this can lead to rising prices. A 9.6 grade of any given comic can be worth significantly less than a 9.8 deemed copy of the same book. This is true even though most people, and even many collectors, cannot really tell the difference between a 9.4 and a 9.6, never mind a 9.6 versus a 9.8 graded book.

The intrinsic value of the book however remains the same. This is always driven by demand and appeal to buyers. If prices have increased, it’s certainly not because the books are objectively more valuable – although we have lost many Golden and Silver Age comics at this point – grading has made evident how few of the older comics still exist in higher grades. Buyers, noting the scarcity, consequently shell out far more money.

The main downside to this is that modern comics, which are not as scarce or hard to find in high grades, also appreciate in value if they are graded- often much above what their actual numbers would otherwise demand. Potential dangers in this trend include disillusionment among young collectors who overpay for modern books that may not appreciate in the future.

Anyone who loses money in large sums can quickly lose desire to stay in the hobby. Unfortunately, I’m not sure there's an easy solution to this problem.