A letter from Mark Salzberg

Dear Clients and Community Members:

There’s a lot of talk about what the year 2009 will mean for the coin business. I’d like to share some of my observations with you and look back at the past 12 months.

NGC had its share of successes in 2008. Despite the overall economic climate, we certified two million coins in 2008, demonstrating that the coin industry can show strength even in a down market. We made our products more accessible through the development of new submitter relationships and expanded online resources. We also upgraded the security of our products while enhancing their appearance. These developments were very well received.

The clearest demonstration of this is the role that NGC certification played in many of the major numismatic events of 2008. Here are a few of the highlights:

• In February we graded the Queller-Mickley 1804 silver dollar. Only eight of these Class I Dollars exist, and three are permanently held in museum collections. Of the remaining pieces, we have graded four. This example realized $3,737,500 when it sold by Heritage on April 18, the third-highest price ever paid for a coin at auction.

• In April, NGC was first to recognize the newly discovered American Silver Eagle with Reverse of 2007, this series’ most significant variety to date. Of the 47,000 reportedly struck, NGC has certified over 14,000, underscoring our leading role in certifying coins for the modern market.

• In May, coins from the steamship New York were offered in a Stack’s auction, and all were conserved by NCS and certified by NGC. Several finest known examples were recovered, including two 1844-O eagles graded NGC MS 63 and an 1844-D half eagle graded MS 63 PL.

• Later that same month, the Millennia Collection was sold by Goldberg’s. Certified in its entirety by NGC, the collection proved that World coins have entered the stage in a big way. The collection realized over $23 million, at that time the highest total ever for a World coin auction.

• In September NGC graded the unique Russia 1755 pattern 20 Roubles piece. This coin later sold in a St. James’ auction in London for approximately £1.55 million (approximately $2.86 million), the highest price ever for a World coin. In combination with the Millennia Collection, such results underscore the fact that NGC has become the undisputed leader in the certification of World coins.

In response to the demand for NGC coins throughout the international marketplace, NGC created a multilingual Web site resource. We opened an office in Zurich to help increase the awareness of NGC throughout Europe and to assist customers with inquiries ranging from taxes to customs and shipping. This will make the submission process a smooth one for submitters outside the US. In addition, we also formed submission center relationships with prestigious numismatic organizations in China and Singapore. These meaningful additions support the talented and experience team we’ve assembled in Sarasota. Even just a few years ago, submissions from outside the US were relatively rare. Now, every day NGC receives a number of submissions from collectors outside the United States.

As NGC becomes more of a global company we are still very focused on the domestic marketplace. Here are some of the things we have done in 2008 to aid collectors of US coins:

• In January we expanded the star designation to all grades of US coins. This feature is our unique way of recognizing coins with exceptional eye appeal or other special attributes that are not communicated by grade and designation alone.

• NGC made numerous enhancements to its Web site for collectors of US coins. Included was a major retooling of the online census, making it interactive and much easier to navigate.

• We integrated the NumisMedia Price Guide for US coins into our site as a free resource. We’ve been asked to offer pricing for a long time, but our philosophy has always been that there should be a separation between pricing and grading. While NGC does not provide pricing services itself, we were able to form a long-term agreement with NumisMedia, a leading impartial guide. To remain independent, NumisMedia does not engage in the trading of coins, and this policy is consistent with NGC’s own policies regarding employee involvement in the commercial marketplace.

• NGC also added an online reference guide to VarietyPlus®, our US coin variety recognition program. This tool makes it easy to learn more about the varieties recognized by NGC and should develop into an essential resource for collectors of die varieties.

• In March we also added our Coin Encyclopedia, which is a great way to learn more about your favorite coin series and see images of thousands of coins. I really encourage collectors to explore the “NGC Research” section of the site.

• Our multi-year research project with the Smithsonian Institution passed a milestone which has had wonderful benefits for the community. The “Top-200” most valuable US coins in the Smithsonian’s collection were encapsulated in an NGC-developed holder. One goal in working with the Smithsonian was to increase the accessibility of the collection and this is made possible with the new holder. Director of the Museum of American History Brent Glass stated, “The coins are popular for scholarly study and now they can be handled safely.”

• To approve it for use, the Smithsonian’s own researchers and conservators conducted extensive tests of the NGC holder, submitting it their own rigorous examinations. The outcome is an important validation of our own R&D. According to their information release: “The Smithsonian conducted rigorous materials analysis and testing to establish the long-term safety of all of the components used in the manufacture of the holders. Results indicate that the holders will remain inert and stable for decades into the future.”

In 2008, NGC’s newest holder—the unique EdgeView®— debuted to wide acclaim. It incorporates many security features, such as a state-of-the-art hologram, developed with consultants who leveraged our experience of over 20 years in providing certification and encapsulation services, as well as all the knowledge gained from working with the Smithsonian. We also now use a pronged insert which suspends a coin within the holder, bringing in light and allowing its edge to be seen. While I believe that we have the best holder available, we're still working on making it better. We’ve been developing a scratch-resistant version of the NGC holder, which will appear in limited use as soon as January 2009 and we will be offering a reholder special for any submitters who would like to have their coins in the new scratch-resistant EdgeView holder in early 2009.

Our attention to security did not end with our holder. Security enhancements were a major part of 2008. This was true in January when we formalized penalties for submitting “doctored” or otherwise deceptively altered coins to NGC. We remain fully committed to maintaining these increased enforcement efforts.

The biggest step forward in terms of security is our photography initiative, just announced this week. Every single coin certified by NGC and NCS is now being photographed in its holder. So far, over 750,000 coins have been photographed. If ever a holder is suspected of having been tampered with or of being counterfeit, it can be compared to an image in our photographic database.

Finally, perhaps the biggest news for 2009 is NGC Ancients, a comprehensive service for coins of ancient Western civilizations. Ancient coins are astonishing artifacts. There is so much to learn from and appreciate about ancient coins, and I sincerely hope that they will become more accessible as a result of NGC Ancients. Our first project was to grade 200 coins for the prestigious Swiss auction house Numismatica Genevensis SA, among them was a Sestertius of the Roman Emperor Hadrian, which realized $1.9 million becoming the most valuable ancient coin ever to trade at auction. The formal launch of NGC Ancients is January 1, 2009.

We all recognize that there will be challenges for the numismatic community in 2009. For our part, NGC will continue to maintain its responsiveness to our customers—every single one—from neighborhood coin shops to large wholesalers, from beginning collectors to advanced specialists. That focus on our relationships with our customers is the foundation of our success and a great source of personal pride for me and the entire NGC team and we remain committed to doing all we can to insure that we meet your expectations of us each and every day.

Sincere regards,

Mark Salzberg
Chairman