DLRC takes the plunge.!!

[DC Dawg]

Let me explore a slightly different angle by projecting what John Feigenbaum may be thinking:

 

Since December, the "second tier" of grading services consisted of ICG and ANACS. James Taylor put both of those companies in turmoil. I monitor the chat boards and have heard about some grumblings from ANACS customers. I have also seen some questions about ICG.

 

I am sitting on a business, DLRC, that is doing very well. Sales are growing and the Internet auctions are becoming more popular. We've increased business with a guaranteed auction program and will name auctions for people selling entire collections. But I need something else to expand the business. There are only so many programs that could be added to coin and currency auctions. What's next...

 

PCI is available. After JT Stanton left PCI, whatever credibility it had made it go down hill. But it is an asset. It has a customer list. If we put the same effort into turning around PCI that we did to expanding DLRC, we can move into the market that ANACS and ICG seems to have fractured because of recent events.

 

Who do I know? Can I turnaround a fledgling company? Can I attract good graders? After all, we're in Virginia Beach, a wonderful area to live and raise a family and central to a number of the east coast destinations. If I speak with ____, will he be willing to help? What about ___?

 

---END OF DREAM SEQUENCE---

 

A person running a company like DLRC does not go into something like this without a plan. Feigenbaum took his father's company and made it bigger, maybe he feels he can turnaround PCI. One thing I have noticed about DLRC is that they are very technology aware and it would not surprise me if technology is not involved in fixing DLRC.

 

Some one line predictions:

• I would not be surprised to hear that some well known and respected person will join DLRC/PCI to help lead the turnaround.
• I would not be surprised to see a new PCI slab that would be a cross between the ANACS Clearview and NGC slabs
• The new PCI will turnaround by restricting what they grade, but will move into the "grade anything" role within one year.
• PCI will re-introduce itself to the market at the Baltimore show in June 2008 with on-site grading.
• PCI will announce a new program that is different from any other service at the ANA World's Fair of Money this summer in Baltimore.

Watch... it could happen!!

 

Scott

[PerryHall]

that's too funny..I just had a crazy vision of people cracking out PCI coins to try for upgrades by submitting them to NGC and PCGS...

 

That would not be so unusual with the older PCI slabs with the green labels. They were very conservative graders under the first owners.

[BULLY]

So, does that mean that any PCI slabbed coin (after the new company is in full swing) will automatically command much higher prices? There is mentioned in the open letter, :

 

"You can also expect a different result than you previously expected on submissions. We will be much tougher on submissions than the "old" PCI. The new PCI coins will stand on their own in the marketplace. And David Lawrence Rare Coins will stand behind the new PCI with market support. We will make an active two-way market in the new PCI slabs"

 

The way I interpreted that press release (and the rest of it since it elaborated), was that new PCI coins will, in fact, be distinct in the marketplace. The announcement indicated that the new coins would be distinguished by new holders, clearly making them look different than the 'old PCI."

 

The problem, I wonder, and not that it matters much to me since I was never a PCI user, is this: If you ARE a PCI user, or if you have a lot of OLD PCI slabs, will the "NEW" PCI offer you anything in the way of compensation or incentive to get them graded or RE-GRADED under the "NEW" PCI standards?

 

I don't think that even the new coins will automatically command higher prices in the marketplace. They may command higher prices that the old ones, perhaps. However, I think ANY new venture takes time. And look how long ICG has taken to gain any modicum of respectability in the marketplace vs. ANACS who had been around for so much longer. Then comes the ANACS sale and shake-up, and will that last? So much can happen, and so easily tarnish a reputation.

 

Part of the problem most serious collectors have:

 

We are trapped. The market on reliable grading (and steady prices for re-sale) is basically cornered by NGC and PCGS. Most buyers don't want to hear about anything else. NGC and PCGS are likely not unaware of this, and can price accordingly, set service levels accordingly, and behave accordingly, because where exactly is the serious collector, investor, or collector/investor going to go as an alternative?

 

May as well be the local cable or phone company where so many of us (depending where you live of course), there is no such thing as "choice." There is ONE carrier, and your choice is get it, or have no service.

[jackson64]

great point there at the end Bully...in a capitalist society like ours competition is probably the single greatest protector of the consumer against inflated prices and poor service..

 

One point that hasn't been touched on enough is the coins themselves...for certain series I only give a cursory glance at the slab grade...I am ultra picky about the details I am looking for in that series ( be it strike quality, matching color, luster..etc etc..)

 

If a PCI holder has a coin that fits my criteria, is graded harsher/lower --and consequently costs less than the SAME QUALITY coin in an NGC or PCGS holder...I'm jumping all over it--name on the slab be dammed

 

Barring a major catastrophe, I plan on owning most of my coins til I die anyhow....when I pull them out to enjoy, I don't waste time admiring the labels...

[braddick]

Look, if Adam Carolla will be performing on Dancing With The Stars, and it was just announced he is going to be...

 

Then certainly DLRC can turn PCI around!

[World Colonial]

That is exactly going to be the the problem for DLRC if he will be slabbing and selling the coins. If the coins he offers in PCI slabs are comporable to NGC and PCGS coins in the same grade which I understand to be his intent from this thread, then I presume he would offer them for the same price (or at least very close) because if he offered them for much less, then getting into this venture would not add value to his business but subtract it. He might as well offer them in an NGC or PCGS holder and not have bought PCI in the first place.

 

The problem for him is that, even if they are the same quality, the same coin in a PCI holder does not have the current market perception and marketability that an NGC or PCGS holdered coin currently has. And we can all tak about "buying the coin and not the holder" all day, but at the end of the day, it would be irrational to pay the same price for a coin that will sell for less at resale. And even if most of the members on this board do not agree with this last comment, most of the collectors and certainly "investors" who have committed hundreds of thousands or millions of dollars will. Moreover, even those who would pay the same would still crack the coin out of the PCI holder and cross it over unless the market acceptance changed between the time when they bought it and when they tried to sell it. And if this does happen, it will mostly or entirely defeat the purpose of the DLRC purchase.

[World Colonial]

The topic you partly cover is the question of monopolies or monopolitic markets. In any economy, many monopolies can only exist because of the government (which is the exact opposite of what most poeople think) and others do so through illegal behaviour (and I am not talking about violation of statutes such as the Sherman Anti-Trust Act) but there are also some "natural" monopolies. An example of one,are the professional sports leagues such as Major League Baseball and the National Football League.

 

With coins, it is more of an oligopoly where a few companies - NGC and PCGS - control the most of the volume of certification and grading. Now whether there is room for only two or how many more, I do not know. But I do believe there will always be more than one because lack of competition ultimately results in poor quality. And since coin collecting is an entirely voluntary activity, I do not believe that either NGC, PCGS or anyone else will ever have a virtual or actual monopoly in this area.

 

I'm with you on your comments about buying an equal coin in any holder for less, but I would still crack the coin out or cross it over if it was economical to do so until an equal marketability existed.

[Tradedollarnut]

40 posts and not one by Bill Jones proclaiming a conflict of interest? I suspected there was a double standard...

[PerryHall]

I'd like to know what guarantee comes with their slab. Also, will they honor the older gold label slabs as far as reholdering them into the newer slab? If they won't, they might as well change the name of the grading company. I guess it's a new day at PCI.

[just-john]

Think it will depend on what part coin market/hobby they go after.If I were them I first would go after the modern commemoratives/state quarter/ Sacagawea dollar/president dollar with a super cheap price the way the majors do with the TV coin guys say $5.00 each when you send in 20 and grade them ms unc.That would get their name out to the public and satisfy

peoples need for plastic for their modern spoons that they already spend up to 20 to 25 bucks for MS69anway.Then grade classic coins conservatively and their standards or placement in the TPGs pecking order should rise in time.Think it's also going to enable them to do some creative pricing on their auction site or in the TV coin shows

I wish them good luck and hope they meet with suscess

 

[carson city]

Interesting Concept----The fox watching the hen house !

[TJ'S Coins]

Maybe through all of this DLRC is buying PCI first as an avenue for non-certified coins to be graded and sold through their auctions. Once the new standards meet acceptance in the collectors market they will expand into more direct competition with the larger, older and better respected TPG's. Time will reveal their business plan further.

[World Colonial]

That might be the idea but this will only work if the marketplace assigns a higher to coins in the "new" PCI holder versus PCGS or NGC. I do not see that happening for a while which means that DLRC would have to willing to leave some money on the table at first to make this happen, either in reduced profits or actually losing money.