How Come No One Ever Talks About This?

[dragon]

In nearly every thread I read, everyone seems to focus on how the grading services are doing right now and how they will do in the future, and about customer service issues.

 

Doesn't everyone realize that there are ALREADY around 10,000,000+ PCGS/NGC coins out there in the marketplace that are ALREADY graded all over the map. So even if the services were to stay exactly on course and not change their standards from here forward, or to ease up a bit and go back to a past standard and stick with it,,,,,,,,what's the difference?? What happens to everything that's ALREADY out there, do they just disappear and we start over??

 

NGC (and PCGS) has tightened up SIGNIFICANTLY in the past 18-24 months, but there are literally hundreds of thousands of coins out there from when NGC was way too loose, especially on Morgan dollars, just go to any major show and look at hundreds of NGC generic common date MS66's and MS67's that are barely MS65's by their standards today. What happens to all those coins?

 

IMO, the whole 'system' is already so messed up and completely inconsistent, it makes little difference what happens from here forward as the horses ran out of the barn long ago and it's too late to close the barn door now.

 

Any comments?

 

Dragon

 

 

 

 

[EVillageProwler]

I think that's why many people push the ``buy the coin, not the holder'' message so much.

 

There is necessarily a far cry between the sight-unseen and sight-seen aspects of our hobby!

 

EVP

 

[a2labmom]

Very good observation, dragon. That is a good argument for "Buy the coin, not the holder"

 

When I purchase a coin, I look first at the coin and pay very little attention to what "holder" the coin is in. It should not matter what holder a coin is in, what numbers are slapped on the holder or who owned the coin before you. What should really matter is, "Do you like the coin? Does it meet your needs? Will you be happy with the coin should you buy it?" Anything else should take second place to coin purchases, IMHO.

 

OK, now I'll get off my soap box and return you to your regularly scheduled program.

[Hoot]

I believe this is why so many of us do refer to inconsistencies in the series we look at/collect. (At least, this has always been one reason for me). That is why any major shifts in the current "standards", as long as they are acceptable to a wide collector base, is repugnant. It creates yet one more grading misrepresentation to look out for.

 

This kind of thing may be very hard to detect based on holder characteristics (e.g. PCGS's changes [which everyone likes to call tightening and I simply like to call an incongruous shift] cannot be told by the holder, as current holders are the same as those used for some time before the shift.

 

So, the advice provided is absolutely correct - buy the coin...

 

Hoot

[cladking]

So long as we insist that coins are market graded there will be continuing shifts in standards. Nothing is static. If collectors were to demand exactly the same sorts of coins and value them in exactly the same way then market grading would remain stable.

 

 

[IrishMike]

The amazing thing to me is when you attend a small local show as I did yesterday, I actually left and came back it was so crowded, that there is very few coins there that are slabbed in PCGS or NGC holders. This is fine we me because I go there to buy raw coins and mostly for the chat. I ran into a guy I met back in 1979 at the show and we chatted about the grading services. Its a large collecting world out there and I get the impression that most collectors don't know one sevice from another.

[dragon]

cladking,

 

I'm not sure I understand that reasoning, an MS65 from 1987 should be the same as an MS65 today. My standards for grading haven't changed in the past 16 years. IMO, PCGS and NGC should have stuck with the exact same standards as when they first began, but I suppose that's impossible due to how many different graders the services have had working for them over the past 16 years.

 

Dragon

[Tradedollarnut]

I think it's impossible to stick to exactly the same standards. You get so much grading "creep" with the crackouts. Submitting a coin 50 times until it gets the higher grade leads to an inexorable movement toward a looser standard.

 

When I first started attending shows, I was amazed at how poor the dealer's wares looked compared to how I thought the coins should look. After a time of staring at the same old stuff, your eye tends to adjust. New graders are almost always hired from the dealer community - they've been adjusting to the creep as it goes. So standards slowly slip away. If I had to make a living selling $500k of coins per month, I'd quickly adjust my standards to the market or starve!

[dragon]

Shortly after PCGS first began, they said they formed a grading reference set for nearly all major series of US coins and that they would constantly add new coins to it. That must have been a hoax as PCGS has clearly never stuck with one standard for more than a 2-3 year time frame.

 

Dragon

 

 

[cladking]

People's tastes change. They value the same thing differently as time goes by. Even if one individual's valuations remain extremely stable over a long period, there is still a constant influx of new individuals with different perspectives. Since coins are not graded to absolute standards due to market pressure, the "market standards" to which they are graded must necessarily shift over time.

[GDJMSP]

cladking -

 

As you know I have written a great deal on this subject - and my thoughts about it. I am not now and never have been in favor of market grading - never will be. But you are correct in your statement

Since coins are not graded to absolute standards due to market pressure, the "market standards" to which they are graded must necessarily shift over time.

And to me that is the key to the entire issue. Because professional coin graders do not have to give in to market pressure - they merely choose to do so. All they need to do to put an end to it - is choose to stop doing so.

 

It is not carved on some granite mountain top that as prices escalate - grades escalate too. The grade can remain static - and the price can go up - or the price can go down - depending on supply and demand principles.

 

No matter whether an idividuals perceptions of value change or not - that does not mean the grade needs to change with it. And it does not matter if there are new individuals entering the market with a different perspective. If any individual - thinks a MS65 coin is worth $100 or $1,000 - fine let them pay it. But at the same time the professional graders should still assign the grade of MS65 and not change it to 66 or 67 just because the price went up.

[cladking]

In order to get completely away from market grading it would be necessary to grade a coin on each of it's attributes against an absolute or a relative scale. People would probably still insist on a net grade in order to make pricing easier. This net grade would tend to fluctuate over time as the various attributes waxed and waned in importance. Ten years ago strike was much less important to the grade than it is now. What will become more important in the future?

 

The grading companies have to keep up with the market or people won't use their services. If lower grade coins begin to consistently bring more money than higher grades if they have a good strike then the integrity of the services will be questioned.

 

We are asking the grading companies to price our coins and then complaining about consistency when we start paying more for coins with good strikes or perfect centering.

[Oldtrader3]

I believe that PCGS had a full grading set for Morgan and Peace Dollars. They used it to do the preliminary programming on the "Computer Vision Grading System" (does everybody remember that fiasco?).

[gmarguli]

PCGS displays parts of their sets at shows. I remember seeing slabs that said "low-end MS64", "medium MS64", & "high-end MS64" or some wording like that. They have displayed their Morgan set several times. These were next to the case of PCGS slabs that said "counterfeit", "altered surfaces", "artificial cameo", etc.

[Oldtrader3]

Now that you mention it Greg , I remember seeing the set at one of the ANA shows years ago.

[GDJMSP]

Well we've hashed this out before clad - and it's obvious we'll never completely agree. But then that's what makes for interesting discussions

 

But I am curious - most folks who read the forums pretty well know what I would like to see regarding the grading services. What would you like to see ?

[Oldtrader3]

I personally would like to see the elimination of the Them and Me attitude of the services, particularly PCGS. Now with the recent management changes and that Rick has joined NGC maybe he can help start the process of healing and rebuilding confidence and bridges on both sides.

 

It would be wonderful to start building those bridges with PCGS to accept the fact that: Yes there is more than one service and the market place is big enough for two strong competitors. There are differences but that is what makes the world go around. The large services should worry more about building market share off the backs of the small services.

 

Each Large Service should have an Operations, Financial, Strategic Plan that promotes healthy competition with each service accepting the differences and building strategies to exploit those differences without all the mud slinging and innuendo.

 

The present conflict is not a healthy business climate, for either service. Both need to exploit the present window of demand opportunity to help expand the collector base and build revenues for both companies. This market (demand) environmental window is not going to last forever, but while it is here, build the top line and make both companies more profitable.

 

" Business is business and love is bullsh*t" as my father used to say. It means don't publically air the dirty laundry. Business should worry more about sticking to their strategies and competing better on the basis of "Customer Facing", Quality and Service.

 

This is my dream of the future of this industry and I sincerely hope that it becomes reality for everyone's sake, especially we collectors.

[cladking]

Really the grading services do an excellent job for what they are charged to do(i.e. price coins). What is needed is for collectors to decide that they would rather have their coins graded than priced. This would require a great deal of work to define the terms and ranges of the various attributes of grade. It can't really happen until collectors demand it but perhaps the grading companies could start the ball rolling by also displaying the component "grades" for marking, strike, die condition, and luster. It woud be nice to eventually end up with a system where the grade would give you an idea of what the coin looks like rather than what it was worth at some point in time. There would be many unforeseeable benefits and some rather apparent ones.

[dragon]

cladking,

 

It has always been my impression that the grading services are NOT supposed to take into account the prices of coins, and are supposed to grade coins without regard to pricing or market strength or weakness or changing fads or tastes,,,,,,thats is what was supposed to make them unbiased and consistent and reliable. Market movements should not dictate to or influence how a relaible, unbiased, 3rd party service evaluates coins or any other collectable IMO if they want to keep their credibility.

 

Dragon

[EVillageProwler]

Dragon,

 

I want to throw out an idea that I'm not so sure I support, but here it is for thought:

 

In a nutshell, you say that the services should not be influenced by the market, which may make sense in theory. But, does it really make sense in reality? The market is essentially us. It is people like you, me and all who are into coins. The graders are people too. They are like us, except that they have more experience than the average collector.

 

Why should they (the graders) be different than us (the non-graders)? To say they should be different is to say that they should remain unaffected by the market. To say that they're not different means that they are part of the market.

 

Moreover, since we are the market, why would we want the services to on the outside and moving contrary to market wishes? It's like if there's a big jogging fad in this country, but the government is trying to force cars upon us.

 

Anyway, I'm not sure I support what I just wrote, but I think it's worth at least some thought...

 

EVP

 

[dragon]

EVP,

 

It is PCGS's policy that the graders are not supposed to be "part of the market" so to speak or deal in coins in any way. I even remember R. Montgomery once telling me that he had "no idea" regarding the pricing of certain Morgan dollars in certain grades.

 

IMO, it is the job of a reliable grading service to develop a standard and stick with it consistently over the long term regardless of fads, market conditions, etc. If the market is able to dictate the way a service operates, then they are not really 3rd party or unbiased or consistent or credible IMO which is exactly what they are SUPPOSED to be, or so they say anyway.

 

As a comparison, I doubt that GIA or any other highly regarded gem stone grading service alters their grading standards up or down depending on market conditions or what the diamond market dictates to them or what's in vogue today, etc.

 

Dragon

[EVillageProwler]

It is PCGS's policy

 

Ok, when you start your post with that, I tend to zone out. We all know how I feel about PCGS and their policies!

 

Anyway, I digress...

 

You're comparison between our industry and GIA is an interesting one, but doesn't address the concept of right and wrong. You're basically saying that it's wrong to allow the services to be affected by the market and the independence that the GIA has shown is right.

 

To me, at a minimum, that's just two ways of doing business. And, they're two separate industries. The diamond industry is almost a monopoly, and has a lot more money at stake (and, hence more corruption). And, the diamond industry is not in any way shape or form a hobby.

 

I think I'm still not convinced -- at least not by the GIA example.

 

EVP

 

[cladking]

They do. They have said so repeatedly. If they didn't then some high grade coins would be graded lower than some low grade coins as conditions evolve.

[dragon]

I would further add that for any grading service to remain consistent over the long term and have a standard that people can rely on, they must have the same people grading coins over that time frame. I can't even imagine how many different graders PCGS and NGC have had since 1986. I know that PCGS generally takes people out of the industry (generally experienced, higher profile dealers) and have them take a "PCGS grading test" and if they pass this random test, they are offered a job as a PCGS grader.

 

It is common knowledge that opinions differ among all experienced graders and different people look at different aspects of a coin when grading and have different tastes for what they like and don't like about any coin. So how can PCGS possibly expect us to believe that "their standards" haven't changed over time with so many different graders working there?? Show any high grade coin to several high profile experienced dealers at any major show and you will certainly get a wide variety of opinions, this is normal and expected. And I do not believe for one second when PCGS says that "all graders grade to the PCGS standard", thats total BS IMO.

 

All of the above IMO is exactly why there is no real thing anymore as a sight-market (which was one of PCGS's basic foundations) for coins as market makers would basically have no clue as to what they would get for their sight-unseen bids and to which standards they were graded. Furthermore, as more coins now trade as to the actual coins quality, the holders become less important in determining value IMO, which again, goes in direct contradiction to the original premise of the services 'value' as an impartial 3rd party, consistent service.

 

Dragon

[GDJMSP]

Well now - we may be able to agree on this after all

 

Seriously clad - I have always understood your opinions and your reasonings. And I am pretty sure you have understood mine. And when it comes right down to it - I think we both agree on what we think would be best. And after reading some of these other posts - I think there is more than 2 of us.

 

But you hit on the key points - things that need to happen. So I hope ( stress hope ) that the powers that be are reading this.

 

What is needed is for collectors to decide that they would rather have their coins graded than priced.

 

You are right - it has to start with the collectors. WE are the catalysts - we are the ones who make things happen the way they happen and WE are the only ones who can force the change.

 

It can't really happen until collectors demand it but perhaps the grading companies could start the ball rolling ...

 

Are you listening ?

 

It woud be nice to eventually end up with a system where the grade would give you an idea of what the coin looks like rather than what it was worth at some point in time.

 

YES - please God - say it can be so !!!!