PCGS debunks three rare micro "o" dollars.

[truthteller]

They concluded that three new orleans minted dates, 1896 mirco 0, 1900 micro 0 and 1902 micro 0, are now considered counterfeits. I would be concerned if I were a collector of these dates and spent $$$$$$$.

 

 

http://www.pcgs.com/articles/article_view.chtml?artid=4400&universeid=313

 

 

 

 

 

TRUTH

[gmarguli]

They do say they will buy them back at market value. That's about $5.50 in silver right now.

[GP_]

ummm errr #@$%!!!

[James_OldeTowne]

Kudos to PCGS for publicizing this discovery!

 

James

[cpm9ball]

They do say they will buy them back at market value. That's about $5.50 in silver right now.

 

The statement says that PCGS will reimburse the owner for the coin's market value . Isn't this different from the market value of the silver content? Does anyone have a copy of the PCGS Grading Guarantee?

 

Chris

[gmarguli]

They do say they will buy them back at market value. That's about $5.50 in silver right now.

 

The statement says that PCGS will reimburse the owner for the coin's market value . Isn't this different from the market value of the silver content? Does anyone have a copy of the PCGS Grading Guarantee?

 

Chris

 

I honestly have no idea what they will pay, but it's not like PCGS slabbed a counterfeit coin and they are saying find the value of a real one and we'll pay you that. They are saying that ALL of them are counterfeit. Therefore, the value is really the base metal unless you say there is a value to the counterfeit, in which case there is no loss for you since you now have a counterfeit.

 

I'm sure PCGS will pay a fair price for them. It's cheap PR.

[Hoot]

Nice article and interesting information. I'm sure auction records will tell them what to pay - certainly not the CU price guide.

 

Hoot

[truthteller]

"The statement says that PCGS will reimburse the owner for the coin's market value "

 

 

PCGS coming out and notifying the public that they graded counterfeit coins is a two edged sword. By "disavowing" these coins, they have admitted to collectors and investors that they do grade counterfeit coins, albeit, the variety has been around before the grading services were established. Furthermore, PCGS acknowledges that coins in their holders can be subject to future "disavowing", such as with the 1963 PCGSPR70 1C As a long term collector and investor, this would not make me feel good. On the other hand, if PCGS were to consistently and publicly pull bad coins off the marketplace and compensate fairly, that would be in their best interests. Unfortunately, there are so many AT and altered coins in TPG holders, it would be a difficult and expensive venture.

 

 

 

TRUTH.

[TonerGuy]

Unfortunately, there are so many AT and altered coins in TPG holders, it would be a difficult and expensive venture.

 

If there had been 12,000 of these coins with a market value in the range of $500,000 or more, do you think PCGS might have taken a different approach?

 

I do applaud them for standing up and taking one on the chin, but this isnt going to be a hard hit. And it can put them in nice standing with their VAM customers making a statement that even though they are new to the game, they are on top of it.

 

Michael

[Techno_mike-migration]

Excellent post...very informative.

I don't collect Cert Morgans, but the general "theme" here is interesting to me. It will be interesting to see what is offered by PCGS for these...Please keep us informed.

 

Do they want them out of their holders and off the market?

 

Will they take on a new life as "certified counterfeits" in the future? The fewer there are in slabs the higher the price it would seem to me. I think I would like one myself, but want it cheap.

 

Mike

[truthteller]

My assumption is they will buy the coin and probably donate the various coins to the ANA musuem as a write off. The ANA museum has quite a number of counterfeits and uses them for research. Same with the American Numismatic Society research museum.

 

 

 

TRUTH

[truthteller]

"If there had been 12,000 of these coins with a market value in the range of $500,000 or more, do you think PCGS might have taken a different approach?"

 

 

Yes, I am sure all the TPG services would handle this scenario differently. For example, there is just too many early US(pre 1830's) coinage which has been "messed with" over the years. I would assume the TPG services would be more select as to their purchase guarantees with these coins.

 

 

 

TRUTH

[TonerGuy]

I would assume the TPG services would be more select as to their purchase guarantees with these coins.

 

Well, you see that's the problem with a guaranty, you really can't selectively warranty/guaranty some coins and not others. PCGS's guaranty would apply to all potential coins that aren't fit for merchantability, ie., coins that are fakes, counterfeit, altered, artificially toned, lasered, whizzed, ect. Basically if there's something wrong with the coin that if they new about before grading the coin would have caused them to BB it.

 

While it seems that on a logical basis this situation only applies to micro O Morgans, one could certainly make the argument that it has universal application to all unfit coins in PCGS plastic.

 

Armen Vartian, former (I think) Legal Counsel for PCGS wrote a very topical article for this week's CoinWorld on a guaranty of authenticity. However, in his article he discusses the warranty of merchantability you receive when you purchase a coin from a dealer and the legal requirements and statute of limitations that apply to such a warranty. Whether you believe it or not, any coin you purchase from a dealer has a warranty of merchantability attached to it, unless the dealer states in his sales form that he is disclaiming the warranty of merchantability.

 

Thus if you purchase a coin that's not merchantable, ie., authentic, you do have legal rights to enforce under the Uniform Commercial Code to secure a refund. The same applies to the TPGs. And I do believe that a subsequent purchaser of a fake, slabbed coin would be considered a third party beneficiary to the original contract that the warranty attaches to.

 

With a TPG, that places a guaranty on their services, this might supercede the UCC's warranty of merchantability, which has a four year statute of limitations, and require them to warranty/guaranty the coin for as long as it remains in their slab untampered with. This only seems to make sense.

 

Long story short -- PCGS has to buy back these coins at the level of damage caused to the purchaser. They can't disavow the coin and then determine what the coins is worth and only pay that amount. The damages following from their malfescence is what the purchase price of the coin was. Now if you cant prove what you paid for the coin, then perhaps a market rate would apply.

 

Dont know if that helps -- but everyone here should read the CoinWorld article at least!

 

Michael

[truthteller]

"Long story short -- PCGS has to buy back these coins at the level of damage caused to the purchaser. They can't disavow the coin and then determine what the coins is worth and only pay that amount."

 

 

Your post was excellent and adressed the major concerns of the TPG and the buying public. Eventually, the liability will become too large, affecting the survival of the TPG services. Actually, one grading service has publicly disavowed a rather expensive modern coin, thus setting a precedent to disavow at any time they wish. Legally, I don't know whether this opens a pandora's box or not, yet the grading service does indeed determine a coin's value, when they give it a grade, thus applying a value. Since each new coin is graded, the TPG knows full well that a previous coin has sold for X amount, so they assign an X value for the given grade merely by rendering an opinion. What bothers me the most is grading services that are attached to retail outlets which market those coins for an X value. Thus, there is no way for the grading service to NOT know a coin's value.

 

 

 

"Well, you see that's the problem with a guaranty, you really can't selectively warranty/guaranty some coins and not others"

 

 

But this happens all the time. Isn't this where the opinion of the TPG comes into conflict of interest with the value of a coin, thus providing an incentive NOT to honor the guarantee? I know from secondhand experience using one of the TPG's regrade guarantees, that a downgrade/repurchase of a questionable coin will only be honored if the grade changes or the service deems the coin counterfeit. Thus, what impetus can be provided for the grading service to honor the guarantee if TPG will lose a substantial amount of money? The TPG essential holds all the cards for compensation to the buyer. A nightmare scenario is if many collectors demand compensation for expensive coins all at once.

 

 

 

 

 

 

 

TRUTH

[TonerGuy]

Isn't this where the opinion of the TPG comes into conflict of interest with the value of a coin, thus providing an incentive NOT to honor the guarantee?

 

Yes, I would say that for the most part that is a true statement, however, if a TPG doesn't honor their guaranty it could and probably would affect their standing in the market place, number of submissions received and finally their overall financial stability to continue to operate. So knowing this, I would bet that NGC and PCGS would still step up, buy the coins back and take the hit, which they could probably write off as a loss anyway.

 

I know from secondhand experience using one of the TPG's regrade guarantees, that a downgrade/repurchase of a questionable coin will only be honored if the grade changes or the service deems the coin counterfeit.

 

You have two different issues -- grade vs. authenticity. Grades are subjective, authenticity is not. So with the grade guaranty a TPG will have wide latitude to determine the scope and extent of their policy, ie., they can affirm the grade and refuse a buyback. With a coin that has questionable authenticity, ie., counterfiet, whizzed, harshly cleaned, AT, AF ect., This less subjective, either the coin is or isn't one of the aforementioned and their ability to subjectively determine a buyback is gone.

 

The TPG essential holds all the cards for compensation to the buyer.

 

If the coin is questionable as to its authenticity and NGC/PCGS should have BBed the coin pursuant to their own standards, they can be forced to buy back the coin, if they chose not to. Of course this might mean you will have to take some legal action against them. Obviously the price of the coin will dictate how far a potentially damaged buyer might want to push this.

 

A nightmare scenario is if many collectors demand compensation for expensive coins all at once.

 

Yes, I would imagine with the sheer number of coins now graded, that if perhaps even 2% of those coins were determine to be unfit and NCG or PCGS would have to honor their warranty of merchantability, that could seriously place a large strain on their operating budgets to such an extent that it might cause a shut down. Though I would imagine that both NGC and PCGS have taken the necessary steps to secure insurance from a AAA rated insurance company in order to pay for such an event.

 

Its a tricky business to be in. This is exactly where I think a lawsuit could have been filed against ACG in order to have them buy back their coins that were either counterfeit, cleaned whizzed ect that they slabbed. Anyone who has started their own backyard slabbing company has to be aware of the potential legal ramifications of placing your item into the stream of commerce on Ebay and stating the coin is real and its a MS65. If you start acting like an expert, in the eyes of the court, you will be treated like an expert, and experts rarely make mistakes.

 

Michael