OK, a grading company question. What is tough and so what?

[IrishMike]

I continue to read on coin forums that this company is the toughest in the business. Whenever I read something like that, no only do I say so what, but it reminds of a couple of real tough teachers, one from high school and one in the master's program. They intimadated the heck out of everyone, to the point you were afraid to crack a smile in class.Did I learn from, I suppose, but there were far more teachers that I felt relaxed around, that were consistent with their approach. In other words I felt comfortable learning from them.

 

Ok to coin grading companies, suppose grading company ABC is tougher than XYZ. If we assume for a moment that this is true, it means the coins graded by ABC will in the same grade cost more than those of XYZ, but XYZ is more consistent in their grades. I can buy more of XYZ's coins because my resources are finite. If both companies coins appreciate 10% over time, then when I sell I recoup the same profit.

 

So why should I invest in ABC coins (this assumes that my statements are correct, and not saying that they are) over XYZ's? I could actually lose money if I end up with the ABC coins that were not graded correctly.

 

So please point out the flaws in my logic (there has been known to be more than a few over the years, but my wife knows nothing about coins, so she can't postulate an opinion and it must be really bothering her).

[Tradedollarnut]

No flaws in your logic except that there are two more variables that must be introduced - upgrades and changing perceptions of the two grading companies.

 

If, over time, grading standards continue to loosen, then the best coins in the tougher company's holders stand a better chance at going up a grade. However, in my opinion, the standards have loosened over the last 5-6 years about all they are going to loosen.

 

If, over the time the collection is held, the perception of the looser company becomes better or the tighter company becomes worse (or the coins are sold raw), then the premium paid in the beginning is lost or the discount paid in the beginning is captured - both benefitting the looser company's coins.

[Hoot]

Perception of the toughness and accuracy are what rule this market for graded/slabbed coins. Any company that plays their cards on the basis of the former attribute will cause people to lose money in the long-run, then so will the company. The simple fact of the matter is that if a company is prone to a market approach that dupes or exaggerates peoples' perception that they are better because they are "tougher on grading," the company will ultimately cause their own suffering as they will have fewer and fewer of their slabbed coins traded for the accuracy of grade and they will ultimately grade fewer coins due to fewer submissions. I believe that it is a delicate trick to create a recognizable standard for grading accuracy. However, in the long-run this is what submitters will return to a 3rd party grader for, as the reliable persistence of grading accuracy is what the collectors who support the market will turn to for consistency in their collecting endeavors.

 

Hoot

[IrishMike]

Two great responses, I have just heard of so many collectors and dealers complaining lately how tough one of the companies has become. Only today at a local show, I saw more NGC slabs at that show then ever before. The answer was, we no longer know what to expect from their major competitor. How can we buy coins not knowing what they will grade of if they are going to undergrade it. Only the copper guys had PCGS slabs.

[Android]

I've seen the same thing at coin shows. A distinct lack of PCGS graded coins and grumblings from dealers who complain bitterly about these "tighter" standards. I've seen a sharp increase in NGC and ANACS holders. I still don't understand the tight - loose deal. Tighter or looser compared to what? Who is to say tighter is right and looser is wrong? What IS the proper grade for any given coin? It seems to me that standards used by grading companies are only as good as those consumers who agree with said standard - the tired old Pepsi/Coke debate. Nothing more. Maybe PCGS is going to have to learn that they might just "tighten" themselves out of the market if they aren't careful. Or worse, develop such a reputation for changing their own standards that they become irrelevent and untrusted. This is precisely why I prefer NGC. I agree with their grading of the coins I send MOST of the time. There is consistancy in applying their own standards. I agree with their grading standards, as the coins I send to NGC for encapsulation almost always come back with the grade the I gave the coin before sending it in.

 

Andy

[Fairlaneman]

Just a Comment on the PCGS grade tightness and Grading Services.

 

Was talking to a Dealer today that I believe is a avid Buffalo Collector. Well at Long Beach he submitted 13 Buffalo's for up-grade via the Express Submission Rate, $100 per coin. In doing this he explained that probably a few of the coins he knew were tweeners and probably would not up-grade. The rest he was sure would make it. The Results were zero up-grades. It is extremely hard for me to believe this person knew so little about his given series that he would throw $1300.00 away just for fun.

 

IMO the shifting standards of PCGS can only hurt them,as it looks to be happening now, and help NGC, as it also looks to be happening now.

 

Then there was another Dealer that commented on Grading Services as a whole. He was talking about PCGS and NGC as the others in his opinion do not even count. This Guy has some Outrageous Proof Franklins that he has had for many years. One guy asked him if he was ever going to submit the Coins for grading. Dealer responded by saying what the heck for. I know what I have and I will not submit to let a Grading Service tell me my Black and White Monsters are junk. His remark was directed straight at the changing Standards the Services have.

 

By the way this local dealer sold many Franklins to a Nationally Well Known Dealer by the name of Rick somewhat over 10 years ago.

 

Fairly interesting comments from a couple of guys that really know thier coins.

 

Ken

[IrishMike]

Ken, the $64,000 question is why are they being so tight? As a registry participant doesn't it bother you that if you buy a coin for your set it won't either upgrade or be gradely as fairly as those coins you compete with in the other sets that were graded perhaps more loosely?

[CarlWohlforth]

Sorry to nitpick but the flaw in the logic is that toughness of standards and consistency of grading are orthogonal issues.

 

Just because A has tougher standards than X doesn't mean that A is also less consistent than X. Having different standards is one thing, adhering to the chosen standard is another.

 

However my personal experience shows that one can lose money buying coins graded by both A and X

[IrishMike]

Carl, this post originated from talking to dozens of dealers the past year, as well as collectors. The consensus by a large margin is that ABC is not consistent for whatever reason or reasons. I have heard the reasons, not sure I buy into them.

[Fairlaneman]

Mike:

 

The $64,000 Dollar Answer.

 

I would Really like to see the scoring in the Registries corrected to how it should be. A happy medium between the PCGS scoring and the NGC scoring would be correct IMO.

 

When it comes to me competing against other collectors and thier coins I really do not care about that. I really try to buy a coin I Like, this is Stressed I LIKE. The grade does not matter as long as I like the coin. The Competition between Members is real for some but again I can take it or leave it. As you have probably noticed the Merc Collectors across the street have a much different way of approaching thier Registry than other series collectors do. We as a whole try to help each other locate coins and add encouragement for completing the Sets.For the Most Part its not a Competition I believe but a Love for the Series We collect. It just so happens We are in a Registry that does promote Competition or does it. People Promote Competition, Registries Do Not.

 

With reference to whether it bothers me if My coin is Under Graded. Personally I think I can Grade a Merc with the Best of them, so the only Opinion that really counts is mine. IMO both Over Graded and Under Graded Coins are owned. No attempt to Correct this will be done by Myself via Up-Grading by cracking the coins out of Slabs. That Game is not for me. In the other sense I will not send coins back telling PCGS they are Over Graded as I see no sense in that either. Heck most of the Over Grades are Common late dates that are worth $50 to $100 a whack anyway.

 

It took a little time in the Registries to get the attitude I have but in the long run I believe the attitude is correct.

 

Hope this Answered the $64,000 Question.

 

Ken

[CarlWohlforth]

That seems sensible, Ken. I just downgraded a type coin because I liked the new one better. Hey, it was a Mercury dime!

 

IrishMike, if we, just hypothetically speaking, assume that A is both tougher and less consistent than X I have no nit to pick with your argument.

 

Who would care about grades if people weren't trying to find the best, finest, coin they could afford? If there is any argument about what coin is better don't pay the price. If people really bought the coin and ignored the holder there would be no change of value when a coin gets upgraded/downgraded. After all it is still the same coin.

 

The problem is there are very subtle, sometimes personal, differences between coins. If an authority says that one is better than the other many people will pay more for it even if they can't appreciate the difference themselves.

 

 

[Fairlaneman]

Carl:

 

Whats with the Merc's ? My last 5 Up-Grades have been Down Grades as far as the Registry viewed them. Nicer Looking coins IMO.

 

Everyone:

 

Is this happening with other Series also ? Does this reflect the Grading Standard changes that run in cycles as referred too in the Thread Title here ? Seems somewhat so to me.

 

Being that almost all of the coins owned are PCGS this is good for Me but a disaster for a Dealer that makes his living selling coins. No wonder a Dealer cuts his Submissions to PCGS and goes to Another Service,such as NGC.

 

Ken

[Hoot]

Carl - In an ideal world I'd agree with you that toughness and accuracy are orthogonal. But this is not a perfect world. And what's more, PCGS has done the collecting community a disservice by "toughening" their standards and have concomitantly created a lesser degree of accuracy for the grading standard of each and every coin they have encapsulated by making the final grade a moving target (thus violating the orthogonal rule). Their move, done this summer, was a market ploy. The dealer/owners of PCGS were marketing "PCGS coins" (they make coins?) as the "best" in the collecting world, and PCGS registry sets as the "best of all time." (What ). The hype stepped up to an all time high with the rise in the overall strength of the coin market and the simultaneous losses in the stock market. PCGS suddenly dropped their arbitrary market grading "standards" to harken to a "tougher" standard. Now, if I had a bunch of faith in my coins as "PCGS coins," I'd be pissed. If I were an investor hoping to ruthlessly drill some naiive collector or another investor with my hoard of "PCGS coins," I'd be elated. Well what stinks in Denmark is that the community of people who ultimately suffers is the collecting community. Does PCGS suffer? I truly do not know, but I know that they are receiving far fewer submissions from many collectors I know. And ultimately, collectors have to look hard through the plastic and see the coin inside the holder and make the grade attribution themselves. In the meantime, those who own "old overgraded PCGS coins" will get screwed when attempting to sell or exchange their coins, and the new submissions to PCGS will not be accurately reflected to the standard that PCGS graded from, just a short while ago. Sounds like a circus to me.

 

We live with a market grading system that already allows for a great deal of subjectivity and such anomalies as date grading and etc. I think that for a major grading service to change their standards in the moment is a broad disservice to the collector community at large and makes such pursuits as exclusive registries (e.g., PCGS) a sham. Sudden changes just mean less consistency and accuracy. A grading service with owners who are dealers and major market makers should be more accountable for their actions.

 

Hoot

[Guest]

I think that this is a marketing tactic that goes in conjunction with the registry set phenomenon. Let's face it, the registry set is a numbers game where you are letting the grading company rate the quality of your set for you. This would provide a degree of relative comparison across coins if their standards were consistent over time. This system feeds itself in a positive fashion, as it taps into one's competitive nature to own the best "set" you can get your hands on, where people want to upgrade or even crackout for recognition in their set.

 

By adjusting the grading so that it is more stringent than other companies, you have adjusted your angle in the market so that your coin slabbed as the same grade is of higher relative quality than from other grading services. This is angled to the collectors that very much want to feel that they have the highest quality set confirmed by a so-called 3rd party, not just their personal opinion.

 

Much of what I see here is centered around the seller's perspective. Another way to look at it is from a buyer's perspective. If you have a new breed of registry collectors that are looking for slabbed coins from company X, you have just created demand. The people who do not want to submit to company X will just lose out in the game, as the ones who do submit will have little competition and will get premium prices. Over time, demand will likely adjust and the people who spent too much for the coins will be the real ones who lose out. If the grading standards of company X fall back in line, then there will be a mad rush to buy the older, more strictly graded coins to crack out for resubmission. The game is then started all over again.

 

Things in life are not stagnant and you need to adjust if you want to succeed. I see nothing wrong with a grading service wanting to tighten their standards. If company X wants to undergrade coins, I can bet that I can get a similar quality coin from them for less money than the higher slabbed grade from company Y. Let's face it, one "marked" grade can result in a tremendous price jump even when comparing across the top 2 grading companies. Since I am not bold enough to say that I can grade coins better than the top professional graders hired full-time by the top grading companies, it instills a degree of confidence in the grade that is marked and minimizes the impact of the subjective nature of grading.

 

Since ebay has had a huge impact on coin collecting and selling, I would not underestimate the demand for strictly-graded coins that would be found in this sight-unseen market. I think the company has shown great foresight here. If you don't want to submit to the stricter company, that's fine. But, I know I will be searching out those people who do sell them on ebay. Even a low end coin for that slabbed grade would likely be very acceptable.

 

Wow, that was way too long!

[CarlWohlforth]

If we are talking hypothetically then I agree a lack of consistency could either cost you dearly or could create opportunity.

 

If we are saying that many dealers and collectors agree that PCGS has changed their standards and are grading inconsistently that is another thing.

 

I'm just a small time dude who doesn't get to go to very many shows nor see enough coins. I have been buying both NGC and PCGS coins for 7 years now. Aside from the addition of Cameo designations to old proofs, the new star designation and the toughening of the PCGS 70 standard I have seen little change in standards. I have seen inconsistencies from both services. But as my experience is so small you all can safely ignore it and continue with your beliefs

 

Ken: I found a proof 1940 Mercury dime with slight cameo contrast and very nice mirror like fields. It is graded 65. It has some hairlines. I like it better than the brilliant 1942 in 67 I previously owned. To me this is an upgrade. For one thing I like the cameo contrast for another the 1940 coin has half the mintage (only 11,000 made!).

[GDJMSP]

For quite a few years there has been a lot of complaining about the market grading system. Collectors have howled like banshees about the overgrading that has been pervasive within all of the grading companies. While it is true that a lot of this complaining was coming from the older segment of the collector society - a great deal of it also came from the newer collectors as well. Then the registry sets began. Suddenly overgrading was a good thing - as long as it came from the grading company that you had your sets registered with.

 

Then came the resubmissions & the crossovers. " If I crack this coin out of an ABC holder and send it in to get it graded and put in a XYZ holder - I'll get an upgrade and my collection will move up in the registry set ! " Or - " If I resubmit this coin to be regraded - I'll get an upgrade !! "

 

But if ABC or XYZ - either one - followed consitent standards - how would either of these eventualities be possible ? The fact of the matter is - neither one did. They both changed their standards over the years with tightening and loosening. And as long as collectors got that higher grade with a resubmission - all was as it should be. And company ABC was the best in the world and the only one that should be trusted. And all those other grading companies - well they just didn't know what they were doing. They overgraded way too much and their grades could not be trusted. But if ABC or XYZ was so trustworthy in the first place - where did all those upgrades come from ?

 

Then comes - buy the coin - not the slab ! OK fine - buy the coin. But if you buy the coin in ABC's or XYZ's slab - and they are trustworthy and their grades are consistent - then why in the world would you even consider resubmitting for a possible upgrade ? And when you get the upgrade - that seems to me to prove that they were not so trustworthy or consistent to begin with. So why should they be any more so now ?

 

What the grading industry as a whole needs is accuracy and consistentcy. All of the grading companies need to agree on one set of standards and stick with it for the next 12 millenia. This nonsense of tightening & loosening grading standards every few years has got to come to a stop. In my opinion all of the grading companies are guilty of it - there is just always one or the other that happens to do it first - soon to be followed by all the others.

 

So I for one happen to hope that this tightening of the grading standards by PCGS is a precursor of things to come. The other grading companies have little choice but to follow their lead or suffer for it. If they do - and if they all will agree to just leave the grading standards alone - and run their respective companies based on the idea of customer service instead of who can give the highest grade - then the collecting community as a whole will be the better for it.

[paigow_johnny]

I always thought the ANA standard was the accepted standard...although I guess human nature being what it is...one individual's "interpretation" of the standard may vary from the next.

[Hoot]

PJ - The ANA standard is a technical grading standard. It is reliable, but it goes on the premise that every coin is essentially perfect (MS or PF 70) when coming out of the coining chamber. After leaving the coining chamber, any flaws gained are what bring the coin down in grade. This works from a technical point of view but not a practical or market point of view. Market grading allows for the possible gain or loss of points due to other factors such as strike and lustre (those two in particular), as well as other factors that affect eye appeal (e.g., toning). Market grading also allows for the relaxation of some of these attributions, particularly strike, when it comes to certain date/mint combinations. For example, buffalo nickels from the San Francisco Mint in the years 1918-1927 are allowed some weakness of strike that other years are not allowed, because all of the nickels from those years from the SF Mint are weakly struck, some dramatically so. Such are the meanderings of market grading, and thus the difficulty of creating a standard. These things also make market grading more subject to loosening or tightening. What others have said here is that there is a little roller-coaster in the game and that the grading companies are all guilty of riding it. I believe that there have been ups and downs, and this summer's "tightening" by PCGS (especially for moderns) was dramatic. I also believe that these are market ploys for the most part. That does not preclude the natural variations that occur from day to day with individual graders or between them. The latter we can always expect. I simply wish that consistency, thus accuracy, would be aimed for. If this requires the use of the ultra grades, then so be it. Let's just get on with a decent consistency that benefits the hobby at large both in the present and the long-run.

 

BTW, I don't think that any grading company has to follow the lead of PCGS. PCGS can go to hell if they are going to sacrifice service for insolence. Besides, NGC has the lion's share of grading nowadays.

 

Hoot

[Android]

Thanks Hoot,

 

That was the best explanation I've ever heard for this phenomenon.

 

Andy

[BillJones]

I buy the coin, not the holder. Yes, on average PCGS is tougher, but they are also inconsistent. Anybody who blindly buys their products because of brand name loyalty is going to be in for shock. NGC coins are more consistently graded, and frankly I usually don't care if a coin is NGC or PCGS since I'm not a registry person. I also like the fact that NCG does die varieties. PCGS does not do attributions except for a few Red Book varieties, and I've seen some PCGS coins that were misattributied, which I think is pretty bad.

 

You are doing yourself a disservice if you don't look at ANACS material. They are quite good, especially for circulated material.

[Gunsmoke]

I agree with the philosophy of buying the coin and not the holder, but all things equal, I prefer NGC coins. Why? Simply because of the customer service they provide and in a large part due to the forum they operate. I appreciate their willingness to listen and to offer advice. So, whenever possible, I'll buy a NGC coin over a pcgs one.

[EVillageProwler]

Anybody who blindly buys their products because of brand name loyalty is going to be in for shock.

 

Mr. Ostrich-head would vehemently disagree! Fortunately, God has blessed us with few like him.

 

EVP

 

[GDJMSP]

Hoot - " BTW, I don't think that any grading company has to follow the lead of PCGS. "

 

When I made the comment about other grading companies following the lead of PCGS - I in no way meant to imply that I favor PCGS in any way shape or form. What I favor is a tightening of the grading standards - market wide. I wish all grading companies would tighten their standards.

 

Over the past few years grading standards - in all the grading companies - have become too loose in my opinion. And with some companies - it is far worse than with others. Some companies have done their own reputations great harm by grading coins too loosely. I could mention one in particular that starts with A and has 3 letters in it. Does anybody here buy coins graded by them ?

 

But if one of the major companies - like PCGS - tightens their standards and the others don't - then over a period of time those companies who do not tighten their standards will soon be thought of as grading coins too loosely. And if that happens - then the coins graded by those companies will no longer bring top prices. And if that happens - then business will begin to drop off. So the other grading companies would have little choice but to tighten their standards as well.

 

I agree that PCGS's tightening of their standards is most likely a market ploy. But I firmly believe it is a ploy that will work. Because collectors want their coins graded consistently and accurately. And PCGS has taken a awful lot of heat over the past year or so about their inconsistent standards - so they have tightened them up. If nothing else - that will give the appearance to a large segment of the collecting public that consistency is coming back. And more often than not - appearances are more than enough.

 

What I would like to see - is all of the grading companies - PCGS - NGC - ANACS - SEGS - ICG - you name it - to use the same set of standards. And I don't care if that set of standards is determined by the ANA - one of the grading companies themselves - or an independent body. I just want them all to be consistent & accurate. So that no matter what name is on the slab - the grade of the given coin can be trusted by us all.

 

 

[Guest]

One thing that I don't agree with is the high number of moderns with the ms70 designation given by several grading companies. I have owned some of these coins, and in all cases, I have seen at least one ding or small scratch. No mater how insignificant it might be from a practical standpoint, I would think that it would preclude it from a technical ms70 grade. Not that I am really concerned by these small differences, but they translate into very large jumps in list prices. I therefore fully support a trend that dramatically tighten-up the criteria for the ms70 rating. That is what I think is the shortcoming of these slabs - there are large jumps in perceived worth attributed to very small differences in the actual coin quality.