Is Third Party Grading Good for Numismatics?

[Newmismatist]

Before you start: : My apologies for the length of this post - but there may be a little bit of useful information to those here who have grown up with only the TPGSs as their reference point for collecting coins.

 

Here's what I posted over 3 years ago across the street - I think it's something worth discussing here also - keep in mind that this was originally posted ATS, so "this forum" refers to "Them over there":

 

There’s a lot of hype on this forum about which Grading Service is the “best”. We repeatedly see forum members here [reference is to PCGS forum members over there] complaining that NGC can’t grade - my crossover was down-graded, BB’d, wouldn’t cross, etc. The complaining certainly isn’t limited to NGC - as we all read the complaints about why’d PCGS grade this XX instead of XY? Then there’s the few shills shouting: PCGS is the best (or even the only) Grading Service to the point were they actually argue that the plastic on the outside is more important than the coin on the inside. On the NGC forum you’ll similar threads, usually asking how could PCGS grade this coin MS65FH or MSXX, but all with the same general theme - ie PCGS got it wrong. After reading these various threads, both on this forum and across the street, a newbie would conclude (with ample support by lots of forum members) the following:

 

1. PCGS accurately grades coins

2. PCGS undergrades coins

3. PCGS overgrades coins

4. PCGS bags coins that should have graded (example coin is NT, bagged as AT)

5. PCGS grades coins that should have bagged (example coin is AT, bagged as NT)

6. NGC accurately grades coins

7. NGC undergrades coins

8. NGC overgrades coins

9. NGC bags coins that should have graded (example coin is NT, bagged as AT)

10. NGC grades coins that should have bagged (example coin is AT, bagged as NT)

 

In fact, if our Newbie were to believe all the comments and opinions expressed in the various threads that deal with Grading, including those that question such things as color (RD, RB, BN) strike designations (FH. FL, FS, etc) and toning (AT, NT, AT but market acceptable), our Newbie could easily conclude that buying coins graded by EITHER of the major Grading Services was about as risky as jumping into pool filled with hungry sharks.

 

Originally the concept of third party Grading was promoted as a means of protecting collectors from the risks of buying fake or counterfit coins, buying over-graded coins or coins that had been “played” with to give the appearance of a higher grade. The corollary benefit to dealers was that if collectors could rely on the protection of a RELIABLE third party Grading opinion, they would be more comfortable in buying coins, thus spending more money for coins (presumably rare coins). Dealers would then be able sell more coins to more collectors, without the controversy as to whether they had overcharged the collector for an over-graded coin. Third party Grading (TPG) was an expansion of the authentication Service then provided by ANACS, which had been promoted by the ANA as a way of eliminating counterfeit and altered coins from the numismatic market place.

 

The concept of third party Grading was started in 1986. After 17 years [now over 20 years] of Third party Grading, the questions are:

 

1. Have the two major third party Grading Services (PCGS and NGC) helped the collector?

 

2. Has third party Grading been beneficial to the hobby of coin collecting?

 

3. Is third party Grading just a clever marketing scheme and the collector is no better off than he (or she) was prior to third party Grading?

 

4. Is third party Grading more beneficial to dealers or collectors?

 

5. Are we better off with third party Grading? or was it better before third party Grading?

 

I believe the above questions are still worth discusing here today - There is no single "Right" Answer to the above questions - Note - this post was prompted by an old thread by Bruceswar which has been recently resurrected which he Titled: "SLABS ARE THE WORST THING IN NUMISMATICS TO COME OUT!!"

 

That's certainly one point of view, and it raise several provocative issues that should be discussed - but as collectors - who buy coins, both raw and slabbed, and from different grading services - we should examine both the benefits of third party grading and those factors that have proven to be detrimental because of third party grading. Although quite long, here's how I answered the above questions which I raised 3 years ago:

 

Here’s my answer (unfortunately very long) to the questions I raised in this post.

 

1. Have the two major third party Grading Services (PCGS and NGC) helped the collector?

 

Overall, I think the answer is a yes. But this answer is multi-faceted. It has helped new collectors tremendously, the average collector a lot and the expert collector very little. New collectors seldom know how to grade properly - Grading is an acquired skill, new collectors traditionally are the easiest collectors for an unscrupulous dealer to sell over-graded, whizzed and problem coins. Both PCGS and NGC do an excellent (but not perfect) job in preventing those types of coins from being put in slabs, in addition to preventing altered and counterfeit coins from being placed in the market place. Although the average collector usually has good Grading skills, (generally in the area that he or she specializes in), third party Grading allows the average collector to expand his interests in to areas in which he is not as knowledgeable, without having as much risk that he is being sold coins that are over-graded. There is still risk, but the chances of being outright swindled are much lower (but not eliminated). Expert collectors have probably benefitted the least from third party Grading. Generally expert collectors have acquired good to excellent Grading skills for a wide variety of coins, are familiar with strike designations (Full head SLQs, Full Band Mercury dimes, etc.), understand the interrelationship between strike, luster, eye-appeal and the value of coins. Expert collectors were generally the type of collector that skilled and reputable dealers enjoyed dealing with - they knew coins and when treated fairly, returned time after time to buy more coins for their collections. When they made mistakes, they tried to learn from their mistakes, not simply give it up because of one bad purchase. I think one of the downsides of third party Grading is that dealers no longer have to rely on the expert collectors to maintain a steady clientele and thus collectors are not encouraged to acquire good Grading skills as there seems to be a sense that its not needed.

 

2. Has third party Grading been beneficial to the hobby of coin collecting?

 

Overall, I think the answer is a RESOUNDING yes. We have more collectors today than ever before and I think this is largely because of third party Grading. I think many collectors believe that by buying coins that have been slabbed by PCGS and NGC, the inherent risk of owning and collecting coins is lowered. Altered and counterfeit coins are virtually non-existent in PCGS and NGC holders, and when the rare mistake happens, both Services make every effort to get that coin off the market. The same is true with whizzed coins.

 

Unfortunately the same is not true with regard to mis-graded coins, nor with coins that have been expertly “doctored”. Although overall, both PCGS and NGC do an excellent (but not perfect) job in preventing those types of coins from being put in slabs, this is the area that is most problematic and causes the most controversy between collectors, dealers and the third party Grading Services. This is also the area in which everyone takes sides. You have the die-hard PCGS camp which is completely convinced that no Service except PCGS can properly grade coins. The NGC camp is equally adamant and takes gleeful delight when any PCGS mistake is uncovered. Then there are the die-hard third party Grading Service haters who constantly point out the mistakes of both Services, to them proof that the third party Grading Services can’t properly grade and they are the sworn enemies of coin-collectors as all they (PCGS and NGC) do is rip us off!

 

Whose right? The answer: NONE OF THE ABOVE. In this debate everyone seems to forget that Grading is an OPINION. It’s not mathematics. I’m not certain both Grading Services even agree as to all the various definitions of the different strike designations. And, when you’re dealing with high grade MS & PR coins, I’m likewise not certain both Grading Services use the same criteria for coins graded above 66. If you have different standards, there will never be uniformity and agreement as to the grade of a particular coin. Furthermore, as Grading is opinion, you will have variations between the individuals that grade the coins. Because of this you will ALWAYS have differences in Grading, even within the same Grading Service; and when you have 2 different third party Grading Services with even slightly different Grading criteria, you will have disagreement, not consensus.

 

Here’s my analysis of this situation. Grading is an opinion of the quality of a coin based upon four basic criteria:

 

1. The number of marks or abrasions,

2. The quality of the strike,

3. The toning and luster of the coin and

4. The overall eye appeal of the coin.

 

These criteria are NOT mathematically quantifiable. Therefore, it is a human interpretation of these always different observable conditions (like snowflakes, no coin is exactly like any other) that result in a numerical quantification of grade. As all humans will process this information differently, it is mathematically impossible to have all graders grade all coins exactly the same all of the time. So once you understand what and how numerical grades are assigned, you can deduce why the same coin will receive a different grade from the same Service when re-submitted, and why the same coin can receive a different grade when cracked out and sent to the other Grading Service.

 

By way of example: if you took a statistically significant number of coins (it would probably have to be at least 300-500 coins, maybe even as many as 1000 coins), sent them to each of the Grading Services to be graded several times (minimum 3 times, maybe even as many as 5 times) over a period of say one year, here’s what you would see (what follows is my educated guess based on statistical samples): Both Services would agree on the exact grade about 50-60% of the time - so for 1,000 coins graded, about 500-600 would be graded the same nearly 100% of the time. (For those familiar with statistics, this is a “Bell Curve” example). Then you would have the “problem” coins: My (educated) guess: Approximately 25-30% of the coins would be undergraded and 15-20% of the coins would be over-graded. I would further guess that neither Service would be more “accurate” than the other, assuming that the graders at each Service are skilled coin graders. Why? Because each Service has human beings who render their best judgment as to their opinion of the grade for that coin on that particular day - this is a variable that cannot be perfectly replicated on different days by different individuals over diverse periods of time.

 

What we have done as collectors is concentrate on that percentage of either under-graded or over-graded coins that BOTH PCGS and NGC invariably will mis-grade, and we draw the conclusion that the Services are incapable of getting it right. What we miss is that both third party Grading Services get it right more often than wrong AND even when they get it wrong, it’s within the statistical margin of error (eg: if a coin is a high-end MS64 or a low end MS65, about 1/2 the time it will be mis-graded perhaps by a margin of less than 1/10th of a point). That type of error is statistically insignificant and within the standard of human deviation for rendering an OPINION. So most criticism of the Grading by PCGS and NGC is not even warranted as it is within the margin of human error. Therefore, I believe that PCGS and NGC are more accurate in Grading large quantities of diverse coins than any collectors would be on an individual basis. They’re not right all of the time, but they are more accurate more consistently than any individual collector would be for the many different coins that they grade. Conversely, an individual collector with good Grading skills who specializes in a particular series would likely be more consistently accurate than either PCGS and NGC for that particular series - for the simple reason that the collector has made a greater effort to understand the subtle nuances of that series of coins and he/she would have an advantage over a third party grader who has to know how to grade EVERY series of coins.

 

3. Is third party Grading just a clever marketing scheme and the collector is no better off than he (or she) was prior to third party Grading?

 

I believe a knowledgeable collector is better using the positive aspects of the third party Grading Services to assist in acquiring high quality collectable coins. Unfortunately, any collector who basis his collecting decisions on only what the piece of paper in the slab say is headed for disaster. Unfortunately, neither PCGS nor NGC is 100% right 100% of the time for 100% of the coins they grade.

 

4. Is third party Grading more beneficial to dealers or collectors?

 

I believe both dealers and collectors have benefitted from third party Grading. Dealers can more easily sell coins to the collecting public and when collectors go to sell their coins, they are far more marketable than they were prior to third party Grading. I would add that third party Grading has probably benefitted PCGS and NGC more than either dealers or collectors, but NOT to their exclusion.

 

5. Are we better off with third party Grading? or was it better before third party Grading?

 

I believe we are much better off with third party Grading, particularly if you are a knowledgeable collector who takes the time to learn how to grade and makes an effort to understand what Grading standards PCGS and NGC use when they grade coins. Third party Grading can and does assist collectors in putting together wonderful coin collections.

 

However, those who erroneously think that the name on the plastic is more important than the coin inside will invariable prevent themselves from purchasing many outstanding coins. Anyone who says I won’t buy PCGS graded coins or NGC coins for whatever reason has just prevented himself from acquiring a significant number of outstanding coins that are available in the marketplace. My question is why punish yourself because they both make mistakes? Learn how to grade and don’t make the same mistakes!

 

In a recent thread one of our forum members stated: “NGC can't grade coins.” I asked this question in response: “Really? Can You?” Now it is fundamental: If you yourself can’t grade, how can you possibly know if someone else can grade? Here was the response: “I don't need to know how to grade coins. That is what the professional graders are for. That is why I only buy PCGS coins. They are the best coins!”

 

The above statement: “I don't need to know how to grade coins” is absolutely a recipe for disaster. It is a pathological refusal to utilize the minimum of human intelligence to be a successful coin collector. It suggests a frontal lobotomy, visual impairment and deafness so as to be incapable of using those senses to know what you’re buying. First you should at a minimum LOOK at what you’re going to buy. Second, many dealers and collectors will tell you whether a slabbed coin is a PQ coin for the grade, accurately graded or over-graded in relation to what is listed on the slab. Some will be brutally direct, some will be more circumspect, but virtually every dealer and collector will give you their 2 cents worth if asked.

 

If you enjoy collecting coins here’s a few simple rules that will help you to acquire a world class coin collection when buying any third party graded coins:

 

1. Learn how to grade so you can make your own independent assessment as to the quality of the coin.

 

2. Buy the coin not the plastic.

 

3. Avoid the slabbed coins that are over-graded mistakes and

 

4. Buy every mis-graded coin that you can afford that is under-graded, whether by PCGS or NGC.

 

My apologies for this long post, but in the past year that I’ve participated in this forum I’ve read thousands of words bashing the third party Grading Services, bashing their mistakes, complaining about the over-grades, the under-grades, the mis-attributions, that Service X can’t grade and Service Y is too lenient, and that all the third party Grading Services want is to screw us collectors. Often the many forum members who make excellent comments regarding both the positive and negative aspects of third party Grading are drowned out by those few who argue that the only way to collect is to choose up sides in the Grading Service war. My purpose in this post is to suggest that we collectors will be better served by passing on the “war’ and using the both PCGS and NGC to help us acquire great coins.

 

We win when we use their Services as another tool to assist our collecting efforts. We gain nothing by arguing that one is better than the other, and we certainly lose if we blindly refuse to use their knowledge and opinions to help us become more knowledgeable collectors.

 

Just my humble opinion for whatever it’s worth, (based on over 50 years of collecting everything from circulated Lincoln cents to proof $20 Gold).

[James_OldeTowne]

Third Party Grading, in my opinion, is overall not good for numismatics.

 

However, Third Party authentication and attribution are both very good for numismatics!

 

Unfortunately, all three of these services get lumped into what we now call "certification".

 

I definitely think certification is wonderful for investors, but not wonderful at all for numismatists. The overall trend in coins is very obviously skyrocketing prices that have put many once-plentiful coins out of the reach of collectors of average financial means, including myself.

 

The biggest problem to me is that "hype" has become inextricably linked with "certification", and to me, that is a negative all the way around.

[IGWT]

That's a well reasoned, balanced evaluation. Speaking as a someone who became a serious collector after the advent of third-party grading, I can't offer a before-and-after critique. Based upon my obvervations during the post-TPG period, I'd say that the interests of the TPGs and collectors were more closely aligned in the earlier years of certification. Now, after the TPGs have matured, their self-interest seems to conflict with what's good for collectors and the hobby as a whole. The point of departure includes grading modern bullion and programs like the First Strike™ nonsense. There's a fine line between serving the market and making a market. I think that the TPGs have crossed that line to our detriment.

[jesbroken]

James,

I truly agree with you 100% as does several others, but my question is if the market is there, why has someone not formed a TPG to do just that authenticate and attribute coins. I would be very interested in sending my coins there, I do not necessarily need a coin graded when if it is popular it is graded different than if not by all TPG's. I believe this would be a growing concern of all if the opportunity was made available to them.

[Zoins]

if the market is there, why has someone not formed a TPG to do just that authenticate and attribute coins.

Do you believe the premise that the market is there? I'm not convinced there is sufficient demand to sustain a company and think that such a venture may go out of business.

[jesbroken]

Fortunately, this would be an enterprize not requiring a great amount of inventory or equipment. It could start small and grow. I believe it would grow rather quickly, moreso than you feel possible. Books, microscopes, photographic equipment would top the list and obviously a computer program to facilitate data storage. There are enough people on this forum that could staff a small enterprize such as this. Even if it never grew to compete with the TPG's, which is not its goal, it could sustain a day to day service much needed in today's marketplace. JMHO.

 

Remember two of the largest corporations surviving today were started in a one car garage, Microsoft and Amazon. Go figure.

[Bruceswar]

if the market is there, why has someone not formed a TPG to do just that authenticate and attribute coins.

Do you believe the premise that the market is there? I'm not convinced there is sufficient demand to sustain a company and think that such a venture may go out of business.

 

The market is there, but this is not something the TPG's want to get involved with. They want you to keep submitting coins for possible upgrades, etc. This would not be good business for them.

[Zoins]

if the market is there, why has someone not formed a TPG to do just that authenticate and attribute coins.

Do you believe the premise that the market is there? I'm not convinced there is sufficient demand to sustain a company and think that such a venture may go out of business.

The market is there, but this is not something the TPG's want to get involved with. They want you to keep submitting coins for possible upgrades, etc. This would not be good business for them.

The question was why not form one to cater to that market niche so it's not only for existing TPGs. There are TPGs that have all kinds of niches. NGC does SCDs, ICG does everything under the sun (except wooden nickels), SEGS does NCM replicas, SGS overgrades, WCG overgrades more. Why has not a TPG not addressed the authentication/attribution-only market? Probably because it's not big enough to sustain a business IMO.

[jesbroken]

IMO the reason the TPG's have not already moved into this operation is because it would take away from their already burgeoning business. As long as no one else is doing it why sell the wheels off the cart when you are selling all the carts you can make now. When someone else does it they will respond and respond quickly as they have the instantaneous means. People tend to remember who was first at doing something, I'm not saying customer's are loyal as they are not, but they do remember names of first commitments.

[James_OldeTowne]

James,

I truly agree with you 100% as does several others, but my question is if the market is there, why has someone not formed a TPG to do just that authenticate and attribute coins.

I could be wrong about this, but my understanding is that all four of the numismatic certification firms will certify a coin with only an "authentic" disclaimer on the slab. I know for a fact I've seen ANACS and NGC slabs labeled like that.

[Zoins]

IMO the reason the TPG's have not already moved into this operation is because it would take away from their already burgeoning business. As long as no one else is doing it why sell the wheels off the cart when you are selling all the carts you can make now. When someone else does it they will respond and respond quickly as they have the instantaneous means. People tend to remember who was first at doing something, I'm not saying customer's are loyal as they are not, but they do remember names of first commitments.

This argument works for existing top TPGs but fails when considering new TPGs that may be formed. Anytime a new business enters a market, they need a differentiator. If not assigning a grade was such a big opportunity, some new entrant that needs to differentiate their services would have tried it already.

[jesbroken]

You are probably right in regards to the multitude of new TPG's as they would need an attention grabber, although they again are trying to grab the market that wants grading performed and are incapable of doing it themselves. Customers who want only the attribution/authentication performed would be too wary of a new company who is famous for improper grading, unless something or someone made them aware of its capabilities and its propriety. Nevertheless, it makes for enjoyable coffeshop chatter. Thanks for listening.

[World Colonial]

I know that no one is saying this, but I think that someone would have to be in an ivory tower to either ignore or downplay the financial aspects of buying and collecting coins and the coin market. I consider myself primarily a collector but I am not a purist. That is one of the reasons I collect the series I do as opposed to something else - because I consider them a better relative value than most others. I'm not in this specifically to make money but I am definitely not in it to lose money either. So yes, I have at least partly selected the series I collect based upon my opinion of their future financial prospects (whether I will be correct is a different issue).

 

My collection is more valuable than most (but much less at the same time than many others) and represents a substantial financial commitment on my part. And from that standpoint, I think there is no question that the TPG have made coins more liquid and marketable.

 

If I were financially independent, then maybe I would have a different perspective. But I'm not and my heirs are not likely to be either. And since they do not know anything about coins at all, slabbed coins along with the instructions I have left them should hopefully reduce the likelihood that they will be ripped off when they dispose of my collection.

[michael]

Third Party Grading, in my opinion, is overall NOT good for numismatics.

 

However, Third Party authentication and attribution are both very good for numismatics!

 

and as per waht i said below

 

changed due to more correct information

[Newmismatist]

That's a well reasoned, balanced evaluation. Speaking as a someone who became a serious collector after the advent of third-party grading, I can't offer a before-and-after critique. Based upon my obvervations during the post-TPG period, I'd say that the interests of the TPGs and collectors were more closely aligned in the earlier years of certification. Now, after the TPGs have matured, their self-interest seems to conflict with what's good for collectors and the hobby as a whole. The point of departure includes grading modern bullion and programs like the First Strike™ nonsense. There's a fine line between serving the market and making a market. I think that the TPGs have crossed that line to our detriment.

 

IGWT - I agree with your comments - but the TPGSs have not necessarily harmed us when they use these marketing ploys - only those who think that a Statement such as "Fisrt Strike" is meaningful and then PAY A PREMIUM for the coin in the slab will get hurt - that's not any different than beenie babies or pet rocks, or any of the other many fads that are marketed to us on a daily basis - you don't have to buy the hype.

 

I think there is no question that the TPG have made coins more liquid and marketable.

 

World Colonial - Excellent point and certainly one that I agree with - in fact, on that very point, Mark Feld has a very interesting thread over on the Numismatic Tangents forum dealing with the very subject of someone who inherits a coin and then sells it "raw" for a 1/3rd of it's value. It happens all the time.

 

I definitely think certification is WONDERFUL for investors and coin peddlers/SUBMITTERS that sell toned morgans and other common toned toned coins that sell for huge multiples of the same exact coin if it were white

 

Not exactly sure what you point is Michael - but the fact that you used capitals and some punctuation in your post is refreshing.

 

If YOU as a collector/investor/dealer don't like toned coins - don't buy them. I have many toned coins that are worth the same whether raw or slabbed, and I have some that someone would want only if they are in certain TPGS slabs - the nice thing about this hobby is you can buy and collect whatever you enjoy.

 

So, buy,collect, invest and sell whatever you want - when you go to sell whatever it is that you own, you'll find that you'll probably do better if your coins are certified by a reputable TPGS - OTOH - if you don't like them certified - crack 'em out and sell them raw - it's your "Nickel" and you can buy or sell your coins anyway you like.

[michael]

great thread by the way

[Newmismatist]

i see i hit a nerve

 

Not really - but you are certainly entilted to your opinion.

[Conder101]

if the market is there, why has someone not formed a TPG to do just that authenticate and attribute coins. I would be very interested in sending my coins there, I do not necessarily need a coin graded when if it is popular it is graded different than if not by all TPG's

The first certification service began as an authentication only service. Grading was added because the collectors kept asking for it. And James is correct, all of the major services will do an authentication only service for you and just mark the holder as Genuine. But the fee for this service is the same as for grading.

 

After the ANA sold ANACS to Amos Press they started a second service that returned to their roots and did authentication and attributions only, ANAAB. That was in 1991. That service was never extensively utilized and it closed down finally in November of 2002.

 

The problem is that it still takes top quality numismatists to run an authentication/attribution service so it is still costly. To a large extent they try to use outside expert consultants, but those consultants have their our lives and the services work tends to be done when they can get to it. This meant long turnaround times. For obscure and specialized material it was taking 6 months to a year to get coins back from ANAAB.

[BillJones]

Having been around during the years when grading abuses were really bad (the 1970s and 1980s) I’d say that ON BALANCE PCGS and NGC have had a positive influence on the hobby. Authentication is definitely a great thing and I’d challenge anyone to dispute that.

 

Grading, however, is a mixed bag. No service gets it right 100% of the time. Some of the “third world services” are or have been in business to help crooked dealers cheat the public. Others, like the old ANACS, had their place in the market because they authenticated and net graded problem coins.

 

There are really two very bad aspects to third party grading. The first primary one concerns the Kool Aid drinkers who blindly swear that one grading service hands down the WORD OF GOD and that that service is ALWAYS RIGHT. Most often this attitude is noted for those who are slaves to PCGS. And I'll tell you PCGS Kool Aid drinkers that you are 100% wrong. PCGS makes mistakes just like everybody else.

 

The other problem has to do with both NGC and PCGS. The people who run both of those services are way too arrogant. They won’t give any credit to other people’s expertise or opinions, and that is just plain wrong. That attitude is show of weakness on their part, not strength.

[ziggy29]

TPGs do serve a useful purpose, particularly for attribution, authentication and perhaps weeding out major problems with a coin that might not be readily visible to the average collector with the naked eye.

 

The problem is, as the market evolves, the overdependence on TPGs is hurting the hobby. More people seem willing to allow the TPG's opinion substitute for their own. Too many people playing 'crackout' lead to grade inflation and situations where the SAME COIN can triple (or more) in 'value' just because it was resubmitted on a more generous day. Raw coins are now looked at with extreme skepticism and since many of the nicer coins have been slabbed already, it takes more money to get them now.

 

Doctors dip nice original "crusty" AU/MS coins to get a bump on the grade and more money. Even common pocket change has joined the slabbing frenzy recently.

 

Registry sets have many collectors more concerned with the number on the slab than the quality of the coin. Marketing gimmicks create demand for coins that are no different than others just like them, only because they were among the first batches shipped from the Mint.

 

More and more of these shenanigans will develop as the market continues to put more and more emphasis on "plastic uber alles."

 

Lest I sound like a plastic-basher, I would add that I do see plenty of positives surrounding the TPG industry. It's just that the more power and influence they have over the market, the more we'll see the deleterious effects of the plastic industry outweigh the very real positives.

 

I'd personally like to see them out of the grading business and stick with authentication. That is where, IMO, they provide an unqualified positive service to the hobby.

[jesbroken]

Thanks for the confirmation re:authentication only, but having this service why hide it, for on neither NGC nor PCGS web site under services or anywhere else is this offered(at least as I could find). Also anyone with a BB'd coin, I would think,would rather they at least authenticate it with a scratch/improper cleaning as they paid the price. I believe these two TPG's have redefined arrogance and this is possibly a reason that so many feel hard toward the companies. I personally have several bad experiences with both and utilize only ANACS for that reason. This does not sour me on TPG's in general, just some of their practices or non-practices. I personally like the holders, the protection, the comfort it supplies a potential buyer, and most certainly the higher value implied to the buyer. I guess I am a capitalist.

[Zoins]

The first certification service began as an authentication only service. Grading was added because the collectors kept asking for it.

Did collectors ask for grading because they felt they were being cheated by dealers? If so, has the issue just changed with dealer/doctors getting worked coins into holders?

[BillJones]

The first certification service began as an authentication only service. Grading was added because the collectors kept asking for it.

Did collectors ask for grading because they felt they were being cheated by dealers? If so, has the issue just changed with dealer/doctors getting worked coins into holders?

 

I don’t know if it was so much a matter of collectors asking for the service as was a marketing opportunity that ANACS saw as a way to enhance their income.

 

Before slabs, ANACS, which was then a part of the ANA, marketed certificate grading. A picture was taken of the coin and ANACS stated that the coin was genuine and then, if asked, put a grade on it. Later the pictures went from black & white to color to a chart was placed on the back of the certificate with comments about luster, strike and eye appeal.

 

ANACS also put a date on the certificate, and this was where they got into trouble. At some point the powers at be an ANACS decided that their grading standards had become too liberal. They announced that after a certain date the grades on the certificates would tighten up to meet the new standards.

 

This resulted in some very negative consequences for ANACS. For a brief while there was a bifurcated in which coins with “old” certificates were sold for less, often a lot less, than coins with new certificates. Then the “old” certificates became worthless. About this time PCSG and then NGC jumped into the market with the sealed slab, which provided proof that the same coin that had been certified was the coin you were getting. With the certificates one had to compare the coin with the picture, and there were abuses, especially among those in the public who can’t discern one coin from another.

 

The grade standard change fiasco consigned ANACS to second class status, and the brand name never recovered. PCGS and NGC ruled the roost for top coins, and ANACS has since been in third, or if you believe in ICG, sometimes fourth place.

[TJ'S Coins]

My take on third party grading is:

 

1) The best authenticate the coin as genuine

2) They do a respectable job of weeding out obviously tampered coins that will not meet market acceptable standards

3) They offer an opinion regarding grade that provides a measure of objectivity for collectors to consider.

 

No system is perfect but if one sticks to the top tier TPG's they have a measure of confidence until they learn to grade and evaluate coins on their own. Just like the rest of us, graders are humans who have good days and bad days. Sure we may grumble about this coin or that but the industry is healthier today than before TPG's,

 

My overall grade is

[World Colonial]

TPGs do serve a useful purpose, particularly for attribution, authentication and perhaps weeding out major problems with a coin that might not be readily visible to the average collector with the naked eye.

 

The problem is, as the market evolves, the overdependence on TPGs is hurting the hobby. More people seem willing to allow the TPG's opinion substitute for their own. Too many people playing 'crackout' lead to grade inflation and situations where the SAME COIN can triple (or more) in 'value' just because it was resubmitted on a more generous day. Raw coins are now looked at with extreme skepticism and since many of the nicer coins have been slabbed already, it takes more money to get them now.

 

Doctors dip nice original "crusty" AU/MS coins to get a bump on the grade and more money. Even common pocket change has joined the slabbing frenzy recently.

 

Registry sets have many collectors more concerned with the number on the slab than the quality of the coin. Marketing gimmicks create demand for coins that are no different than others just like them, only because they were among the first batches shipped from the Mint.

 

More and more of these shenanigans will develop as the market continues to put more and more emphasis on "plastic uber alles."

 

Lest I sound like a plastic-basher, I would add that I do see plenty of positives surrounding the TPG industry. It's just that the more power and influence they have over the market, the more we'll see the deleterious effects of the plastic industry outweigh the very real positives.

 

I'd personally like to see them out of the grading business and stick with authentication. That is where, IMO, they provide an unqualified positive service to the hobby.

 

 

I agree with your comments. And in my opinion, the next bear market in coin prices will cost many collectors and investors a lot of money. If I remember correctly, one aspect of a tough market is that people become more selective which means that grading standards become stricter. So their MS-65 might become a market MS-64 or even MS-63. I've seen many coins with grades like these that look awful and do not see how they get these grades.

[BillJones]

I agree with your comments. And in my opinion, the next bear market in coin prices will cost many collectors and investors a lot of money. If I remember correctly, one aspect of a tough market is that people become more selective which means that grading standards become stricter. So their MS-65 might become a market MS-64 or even MS-63. I've seen many coins with grades like these that look awful and do not see how they get these grades.

 

The pattern that I have seen through the years since slabbing become common has been that the grading services tended to get fast and lose with their standards during boom times. When the market adjustment came along, they tightened up and became more conservative. This might account for the fact collectors and dealers have an affinity for PCGS "green label" holders and NGC holders with the old style security label on the reverse. These holders were issued circa 1990 which was weak period in the coin market. There had been a crash circa 1989.