Featured More on Grading & Grading Companies

Discussion in 'Coin Chat' started by GDJMSP, Jul 5, 2004.

  1. GDJMSP

    GDJMSP Numismatist Moderator

    It never seems to fail - whenever this subject comes up or makes the headlines in the trade papers I go off on one of my tirades :eek: It appears this time is no different :D

    But instead of writing something entirely new, and because there are so many here who are either new to the hobby or that do not know me that well I have decided instead to revisit some material on the subject so that those who are not aware - may be.

    Back in March of 2002 the PNG, Professional Numismatist Guild ( an organization made up of coin dealers ) decided to conduct a survey about grading companies amongst its members. This survey was much discussed in the numismatic field and for a while it appeared the PNG would not even make the results public. But they did - in the fall of 2002.
    PNG Survey

    Now if you think this survey was being discussed before the results were published - that was nothing to what happened afterwards. I saw the survey the day it was released and responded immediately. I sent my response not only to the PNG, but to several on-line coin publications. My response was quickly published - since it is no longer available on-line I copied it below.

    Being a voracious reader of anything I can find about coins as well as being an avid collector, I read PNG's Consumer Alert posted on your web site with great interest. While I would be among the first to agree with the premise of the article and the many other articles I have recently read along the same vein; I can't help but feel that it is about time that someone - collectors in particular - spoke up.

    Everybody has their own opinions about which 3rd party grading company is the best. But it is pretty much an accepted fact that coins graded by PCGS command the highest prices in the marketplace. This fact is evidenced simply by visiting any on-line auction site you care to mention or a visit to any coin dealer's shop or web site that sells certified coins. PCGS is quickly followed up by NGC in this regard and the rest fall someplace farther down the ladder. CDN even list a Certified Coin Market Indicator in their weekly newsletter with a ranking of the different grading companies as to the prices their coins bring. Everybody knows this and the marketplace clearly reflects it. But is it really justified ? In some cases, I am sure it is. In others, I am not so sure.

    It almost seems as if some folks would like the majority of the grading companies to just dry up and blow away. That is except PCGS and NGC. While PCGS is endorsed by PNG and NGC by the ANA, does that mean all the others don't count ? If that is the case, is NGC somehow denigrated or slighted because PNG does not endorse them as well ? Or is PCGS a lesser company in regard to quality or standards because the ANA does not endorse them ? And in turn, if this is true, is the ANA somehow more highly regarded or given a greater degree of respect than PNG - or visa versa ? I don't think so !!

    But when I read an article like this, it bothers me. It bothers me for two reasons. Number one is because it seems to me that they are painting their warning in too wide a swath and with too large a brush. It also bothers me because the very people they are trying to protect, the beginner or the uninitiated collector, are now being told, or at the very least the implication is given, don't buy anything but PCGS or NGC coins.

    As a collector, I search for knowledge. Knowledge enables me to make a better informed decision when it comes to buying a given coin, as it does us all. I often buy coins on different auction web sites and from different dealers all over the country - both sight seen and unseen - certified and uncertified. This is pretty much the way most us conduct our business or pursue our hobby. I do of course pay attention to who the grading company is when I buy certified coins. But most of all, I try to heed the advice I find most often quoted in any & all publications or given in person - I trust my own eyes.

    If a coin has that certain look that appeals to me, or seems to be of a higher grade than that being given by a grading company or individual - I buy it. And if I get a better price because of the name on the plastic slab wrapped around it - so much the better. And if the coin in question is of too high a price because of the name on the plastic slab wrapped around it - I don't buy it. It's that simple. And I know for a fact that it is just that simple for the vast majority of all collectors out there. But for those who have yet to gain the knowledge to allow them to do this - as the phrase has come to be known - they buy the slab and not the coin.

    While I am far, far from being an expert on coins, I have eyes, I know the basic rules and I know how graders arrive at their decisions when it comes to assigning a grade to a coin. I also know that I have on many occasions spent the money to purchase the same year, type, mint and grade of a given coin in multiples - all graded by different grading companies so that I might be better informed in deciding which grading company I like the best or in who I have the most confidence.

    What this process has taught me is that there are many grades within each grade assigned to any given coin. Most collectors are aware of this. Most of us realize that in any group of MS69 graded $10 Gold Eagles, some just barely made the cut to the 69 grade. Some are solidly in the middle of the 69 grade and yet others will be just the tiniest whisker away from that pinnacle of perfection - an MS70. And with this being true, I can give you countless examples of an ICG graded coin being of a higher quality than say a PCGS graded coin of the same grade. Or of an NGC graded coin being of a higher quality than an ICG of the same grade. This comparison can go on forever with any of the different grading companies whether it be PCGS - ICG - ANACS - NGC - SEGS and so on. This is the nature of grading coins - this is the nature of our pursuit - our hobby - our business or our life. So to state that only coins graded by so and so are of sufficient quality to warrant purchase or collection is an out and out falsehood.

    Now I am an ardent fan of 3rd party grading companies. And I think they have done a tremendous amount of good and perhaps done more to advance the collection of coins than perhaps anything previous in the history of collecting coins. But I am here to tell everyone that the time has come. The time has come for the PNG - the ANA - the many magazines and newsletters - and most of all us - the collectors and investors to put an end to this scenario. It is time for the numismatic world as a whole to stand up and demand a reckoning - a balancing - and a single global standard when it comes to the grading of coins.

    No longer should any organization endorse just one grading company. This only promotes the false inflation of prices and a false sense of security for collectors & dealers alike. Let the ANA and the PNG - and anyone else who has an opinion - get down off their high horses and speak their minds as individuals. Let them come forward and drop their petty endorsements of just one grading company. Let them establish rules - regulations - and standards that ALL THE GRADING COMPANIES must adhere to and let them all be recognized and accepted. And for those companies who do not adhere to these standards - well the market will take care of them. Those companies will dry up and blow away ! And rather quickly too I might think. And these stories of little old ladies being bilked of their life savings will go away too.

    So collectors - dealers - investors - writers and all of you out there in the world who collect coins for whatever reason - if you agree with these thoughts - then let your thoughts be known as well. For the PNG - the ANA - they are us. These organizations are made up of people just like you and me. And without us - none of them would even exist.



    I was not the only one to respond. There were letters to the editor in every coin magazine, editorials - Editorial , articles about the survey in all the magazines - Article , and the coin forums were hopping. Opinions regarding the survey were widely varied both for and against it.

    More recently, Coin World conducted their own test of the grading companies. They sent 15 coins to each of the grading companies and had them graded so the results could be compared. While this was a commendable effort - the results were fairly meaningless because the sampling was so small. I would have posted a link - but am sorry to say that I have been unable to find this survey available on-line.
     
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  3. GDJMSP

    GDJMSP Numismatist Moderator

    Now - in a further effort to help those who may need it - I am posting some additional links on the subject of coin grading. Even if you feel you don't need it - read them anyway ;)


    On-line Resources


    The following links lead to a 3 part series written by John Maben, one of the most respected names in numimsamtics.

    Part 1

    Part 2

    Part 3
     
  4. GDJMSP

    GDJMSP Numismatist Moderator

    Sorry for such a lengthy post folks :(

    As I said - the subject does get me goin :D
     
  5. jody526

    jody526 New Member

    Now that you're going, GD, care to elaborate on how A.N.A. and P.N.G. endorsements are assigned?
     
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  6. GDJMSP

    GDJMSP Numismatist Moderator

    I'm sure you're already aware of it - but for those who are not - the endorsements of the ANA & the PNG are sold to the highest bidder. Money talks folks ;)

    This is what I find so aggravating - the endorsemnt has nothing to do with quality, or lack thereof, of the grading company. It just depends on who is willing to pay the most. To me - this is just plain wrong.

    For several years now I have campaigned to have this practice changed. And finally - this year - one of the PNG board members at least acknowledged that the idea was at least being considered.

    My proposal is much as described in my letter of a couple years ago to the PNG - that any grading company can be endorsed by these organizations. With the provision of course that the grading company strictly adheres to a set of grading standards approved by the organization providing the endorsement.

    I have no problem with the grading companies paying for the endorsement - my problem is that it is only issued to one company. And that one company is determined by who is willing to pay the most. Instead - I would prefer to see a set fee for the endorsements - much like the way the UL ( Underwriters Laboratories ) and the Good Housekeeping Seal of Approval are issued to companies. Then at least - if the grading company changes their practice or standards - the endorsement could be withdrawn.

    If this were done in this manner - the endorsement would finally have some meaning.
     
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  7. cladking

    cladking Coin Collector

    When you get right down to it collectors are afraid of real standards. The only possible standards that can be applied to something which varies in so many important ways would result in grades for each of the ways in which it varies. This would make current price guides obsolete. The first question of newbies with a potentially valuable coin is never about history, grade, or the coin's importance, it is always "how much is it worth?". Even most more advanced collectors balk at not being able to look up a coin's value despite the fact that the coin will likely trade on its merits and the price guide is nearly meaningless.

    It's ironic that the only reason to grade a coin at all is to be able to describe it to someone yet collectors generally hate the idea of a descriptive or objective grading system which could actually give someone a good idea of what the coin looks like.

    Perhaps such a system would be acceptable if there were a formula to translate the grade into a "net grade" so people could still look up the value and still not be able to really know the condition nor the likely selling price of the coin. The biggest problem with adding a net grade is that it would severely inhibit the formation of a real and usefull price guide but at least we'd get a grading system which would actually grade the condition of the coin rather than it's price.
     
  8. GDJMSP

    GDJMSP Numismatist Moderator

    clad - you and I have been involved in these discussions many times over the years. We pretty well know what each other thinks about the subject. More often than not - we seem to think alike. It's human nature to be afraid of change. And when it comes to grading coins - it's not much different.

    Most "old time" collectors have hated the slabs and the grading companies ever since they first appeared. They cry repeatedly - go back to the old system of G - F - VF - XF - UNC ! And somehow they forget what that old system did to them. How it allowed dealers to sell coins at hugely inflated prices for the grade. How it allowed new collectors to be ripped off even worse than they are today.

    But mention that the grading companies are going to begin using designations such as FT or FBL that will actually help describe the coin in greater detail - and they scream all the louder.

    People have fought against change since day one. The first time a family moved into a home built by hand and out of a cave - they fought it. They fought against the installation of electricity and utilities into their homes. They fought against the advent of the automobile and the airplane. And for years they fought against the internet and computers.

    But all those things have come to pass and today people would not know what to do without them. Change within the grading industry will come to pass as well. It's just a matter of time ;)
     
  9. National dealer

    National dealer New Member

    One important factor that allows the grading companies to grow each year is that people by nature are lazy. We work 40 plus hours a week, deal with customers, employers, friends, family and a host of others throughout our days. Finally, we decide to pick up a hobby to take our minds off of the daily grind. For each personal reason, coins are picked. Seems easy enough on the surface, plus adds the seductive charm of buying and selling money.
    Mainstream articles in the papers help to spread the ease of collecting. "Collector finds million dollar coin in closet", or "collector gets $220,000 for bill found in attic".
    We begin our quest with the least effort possible. Most jumped onto the internet auction bandwagon and hear that some coins can be bought at bargain prices. So we jump to the first price guide that we can find. Not knowing that these are retail prices, or that they are not updated regularly. We scour the auction houses again until the underpriced coin is found. Looking at the certified name on the holder, how can we go wrong?

    How many of you have started in such a fashion?

    Numismatics is the study of coins. This is different than being a collector of coins, or being a dealer of coins.
    Numismatists can be spotted with ease. They collect like a dealer but with the passion of the collector. They know and understand the many aspects of what the coin business can be.

    When grading services came along, they allowed collectors to use their first choice. Laziness. Now collectors do not have to study, or grade, or authenticate. All they have to do is buy the plastic. Investors flocked to the hobby when plastic became the collecting rave.

    As a dealer, I have to play the game by the rules given. This means we have offer the plastic that our customers want. Most do not engage in our numismatic classes, or heed the advice of buying the coin not the plastic. They want ease and simplicity. This is exactly what the slabs offer.

    GDJMSP has spread great advice over the years about this service. His experience has taught him what grading means. ( I will add, a great eye for coins).

    A holder with MS-64 on it doesn't tell the whole story. All MS-64 coins are not equal. In today's world many dealers and collectors are adding phrases to their coins. PLUS,PLUS,PLUS, or Premium Grade, Pop Top, Gem, and many others. This is because our current standards are no longer meeting the needs.
    All "numismatists" know how the grading system works and why. There really isn't much argument on that point.
    The ANA has suggested grading the graders. This hot topic found many opinions. Change sweeps our hobby despite what people want. Some good, some bad. Grading companies overall have been good for the hobby in my opinion.
    Magazines and organizations are driven by money. Until the collecting community stands up and demands better, we will continue on our current path.

    With all of this rambling almost done, let me add just one more thought.

    Knowledge and study will allow you to bypass the system to a certain degree. The road less traveled can lead you in different directions, but will still get you to the same destination (the overall enjoyment of collecting coins).
     
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  10. Johndoe2000$

    Johndoe2000$ Well-Known Member

    '2004...
    I think they'll (tpgs) work out all the issues that we have, and become the infallible, trustworthy entities that we are extremely confident to spend our money on, for their unquestionable evaluation of each and every coin we send them for grading. Furthermore, they will allow the time needed to accurately do the task that they are being paid to do, no matter what.

    2019...
    I totally agree that... TPGS grading will remain controversial for the foreseeable future. :D
     
  11. GDJMSP

    GDJMSP Numismatist Moderator

    Oh please, please, say it isn't so !! :rolleyes: :rolleyes:

    Now tell me, how in the world did you manage to dig this up ?
     
  12. Mainebill

    Mainebill Bethany Danielle

    Lurking around in an old graveyard after dark with a shovel in search of coins maybe
     
  13. Johndoe2000$

    Johndoe2000$ Well-Known Member

    Lol...Picked a forum, then started at the first page. (beginning)
    Noticed that... the more things change, the more they stay the same. :D
     
    Last edited: Oct 23, 2019
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  14. geekpryde

    geekpryde Husband and Father Moderator

    Damn that was well written. Doug, I have to hand it to you, you are eloquent without being verbose. I never saw this thread before, so I am happy someone went into the graveyard and dug it up.

    :vamp:
     
  15. calcol

    calcol Supporter! Supporter

    I've never assumed that a particular TPG service becoming the "official" grading service of a particular organization was anything but a money deal. Really no different than a company paying to have its name on a sports stadium. I do assume that the organization considers the TPG service to be acceptable, but no more than that. And I certainly don't judge a TPG service based on it being the official service of any organization.

    However, having a TPG service be the official service of an organization to which one belongs can have some perks. For example, ANA members get free membership with NGC. I belong to ANA; so do I send all my coins to NGC? Nope, some world coins go to NGC; the rest go to PCGS.

    Cal
     
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  16. GDJMSP

    GDJMSP Numismatist Moderator

    Except for one thing, this -

    Ya gotta remember how long ago it was that I wrote that. Back then, that was true. In today's world however, the vast majority of coin buyers are plastic buyers. They do the exact opposite, they buy the slabs and don't even pay any attention to the coin.

    Now don't get me wrong, as I said above, plastic buyers existed back then, there just weren't all that many of them. But yeah, other than that, what you said is correct, the more things change the more they stay the same.
     
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  17. GDJMSP

    GDJMSP Numismatist Moderator

    Shhhhhh !

    Geeez Matt, you're gonna ruin my reputation if ya say things like that ! :D
     
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  18. Lehigh96

    Lehigh96 Toning Enthusiast

    This has to be a necro-thread record, 15 years! It’s so old, Doug actually collected coins when he wrote this.
     
  19. GDJMSP

    GDJMSP Numismatist Moderator

    Yup, hard to imagine aint it :)

    But we can go back even further -
    https://www.cointalk.com/threads/time-for-a-change-in-our-change.170/

    Though I do kinda hate to remember that one given what we ended up with as a result of my efforts back then :(
     
  20. RD302

    RD302 Member

    Thanks for posting this and all the responses. I’m a new collector and read though all of it and this has given me a whole new way of looking at the hobby. I now need to rethink the way I’ll continue. Great post.
     
  21. John Skelton

    John Skelton Morgan man!

    I have never bought a slabbed coin, even though I might sometime. I also don't take what someone I don't know graded the coin. As a result, I've done what I can to learn how to grade a coin. So that's where I'm starting from, and maybe where I'll stay.
     
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