It seems like everybody in the coin collecting circle, from dealers to novice collectors, consider the only reputable grading companies to be PCGS, NGC, and ANACS. The other grading companies are considered inferior. If this is true, why would anybody even consider sending a coin to one of these "other guys"?
ICG is in the second tier with ANACS, but is losing popularity. In the third tier, I don't see any reason to send one to them.
Because they take loose change, over grade it, then these people sell it on EBAY to unknowing people. Easy - they do it to make money. And some of them are slabbing their own coins and making money on ebay.
One reason is many buyers only look at the grade on the slab and pay the price for a coin of that grade. Some sellers submit their coins to an inferior TPG who will assign a higher grade than the coin deserves so they can sell the coins for a higher price to buyers who don't realize the coins are not worth the price.
I have absolutely no problem purchasing coins from the lower tier grading companies. Buy the Coin and not the holder. The coin is the coin, is the coin.
But it seems to me that everybody already knows the deal. A collector knows to avoid them. A dealer will tell you to avoid them. A non-collector doesn't even know about coin grading. Are these "other" coin grading companies made for just the flea market crowd? Do they consider themselves inferior, or do they strive to do the best they can?
If the 3rd tier TPGs tend to overgrade wouldn't it be possible that they would be more apt to miss some forgeries also? Like accurate grading, detecting really good fakes takes practice. I'll stick with the ones that the pros trust.
There are some real bargains to be found in some of those encapsulated pieces from the lower tier grading companies.
there are bargains to be had (undergraded coins) in top tier TPG slabs as well. You have to be able to grade them on your own to find them, though
Grandma might buy a coin for her coin-collector grandson. A coin in a slab with an insert that has an official-sounding name and a high grade probably looks like a safe purchase to her. She can look up the coin's value in any of the available price guides (Red Book, Coin Values, etc.) based on the assigned grade. Little does she know the coin is grossly overgraded and probably worth a fraction of the purchase price. Also, there are plenty of collectors who don't know how to grade and (unfortunately) rely on the grade someone placed on a slab. The looser their grading (i.e., the higher the grades they assign) the more business they get.
Probably the most over-looked reason for someone to use a lower tier TPG is because the people using them have no idea that there even is such a thing as a lower tier TPG. They mistakenly think that all TPGs are equal and that they all use the same set of grading standards. These folks also buy the coins in these slabs for the same reason. They really believe they are getting a deal ! You have got to remember, there are only 30,000 or so ANA members. Only 150,000 or so subscribers to Coin World and other coin mags. Only 30-40,000 members of the various coin forums. Now consider how many coin collectors there are. Depending on who you ask you'll get numbers anywhere from 1.5 million to 3 million. And no I'm not counting those who grab up SQ's and the like. But anyway - out of say 3 million collectors only maybe, repeat maybe, 200,000 of them have any idea that there is any difference between the various TPGs. In their eyes any one of them is as good as all the rest. That's why they use them and why they buy coins in those slabs. Yes, the other reasons mentioned are also valid. But it is my belief that what I have said is the most common reason by far.
I think if Grandma went into a shop to buy a coin for her grandson, the dealer would do his best to educate her and steer her away from them. In fact, I don't ever remember seeing any of these lower tier slabs in any shop I've been to. All the dealers I've talked to frown on them, and they'll let you know. The only place I've ever seen them is on ebay, and the low bids most get don't reflect the inexperience of novice collectors. I don't think the part-time state quarter collectors would even know about slabbed coins, and if they found out, they would have to do some studying to learn the coin grades, and it wouldn't take much reading to figure out about the reputation of these guys. So, who are these guys? Do they consider themselves lower tier graders? Do they overgrade knowing these coins will enter the market overgraded and overpriced, or do they actually think the are grading accurately? Also, do the submitters use these graders to deliberately get more for their coins or do they actually believe the accuracy of these grader? I think you would have a better chance trying to sell a PCGS graded MS69 ASE than you would an MS70 third tier graded ASE. Do they charge less than the top tier graders?
The "other guys" would most likely grade any coin favorably so that the submitter will think they have something they don't or worse the siubmitter can try and sell this coin to an inexperienced collector and cheat them. If I were to submit any coin I would only do it if I planned to sell. PCGS or NGC would be my preferences, because they are reputable. All grading is subjective to the view of the grader. There are no absolutes, at least not at the common mans level of expertice. Don't pay someone to tell you something you could know on your own. Learn to grade your collection and keep them raw. Allen
The only graders you will ever see at a show are NGC, PCGS, ANACS & ICG. Now that said you can still sometimes find coins graded by the other guys, but not often.
You must know a lot of honest dealers! Some dealers I know, including the dealer in my hometown, would not offer slabs by questionable companies. However, as with any business there are sharks posing as coin dealers, and some of them could just see Grandma as a sheep waiting to be shorn of her cash and take advantage of her naivete about coins, figuring that she will likely only be a one-time customer anyway.
This is my opinion 100%. Just because a smaller, unknown grader isn't recognized, doesn't neccessarily mean they overgrade everything they see. Use your own judgement on grade and eye appeal to decide how much you think the coin is worth. We need to be careful how we stereotype these small TPGs, we have a few cointalk members who grade and encapsulate coins.
There is no doubt that you can sometimes find Gems in any slab. But the reality is that you are not going to do it very often.
