Will CAC succeed as a primary grader?

I have my doubts, but they make a go of it. It’s possible that CAC is just waving a flag to see who salutes and who spits. A few thoughts on it:

1. Becoming a primary grader from scratch is a big investment with many pitfalls. There are a host of mechanical and administrative systems to set up: label generation and inspection, cracking, raw handling, slabbing, metal analysis, photography, sniffing, etc. None of these is needed for stickering. And, yeah, JA was involved with NGC and PCGS startups, but they were much smaller, simpler operations back in the day.

2. PCGS and NGC have regarded CAC as a value-added service. Both services have added CAC sections to their registries. They commonly use pictures of their slabs with CAC stickers in their promotional materials or brag about their slabbed coins that have stickers. They indicate in their auction prices realized section whether coins have a sticker. That will do a 180 if CAC becomes a primary grader. There are already reports that PCGS is avoiding using pictures of their slabs with CAC stickers in their promotional materials. They either use a picture of the slab before it was stickered or perhaps photoshop the sticker out.

3. It’s tougher to be a primary grader than a secondary. When CAC receives a coin now, they can be a little relaxed about some aspects like authenticity, toning, residues, subtle varieties, metal content and a few other things, and just concentrate on the grade. There is probably a lot of trust (rightfully so) in the ability of PCGS and NGC to ferret-out problems.

4. CAC will make obvious mistakes as a primary grader just like NGC and PCGS do. As a startup, they may make more. These may be just mechanical like inaccurate labels but could involve issues mentioned in #3 above. As it is now, their mistakes, if they can even be called mistakes, are completely subjective. Whether a coin is solid for the grade is strictly a matter of opinion. They’ll have to deal with more objective mistakes as a primary grader.

5. PCGS and NGC are big companies. They have a lot of influence in the industry, including with the coin press, dealers, auction companies and non-profit institutions. They will do everything legal and ethical to compete with a newcomer viewed as a threat. However, “ethical” is a sliding scale. Is persuading an auction company not to mention whether a coin has a sticker or only use pictures that don’t show stickers unethical? Coins sent in for regrading/reconsideration will always (even if grade does not change) be put in a new slab with a new number, thereby nullifying CAC status. When CAC announces prices, both PCGS and NGC may undercut them. And it’s possible that one or both companies together could underwrite a prestigious secondary grading company that could sticker CAC, NGC or PCGS slabs.

6. Big growth areas of grading are world and modern coins. NGC and PCGS handle both now; CAC does neither. Will they start? If so, that will be an additional enormous startup task and expense.

7. Collector perception of CAC may change if they become a primary grading company. If a collector has a slab from PCGS or NGC that also has a CAC sticker on it, they know two independent organizations have graded it and agreed on the grade. If it’s in a CAC slab, then only one group has decided its grade, and that may not be perceived as reliable as two groups. And yeah, PCGS or NGC could setup a stickering business for CAC slabs.

Back in 2007 when CAC started, if PCGS and NGC had setup a service within each company to sticker the other service’s slabs, CAC may have died in infancy. If a collector had a PCGS slab with a NGC sticker or vice versa, there would be little motive to have yet a third company verify the grade. Instead, they introduced the unnecessary plus grades, which had no effect on CAC’s attractiveness to collectors … it was the second opinion that was the big deal.

I’m a CAC member. Will I send in coins for grading or crossing? No chance until they prove themselves as primary graders. So, if other folks feel this way, what will happen?

Cal

 

Log in or Sign up to hide this ad.

Seems like CAC has played the role of Third Party validation and folks found that useful...so who will validate them? Wondering if being a primary will change their feelings about the relationships now that the TPGs are competition.

 

They've the potential at this stage to become the premier. Whether they've the money, there's the question. If they can get the money behind their marketing, that's all it's going to take, they smoke the other two.

 

When is this supposed to happen anyway? I've been hearing about it but there's nothing on their website.

 

Yeah, I know.

 

Money is always the question. I like the current setup and wish it could remain that way. As far as I’m concerned, it works well.

 

Since JA was involved in the creation of both NGC and PCGS I have no doubt that CAC will succeed. Given the extremely slow turnaround times for grading at the big two there's definitely a need for another major player; especially since they appear to be staying out of the modern arena. Too bad that the other two TPGs, ICG and ANACS, haven't been at the same level in the market. Otherwise, there wouldn't be a need for CAC as a grading company.

 

So long as the evaluation methods remain subjective (some person looking at a coin), I don't see any benefit from yet another TPG setting up shop. The process needs to be automated (done based on machine measurements and analyses) for there to be any real, beneficial progress (reason to switch).

Another consideration...... How many coins worth grading still remain in a raw state? Sure, there will always be some, but enough to build a brand new company into sustainability? The only continuous influx of supply is with hyper-modern coinage (stuff being produced today). So if a new company is going to be successful, then it seems as though they'd have to specialize in that niche.

I've always perceived the whole green-beaning deal as gimmicky non-sense that caught-on because of our competitive need to one-up each other. I don't think that demand for this type of thing will translate into a successful business that has to compete with the established hegemony.

 

Machine learning and AI is inadequate to grade ANYTHING yet. Computers still have issues properly identifying counterfeits, let alone determining net grades.

I think that CAC will do extremely well on coins that it passes, but I feel they might have a much higher fail rate than PCGS/NGC, which could hurt their reputation. As it stands, people view CAC as a grade confirmation company. CAC issues beans based upon agreement with the “minimum grade” and “original surfaces” models.

I like how the holder looks, so, if all CAC does is reholder (from PCGS/NGC) coins to CACG holders, then I think they might do fairly well. Their market would be limited to elite collectors who simply trust CAC and its holder tech over the existing holders.

 

There are people ready to send their entire collections in for re-grading. Then there are those who want to send their non-stickered coins in for grading. I do think CAC will do great. There aren't nearly as many members in CAC as there are in PCGS and NGC. And they have membership closed. This should keep the amount of coins graded by CAC a lot lower than the other 2. I feel this is going to create high demand.
Mistakes will be made. Every one of us can find a coin with a sticker we don't think deserved it. Just like we see graded coins that aren't correctly graded. I do believe there will be a lot of people who aren't going to like some of the grades they get. I personally won't be cracking any coins to send. Nor will I be crossing any over. But I think among the members and the ones who do there will be strong demand. I have some raw coins that I'm going to send in once the opportunity presents itself. In the end, everything in grading is opinion. There are going to be a lot more coins coming back with details grades than the other services. I will still, always, and forever look at the coin in the holder before I buy it. But lately there are a lot of coins coming back from PCGS that I don't agree with. I would think they would tighten their standards up a bit. But it is what it is I guess.

 

I think they will get slammed right off the bat with more coins than they can handle and have to limit what can be sent in. Those that are already setup with CAC will be slammed with others asking for help sending coins in. I can see it taking over a year for them to catch up and start taking submissions from everyone.

 

You are all missing the point - there's a lot of data out there that you have to pull together, but...

CAC Grading will grade approx. 500 coins a month. With one grading triad and a single judge of appeals that's all they can do.

That's a drop in the bucket of the entire market. They'll get the cream and charge top dollar. Most of us will never be able to afford a CAC-graded coin.

What it WILL do is take the CAC green/gold beans out of the market.

Once people figure that out there will be a land-rush to get coins regraded at NGC and PCGS so people can (truthfully) say "Oh, that coin was graded after CAC stopped beaning coins, so that's why it doesn't have a bean" and sell C coins for A/B money.

 

That's hilarious; hadn't even thought of that. Unfortunately neither appears to have excess capacity, to put it politely.

 

That's definitely going to happen. Just like they restricted the sticker service.

 

If they don’t open up submissions to everybody…..what say ye?

 

CAC faces the same problem as the other second tier graders faced when they tried to challenge NGC and PCGS. If their standards are lower, collectors will spot that, and their business will be sent to the "kiddie table." If they are tougher, they have to viewed as a super premium service that rates higher retail prices and auction bids. They have that now with the sticker.

If they are not viewed as a premium service provider, their product will be cracked out and sent to the "big two" for higher grades and higher prices.

The key, of course, is the owner, whom some view as the greatest coin grader in history. Even if they are able to take advantage of that, they will have to get the product out fast enough for the dealers and collectors to do business. As a business you can't send material in and have to wait six months or more to get it back. You need to keep your inventory flowing.

 

One other thing to consider is that JA is pretty old. How well is CAC, even as a stickering service, set up to survive him? PCGS is doing well without it's founders and has a large base of stockholders. NGC is now owned by a multi-billion dollar hedge fund, and it's transition to new management appears to be going smoothly. Both companies have global operations as well. And both appear to be well equipped to continue indefinitely.

Cal

 

Wow...

CAGC is setup initially with a pod of three graders. If they can't agree, JA is the finalizer. But in no way is CACG a one-man band.

They can expand capacity by setting up other pods.

As far as I know, they don't even promise all coins will be seen by the same three graders. Other services simply ensure more than one set of eyes see a coin.

CACG can increase capacity by adding graders and picking which n see the coin at random or my speciality. There's nothing promissed...

 

I’m nauseated by the news and #7 above could arguably be #1 in importance.

I don’t think combining the grading and beaning is value added. They had a great model of exclusivity, added quality, lack of bias, and being conservative in applying their brand to a product in which all the work was already done.

CAC’s decision likely will fail and erode their entire brand. They didn’t pay attention to Porter’s forces of business. Hopefully they’ll realize sooner than later and do the walk back… resume their core competency on creating value.

Personally I’ve cherry-picked about 100 coins, all PCGS graded, which I’ve been waiting to submit to CAC for bean additions as I insist on CAC-beaned coins. They just gave me the membership application after years of waiting and now I hear this blunderous idea. That’s why I’m nauseated and decided on holding my coins until they (hopefully) smarten up.

At least continue the old service in parallel. Going all in as they have is plain dumb in my opinion.

 

I think it’s a crazy idea, too. They had a simple model where they could take a piece of any graded coin for the cost to them of a simple sticker and they turned it into this confusing grading-stickering model they’re now put to trying to make a market for, well good luck with that.