We'll I never.........

Sorry Ruben. You logic escapes me totally.

 

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Not really because its not a business model for him.

Fraud is a technical economic term...

Ruben

 

I'm starting to get a little confused.

 

It is part of his business model and there are probably hundreds of dealers just like him.

If fraud is a technical economic term, just how is that related to the folks involved with coins? I would guess most view fraud as someone that is a dishonest thief. I'm sure that's not what you are saying.

 

Did you say rainbow toning, is it for sale?

 

Putting aside the emotional charge that the term fraud generates for a moment, understand that it is possible that if a dealer is making a business of hedging investment advise of others that they can also be caught up in a fraud based on that business practice. With CAC though, that is there core business.

Also, understand that even the recent Madoff $50,000,000 Ponzy scheme probably didn't start off as an attempt to deceive. It's likely that he started out with some legitimate investment which he got wiped out on and then covered it up to save face, which fed on itself. A business model which leads to a economic forces that cause the business to inevitably put the business into a position of deceit in order to maintain profitability is how economists define a fraud. Hedging others investment opinions for profit is an old and known fraud in this regard.

For example, if CAC reslabbed their coins with fractional grading, then the market would respond with competition and follow CAC down that path. That would be an open market where CAC is an innovator and in competition. A long time ago I asked what could any of the TPGers do to compete in the CAC market share. The answer is nothing, because CAC is grading the Slabbers opinions. No matter how accurate, fractional or perfect the grading of the slabbers is, CAC will claim another level of secondary hedge opinion in order to survive. Whether the hedge opinion is based on observable fact or not is irrelevant over time. They MUST produce a quantifiable amount of market uncertainty about the slabber grades to ensure profitability. Therefor, regardless of any claims of criteria that CAC might make, the model can not be sustained without inevitable deceit, unless there is collusion which is fraud on a grander scale involving more market players.

I respect that others might disagree with me on this, but you should give this some thought and understand the underlined reasoning I'm making. Its not revolutionary on my part. I've read it in books

Also, it is possibly for many legitimate businesses to do things that are dicey at best for a variety of reasons, even without the intention of doing anything wrong. You can't squeeze that out of the market place, nor would you really want to. Its part of the risks of business. But it is difficult at best for a single dealer to warp the market by himself, nor is hedging opinions their bread and butter. In fact, I'd venture to say that much of these types of deals, in as much as they might exist, the dealer is really just accessing the coin and the discussion of the slab is secondary. The Arbitrage of wrongly graded coins in of itself isn't a general cause for fraud. But placing a sticker on the slab as a secondary rating is in itself a huge problem.

As I said, if they cracked the coins and regraded them as a second opinion, that wouldn't be such a problem. Its the stickers and registration of already graded coins that is the problem. That is an activity that is clearly designed to bend the market and prevent fair competition.

Ruben

 

Thats a different flame war, one which I'm far less serious about..

Ruben

 

Sorry.... I should have addressed this more directly.

Fraud is any business practice which under normal economic conditions leads to situation where the business has to be deceitful and hide important market information or to advertise incorrect market information to maintain profitability.

That is different from a scam, which is really a related but different concept.

Ruben

 

I agree with most of what you say, but even better is I think understood what you said this time.

 

Yeah, but I was serious. I would like to have a coin that has a verifiable AT pedigree that resides in a PCGS slab with a CAC sticker. If the owner has before and after photos with verifiable marks that identify it as the same coin, I would be an interested buyer. My reasons for wanting this coin I will keep private at this time, but my interest in the coin is genuine.

 

Since this thread has evolved into a CAC thread I have a question. IF I send a PCGS or an NGC or any other TPG slabbed coin in to CAC and it comes back without a sticker does that mean I can send my coin back to the TPG as not having the right grade ?? They do have guarantees. We all know that the difference between a 64 and a 65 can be hundreds if not thousands of dollars in some coins. Will a coin NOT be CAC'd if it is UNDERGRADED ? How does this game work? I may want to play....................................John

 

I think you misunderstood what CAC means. You assumed it meant good eye appeal and that simply isn't true. What it means is that a very talented grader or two has reviewed the coin and they agree that it isn't overgraded. People are assuming that the CAC sticker means the coin is superior in some way to other properly graded pieces and this simply isn't true; the goal of CAC is to protect buyers from overgraded coins, not to pick so called "PQ" coins out.

Another thing to remember is that originality is one of the things that a number of the CAC people prize. This means that a coin with average (or less) eye appeal that clearly has fully original surfaces is less likely to be down graded for what the normal collector would deem to be a negative factor that you might suspect. Alternatively pure white classic coins (that almost arruredly have been dipped at some point) are generally not given as much leeway because of their obvious lack of originality. This holds true for gold coins too. A gold coin with some toning due to copper on the surface will be regarded as more original than a coin that has had the copper spots removed, even though the prices in the market pay a discounted price for gold that is spotted.

 

You are assuming that CAC and N/P use the same grading standards and they don't! The simple fact that CAC will not sticker a coin will NOT be the deciding factor in P or N's decision on whether to downgrade the coin or not.

First they will check to see that it reasonably meets there minimum for the grade assigned. If it is not clearly misgraded they will return it to you in the original holder.

 

Cave Troll - in my view, this is a common misunderstanding that dealers either distort or deliberately do not clarify. It is to their marketing advantage to blur this distinction.

Additionally, isn't there a different colored sticker that they affix that signifies their recognition of eye appeal? So, in fact, CAC does do this occasionally.

 

So being new to all this, does this mean that in another year or two, we are going to have a sticker to verify the sticker, to verify the sticker that CAC put on a PCGS or NGC coin?


Dave

 

Thanks Scott. But you should know that despite numerous problems with graders, I don't think that the graders themselves are a fraud. There business practices are to the most part legitimate and the value of their services reflect in the market prices of their slabbed coins. It is something specific that CAC does that is problematic because despite everything they say they are hedging the investment opinion and product of another company in such a way that they need to distort market values in order to drive profit.

Ruben