Are the grading services ruining coin collecting?

My question to everybody is this:

Are the grading services ( NGC, PCGS, et al ) ruining coin collecting?

IMHO they contribute significantly to the number of people who invest in coins rather than collect them. Investing is quite different since it depends on turning a profit not necessarily one's interest in the coins invested in. As more investors enter the arena, demand ( especially in rare and high end pieces ) will drive prices up and eventually down when the investment potential declines. Typically this hurts the hobbyists by inflating prices in the short term and in their wake creating a bubble to pop later.

This is not at all to mention that when big $$$ are paid for coins, and the authority on those coins becomes the grading services via the "slab", it creates an incentive to get coins into overgraded holders. Whenever there is a financial incentive, the devious mind will become involved at some point, and more and more coins will become altered. Some will get past the grading services and people will pay huge amounts for them. Whether or not you are the knowledgeable person who won't buy the altered coins, you will pay more even for lower grade coins because of the price inflation.

I apologise for neing wordy, but I wanted to make sure you all knew where I was coming from before you respond.

 

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i think the gradual rise and fall, and the inevitable creation of bubbles... are a natural occuring event in the numismatic hobby ... yes i agree to a point on what you say about the TPG's, but i dont think they are the driving force, just one of many equally distributed factors.

 

I answered on the WINS list.

Ben

 

They are good because of the authentication, identification of problem coins, and provision of an approximate grade. They are bad because they give the illusion of precision to the grade which encourages people, or at least gives them to confidence to overpay or at least pay more than they would otherwise. For me, it is too tough a call as to whether a coin is MS64 or MS65 to justify paying double the amount if I think it is a 65. The TPG will very confidently grade a coin MS65 and people rely on their opinion perhaps more than they should.

On balance, I think grading services are positive as long as the tool is used properly and the limitations are recognized.

 

I think that grading services are generally a good thing. Many of the issues that exist, such as people slipping problem coins past the services, would be much worse if all coins were purchased raw, as even less knowledgeable collectors would be fooled. They are a necessity for the general authentication and recognition of problem coins, although they do miss a few from time to time.

I believe that a major problem with the outlook toward the grading services by many is the same problem that existed during the bubble and crash of 1989-1991. Many see slabbed coins as a commodity. Just because 10 different Morgans say MS-65 does not mean that those coins are all homogeneous and of the exact same quality.

If used correctly, the grading companies provide a valuable service to the hobby, one that the coin market demands. But, many need to also learn to evaluate coins, and not just holders.

 

I think Mike's point is that too many people, including virtually all non-collector "investors" do not use the TPGs correctly. Instead they blindly accept their opinions as homogenizing all coins of the same grade as being equal in value. To far too many investors an SGS MS70 and a PCGS MS70 and a PCI MS70 and an NGC MS70, are fungible goods*.

We, as collectors, and truly sophisticated investors, certainly know differently!

*As defined in Merriam Webster Dictionary of Law

 

The devious mind has been involved in numismatics from the beginning.

One of the favorite topics in this forum is "E-Bay scams". Scams in numismatics are nothing new. Forgeries and scams have been an issue forever, and always will be. If anything, it is more prevalent due to the Internet.

For many, coin collecting has a pretty shady reputation due to the history of hustlers and scam artists.

One of the great values of top TPGs is that they dramatically lower the chance of buying an outright counterfeit or forgery. They also improve the image of the hobby - and rightfully so.

I strongly agree that one should become as educated and skilled as possible, and "buy the coin, not the slab".

But, at any point in time, it is not possible for the full body of all collectors to be sophisticated, because beginners cannot possibly be at an educated, skilled, experienced level of play. Please consider them when forming an opinion; not everyone has been at this for decades.

For those who are collecting coins at face value (roll searchers), or those whose purchases are inexpensive, forget TPGs.

But anyone new to the hobby who prefers pricier pieces should stick to top TPGs while they advance their skill set, knowledge, and experience.

It's just not safe to buy expensive raw coins until one has accumulated a great deal of exoerience. Top TPGs, while imperfect, are much, much safer... for collectors like us.

 

To me it is the 4th tier graders that ruin it. (i.e. SGS, CCGS, and all the other self slabbers).

 

I agree completely. I think that the people do not correctly use the grading services, but that they do provide a good service when used correctly. I feel that is the responsibility of people like us to educate new collectors and investors with respect to the grading services.

 

No. The crackout artists, coin docters, scam-artist type of coin dealers, etc. are ruining coin collecting.

 

I couldn't agree more. It's exactly how I feel. It's exactly why I look for PF-69 coins as they tend to be a tad bit lower than the mint sells them, as opposed to PF-70 which tend to be outrageous (just one example). To me it's ludicrous (knowing how coins achieve the grades) for someone to buy a PF-70 over a PF-69. Then I recall the discussion about 69.2, 69.3 and chuckle.

 

A necessary Evil

Just imagine the other side of the coin (Sorry, couldn't resist....)

What if there were NO TPG's. I wouldn't want that!

 

Originally I hated TGPs. Took the fun out of the hobby for those who knew what they wanted when they walked into a local shop.
With the increase in "investors" they have a place although investors are a load of crap in themselves. Go buy some oil in my opinion and see what happens.

I invest in coins. Does that make me an investor? I think not because I am also a die hard collector and have been for nearly 40 years. Geez I'm getting old.

My last 4 purchases included a 1914-D ANACS F15 Lincoln, an ANACS 1883 AU50 3 Cent Nickel, an 1884 XF45 ICG graded 3 Cent Nickel and a raw 1876 AU58 20 cent piece.

The 14-D was a great deal at $225 so yeah, it's an investment coin as I'm not gonzo about Lincolns. The others are part of my retirement fund so they TOO are investments. Difference being that I've been working on those sets and I'll sell them before I die at a profit to someone that appreciates them like I do. In my eyes that's a great scenario as long as it's a real collector.

Will the bottom drop out due to investors? Perhaps it will some day as they have not taken the time to learn squat about coins. Conversly there are SO many of us that have.

I believe we will keep the hobby going strong (expecially on the tough dates) while "investors" realize that they should have done the homework.

I should add that my brother is an investor. When I first started selling on ebay at a 30% markup he was all for it. My reply to him (this was almost 10 years ago) was to "do your homework". He doesn't invest in coins now.

I'm getting windy here but we all know how many "garbage" TGPs there are. Hell, even the "investors" don't mess with them. As time goes on the the true collectors will do fine as well as some of the "investors". Garbabe graders will continue to sell to the uninformed (that sucks). Many will be sorely disappointed.

On the bright side REAL collectors/investors will do fine. After all we APPRECIATE the coins as more than money in the bank.

clembo

 

the problem is and always will be overgrading and the lowering of standards based on population numbers.

overgrading=more $$$ thus there will always be a coin that is overgraded in a slab.

-Steve

 

No, The 2 you mention have been good for the hobby.

I am too young to have been involved in numismatics prior to the advent of the top tier tpg's, but I shudder when I think about all the coins I see in my present position every day that are in mylar flips with paper inserts from firms that are respected in the industry and have inflated grades on those flips, grades that those coins will never achieve at any reputable grading firm.

Prior to the mid-eighties every dealer in the country had the aility to overgrade his inventory and until the buyer tried to sell the coin there was no grading entity to corroborate or disagree with his opinion and collectors were left with the option of becoming grading experts or risking being seriously taken on every coin they bought.

Largely the reputable grading services eliminate this problem. Sure there are overgraded coins in slabs, but if you have an overgraded PCGS coin you stand to lose much less when you resell it than if you bought it raw and overgraded.

BTW, my comments intentionally disregard ultra high graded moderns. They are a time bomb that is going to destroy a large number of "investors" when they inevitably crash. My comments are made in regards to classic US coins only (pre-WWII coins).

 

But the coins that you disregard speak EXACTLY to my point!!! The problems created by the ultra high graded modern coins currently flooding the market cannot be good for the hobby. As for the top TPGs being good for the hobby, how about this? The special holders and designations put on the slabs by NGC IMHO give the illusion of rarity or collectability to coins that will never be more than common. First strike Eagles anyone? These things as well as the inevitable crash are exactly what I was speaking about. The classic coin collectors won't get ripped off mostly because people don't start with these series. Typically by the time one starts to collect these kind of coins they have acquired enough knowledge to avoid "rookie" mistakes.

As well, kudos to Roy for "getting it" your analysis of what I said was spot on!

 

I agree. I am not sure they ruin the hobby though as they do bring new people in and some become enlightened. Probably the worst loss one could suffer on any coin they offer would be less than $1000. I would guess more has been lost on a Top Tier company coin.

 

Lets not just pick out NGC....PCGS, ANACS, ICG and I think I've even seen PCI, are doing the same thing and sometimes hype it up even more than NGC. I think they are all about the same.

Speedy

 

Very astute observations. I left collecting for a long time after I realized that the local dealer was badly cheating on grading and pricing. [TPGs and the incredible beauty and low prices for siver eagles brought me back.] TPGs give the casual collector a chance to participate with a lower level of risk of having dealers dump their overgraded junk on the new guy.

 

Exactly the same things that brought me back!