Commercial Grading Commentary
Catbert
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Provocative article from Warren Mills (RCNH), quoted below:
Commercial Grading a Sham and a Shame
"Call it what you want, the words are interchangeable, commercial or market grading. Those of us with snow on the roof or a shine on the top of our heads call it “grade-flation.” Commercial grading relaxes strict grading standards to the point that it increases the supply so much that prices drop and continue to slide downward. A coin may have the look of an XF and you may grade it XF without punishing the coin for a wipe, nick, cleaning or scratches, however, that coin should be punished. Those of use that grew up buying wholesome original coins for the grade are appalled at the over-graded pieces that distort populations to make great coins look common. Apply the same process to mint state coins. A lustrous nice AU-58 with obvious rub ends up in a MS-61 or MS-62 holder. A nice MS-63 with noticeable naked eye abrasion ends up in a MS-64 or MS-64+ holder. Hence market grading.
You may not like it, but in my opinion C.A.C. has the potential to save the coin market by delivering to the knowledgeable collector the strict standards that they deserve not only to preserve value but hopefully to increase in value. I’d love to know how many collectors are submitting coins for cross-over to C.A.C.G. and will even take a lower grade based on true technical merit! I’m not saying that all C.A.C. or C.A.C.G. coins are fine, far from it and I will state examples later, but at least these services give the collector a better-quality product that may actually increase in value. Distorted high populations only lead to lower prices.
Even though I believe in C.A.C. and C.A.C.G., I had to decline becoming a shareholder. When John contacted me and I said I thought it would be a conflict of interest, his words to me were “I knew you would say that.” I understand all of the affluent dealers and collectors that want to take a bite of the apple. Many could care less about coins or collectors but they hope to be in on the next money-making opportunity. To me, it’s not right. I never want to lose my objectivity to help the end buyer of a coin. I think I still would be able to be objective, but my opinion could be looked at as tainted as an owner."
Comments
I like diversity - Have coins by all 5 TPG accepted by ebay. Many picked up from estates or deals from wholesalers. Don’t see the coin market as needing to to be saved. Certainly more strong buyers, investors needed.
Interesting view but market more complex than some generalization. Furthermore every slabbed coin is unique - PQ, solid for the grade, etc. Furthermore many slabbed coins are victims of reaction to the atmosphere / has nothing to do with grading (coin preservation handbook).
Players need to take responsibility, learn how to grade and look at coins.
Only a PCGS submitter at this time and will continue on that course. I keep a copy of the PCGS grading standards in my show briefcase binder. Works for me. If some trying insinuate PCGS somehow liberal, commercial - would consider that an absurdity and laugh that person off the bourse.
For me it’s the coin not the holder.
In my opinion, Mr. Mills is the most straightforward, above board, and honest dealer I have ever encountered. An absolute pleasure to deal with and a credit to the industry,
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Now listen boy, I'm tryin' to teach you sumthin' . . . . that ain't an optical illusion, it only looks like an optical illusion.
My mind reader refuses to charge me....
Few people get fooled by a coin no matter what holder it is in; they assess and judge the coin and the holder then make a decision on the right price. To act as some type of grading police when the market of customers usually accurate assess all aspects, grade, eye appeal of the coin, the holder, the price, etc. strikes me as overly critical. Of course it is appropriate for there to be tougher oversight when the grading company just got it wrong or the coin has hidden or evident issues that the grading service ignored.
To a significant degree this ship has already sailed. CAC has demonstrated the demand for a second opinion, one that is perceived as "conservative". CACG does not need to dominate the market in order to move the pendulum away from "market grading", if such is indeed the case. It just needs to lead, as CAC has.
As I have said before ... learn to grade conservatively and don't rely on the "opinions" of others.
Maybe I’m not understanding what you wrote but countless people - even very sharp collectors and dealers - get fooled by coins.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
And certainly a LOT of newbies get fooled by the number on the slab, even if it's not a respected slab.
Grading has a subjective component. And a grade opinion recorded on a slab is captured at that moment in time as it is graded. Opinions can change and often do as we have witnessed crack outs with grades moving higher and lower after multiple attempts to seek the right outcome. All we can hope for is to see coins that have the look acknowledged for that look instead of what has been enhanced or processed to a point where it simply has lost what matters. It really is not about gradeflation, but recognizing what the natural state of preservation should look like at various grade levels. And that difference is what has been lost and is the problem. Stickers or new grading companies cannot fix this... it is simply too late to reign in the mistakes of rewarding enhanced coins. And to complicate matters, it does not help to move the goal posts in connection with what some may now consider rub when that look is likely a combination of multiple factors.
So how does one reconcile all of this in an effort to assemble the collection one aspires to achieve?
That is where the work and commitment start in an effort to understand the science of grading and how it remains a work in progress based on acknowledging general inconsistencies in the production of coins within a series and in coins in general. Coins at the same grade level are just simply not created equal. The goal is find the look and quality for the grade.
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He had a great point - maybe u should read it again. That’s possible with any TPG. A lot of us prefer pick out our own nice coins at our price. And buy it right. Not pay thru the nose - look at the prices many dealers have over way over the CAC CPG for CACG material on eBay. I took an audit sample of about 25 coins. Many about 25 pct over. Perhaps they will come down a bit once more out there. A sharp well off paralegal friend noticed that and is also in the coin business - she knows how to grade and price coins. She is already on instagram interested using that as a rare coin biz platform. I do have some CACG coins (like them) but may have overpaid early in the game lol.
It can be easy to grade conservatively, but that might result in passing on great coins that are accurately graded. It’s also important to understand how the major grading companies grade, even if you frequently disagree with their opinions.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
Gradeflation? I guess no one here remembers what REAL gradeflation was back before TPGs - the common (and maybe even expected) practice where dealers would buy coins at one grade and sell at another. Not just a one or even two point disagreement, but a whole grade difference.
Actually, why do you need to grade at all [following 5ths logic]? If you like it, buy it. No need for a grade, especially if all those fools making price guides are using TPG grades. You then have a price applied to a number you don't feel you need to understand. Grades, prices, all just opinions of people I don't agree with.
People keep forgetting a lot of transactions occur over the internet and seeing the coin in hand and grading is not an option. You rely on seller's photos (good luck) and TPG's grades. Getting a netted grade on a details or over-graded coin and having to ship back is a PITA, never mind the added cost. I welcome the 2nd opinion and more conservative approach to grading.
Sorry to be so blunt but it is hard not to offend.
The only people that need a grade should probably not be buying coins!
Have any of you seen two professionals dealing? You will** hardly ever hear a grade mentioned.** It goes like this:
Dealer A: how much?
Dealer B: $
Dealer A: I'll take it.
Every so often:
"can you do a little better..."
"I've got to make..."
Please add what you have heard in my New Discussion just posted!!!
Thanks
Warren Mills is a known legend. Great post @Catbert !
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Sounds like a very ethical guy and more power to him.
Unregulated capitalist marketplaces are strewn with potential conflicts of interest.
I don"t think its realistic to not have commercial interests involved in TPGs for total separation and objectivity.
Reality is the marketplace wants TPGs and what is the alternative?
BU, Gem BU, Gem BU+?
@logger7 said:
No one gets fooled by a coin no matter what holder it is in; they assess and judge the coin and the holder then make a decision on the right price….
My reply to him:
Maybe I’m not understanding what you wrote but countless people - even very sharp collectors and dealers - get fooled by coins.
Maybe YOU should read what he posted and my reply to it. I didn't say anything about choosing coins, prices, or CAC. I simply refuted his comment that "No one gets fooled by a coin..."
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
I read this yesterday on Gerry's blog, I 100% agree with what Mr. Mills penned.
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Never a slave to one plastic brand will I ever be.
I of course 100% agree with you...but what are the chances of him reading anything? Blood from a stone at this point.
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BU, Gem BU, Gem BU+?
Strictly UNC, Select UNC, Choice UNC, Gem UNC, Superb gem UNC are the only grades needed for UNC coins. Leave out the numbers, the pluses, the PQ's, etc, and go with the five descriptors I just listed for uncirculated coins.
"Strictly", "Select", "Choice", "Gem", "Superb gem", says it all when it comes to assessing the condition of an uncirculated coin.
Great spirits have always encountered violent opposition from mediocre minds.-Albert Einstein
Agreed. That other thread about 68+ and 69 Morgans had it all wrong. 67 Morgans and 69 Morgans are identical and there's no reason to differentiate between them.
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Jeremy, are you joking here?
Coin Photographer.
I know him well enough that I can answer for him here, he’s being facetious.
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Thanks Dan. I thought so.
Coin Photographer.
Me? Facetious? Sarcastic, recalcitrant, abrasive, sure. But facetious?
😉
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I see no proof or references that so many coins have been given a free pass as to drive down market values due to over supply. He lost me after the first paragraph.
See the CACG discussion about high point friction. Look at early copper with minor corrosion that straight grade. There is plenty of evidence. You're the only one on this thread who doesn't appear aware of it. TPGs don't pretend otherwise.
In general, look at the explosion of high grade on the population reports. And it' not just due to the passage of time.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
As usual excellent point, and I modified my absolutist comment that "no one gets fooled" in this day and age, most people don't get fooled. Once you rigorously look at all the potential categories, and mistakes, and the overlooking of issues which cac most always catches, there are many potential mines in the field. Warren was famous in his reports calling out the "walking wounded" coins in various holders that are in "their final resting place". Just how granular do you want to be in grading analysis? My personal experience is with relatively small grade premiums and the low end market under $500 coins; but a large part of the market is the high end where accuracy becomes vital.
Great post @Catbert !
Thank you for sharing it and I agree, it's what I've been saying for a while now.
Mike
My Indians
Danco Set
This is what I know for a fact from reading the opinion of others:
People toss about the term "conservative" when talking about coin grading. What does that mean? At one time. the standards for grading were much stricter than they are today. That is why an older collector is called a conservative grader by assigning the REAL grade to a coin. Yesterday's AU coins, now graded MS by today's collectors does not change the coin's actual condition! IMO, that old guy is not grading conservatively, he is grading accurately! Why do you think there is a big stink in the forums about CACG? Is it possibly becuse they are grading coins closer to what they actually are? We (dealers and collectors) made this mess by ignoring the naked truth and fudging the grading systemall these years.
The original sin in certified grading was making the grading services for profit companies. Grade inflation is needed to keep the companies afloat. So much for objectivity. It truly is disgusting.
On the other hand, PCGS's growth helped fuel the hobby whereas a non-profit may not have had the same impact (much like the ANA's anemic growth).
Great discussion. I enjoy learning to grade based on the fruits of my peers. Examining a coin is like having a conversation with a stranger, IMO
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IMHO, you don't know what you are talking about. Oops, sorry! What I should have posted is that perhaps you might be a little misinformed. While in DC, ANACS had terrific growth - so much so that the powers to be quickly moved that "cash cow" to CO so they could have more control. As for non-profit, that is the key. TPGS are slaves to the bottom line and all kinds of abuse (market acceptable?) goes on! Oops, sorry, I should have written that the need for profit might tilt the playing board on rare occasions.
Anyway, the only perfect TPGS would be endowed with enough cash to operate for years with no income! Staffed by very well paid, knowledgeable, top graders and authenticators in an "ivory tower" above the fray who could stick to a strict standard, separate the dogs from the gems, and not worry about anything or anyone. If folks did not want to know the truth about their coins, they could send them elsewhere to be graded. Now back to reality.
What market would we have without coins in these higher grades? The availability has created a larger market which did not drive prices down.
I disagree. What keeps the grading companies afloat are the truckloads of moderns. If they were all just re-grading classics, they'd all be out of business.
Could you provide evidence? You can't. The data doesn't exist because coins achieving grades that they never could before creates a price for a formerly priceless rarity.
Then again, you really don't need prices to prove the point. Your supposition is what? That having eight MS68 coins instead of one makes the price of the MS68 higher? The same? Common sense and basic economics tells you that the price has to be lower when the supply goes up.
If you're going to tell someone they don't know what they're talking about, you should easily be able to refute it. I read your post twice and don't see where you accomplished that.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
In the famous words of Bill Munny… “He should have armed himself… “. In how many commercial endeavors (not involving “equals”) , is that a totally acceptable operating philosophy? Thank goodness for Warren Mills and firms like RCNH…
Certainly, the founding of PCGS slowed their growth. However, while I worked for ANACS, they hired three more people after Irene and I were hired. Submissions grew every year while in DC. Therefore, from my experience, the blanket statement that ANACS had anemic growth was incorrect. I cannot help it if folks cannot comprehend what I wrote. I hope this post is more clear.
Once I started the Grading Service we immediately had more business than we could handle. Counting support staff, we went from 4-1/2 people to about 60 in three years.
LOL, that does not sound "anemic" to me! But what do we know - right?
The post by @Catbert, to which you replied, stated "On the other hand, PCGS's growth helped fuel the hobby whereas a non-profit may not have had the same impact (much like the ANA's anemic growth.)" Then you told him he didn't know what he was talking about and proceeded to go on about the "terrific" growth of ANACS. But you didn't say a word about that growth fueling the hobby, as Catbert stated with respect to PCGS.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
Of course, all is speculation, but let's count the ways PCGS has influenced the hobby positively:
CoinFacts
Registry (love it, hate it)
Slab technology, Counterfeit prevention
TruView
to name a few.
PCGS being a publicly traded company pumped many dollars into the company where such innovation could be gestated. My "ignorant" take is that a not-for-profit would not have had the same advantages. This is taking nothing away from our learned old hands who worked at the early ANACS.
Edit to add: when I referenced the ANA, I was thinking about it's organizational history (not its early ANACs history) and how they have failed, in my opinion, of promoting the hobby, in creating innovation, and in expanding membership. For-profit companies must produce and innovate or they go out of business.
@MFeld said:
"The post by @Catbert, to which you replied, stated "On the other hand, PCGS's growth helped fuel the hobby whereas a non-profit may not have had the same impact (much like the ANA's anemic growth.)" Then you told him he didn't know what he was talking about and proceeded to go on about the "terrific" growth of ANACS. But you didn't say a word about that growth fueling the hobby, as Catbert stated with respect to PCGS."
As you know, there was NO PCGS to "grow the hobby" before 1986. Everyone knows the influence David Hall and PCGS had on our "hobby" after 1986. Therefore, we are possibly in complete agreement; however, as the first coin authentication service and second grading service (its success probably prompting the formation of PCGS), ANACS should not be slighted by misinformation. These statements are facts and not fiction.
I agree with this. I think people are giving credit to PCGS for things that preceded them. Yes, PCGS and NGC became forces in the modern era. But, apologies to Isaac Newton, it is because they stood on the shoulders of giants.
Except registry sets. They did convince people to spend $30 slabbing $3 coins for their registry sets. Brilliant!!
"They stood on the shoulders of giants" - so did Microsoft.
But this is a silly argument and I'm out.
Which part is silly? Giving ANACS and others fair credit?
P. T. Barnum would agree.
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"Everything you say should be true, but not everything true should be said."----Voltaire