Conspiracy Theory------PCGS Marketing Ploy
keets
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It's often mentioned that the registry is nothing more than a marketing tool for PCGS to stimulate interest in their slabs and increase revenue. Maybe, maybe not. Discussion on another thread has caused me to give thought to another tactic which hasn't really been discussed as such.
A link was provided to a Teletrade auction for an Ike dollar slabbed NGC MS69, a premium grade even for the higher quality 1972 silver issue. Where my thinking drifted to is the "allotment" of MS70/PR70DCAM grades which they assigned for awhile and have now seemingly ended. I find it coincidental that they choked off that supply after the registry was underway.
Given the huge jump in price from a 69 to a 70 grade and the fact that the two are essentially the same, it seems that PCGS assigned that grade in the form of a carrot to stimulate submissions from hopeful collectors of the big payoff. And now that interest in the registry is at a fever pitch the bigger submitters in the PCGS dealer network are allowed to enjoy a slice of the pie. I'm sure a tactic like that happens in lower grades with certain issues, but it seems more prevelant and obvious with moderns.
......or do I just think too much??
Al H.
A link was provided to a Teletrade auction for an Ike dollar slabbed NGC MS69, a premium grade even for the higher quality 1972 silver issue. Where my thinking drifted to is the "allotment" of MS70/PR70DCAM grades which they assigned for awhile and have now seemingly ended. I find it coincidental that they choked off that supply after the registry was underway.
Given the huge jump in price from a 69 to a 70 grade and the fact that the two are essentially the same, it seems that PCGS assigned that grade in the form of a carrot to stimulate submissions from hopeful collectors of the big payoff. And now that interest in the registry is at a fever pitch the bigger submitters in the PCGS dealer network are allowed to enjoy a slice of the pie. I'm sure a tactic like that happens in lower grades with certain issues, but it seems more prevelant and obvious with moderns.
......or do I just think too much??
Al H.
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Comments
Fair questions that I just don't know can be answered external of the company. The 70 grade all but went away, and I personally find it incredulous that a 70 is substantially more valuable than a 69, but then we are the ones assigning the value (remember, determining the difference requires a loupe). In the Ike example, a PCGS MS68 Ike was listed with a buy-it-now of $105, and a NGC MS69 was $5200. I find that fascinating also. Whether or not the services are manipulating the market, it sure seems as though the market is more than willing to be manipulated.
and it sets us apart from practitioners and consultants. Gregor
PCGS unquestionably choked off supply, and many of the coins out their in PR70 holders now are from "bulk" submissions. Whether or not bulk submitters were getting a larger percentage than the general submitters I don't know. Certainly for the Ike PR70s that was the case (30 of 32 all from one submission), but given what many of those look like I can't fathom any reasonable explanation other than temporary insanity.
But regardless, since they tightened up, I haven't seen any evidence of favoritism.
Anybody think collectors are flocking to state quarter proof collections because of no PR70's. Anybody think grading -0- proof 70's was a "marketing ploy"? Of course not.
On the contrary, I believe PCGS may have actually hurt certain Registry collecting by its election to not grade 70's. Has anyone else noticed the number of serious Proof modern collectors that have quit recently? Who would want to build a collection of Proof70 Kennedys for example where you basically can't buy one dated after 1998?
Meanwhile NGC continues to deliver a quality PR70 product with respect to Lincolns, Jeffs, Roosies, Wash, Kennedys etc. from what I have seen. Anyone else notice that these NGC PR70's are gaining momentum and price appreciation and the "gap" is closing between PCGS and NGC?
I know that several folks have written about this PR70 issue on the "Q&A". I, for one, would love to understand why PCGS could not find a single "perfect" state quarter proof this year after 10,000 slabs. Has the mint quality gone that far down?
Wondercoin.
I think this is very Telling.
regarding your comment about the gap closing on NGC-PCGS 70's, how much of that do you think is related to a shrinking supply of available PCGS coins and lust for the 70 insert? there's always gonna be a market sector that wants those coins. in that sense it doesn't seem logical for PCGS to tighten up unless it's to stimulate prices------paranoid thinking, but the heart of a conspiracy theory!!!!!
al h.
IMO it isn't just the 70 coins. I posted a question concerning 71 PR Kennedys some time ago that drew tepid response, but your comment brings it back to mind. If PCGS is occasionally given to market grading, or even to leniency toward certain dates with regard to grade and cameo designation, why is a PR69 71 half so rare. If you look at the grade distribution of cam/dcam coins, based on the normal distribution for all other years, there are 3 times too many PR69 Cams, and 2 times too many PR68 Dcams, and 1/3 of the expected PR69 Dcams. Are the 1971 PR69 Dcams being undergraded? It is the key to the series. It now has a controlled population in PCGS plastic much like the PR70 coinage.
and it sets us apart from practitioners and consultants. Gregor
i can't speak for kennedy's and i haven't studied the pops for denominations other than jefferson's, but 1971 seems to have been a bad year for the mint. coming out of the SMS years the quality seems to improve some until they made drastic changes in 1976. i see a lot of uneven cameo's and one sided cameo's for 1968-1972 and then it gets better but not by much. the bummer is that even though i can get some of those years for under $5 there really isn't anything i want in most of the sets.
al h.
<< <i>When all else fails, try some common sense! Odds are, the more a collector or dealer submits, the more chances of a 70! >>
Gee, WSM, that must mean submissions have dropped by about 90% since 1998. Do you ever make any sense?
<< <i>Maybe they just decided a 70 deserves more respect. Maybe sometimes they speed up the grading times and decide that a flawless coin cant be determined in this limited time! >>
Or, maybe they changed their grading standard because they realized their ass was hanging out on their grade guarantee. Or, maybe ICG was no longer a credible competitor, so there was no need to grant the 70 grade.
Which is also why Rick Montomery conveniently ignored any specific questions addressing this issue. It's all about liability.
Russ, NCNE
BTW - Russ,
and it sets us apart from practitioners and consultants. Gregor
PCGS (and thus Collectors Universe) maintains a reserve for grade guarantee costs. If the reserve were to change to the lower side, the difference would be an addition to earnings. I wonder if this reserve has changed recently, after the change in standards, and if it has then how much of their earnings improvement was actually due to a change in grading liability reserve?
Conspiring minds want to know!
coins that might come in for regrading. "Gee," says one representative to the another,
"We can't grade them any higher!" The other respnds, " I know, but how do you think
we can reduce our risk of liability? After some pause in thought the first suddenly exclaims,
"I've got it! We just won't grade anymore MS70 coins!" They must control it or why would they
subject themselves to a big payout per their grade gaurantee because of a huge price difference between two grades by unknowingly downgrading a coin. Have some coins somehow slipped by...... They only can do that for so long before the reserve starts to show signs of drying up.
Am I possibly right, partly right or have I totally missed the point of this entire thread.
I can take it but be kind.
Leo
The more qualities observed in a coin, the more desirable that coin becomes!
My Jefferson Nickel Collection
Is ACG really an independent company, or a puppet of the larger and quality-driven establishment?
Hasn't the effect been to create a doubt in the other competitor's products in the minds of the consumer? Driving the herds of numismatic sheep towards a level of higher confidence has been the effect of tolerating the emergence of this competitor?
If this is so, the limitations of MS-70/PR-70 would tend to strengthen and exploit that position I believe.
The plot thickens... Hunt for the Witches !
The PCGS "supply" of PR70 coins has never been greater this year, best I can tell. When have outfits like DHRC and DLRC had a dozen or so PR70's in stock at any given time to chose from? When have auction houses like Heritage had a dozen PR70's for sale in an auction (I hear Santa Clara is no exception)? I believe these coins are coming on the market as collectors essentially quit building PCGS-PR70 sets. Again, why build a set of PR70 Jeffs when you can't buy any dated after 1998 in PR70 because PCGS obviously doesn't feel like grading any?
Russ: Your "liability" theory doesn't really hold up. As coins such as PR70 modern Commems, Ikes, etc. trade at higher and higher levels, PCGS' exposure theoretical rises higher and higher as well. They have a much more diffcult time buying back (or replacing) a PR70 Ike at $2500 where some trade at $5,000-$6,000 in a Heritage sale. If PCGS simply graded PR70s that deserved to make that grade, prices would likely not continue to rise up in a straight line and their potential liability would likely fall.
No, Russ, IMHO, I am afraid it is not "fear of liability" at the heart of PCGS' decision not to grade PR70. Ask me the next time I run into you at a show and I'll tell you what I think is at the heart of the situation.
Wondercoin
hey mitch
does it have to be russ asking and does it have to be at a show??
al h.
If every PR70DC was slabbed a PR70DC there would be a lot of PR70DC's.
How hard is it for a modern press to stamp out a coin and package it without dinging it up?
The rariety is not in the coin, but in the graders opinion. As not all 69's are created equal neither are all 70's.
So I beleive PCGS graders are instructed that technical 70's that are not outstanding become 69's. Since they are in the rare coin business, the illusion that their grade of 70 is at a higher standard set's them apart from the rest of the players and distinquishes them in the marketplace.
That makes a PCGS holder more desireable which in turn increases their submissions which increases their income.
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I think the supply is coming from a few places. With no new supply, the coins have risen so much in value that people who owned them are selling them.
The registry is slowing down. PCGS might register X new sets each month, but they mostly aren't real sets. It's the same coins spread out over more sets owned by the same people.
I think that many people gave up on their sets. The State quarters brought people into this hobby and they have gotten bored and move on to another hobby.
People also got tired of playing the PCGS game. No 70s, a few 70s, tons of 70s, few 70s, no 70s, etc. And the fact that no 70s are there has to be frustrating for collectors. Who wants to have a PR69 when a million other people can have that coin.
Russ: Your "liability" theory doesn't really hold up. As coins such as PR70 modern Commems, Ikes, etc. trade at higher and higher levels, PCGS' exposure theoretical rises higher and higher as well.
And we all know that if too many PR70 coins are sent back to PCGS they will loosen up the grading standard just a little to soften the market. They don?t even have to grade more PR70 Ikes to soften that market. Grade a few PR70 Kennedys and the marketplace takes notice. People are scared that the floodgate at PCGS will open again and their prices are lowered.
No, Russ, IMHO, I am afraid it is not "fear of liability" at the heart of PCGS' decision not to grade PR70. Ask me the next time I run into you at a show and I'll tell you what I think is at the heart of the situation.
I'll take a stab at this. ICG lost all credibility. PCGS no longer had to compete with them. Secondly, dealers got upset at the falling prices of the PR70s and complained to PCGS. PCGS responded to this by slowing the flow.
We all know that PR70s will flood onto the market again. It's just a matter of when PCGS will decide to do it for marketing reasons.
Kind of like how several PR70 Buffalo dollars showed up early onto the market. Lets see, a hot coin, the ultimate grade which had stopped being given, then high submissions.
The PCGS marketing machine is a little too obvious. The registry was a hit. Everything else is a bust.
I don't believe I agree with the accuracy of your last statement. I believe a VERY significant number of submissions have gone to NGC due to concerns that 70 candidate coins would not receive the grade they deserved from PCGS. Personally, I would much rather receive $200 for a number of my 70 Kennedy coins than $19 for a PCGS 69. Granted, if the coin were to receive the 70 grade, I could sell it for $500 or more. However, that just isn't happening, except with some very Modern commems.
A lot more people are receiving $500 for their 70 Eagles and they don't even look back wondering if they could have received $1200 for the coin in a PCGS holder. In my opinion, only a fool would send a serious 70 candidate coin to PCGS in the current grading environment. For the past couple of years, a growing number of dealers have shifted the bulk of their best submissions to NGC where the 70 grade is still a realistic opportunity.
i remember well when that first buffalo showed up on eBay in a 70 holder. i watched in amazement as it sold for close to $1500 and now can be had for less than 1/3 of that.
al h.
DCAM-
My opinion was from a collectors point of view, but I agree with how you point out that it is flawed from a dealers point of view, which is where PCGS would make the bulk of their money.
But the dealers make money selling to collectors, so messing with the collectors mind helps PCGS too!
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grade should be reserved for the theoretical perfection that no coin could ever
achieve.
I also believe it is the liability that holds them back now. It's too easy for a coin
to go from 70 to 69 due to haze or a pin-point spot appearing over time.
Since they have graded 70's in the past, I think they will let a token 70 out once
in a while now, but they will be few and far between.
I believe there should never have been any MS70/PR70 coins graded as that
grade should be reserved for the theoretical perfection that no coin could ever
achieve.
wow, ken, i knew the voice of reason was out there someplace!!!
al h.
grade should be reserved for the theoretical perfection that no coin could ever
achieve.
Why? Based on a set of standards with MS70 being no marks (perfection) under X-power magnification, there should easily be coins that meet this standard. If it isn't going to be used, then why not have a 01-69 grading scale?
I also believe it is the liability that holds them back now. It's too easy for a coin
to go from 70 to 69 due to haze or a pin-point spot appearing over time.
The flaw here is that PCGS does stilll give out the 70 grade. They just give it to MS coins and not proof coins.
Theoretical perfection moves outside the bounds of our space-time reality.
Since we are talking about coins on the current grading scale a 70 is a full strike/as struck without flaws under magnification.
Humans have invented processes that can make a perfectly smooth surface with in a few microns, however the minting of coins doesn't have a need for that requirement be met.
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the PCGS-defined standards, but rather a theoretical perfection. A 70, in
my opinion, should be perfect - which no coin can really be. Therefore, I
feel that the highest graded coin should be a 69 - the closest thing to
perfection.
I know others will disagree...that's just my take on it, and it's the reason
I will probably never buy an MS70/PR70 graded coin.
Would I like to get one back from PCGS? You bet!
it straight in the holder...I mean, it's a "perfect" coin, so you'd think they
would take a little extra care in handling it and placing it in the holder!
Ken
<< <i>I believe there should never have been any MS70/PR70 coins graded as that grade should be reserved for the theoretical perfection that no coin could ever achieve >>
agree w/ "there should be no ms-70", but disagree w/ "there should be no pr-70".
K S