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Reasons why PCGS and NGC are so often "wrong"....
coinguy1
Posts: 13,485 ✭
What does it mean if a coin doesn't receive the grade its owner wants or thinks he deserves?
It can mean a number of things, including, but not limited to:
1) The owner/submitter knows how to grade but is looking to get his coin over-graded because of the potential profit and $ signs in his eyes.
2) The owner/submitter knows how to grade but the grading service under-grades the coin.
3) The owner/submitter knows how to grade but the coin is a legitimate liner (where most experts would agree on one of two different possible grades but there is simply no clear cut "right" answer) and the grading service doesn't give it the benefit of the doubt.
4) The owner/submitter doesn't know how to grade and has unrealistically high expectations. If the owner/submitter doesn't know how to grade, he/she might also receive grades that are higher than expected.
Please keep in mind, that PCGS and NGC combined, typically grade more (probably many more) than than 70,000 coins per month. Even if they are incredibly accurate and consistent and grade only 5% too high and only 5% too low (I think that would be giving them far more credit than they are due), that is 3500 under-graded coins and 3500 over-graded coins per month. That is 42,000 over-graded and 42,000 under-graded coins per year, entering the marketplace.
Clearly, there are plenty of coins that knowledgeable collectors and dealers can legitimately claim are either under-graded or over-graded, even if they aren't biased. Add in the bias factor and the opinions of people who don't know how to grade, and it's easy to see why there is so much complaining.
Edited to add:
As dorkkarl so rightly pointed out, grading is an opinion (though I maintain that some opinions are more expert/correct than others). Often, there is no "right" or "wrong" grade/answer.
It can mean a number of things, including, but not limited to:
1) The owner/submitter knows how to grade but is looking to get his coin over-graded because of the potential profit and $ signs in his eyes.
2) The owner/submitter knows how to grade but the grading service under-grades the coin.
3) The owner/submitter knows how to grade but the coin is a legitimate liner (where most experts would agree on one of two different possible grades but there is simply no clear cut "right" answer) and the grading service doesn't give it the benefit of the doubt.
4) The owner/submitter doesn't know how to grade and has unrealistically high expectations. If the owner/submitter doesn't know how to grade, he/she might also receive grades that are higher than expected.
Please keep in mind, that PCGS and NGC combined, typically grade more (probably many more) than than 70,000 coins per month. Even if they are incredibly accurate and consistent and grade only 5% too high and only 5% too low (I think that would be giving them far more credit than they are due), that is 3500 under-graded coins and 3500 over-graded coins per month. That is 42,000 over-graded and 42,000 under-graded coins per year, entering the marketplace.
Clearly, there are plenty of coins that knowledgeable collectors and dealers can legitimately claim are either under-graded or over-graded, even if they aren't biased. Add in the bias factor and the opinions of people who don't know how to grade, and it's easy to see why there is so much complaining.
Edited to add:
As dorkkarl so rightly pointed out, grading is an opinion (though I maintain that some opinions are more expert/correct than others). Often, there is no "right" or "wrong" grade/answer.
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I am a conservative bear when it comes to grading.
The coins might even be better than stated.
Camelot
Tom
My Website
"Everything I have is for sale except for my wife and my dog....and I'm not sure about one of them."
grading is an opinion, neither right nor wrong, & differences of opinion are OK.
K S
The coin that i regret the most not buying was a coin i could have made over 30,000 in 2 years on, but the one that i regret right behind it was i believe an 1897 S barber half with borderline 64/65 quality surfaces, [p.c.g.s. graded it a 64] a razor sharp strike in all areas of the coin, and beautiful natural [not picaso like] toning, the luster was like that of a new kennedy half. The most eye appealing mint state barber half by far i have ever personally examined. The dealer wanted 3500, grey sheet was 2200.I think the percentage difference was about 60 percent. I tried for quite a while to talk him down, but he had baught the coin raw and submitted it hoping for[at least 65]. I gave up and walked baway from the prettiest barber half i'd ever seen, Why? because of the grade on the plastic!!! I will never do that again. Buy the coin first, i will not say don't buy the plastic though because it does serve a valuable purpose but the coin in the holder should always be the first consideration. If i ever see that coin again i would gladly buy it for 3500 even if i had to sell blood to pay for it [profit potential be damned] Les
1- The graders were smoking something unidentifiable
2- The graders can't grade... I'm just always right
My 2 cents
Jeremy
Ihave no problem with the third pary grading system, it is the disparity of value between them.
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Therefore, it is in PCGS's and NGC's best interests to reduce the outliers and place as much of their product as possible in the correct spot that their standards say it should put on. Now, another person might disagree with the grade -- fine. That is where opinion can show up. But if the companies work to eliminate outliers (that do not conform to their standards), they can indeed put the right number on the slab each time the coin comes through (barring changes of the coin).
And with that elimination of outliers goes the crackout game. The only game would be crossovers and people who say "PCGS Grades this 64, I say it is 65" or "PCGS Grades this a 65, I say 63". For you see, PCGS and NGC do not need to agree with you! Ever! They only need to grade according to their standards. Once that's done, the rest is out of their hands and inconsequential.
Neil
I agree that there are undergraded and overgraded coins hitting the market place every day. That is why the crackout game is so big.
We all see the mistakes. Maybe 5% of the dealers can tell, but no more than that. Yet lots of them play the crackout game. I've seen them,
no clue what they are doing. A hit here and there and they are hooked. Often the next jackpot never comes. But I guess I've missed your point?
Unless you were just stateing the obvious?
Rusty
hey mark
heck, i hear so much about the "10 second rule" that i assume the following to be true; 1 coin in 10 second, 6 coins in a minute, 360 coins in an hour, 2880 coins in a day, 14400 coins in a week and a whopping 748,800 coins per year for 1 grader at PCGS!!! if we cut that in half for bathroom breaks, smoke breaks, lunch breaks and sanity checks, it still comes out in the neighborhood of 375,000 coins viewed a year just by one grader
perhaps some additional thought needs to be given regarding the 10 second grade.
uh, you forgot #5.
5. The owner/submitter knows how to grade but not as well as PCGS/NGC whose opinion is more subjective and based on a larger overall sampling.
to put things in perspective, what i view as an MS66 probably is, based on the limited sampling i have seen. when PCGS/NGC sees the same coin, based on there much larger sampling, it is only an MS65. it is logical, to me at least, that if 100 coins of a given date/series are graded, the high-low grade spread will be much different than when 10,000 of the same date/series are graded. then we hear all about "changing standards" when the standard may be the same but the graded pop has only changed the perspective of what is MS66 and what is MS65.
experience is really what i pay for when i submit a coin. over the course of time, as i submit more coins to PCGS for a grade opinion it causes my RAW collection to grow at a faster rate than my slabbed collection!!! as i become more secure in my ability to grade accurately by submitting to get an informed opinion, i become less dependent on needing that opinion. in short, i morph into dorkkarl!!!!!
al h.
"Even with the acknowledgement that grading is an opinion, if the opinions are based on published standards then it is no longer an opinion but adherence to the standard. (The standard establishes hard lines that clearly demarcate the grades -- theoretically)"
Neil, this is not directed specifically at you, but, you have raised an issue that others have mentioned before and I have a reply.
Unfortunately, there are no real, true, objective, practical standards, though many cling to that thought/hope. People can point to the published A.N.A. (or other supposed) standards all they want to. But, no written grading guide fully/properly addresses the virtually infinite number of different ways in which a coin's grade/condition can be affected by both mint-made and man-made imperfections.
Just for fun, I have picked up and opened an Official A.N.A. Grading Standards For United States Coins guide and looked up M.S. 65 Morgan Dollars. The M.S. 65 "standard" is: "No trace of wear; nearly as perfect as MS67 except for a few additional minute bag marks or surface mars. Has full mint luster but may be unevenly toned. Any unusual striking traits must be described."
I don't know about you, but that sure doesn't solve the objective grading standard problem for me! No written guide can fully address the combination of the size, location, depth, number and appearance of marks and how they affect the grade of a coin. Ditto for other factors such as toning. And so on. Like it or not, there is no objective standard, period.
<< <i>Like it or not, there is no objective standard, period. >>
Especially when applied by collectors to their own coins.
Clankeye
go look at a boatload of coins and that subconscious opinion is fine tuned.
any guesses by any member as to how many coins have been graded by PCGS/NGC in the last 5 years, how that has been escalting since their inception, how often the grader pool has changed........i could go on but you should understand the gist of my thinking. to try and find some sense in the perceived "standard shift" is akin to climbing into a squirrel cage. whether real or not, there are so many factors involved, most of which go unmentioned, that it isn't a simple thing as many, this thread included, would want to find.
al h.
I mostly did Morgans but I did notice a few things about PCGS:
<<<3) The owner/submitter knows how to grade but the coin is a legitimate liner (where most experts would agree on one of two different possible grades but there is simply no clear cut "right" answer) and the grading service doesn't give it the benefit of the doubt>>>
This used to give me fits; 65 DMPLs a lot of the time became 66 PLs. 64PL & 65 PL could easily become a plain 66. This was good at selling time but didn't do much for my DMPL collection. Later I found out PCGS would upgrade the designation or the numerical grade but rarely both on a coin that was borderline.
<<<2) The owner/submitter knows how to grade but the grading service under-grades the coin.>>>
I took some big hits on 78 7/8 TFs that went from STRONG to WEAK. I wasn't much into VAMs so I didn't worry much about because the numerical upgrade evened it out. I honestly think PCGS had problems with the WEAK/STRONG designations years ago. I have heard VAM guys say that PCGS is hard on the 78P but maybe PCGS was just getting with the program.
<<<4) The owner/submitter doesn't know how to grade and has unrealistically high expectations. If the owner/submitter doesn't know how to grade, he/she might also receive grades that are higher than expected.>>>
9 times out of 10 PCGS graded them the way I called them. But Blast White Morgans are no-brainers to grade. I also put the evil eye on them, if they weren't PQ they were dogs to avoid. That's why I'm so critical even nowdays.
I also dipped almost every one before I sent it in.
If I wanted to keep a coin from upgrading just send with a little monochrome periph tone like you get from a roll or album or with some specks, splotches or spots.
Don't worry I never dipped a toned monster. I cracked & dipped a MS64 CC with dark, brownish black bag tone one time and got a dull gray coin that you could still see where the cloth pattern was and said uh-oh, dark ones won't work. After that I avoided toned coins.
I always see plenty of the overgraded coins on the bourse floor at Long Beach. I almost needed a barf bag at the last show
"Seu cabra da peste,
"Sou Mangueira......."
If PCGS and NGC are misgrading 10% of the coins submitted they need to slow down or change procedures...
Looking for Nationals, Large VF to AU type, 1928 Gold, and WWII Emergency notes. Also a few nice Buffalo Nickels and Morgan Dollars.
Monty...
Some of the biggest mistakes collectors and dealers make is not reaching for a coin, especially a coin that rarely surfaces in a highly desired state of preservation. I have made this mistake too, but the times I have reached I can say it was the right decision.
In the final analysis, you should consider the coin and whether if is high end for the grade over the actual grade assigned by the TPG company.
Experience the World through Numismatics...it's more than you can imagine.
<< <i>Mark;
If PCGS and NGC are misgrading 10% of the coins submitted they need to slow down or change procedures... >>
There does appear to be a problem here. I can't think of many businesses that can get 1 in 10 wrong and stay in business. Especially when a single point can result in thousands of dollars in value. Now if we are talking about liners here that is different, but if we are talking near consensus agreement and the numbers of misgradings stated are close to accurate, then I must agree that their accuracy is unacceptable.
As Fatman said, how many businesses can get away with such poor results? Imagine if I misdiagnosed or had surgical complications on even 1% of my patients. I'd be in big trouble.
<< <i>As Fatman said, how many businesses can get away with such poor results? Imagine if I misdiagnosed or had surgical complications on even 1% of my patients. I'd be in big trouble. >>
<< <i>There does appear to be a problem here. I can't think of many businesses that can get 1 in 10 wrong and stay in business. Especially when a single point can result in thousands of dollars in value. Now if we are talking about liners here that is different, but if we are talking near consensus agreement and the numbers of misgradings stated are close to accurate, then I must agree that their accuracy is unacceptable >>
Perhaps THE biggest problem is that there is no objective standard by which to determine whether the grading company is "wrong".
<< <i>There does appear to be a problem here. I can't think of many businesses that can get 1 in 10 wrong and stay in business >>
A baseball player who bats .300 is considered a superstar these days; yet he fails 70% of the time. Lets give him an extra .100 for walks, sacrifices and fielder's choices and he is still screwin up 60% of the time.
MY COINS FOR SALE AT https://www.pcgs.com/setregistry/collectors-showcase/other/bajjerfans-coins-sale/3876
well said and fairly said to boot!! ...................kudos to you
<< <i>With the current setup, the grading services have a financial incentive to misgrade as many coins as they can get away with. This stimulates resubmissions and additional grading fees.
As Fatman said, how many businesses can get away with such poor results? Imagine if I misdiagnosed or had surgical complications on even 1% of my patients. I'd be in big trouble. >>
But doesn't this assume that the TPG's are somewhat crooked and defeat their purpose for creating resubmissions. If I take my car to a mechanic and he screws it up, I'm not likely to take it to him again. If I find out that a business I trade with is underhanded/unethical/crooked, I tend to avoid doing further businesswith them. Just playing devils advocate here.
Neo...
<< <i>Please keep in mind, that PCGS and NGC combined, typically grade more (probably many more) than than 70,000 coins per month >>
Are there really THAT MANY that are worth submitting? No wonder there is so much crap in holders these days.
MY COINS FOR SALE AT https://www.pcgs.com/setregistry/collectors-showcase/other/bajjerfans-coins-sale/3876
<< <i> If I take my car to a mechanic and he screws it up, I'm not likely to take it to him again >>
There are MANY more mechanics (and doctors) to choose from than there are highly regarded grading companies. And, while a properly tuned or repaired car (or body) is great, it still doesn't always offer the (financial and/or emotional) upside of a favorable grade or up-grade from a grading company.
<< <i>mark feld you hit the nail on the head and with regards to your thread today it is for me the thread of the summer!!!!!! >>
Thank you Michael. I must disqualify this thread from consideration as such however, since I had started it in March (of 2003).
Subjective professions such as movie critics where huge money is at stake have wide disagreements--AG3 and MS67 on the same movie, so to speak.
What hasn't been pointed out (but is also obvious) is that at each turn of the wheel, the market rapidly removes the undergraded coins. Next, the nice coins go. Next, the average coins. What is left is the low end and the overgraded. It is a natural cycle. In my opinion, bumping up standards will do little to cure it. Permanently removing the low end coins would be a bigger travesty than the current situation. Besides if that occurred there would be a new 5% low end. It is endless.
Subjectivity will always exist. Even if a computer graded the coins, humans write the guidelines. Besides a grading machine that always spit out the same grade would be bad for business (no crackouts), so there is no incentive to use one. My wild guesstimate is that crackouts represent about 25% of the grading business. Only a foolish business person would turn that away.
<< <i>
<< <i> If I take my car to a mechanic and he screws it up, I'm not likely to take it to him again >>
There are MANY more mechanics (and doctors) to choose from than there are highly regarded grading companies. And, while a properly tuned or repaired car (or body) is great, it still doesn't always offer the (financial and/or emotional) upside of a favorable grade or up-grade from a grading company.
While I agree with you...should the lack of such organizations allow those that do exist to take advantage of their patrons? Once again playing Devil's Advocate.
BTW...I think the services, while they certainly have room for improvement, are doing a reasonably good job. Especially when you consider the volume they handle.
Neo...
The grading services are a business after all, a service business at that, but on that has become an assembly line operation that survives based upon their ability to crank out a large volume of product each day. At 10 seconds per coin you are paying for grading at a rate of $10,800 per hour on a $30 submission. OK, they have at least two guys check it out, so maybe its really $5,400 per hour and only $3,600 per hour if a finalizer is needed.
Is that the way your grade when you buy a coin? Or do you take your time, pull out your glass or loupe and pontificate over it for several minutes? Maybe you even compare the prospective purchase with another in like grade or higher grade. Maybe you even show it around for more opinions.
So when you find that super super coin that is better than the 67's you have on hand for comparison and send it in for a 68 grade what is going to happen? Since the graders at the services do this all day long for years on end, they can take one look and know what the grade is. After seeing a gazillion MS65 Morgans or MS66 Red Lincolns or MS whatever in any series they know what one looks like. And when they see a super example, they "know" its a 67. Of course if they have never put one in a 68 holder, where do you think a super super example is going to go? In a 67 or 68 holder? Remember, they "know" what a 67 looks like and have done a bunch of them, but not a 68, so why start now with your coin? And if you don't like the grade you'll just send it back in with another grading fee for another try.
By the same token, why should anyone be surprised when they miss something on the down side? That mark or brown toning area that you decided you don't want for 67 money after thinking it over might not have looked that bad, or might not even have been seen in a 10 second glance. And if the graders have been looking at a batch of low enders, maybe the coin looked super in comparison--just like you big submitters count on when you use the "set up" coin method.
So stop your complaining. What do you expect for your measly $5,400 per hour, perfection?
CG
TorinoCobra71
<< <i>Perhaps THE biggest problem is that there is no objective standard by which to determine whether the grading company is "wrong". >>
Mark, when I am going through boxes of coins at the shows, I see coins that are so far off it’s pitiful. I just shake my head, put them back in the box and move on. There is no way to police this stuff.
What are you going to do? Intentionally buy a coin that is “way off,” and go fight city hall to make them make it right? Frankly small dealers and collectors like me are “grade takers.” We don’t have enough clout to change the system, and trying to do so would just ruin the business and the hobby for us.
The solution is to go through 500 coins to find 10 that are worth pricing, and buy the five coins that are priced at a level where one can make money or be happy with it in your collection. To me the grading services are imperious, arrogant giants who don’t listen their customers and don’t give their customers’ expertise and experience any respect. Forty-five years of experience and thirty years of acknowledgement from my peers that I am expert grader does not mean anything these people. They are right; you are wrong; and that’s the end of the discussion.
They tell you that the 20 seconds they collectively spend grading a coin beats the one or two minutes you have spent grading a coin. That’s just a load of BS, and they know it. But they’ll never admit it because that would shatter the illusions about the “infallibility” of third party grading that they have succeeded in implanting in the minds of so many coin buyers.
Damn! I guess I killed that thread!
So no one has any response to my post? I can't be 100% correct.
<< <i>So no one has any response to my post? I can't be 100% correct >>
Close enough?
<< <i>There are a ton of professions where percentages are low. Baseball hitters and pitchers both. Quarterbacks. >>
They say that when a quarterback throws a pass, three things can happen, and two of them are bad. Not a bad analogy for submitting coins. One good thing can happen: You can get the grade you desire. Conversely, a ton of bad things can and will happen eventually.
Take the MS-65 Morgan Coinguy1 cites from the ANA definition of GEM. The ANA description is a joke to me-it says very little ... Hows this: The cheek is clean to your eye and their are only one or two small abrasions in the fields smaller than Liberty's hair curl, with nothing overall distracting your eye away from the overall cion's eye appeal. Under 5 power, there are no distracting bag marks on the cheek except minor grazes hard to see without a handlens. The overall luster is stong for the date, and the reverse looks OK at a quick glance without cuts on the breast, or a bunch of marks that stand out, especialy on the wings and around the motto.
Then show a photo of each date in high end and low end for the grade. For O mints--show the weakest strike acceptable.
Certainly PCGS and NGC can do a clearer, more acceptable description of GEM than a collector like me, and find a few photo's--
If dumb me can take a cut at it in 30 seconds here, why can't PCGS??
This I find discouraging, because I also believe a 1 in 10 error rate is too much.....
there seems to be a significant number of slabbed coins of their
doing, that are horribly overgraded, some by two points. How is this
possible?
Camelot
<< <i>
<< <i>Perhaps THE biggest problem is that there is no objective standard by which to determine whether the grading company is "wrong". >>
Mark, when I am going through boxes of coins at the shows, I see coins that are so far off it’s pitiful. I just shake my head, put them back in the box and move on. There is no way to police this stuff.
What are you going to do? Intentionally buy a coin that is “way off,” and go fight city hall to make them make it right? Frankly small dealers and collectors like me are “grade takers.” We don’t have enough clout to change the system, and trying to do so would just ruin the business and the hobby for us.
The solution is to go through 500 coins to find 10 that are worth pricing, and buy the five coins that are priced at a level where one can make money or be happy with it in your collection. To me the grading services are imperious, arrogant giants who don’t listen their customers and don’t give their customers’ expertise and experience any respect. Forty-five years of experience and thirty years of acknowledgement from my peers that I am expert grader does not mean anything these people. They are right; you are wrong; and that’s the end of the discussion.
They tell you that the 20 seconds they collectively spend grading a coin beats the one or two minutes you have spent grading a coin. That’s just a load of BS, and they know it. But they’ll never admit it because that would shatter the illusions about the “infallibility” of third party grading that they have succeeded in implanting in the minds of so many coin buyers. >>
sadly, far too many "collectors" fail to realize that the MOST WONDERFUL part of the whole hobby is the right to have your own opinion on a coin's grade.
the persistent & completely erroneous belief that there is a "right grade" for every coin can only detract from your enjoyment of the hobby. that is ultimately the reason that slabs are worthless to me.
great to see this old thread resurrected!
K S
1. to establish a price-- If this is the reason, then just think about how much money the item is worth to you and that is all that you should pay.
If you do not know how to grade and wish to sell an item, then the TPG's do offer a valuable service, but recognize that there can and will be differences of opinion. This can definitely be an unscientific result, as grading is an art and not a science.
2. for competition purposes in the registries-- If this is the reason, then the TPG's are critical for listing your sets in competion.
If the purpose of using the services is for authenticity, they are nearly perfect in this regard.
Many dealers will happily counsel clients on grade and authenticity, without charge.
I firmly believe in numismatics as the world's greatest hobby, but recognize that this is a luxury and without collectors, we can all spend/melt our collections/inventories.
eBaystore
On the contrary, if those guys could grade with 90% accuracy in 10 seconds, day in and day out, with varying graders, and a host of other distractions, it would be WONDERFUL. Simply stated, they cannot reach a 90% accuracy level. They didn't get there in 1989 and certainly are further away today than ever before with the dwindling quality of available graders. And the hotter the market gets, the tougher it is to find quality graders. My gut feel is that today the services are at best at 80% accuracy on average. And potentially are as low as 70-75% on average. This based on sending the same coins back and getting diff grades from the same service. One cannot explain this away due to liners.
In coin grading, 90% is superb. And you would think that with 4 graders at 80% accuracy each, that a 90% consensus would be a snap........not! Give the graders unlimited time to view the coins and they probably could hit 90% or higher. But that will never happen.
The guys buying on the bourse and at auctions take considerable time in looking at their purchases. Too bad they are going up against TPG's that put far less care into the grade. And on top of that toss in the constant grade inflation and it is not hard to understand why those guys are wrong so often.
roadrunner
THere is no way the TPGS are 100% accurate and the business model would militate towards under-grading so you send it in again and again and again .... until you either run out of money/patience or you get the grade you want - THE TPGS make money when they under grade - the submitter (usually a dealer) makes money when they over-grade - seems to me that the "reward" (profit) is for grading companies to under-grade on the liners
“It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.” Mark Twain
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