How do we explain a certain inconsistency in the behavior of collectors?
IGWT
Posts: 4,975 ✭
On the one hand, most collectors trust and rely on a reputable TPG's opinion when buying a coin. On the other hand, those same collectors won't risk removing a coin from its holder out of concern that it will be downgraded (or even body bagged) when resubmitted. That concern reveals a fundamental lack confidence in a TPGs' ability to grade the same coin consistently.
Why do collectors lack confidence in a TPG's ability after buying a coin, but not before?
The TPGs' ability to control a coin's value in the marketplace despite the inconsistency feared by collectors is precisely what keeps coins locked up in plastic. Even if the inconsistency didn't necessarily spell the end of TPGs from the start, logic suggests that the assigned grades wouldn't matter so much, and that the emphasis would be on authentication. Instead, we have a counterintuitive result: one-point differences in grade bring about huge disparities in price. Is the hobby is engaged in some sort of collective, willing suspension of disbelief?
Why do collectors lack confidence in a TPG's ability after buying a coin, but not before?
The TPGs' ability to control a coin's value in the marketplace despite the inconsistency feared by collectors is precisely what keeps coins locked up in plastic. Even if the inconsistency didn't necessarily spell the end of TPGs from the start, logic suggests that the assigned grades wouldn't matter so much, and that the emphasis would be on authentication. Instead, we have a counterintuitive result: one-point differences in grade bring about huge disparities in price. Is the hobby is engaged in some sort of collective, willing suspension of disbelief?
0
Comments
I guess a bird in the numismatic hand is worth two in the numismatic bush. Why take the risk of cracking out a coin with a known grade and a known value? I find your other point intriguing about one grading point translating into a huge difference in price, especially if the TPGs cannot grade consistently. I suppose again it is the "bird in hand" argument that if the plastic has a particular grade, then that grade is right, and, as such, supports such wide disparities in prices for a single point.
Didn't wanna get me no trade
Never want to be like papa
Working for the boss every night and day
--"Happy", by the Rolling Stones (1972)
That expression aptly describes the risk that collectors perceive. But, if TPGs graded consistently, the bird in the bush would be as certain as the bird in the hand. Edited to add: So, why does a collector place greater value in one than in the other? Why do you trust that a TPG was right before you buy a coin, but that it will not be right after the purchase?
<< <i>Why do you trust that a TPG was right before you buy a coin, but that it will not be right after the purchase? >>
Your assumption that I am trusting the TPG before buying a coin is erroneous.
<< <i>On the one hand, most collectors trust and rely on a reputable TPG's opinion when buying a coin. On the other hand, those same collectors won't risk removing a coin from its holder out of concern that it will be downgraded (or even body bagged) when resubmitted. That concern reveals a fundamental lack confidence in a TPGs' ability to grade the same coin consistently.
Why do collectors lack confidence in a TPG's ability after buying a coin, but not before?
The TPGs' ability to control a coin's value in the marketplace despite the inconsistency feared by collectors is precisely what keeps coins locked up in plastic. Even if the inconsistency didn't necessarily spell the end of TPGs from the start, logic suggests that the assigned grades wouldn't matter so much, and that the emphasis would be on authentication. Instead, we have a counterintuitive result: one-point differences in grade bring about huge disparities in price. Is the hobby is engaged in some sort of collective, willing suspension of disbelief? >>
Yes, however that disbelief is focused on coins that collectors have already purchased, in a sense giving a vote of confidence in the coin if not the grade.
Said another way, the downside of a downgrade is a realistic concern that is avoided by not cracking it out to begin with, but don't forget that the collector, by buying the coin, has already stated they believe in the grade/value assigned to it by the TPG.
<< <i>Well, I thought that was a safe assumption for most collectors given how the market works. So let's be clear: You just wrote that you don't trust the graders at PCGS when you buy a coin in a PCGS slab. I take it that you won't try to take advantage of the PCGS guarantee if you make a mistake? >>
I trust them, I just don't agree with them. Furthermore the process, being subjective, has an plus/minus error rate that is real -- it's the nature of the beast.
<< <i>Well, I thought that was a safe assumption for most collectors given how the market works. So let's be clear: You just wrote that you don't trust the graders at PCGS when you buy a coin in a PCGS slab. I take it that you wouldn't ever try to take advantage of the PCGS guarantee, because you didn't rely on PCGS's opinion in the first place? >>
Grading is not an exact science even with consistent standards. Furthermore, the standards have been observed to fluctuate over time.
When I buy a slabbed coin, the only thing I consider guaranteed is that the coin is genuine. I do trust PCGS to assign the correct technical
grade most of the time, but no one is perfect, and the technical grade is not the only thing I assess when deciding whether to pay up for
a coin. I have attempted to take advantage of the PCGS guarantee on a few coins in the past (with a single successful downgrade), but
it's not much fun. Better to avoid buying overgraded coins in the first place!
Who is John Galt?
<< <i>Instead, we have a counterintuitive result: one-point differences in grade bring about huge disparities in price. >>
They wouldn't, if people refused to pay them. There is nothing intrinsic to one point differences that leads inevitably to disparities- lots of coins trade with just a very slight increase from grade to grade.
But when they don't, there appears to be a positive feedback loop in effect- buyers are willing pay multiples more for a one point difference because of a perceived scarcity from one grade to the next, so the TPGs are reluctant to make as many of of the higher grades as they might if the spread were less, so fewer of the higher grades are available, thus reinforcing the perception of scarcity among buyers and continuing to serve as a disincentive to the TPGs to make more. And around and around we go...
One of the reasons I became interested in collecting on the darkside was the fact that the people there don't (for the most part) obsess over a one point difference in grade. Not that there's anything wrong with that (focusing on grades) of course- it's just not for me.
<< <i>You make a good point, but that's why smart collector's buy the coin AND the holder. >>
<< <i>Does this mean "Buy the slab"??? >>
In some cases.......Yes.
My MS65 1972 Type 2 IKE which I paid $3,500 for might look awfully purty in a Dansco next to its brothers as its a nice coin but................I would never have a chance or recouping its costs if I cracked it out and my heirs ended up selling it raw. Thats just stupid no matter which way you look at it.
Sure, I could submit it for grading and there's a better than even chance it would grade MS65 again but why on earth take the chance?
Does that make me weird? Inconsistent? Or realistic?
The name is LEE!
TPG's do not "control" the price of the coins in their holders. For most coins, most series, where there are a fair number of coins graded, the auction results often show a 100% price variation from low to high because of the perceived quality differences within that single grading point. That's for the same basic coin (no special toning), in the same company's holder.
Everyone acknowledges, even the company executives that 100% consistency given the current business model is a pipe dream. Really, to me, the original post sounds more like a rant from a person that basically can't stand slabs and the slabbing companies, than a post with well reasoned, well thought out points.
The assumptions, while not universally true, are true enough to support the point made. The opening post would seem like an unreasoned rant only to someone who is overly sensitive.
TPGS and the hobby would be better off noting the top 10 best coins for a date and let the collectors figure it out for themselves. Perhaps we already have that, for those in the know anyway. But then again, the inconsistency factor just keeps everyone guessing and chasing the ghosts in high labeled slabs. But I think the collector does really want to know. Otherwise, we become too dormant because too many of us are so dependable on that $30 opinion.
Leo
The more qualities observed in a coin, the more desirable that coin becomes!
My Jefferson Nickel Collection
When sending NGC coins to PCGS, you need to crack them
The one time I sent a coin in the NGC holder it wouldn't cross. I broke it out, sent it back in and it upgraded!
When sending PCGS coins to PCGS, you need to leave them in the holder
PCGS breaks them out of the holders, so there is no risk. I had many coins upgrade this way.
When sending ANACS coins to PCGS, you can remove them or leave them in the holders
Depending on my order I will sent them either way, and I haven't had a single issue where I disagreed.
Others it depends on the coin; not the holder.
President, Racine Numismatic Society 2013-2014; Variety Resource Dimes; See 6/8/12 CDN for my article on Winged Liberty Dimes; Ebay
<< <i>I think---
When sending NGC coins to PCGS, you need to crack them
The one time I sent a coin in the NGC holder it wouldn't cross. I broke it out, sent it back in and it upgraded!
When sending PCGS coins to PCGS, you need to leave them in the holder
PCGS breaks them out of the holders, so there is no risk. I had many coins upgrade this way.
When sending ANACS coins to PCGS, you can remove them or leave them in the holders
Depending on my order I will sent them either way, and I haven't had a single issue where I disagreed.
Others it depends on the coin; not the holder. >>
I expect that in the case of smoeone cracking to put into a Dansco fer instance likely isn't to worried about or planning to have the thing reslabbed anytime soon. I think if they buy right the odds of reslabbibg successfully should be high.
<< <i>Even if the inconsistency didn't necessarily spell the end of TPGs from the start, logic suggests that the assigned grades wouldn't matter so much, and that the emphasis would be on authentication. Instead, we have a counterintuitive result: one-point differences in grade bring about huge disparities in price. Is the hobby is engaged in some sort of collective, willing suspension of disbelief? >>
Yes.
Ed. S.
(EJS)
There are coins that are absolutely rock solid, and I have no problem cracking those because there is no way they are coming back lower. I have not done it a lot, but I have never gotten bitten on a coin like this. It's the kind of coin you throw in to fill out a submission, just to see if you get lucky.