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PCGS Copper Guarantee Controversy - My Thoughts
Waltz
Posts: 86
I've never posted much on the board (in fact, only once to thank a member for recognizing my 1863 DCAM Indian cent), but I am a frequent reader of our community discussions. In light of recent events of PCGS arbitrarily cancelling (some?) (all?) of its grading guarantee, I feel compelled to share my thoughts on the matter as well as respond to some of our fellow travelers in numismatics. First, a little info to establish some "street cred" but also provide some background which undoubtedly colors (pun intended) my view on the matter.
Since my grandfather gave me a 1924 Peace Dollar when I was 11 years old, I've been hooked on coin collecting. I am a collector at heart, but having purchased about $200,000 in mostly bright, shiny copper indian proof cameo cents in the last 3 1/2 years I respectfully disagree with those who believe this is somehow a positive to either collecting/investing in any high grade colored copper of any series. It will reduce the number of collectors from venturing into these series and depress values. Again, my story: In 2006, I decided to renew my coin collecting after several years focusing on other things (I'm 36 years old). I knew I wanted to stay in the 19th century realm, and was deciding between Indian Cents, Seated Dimes or Seated Quarters as my focus. I opted to go with cents since it was both mathematically and financially feasible to assemble a high grade collection and continue with Lincolns to present day. Should I decide to go back to proof large cents, I'd have a relatively short (but expensive) journey back in order to assembly a complete proof cent collection.
When I discovered cameo Indians, I fell in love. Their rarity (most years have PCGS Cameo certs around 10 coins, there are only 12 DCAMs certified for the ENTIRE series) and their appearence convinced me of the correctness of my decision. But had I known then that PCGS was going to renege on their promise, I'd be assembling some really nice seated liberties instead!!! If other would be collectors arrive at that same conclusion, fewer new collectors will assemble cent collections (good for those still set building, but will reduce the money coming into the series). That HAS to lower demand, ie prices, in both the near and long term.
Does this make me one of those "evil" investors that are allegedly ruining the Hobby of Kings? Perhaps. But I have never flipped a coin and intend on holding onto my cents for a very long time. But take for example my 1886 Variety II Proof 65 Red Cameo (formerly of the Palm Beach Collection). A rare coin for the grade (only 2 PCGS cameos that year, and the other is a lowly Proof 62), and one that I paid $12,500 for a couple of years ago at Heritage. Its color has remained constant, but it is clearly not bright red. Does its mellowed red warrant a PCGS downgrade in color? If I sell the coin in 20 years and the buyer thinks it should be a RB, what should be done? We send to PCGS, they call it a RB. I get the difference between a RB 65 and a Red Cameo 65 (Remember that only Reds can attain a cameo grade at PCGS). And I miss out on 2 decades of value appreciation on the coin but get the purchase difference refunded. Should that not be a consideration in what people collect and how much they spend on such coins? It will definately alter my buying habits.
Let's discuss the bread and butter of many dealers and auction houses - upgrades. There's an 1892 Proof 66 cameo (pop 5/0) at Heritage in January. I own a 65 cameo (pop 4/5). The 66 cameo has some greenish toning on the obverse - someone might consider that an RB and I no longer have a PCGS guarantee. I WILL NOT be bidding on the coin. The other primary Indian proof registry collectors have their 66 cameos. I know it will sell for less than it would have otherwise - because I was going make a respectable bid for it. I own 31 cameos out of the 52 dates, but only 9 cameo top pops. If you own a 1877 Proof 66 cameo (pop 2/0), I'll be less likely to upgrade my 65 cameo (pop 2/2) as a result of PCGS' decision. And I'll be less willing to buy at the higher spread that you did when you bought the coin. Please explain how this can anything BUT lower values and spread uncertainty in what (was) a strong market.
I only have 2 proof large cents. The 1841 is a RB, but all of the future ones will be brown or with such little red that its disappearance will not affect the price. There are some astounding red proofs out there, even some red cameos. But without the guarantee it simply makes no sense to risk large sums of money on these coins. I'd rather go to China and start a collection of early dollars. I'd bet they'd (initiially) guarantee their coins too.....
I have TREMENDOUS respect for Mssrs Snow and Blay and I recognize that they have single coins valued more than my entire collection. But for someone planning on spending the next 20 or 30 years assembling a cent collection worthy of their praises, I am extremely disappointed by PCGS going back on their word.
Brent Waltz
Owner,
The Waltz Collection
(a set former guaranteed by PCGS)
Since my grandfather gave me a 1924 Peace Dollar when I was 11 years old, I've been hooked on coin collecting. I am a collector at heart, but having purchased about $200,000 in mostly bright, shiny copper indian proof cameo cents in the last 3 1/2 years I respectfully disagree with those who believe this is somehow a positive to either collecting/investing in any high grade colored copper of any series. It will reduce the number of collectors from venturing into these series and depress values. Again, my story: In 2006, I decided to renew my coin collecting after several years focusing on other things (I'm 36 years old). I knew I wanted to stay in the 19th century realm, and was deciding between Indian Cents, Seated Dimes or Seated Quarters as my focus. I opted to go with cents since it was both mathematically and financially feasible to assemble a high grade collection and continue with Lincolns to present day. Should I decide to go back to proof large cents, I'd have a relatively short (but expensive) journey back in order to assembly a complete proof cent collection.
When I discovered cameo Indians, I fell in love. Their rarity (most years have PCGS Cameo certs around 10 coins, there are only 12 DCAMs certified for the ENTIRE series) and their appearence convinced me of the correctness of my decision. But had I known then that PCGS was going to renege on their promise, I'd be assembling some really nice seated liberties instead!!! If other would be collectors arrive at that same conclusion, fewer new collectors will assemble cent collections (good for those still set building, but will reduce the money coming into the series). That HAS to lower demand, ie prices, in both the near and long term.
Does this make me one of those "evil" investors that are allegedly ruining the Hobby of Kings? Perhaps. But I have never flipped a coin and intend on holding onto my cents for a very long time. But take for example my 1886 Variety II Proof 65 Red Cameo (formerly of the Palm Beach Collection). A rare coin for the grade (only 2 PCGS cameos that year, and the other is a lowly Proof 62), and one that I paid $12,500 for a couple of years ago at Heritage. Its color has remained constant, but it is clearly not bright red. Does its mellowed red warrant a PCGS downgrade in color? If I sell the coin in 20 years and the buyer thinks it should be a RB, what should be done? We send to PCGS, they call it a RB. I get the difference between a RB 65 and a Red Cameo 65 (Remember that only Reds can attain a cameo grade at PCGS). And I miss out on 2 decades of value appreciation on the coin but get the purchase difference refunded. Should that not be a consideration in what people collect and how much they spend on such coins? It will definately alter my buying habits.
Let's discuss the bread and butter of many dealers and auction houses - upgrades. There's an 1892 Proof 66 cameo (pop 5/0) at Heritage in January. I own a 65 cameo (pop 4/5). The 66 cameo has some greenish toning on the obverse - someone might consider that an RB and I no longer have a PCGS guarantee. I WILL NOT be bidding on the coin. The other primary Indian proof registry collectors have their 66 cameos. I know it will sell for less than it would have otherwise - because I was going make a respectable bid for it. I own 31 cameos out of the 52 dates, but only 9 cameo top pops. If you own a 1877 Proof 66 cameo (pop 2/0), I'll be less likely to upgrade my 65 cameo (pop 2/2) as a result of PCGS' decision. And I'll be less willing to buy at the higher spread that you did when you bought the coin. Please explain how this can anything BUT lower values and spread uncertainty in what (was) a strong market.
I only have 2 proof large cents. The 1841 is a RB, but all of the future ones will be brown or with such little red that its disappearance will not affect the price. There are some astounding red proofs out there, even some red cameos. But without the guarantee it simply makes no sense to risk large sums of money on these coins. I'd rather go to China and start a collection of early dollars. I'd bet they'd (initiially) guarantee their coins too.....
I have TREMENDOUS respect for Mssrs Snow and Blay and I recognize that they have single coins valued more than my entire collection. But for someone planning on spending the next 20 or 30 years assembling a cent collection worthy of their praises, I am extremely disappointed by PCGS going back on their word.
Brent Waltz
Owner,
The Waltz Collection
(a set former guaranteed by PCGS)
0
Comments
Thank you for that well written and well thought out statement. You are preaching to the choir. I too am tired of people justifying the move and saying it's good for PCGS and the hobby. PCGS R and RB copper consistenly sells for more than other slabs. Granted not all their slabbed copper is PQ and I do buy the coin and not the holder but the guarantee was definately a selling point and part of the justification for paying strong money for high grade R & RB copper. I said it before and I'll say it again, legally, if you generate revenues on a product with a lifetime guarantee attached, you must honor that guarantee if your entity continues to operate or there can be ramifications. There is no where that says the guaranty is not transferable either. If PCGS wants to change there policy going forward, that is a business decision but they must honor the premise under which their sales were made prior. They also need to differentiate the different products (there's rumors of a new slab). I think a lot of what's being said is spinning and damage control so the bottom doesn't fall out of the R & RB copper market. JMHO
https://pcgs.com/setregistry/showcase/2819
I have to give serious thought if I will ever be able to complete and continue to work to upgade on my 1865 Proof Cameo set (no gold)
Link to HA auction 2c Proof 65 Cameo Brown
<< <i>Remember that only Reds can attain a cameo grade at PCGS >>
I'm working on that
Here's my lone cameo IHC, graded PR65BN CAMEO at NGC. The mirrors are like liquid glass...
Another shot of the obverse...
Edited to add: This is also my lone NGC graded coin!
Empty Nest Collection
Matt’s Mattes
Dead Cat Waltz Exonumia
"Coin collecting for outcasts..."
Who is John Galt?
WS
Empty Nest Collection
Matt’s Mattes
In fact I overnighted to David Hall my concerns about this lack
of a color grade guarantee for all dales of copper coins after January 1.
The letter was not only signed by me but joined my seven other highly ranked
members of the Lincoln Registry.
They as I see the value of their reds and RB Lincolns and Indian heads falling precipitously after Jan 1, and the decision
is GROSSLY UNFAIR to dealers and collectors of these coins. The prices paid for these coins were, in large measure, influenced by
PCGS's gurantee. Sure, PCGS grading stadards for copper were tougher than any competiing grading company, but their standards an guarantee were worth it!
As far as the excuse that storage is causing this policy change, I believe that excuse is bogus. A tiny number of PCGS copper may have opitimistally designated as to color, and those coins should be regraded with compesation offered, but these represent a miniscule num
ber of the total graded population. But the real problem are the coins worked on by the coin doctors. When freshly done by the most skilled, they are indinguishable by experienced collectors and graders alike. The solution is simple and fair. All doctored coins in the holder will change color within a year. Thus coins graded January 1 or later , those graded with the new style insert, will change color in one year or less from the moment of treatment. Those coins with original color will be unchanged. These coins cab be reexamined by PCGS and given a special non movable sticker ala CAC with the words color guar embossed therein. The fee should be nominal
For all coins graded Dec 31 or earlier should have PCGS's covenant honored. In my opinion, this miguided effort to
protect themselves from liabiity at the expense of collectors and dealers may well put PCGS out of business, an event none of us want.
Ira Stein
Dealer and Collector
You response just gave me a very plausible solution to this problem. Consider these issues:
1. PCGS is rightly concerned about their inability (as well as everyone else's) to discern the long term color of copper.
2. Buyers will likely be willing to pay a smaller (if any) premium for PCGS copper coins. This will harm both their company and the copper market.
3. Solving both these issues simultaneously will resolve the greater problem.
The only solution I can think of is to provide a provisional grade with no guarantee on color. If you're right that 1 year is enough time for the true color to be known, then they can resubmit for a guarantee. No doubt PCGS will want to keep photos of the copper in their records to compare. They should be able to reject any coin they deemed questionable. Obviously, the provisional graded coins must be diferentiated from other PCGS coins. Be it color, shape, or annotation on the slab.
This solves these issues unless one really believes that copper will magically change in these slabs after a decades or that we all live on the beach.
As a side note on how this will affect the market, I'm watching with great interest the 1849 Red Proof 64 Large Cent, in attention to the 1892 Indian, and the high grade MPLs. I wouldn't want to be a consignor in January on a five figure red copper coin. Should these coins not meet expectations, the justified howling will reach new highs. And many of us will be deciding what our relationship with PCGS coins and copper as a result.
Why shouldn't PCGS simply assign a grade to a copper coin (without a color designation) and let the market decide if the coin is RED, RB, BR or myriad shades in between?
Wondercoin
<< <i>"The only solution I can think of is to provide a provisional grade with no guarantee on color"
Why shouldn't PCGS simply assign a grade to a copper coin (without a color designation) and let the market decide if the coin is RED, RB, BR or myriad shades in between?
Wondercoin >>
I've thought about that idea since I heard it mentioned fairly recently. I liked it initially, but believe that it wouldn't adequately cover the problems that can occur with copper which affect the grade and not just the color. If a copper coin develops spots and/or stains and/or streaks and/or (even just) mellowed color, that can also negatively impact the grade.
<< <i>
As a side note on how this will affect the market, I'm watching with great interest the 1849 Red Proof 64 Large Cent, in attention to the 1892 Indian, and the high grade MPLs. I wouldn't want to be a consignor in January on a five figure red copper coin. Should these coins not meet expectations, the justified howling will reach new highs. And many of us will be deciding what our relationship with PCGS coins and copper as a result. >>
And I'm watching HERE to see what happens to THIS coin at FUN. Steve
My Complete PROOF Lincoln Cent with Major Varieties(1909-2015)Set Registry
<< <i>Why shouldn't PCGS simply assign a grade to a copper coin (without a color designation) and let the market decide if the coin is RED, RB, BR or myriad shades in between? >>
Just my opinion, but I think that would not that be a step backwards ..to the like it was before TPG's?
So, why wouldn't the coin community also figure out that one particular cent (with just a grade on it) was beautifully "red" (and go for huge bucks) while this other one was nothing close in color and go for far less? Just a thought. My set is ranked on the "second page" so I defer to the top sets who have the most at stake here. Although I did just come across my 1926-S Cent in PCGS-MS65RB (with plenty and plenty of red) and boy do I enjoy the coin for the sub-$10,000 price I paid for it!
Wondercoin
Oh....THAT coin. You're absolutely right, the MPL 09 VDB in Red 65 does deserve special mention. But again, I wouldn't want to be the own putting it on the block until the uncertainty is resolved.
<< <i>I can't think of any of my copper coins which deteriorated while in my bank vaults. I have never had a negative effect from any of the PCGS holders since the 1988 rattler holders. >>
AND
<< <i>None of my coins have turned in my various bank boxes >>
I can't think of ANYONE who is likely to have owned more RED copper coins in PCGS holders since 1988 than Stewart Blay (and I don't recall him ever saying anything about using Intercept Shield box systems, Ira, either). Stewart says that none of his coins have turned in his various bank boxes, maybe going back 30 years. Considering his wide-ranging interests in various series going back to the 18th century, his complete collections AND his duplicates, he has held a large number of red copper coins in PCGS holders for a very long time and yet NONE of them have turned color! My point about the disappearing color guarantee? The real culprit behind this unfortunate change in the PCGS guarantee is the doctoring of coins.
Am I beating a dead horse on this issue? Does ANYONE out there disagree with the statement? "It's not due to to storage. This is thanks to the coin doctors!"
I am not kidding,
G99G
I collect 20-slab, blue plastic PCGS coin boxes. To me, every empty box is like a beating heart
People come up sometimes, and ask me, G99G, are you kidding? And I answer them no, I am NOT KIDDING.
Every empty box?
C'mon!
<< <i>Please forgive the duplicate post, but the following quote is from Stewart Blay on the parallell thread entitled, "PCGS Grading Guarantee Update":
<< <i>I can't think of any of my copper coins which deteriorated while in my bank vaults. I have never had a negative effect from any of the PCGS holders since the 1988 rattler holders. >>
AND
<< <i>None of my coins have turned in my various bank boxes >>
I can't think of ANYONE who is likely to have owned more RED copper coins in PCGS holders since 1988 than Stewart Blay (and I don't recall him ever saying anything about using Intercept Shield box systems, Ira, either). Stewart says that none of his coins have turned in his various bank boxes, maybe going back 30 years. Considering his wide-ranging interests in various series going back to the 18th century, his complete collections AND his duplicates, he has held a large number of red copper coins in PCGS holders for a very long time and yet NONE of them have turned color! My point about the disappearing color guarantee? The real culprit behind this unfortunate change in the PCGS guarantee is the doctoring of coins.
Am I beating a dead horse on this issue? Does ANYONE out there disagree with the statement? "It's not due to to storage. This is thanks to the coin doctors!" >>
Stewart's experience notwithstanding, I believe the odds are excellent that many other collectors have had non-doctored copper coins change in appearance over the years. It is widely known that copper is highly reactive, and that doesn't necessarily have to have anything to do with doctoring.
I am not kidding,
G99G
I collect 20-slab, blue plastic PCGS coin boxes. To me, every empty box is like a beating heart
People come up sometimes, and ask me, G99G, are you kidding? And I answer them no, I am NOT KIDDING.
Every empty box?
C'mon!
BTW, as far as I'm concerned, storing rare red copper in an environment where change is likely is like letting your oil run out of your 1954 Corvette...
Few, if any, serious collectors, dealers, or investors would do such a thing. And those dealing with four, five, and six figure coins know better. Sure, there are stories of children of coin enthusiasts spending dads' S VDB at the candy store. But it's awful hard to spend money in plastic slabs.
A provisional slab for as long as it takes to determine whether it's been doctored would go a long way to resolving this issue, striking a balance between PCGS' legitimate concerns and those of us who placed have our trust and money in the reputation of PCGS.
<< <i>Since PCGS has listed various non-copper coins they've paid on, I'd be quite curious to know what red copper they've paid on that's prompted the change in policy. >>
Reading the letter from Don Willis, it would seem that the blame for the copper color problem lies solely on the person who "doctored" the 1969-s Doubled Die cent. I'm sure there are others, but I'll bet that guy's keeping an eye out for the lynch mob.
Empty Nest Collection
Matt’s Mattes
Empty Nest Collection
Matt’s Mattes
<< <i>
<< <i>Since PCGS has listed various non-copper coins they've paid on, I'd be quite curious to know what red copper they've paid on that's prompted the change in policy. >>
Reading the letter from Don Willis, it would seem that the blame for the copper color problem lies solely on the person who "doctored" the 1969-s Doubled Die cent. I'm sure there are others, but I'll bet that guy's keeping an eye out for the lynch mob. >>
The problem is certainly not solely with that one coin doctor and I don't think Don's words even hinted at that.
<< <i>The problem is certainly not solely with that one coin doctor and I don't think Don's words even hinted at that. >>
Oh, no. Of course you are right, Mark. It's just that reading the letter, that is the only coin mentioned specifically that fits the criteria. All other coppers referred to in the letter were victims of spotting, which as far as I can tell, is still covered under the grading guarantee.
Empty Nest Collection
Matt’s Mattes
<< <i>Why shouldn't PCGS simply assign a grade to a copper coin (without a color designation) and let the market decide if the coin is RED, RB, BR or myriad shades in between?
Wondercoin >>
So in the Registry, an 1877 MS65 would be worth 520 points whether it was BN, RB, RD, CA or DC? A DC is now worth 552 points. Would the collector paying market decided money for an MS65DC accept that their coin would be equal to a substantially less market decided priced MS65BN... both would be worth 520 points?
Wondercoin