CAC - should it bother us that CAC is a buyer?
jmlanzaf
Posts: 32,123 ✭✭✭✭✭
One of the advantages of a "THIRD PARTY Grading Service" was supposed to be the absolute objectivity that came from their professional opinion that was devoid of any conflict of interest. CAC has no such objectivity and it makes me wonder why "we" don't care?
Since CAC is also a buyer of coins, could they not make a list of upgrades and purchase them when they hit the market? Even worse, couldn't they deny a CAC, record the registration number and buy the coin at market KNOWING that it would actually upgrade?
The reason I bring this up is that @keets mentioned the CAC in Greysheet where - according to CAC themselves - they have evaluated 1,000,000 coins. At $15 each, that's only $15 million in revenue. However, they have also purchased $500 million in CAC coins. At even a FIVE PERCENT profit margin, that's $25 million. At a more normal 10-20%, that's $50 to $100 million. And, of course, if they were "cheating" and buying crack-out upgrades with large spreads their margins could be higher.
Shouldn't we be at least a little concerned that our valued "objective observer" makes more money from buying the coins they evaluate than they do from evaluating the coins?
[Note: I buy CAC. I like CAC. I pay a premium for CAC.]
Comments
Yawn
Please note that I am NOT ACCUSING JA or CAC of doing anything nefarious. I am simply asking the question of whether we should question the absolute objectivity of an entity that is in the coin business.
I know. "Another CAC thread". But I honestly did not realize just how many coins CAC was buying until @keets referenced the ad in another thread.
I would not conflate a CAC sticker with a grade certification (of a certification). It was devised as a simple tool to quickly identify coins that the Consortium wanted to market. That's it. Collectors started the CAC bandwagon, and some specialty/high-end dealers have used CAC stickers as an effective marketing tool. Of course, CAC has, in turn, used this to its own advantage. The real money that CAC has made has come from coin transactions, not stickering fees.
This said, some posters presume that a sticker on a coin automatically means that CAC will make an offer to buy it. I wouldn't.
RMR: 'Wer, wenn ich schriee, hörte mich denn aus der Engel Ordnungen?'
CJ: 'No one!' [Ain't no angels in the coin biz]
If there isn't a conflict of interest there is at least the appearance of a conflict of interest.
Worry is the interest you pay on a debt you may not owe.
No, you used the words "suppose to" in the first line of your opening post, enough said.
???
It would bother me a lot more if JA did NOT put his money where his mouth is ... green-beanily speaking.
Kind regards,
George
I have probably had 50 coins sticker since I was given submisson priviliges.........never got an offer from CAC to buy....of course my level of collecting may be a bit below their radar
So, you LIKE the conflict of interest?
YAWN...
Don't forget Rick Snow, Wings, etc.
I must have missed something as I thought the stickers indicate that the coin meets the standard assigned to it. What is wrong with the fact that someone will purchase a coin that meets their approval? We all do that! Sticker/no sticker and raw/certified. e hoʻomaopopo?
I don't perceive it as that at all. He expresses a view on coins he likes and offers to buy them (although I'm not sure how or where). That is what any dealer does. And he makes a market in some coins, which is also what a lot of dealers do.
Kind regards,
George
It's not rocket science, think about it, then ask a specific question. Perhaps someone will enlighten you.
No, it should not bother anyone...there are far more pressing - real - issues to be concerned with. Cheers, RickO
Implicitly, you are calling into question the objectivity of PCGS and NGC. That's fine. However, that is a separate issue from whether there should be concern over conflicts of interest.
The POTENTIAL problem is that it removes objectivity. See my OP. If someone hands me an MS65 Chain cent, I could NOT sticker it, buy it myself, then sticker it and make a whole lot of money. I could also cherry pick my own stickered coins...and make a whole lot of money.
There is nothing wrong with it from the standpoint of being a coin dealer. There is a POTENTIAL problem with then viewing the opinion as objective.
It's like a dealer putting PQ on all his raw coins and then getting a premium based on the PQ. From a dealer standpoint, it's great marketing. But the market as a whole should not necessarily be viewing the PQ designation as meaningful in a quality sense since the opinion is tainted by self interest. [POTENTIALLY.]
It suggests that it would be more appropriate to consider CAC as akin to APMEX and not as akin to PCGS.
yes, the appearance of a conflict is as bad as an actual conflict as far as public trust goes.....
Really, why disagree with my post? didn't mean to hurt your feelings. At least you thought about it and expressed your opinion which is what makes this board interesting and valuable.
Your question is an important one, the reality is what it is. If your concerned about conflict of interest and or the appearance of conflict of interest then you must apply the same standards to all companies to arrive at an accurate and fair conclusion.
I agree. Here are a few:
"Post something that will get you "agrees"
"Why can't we get this guy taken down? HEEEEEE'S BAAAAAACK."
"Filthy money …"
"Hypothetical: You buy a 1799 $1 on eBay..."
whoops
Yet another facet of the scheme I seem to have missed.
@jmlanzaf said: "The POTENTIAL problem is that it removes objectivity. See my OP. If someone hands me an MS65 Chain cent, I could NOT sticker it, buy it myself, then sticker it and make a whole lot of money. I could also cherry pick my own stickered coins...and make a whole lot of money."
I guess you are a new collector as your fears are justified. Human nature being what it is. I cannot think of anyone worthy of throwing stones but that is not your point. What you are worried about has already been done in the past. Some changes were made to correct the problem. It all comes down to the individual, their reputation, and that of the company they work for or own.
Hannes Tulving sold a lot of stuff for a lot of time.
There are a lot more actual conflicts of interest going on than CAC, which is performing a valuable service to the hobby-industry of numismatics. CAC is more of a consultant. I will not point out any of those conflicts, but all those of us who have been around for a while need to do is look around. They are there. Some are widely known, and some are not.
CAC is making good money because they do not list the cert #s of coins that don't CAC. (Nor should they.) I suspect as those coins change hands manyfold over time, some get sent in again and again. Instant money! But I bet JA could make as much or more simply trading coins.
It's easy to toss around the shibboleth of "conflict of interest" but it takes deeper thought to analyze if it in fact exists.
Kind regards,
George
I removed it. I'm sorry. It seemed to be unnecessarily condescending, but perhaps I misinterpreted.
LOL. We're back to "Rookie"?
Of course it has been done. But the conflict seems to be ignored with respect to CAC. Now, admittedly JA is well-respected and, as far as I know honest. But CAC is treated as a TPGS when they are not if they make all their money from dealing coins.
I mean, if PCGS opened a retail arm, would you not question their objectivity? Their ability to inflate their own coins.
CAC could simply buy unstickered coins and sticker them and make a profit that way on the spread. That is an inherent conflict of interest that, I think, if it were anyone but JA would be questioned more.
And you completely left out the 270 Doubled Die posts with the corresponding 30 Gigabytes of blurry photos.
Didn't he end up being charged with ripping people off?
Are they really this stupid, or are they destroying the dollar on purpose?
Charged, convicted and imprisoned
"Let's send these raw coins in to CAC."
"Okay."
(Later ...)
"What the hell is this green sticky label on my coins? I can't read the date on this one!"
It's absurd to consider CAC a TPGS.
3,274 posts in 11 months.
CAC thread reminds me that it is time to break out the grill and the waterslide for the weekend!
I started to yawn, but then I realized a good discussion would follow.
IF, in fact CAC is a market player, kudos to the OP for opening up this controversial discussion. IF we are talking about CAC dealers buying these coins, and not CAC, then the discussion is meaningless.
Outfits being paid for a professional opinion that provides added value to an asset should not be allowed to be a player in the market for those assets. I believe in some areas, such as finance, it is even against the law. How comfortable would you be if the buyer of your house was also the guy appraising it? How safe would you feel if the contractor building your home was the same guy performing the required building inspections?
Independence protects consumers and is paramount when it comes to many things including a professional, paid opinion on a coin. NGC and PCGS's long term success and reputation have thrived because of this.
Are they really this stupid, or are they destroying the dollar on purpose?
I agree. But CAC is not only treated like a TPGS, it's treated like the KING of TPGS.
And, what makes a TPGS a THIRD-PARTY grading service is the objective opinion not the plastic slab.
I'll send you my address if you'd like to ship a commemorative medal or plaque.
Make sure the grill is not at the end of the waterslide....
TDN yawns and gets a disagree. Tough crowd here.
There is no "objective opinion" (which is an oxymoron, when you think about it) unless someone can't think (or grade) for themselves. I hope that anyone looking at a slab examines the coin as well as the grade and forms their own subjective opinion as to all aspects of the coin.
And as for CAC, I'll just say I value their opinion a lot more than I value yours. If you don't like them being treated as KING of TPGS, don't buy their coins. More for the rest of us. Have a nice day. I'm done.
Kind regards,
George
Sounds like cherry picking at it's best. What's next PCGS sending us a offer with are grades?
Hoard the keys.
There is really no evidence whatsoever that CAC doesn't sticker nice coins and then buys them. Ive never heard of one example where that happens. In fact, the objective evidence is that the large majority of CAC coins stickered are premium for the grade and do bring higher prices at auction. Anytime a third party is giving its opinion of a coin, there is always the risk of some bias. However, at the bottom of my list of concerns in the coin world is that CAC won't sticker a deserving coin and then somehow finds a way to buy it for a profit. I am much more concerned about buying a doctored or messed with coin and CAC does an excellent job with that.
Again, I'm not suggesting that CAC is actually currently doing any of these things. But, there is a conflict of interest that makes one wonder about the whole operation.
By this, I mean: why sticker at all?
If I can make $50 million+ by buying and selling slabbed coins because I have an eye for quality, what is the point of adding $15 million to that by selling my opinion. In fact, I would be better served not inflating the price of the very coins I'm trying to buy. The $15 million in opinions that I've sold have actually raised my cost to buy the coins that my real profits are built upon.
I did not see myself agreeing here, but I must.
Someone has created a market for a product that they have a vested interest in not just in performing the initial service, but then buying and selling the coins they performed the service on. Isn't that one of the definitions of "conflict of interest"?
I think @jmlanzaf and @derryb have made some very good points here.
Donato
Donato's Complete US Type Set ---- Donato's Dansco 7070 Modified Type Set ---- Donato's Basic U.S. Coin Design Set
Successful transactions: Shrub68 (Jim), MWallace (Mike)
No more than Dave Hall who used to buy and sell PCGS coins. Doesn't bother me at all. I think the stickering and JA,s opinion can be separate from his business. There is a frictional cost to buying and selling coins and to inventory them all. I like the idea that I have a buyer for my CAC coin that has the money and has seen the coin.
@jmlanzaf
Aren't you an attorney? If so, why don't you chase down CAC, all the TPGS's. all the sticker guys, etc. The world and the board will probably be grateful for your service.
I think the point is......................adding $15 million.
Great topic for discussion @jmlanzaf , in my opinion
Successful transactions with : MICHAELDIXON, Manorcourtman, Bochiman, bolivarshagnasty, AUandAG, onlyroosies, chumley, Weiss, jdimmick, BAJJERFAN, gene1978, TJM965, Smittys, GRANDAM, JTHawaii, mainejoe, softparade, derryb
Bad transactions with : nobody to date
The $15 million in opinions that I've sold have actually raised my cost to buy the coins that my real profits are built upon
by logical extension that would mean that the profit would be larger.
No. CAC is not a grading service and was never meant to be one. Its sole purpose is to set up a trading network for John Albanese and crew.
On another note, to my knowledge, CAC does not sticker its own merchandise or that owned by any of its graders. The coins it trades in come from collector and dealer submissions.
PCGS is a buyer of their coins in some cases. Was it a conflict with David Hall selling PCGS coins at DHRC?
I sort of think of CAC now that I put some thought into it as a therapist for coins and their owners. They give you the green or gold bean and it makes you feel warm and fuzzy in the comfort zone it provides.
.
Might want to look into that a bit.