The second tier grading services could they compete with top tier?

logger7 · January 10, 2021 5:17PM

A local former big advertiser in Coin World and other publications rarely sends coins now to the top tier grading services. He uses Anacs. I've been thinking that Anacs and ICG could compete effectively with substantial investments in their infrastructures; buying back mistakes they have graded, upgrading holders, better online resources. Many companies have re-invented themselves with substantial improvements imitating the success of major companies. How much money would it take for Anacs or ICG to compete reasonably? $10 million? The second tier companies are faster in grading and cheaper. Many collectors liked the old Anacs and ICG holders from 20 years ago. Another question: could a cac like company sticker coins they regarded as high end for grade by Anacs or ICG, and would that business model work?

WQuarterFreddie · January 10, 2021 5:21PM

Just a heads up. PCGS does not allow the following threads or comments:

Posts promoting or bashing other grading companies or services are not allowed.

I am not saying your thread is doing this but be careful. 😎

MFeld · January 10, 2021 5:25PM

If someone has an ungraded coin worth several hundred dollars or more, what incentive would there be to submit it to a company other than the top two? Cheaper and faster grading isn’t going to do it, as long as liquidity and perceived market value are considerably less.

So the question becomes, how could liquidity and perceived value be dramatically increased. I can’t think of an answer, other than a group of market makers, with bundles of money to support the market for that grading company. And those bundles would need to be huge - many multiples of the $10 million dollar figure mentioned in the opening post.

Justacommeman · January 10, 2021 5:26PM

My thoughts are that it would be much easier for a brand new company to make head winds then older ones reinventing themselves. I think that train has left the station

m

clarkbar04 · January 10, 2021 5:32PM

Start buying anacs and icg coins for top tier prices and see what happens when you sell them.

In other words, no.

jmlanzaf · January 10, 2021 5:38PM

@Justacommeman said:
My thoughts are that it would be much easier for a brand new company to make head winds then older ones reinventing themselves. I think that train has left the station

m

This.

It would also be cheaper. The need to buy back earlier "mistakes" makes any attempt to fix your entire portfolio of slabbed coins prohibitively expensive.

jmlanzaf · January 10, 2021 5:39PM

@clarkbar04 said:
Start buying anacs and icg coins for top tier prices and see what happens when you sell them.

In other words, no.

This has nothing to do with what the OP is suggesting.

jmlanzaf · January 10, 2021 5:41PM

Any "CAC like company" would fail miserably unless you had someone like David Hall or John Albanese as the finalizer. No one cares about the sticker, it's what the sticker represents: the opinion of one very well respected individual.

clarkbar04 · January 10, 2021 5:56PM

@jmlanzaf said:

@clarkbar04 said:
Start buying anacs and icg coins for top tier prices and see what happens when you sell them.

In other words, no.

This has nothing to do with what the OP is suggesting.

It has everything to do with it.
There’s a reason they’re cheaper.
It’s base model Ford Focus versus Lincoln SUV. People will always pay more for higher resale value.
“Completely irrelevant” reply in 3..2..1..

coinkat · January 10, 2021 5:58PM

Good luck trying to change perceptions within the US coin market.

Zoins · January 10, 2021 6:00PM

They would need one of the top two to stumble. Just look at the dominance of Coke and Pepsi.

jmlanzaf · January 10, 2021 6:13PM

@clarkbar04 said:

@jmlanzaf said:

@clarkbar04 said:
Start buying anacs and icg coins for top tier prices and see what happens when you sell them.

In other words, no.

This has nothing to do with what the OP is suggesting.

It has everything to do with it.
There’s a reason they’re cheaper.
It’s base model Ford Focus versus Lincoln SUV. People will always pay more for higher resale value.
“Completely irrelevant” reply in 3..2..1..

The OP is asking about them turning the Ford Focus into a Lincoln SUV or maybe a Ferrari. He's not saying they could compete using their current standards. If you read all the words, he even suggests their buying back the Focuses so they are only associated with the Ferrari.

koynekwest · January 10, 2021 6:16PM

When SEGS started out they had great potential. It never came to fruition. ICG lost their credibility during the Teletrade days when they graded too many coins MS70 and PR70. I think most ICG coins are spot-on but once a slabber loses their reputation it's nearly impossible to get it back.

The Coke and Pepsi analogy is a good one.

clarkbar04 · January 10, 2021 6:24PM

@jmlanzaf said:

@clarkbar04 said:

@jmlanzaf said:

@clarkbar04 said:
Start buying anacs and icg coins for top tier prices and see what happens when you sell them.

In other words, no.

This has nothing to do with what the OP is suggesting.

It has everything to do with it.
There’s a reason they’re cheaper.
It’s base model Ford Focus versus Lincoln SUV. People will always pay more for higher resale value.
“Completely irrelevant” reply in 3..2..1..

The OP is asking about them turning the Ford Focus into a Lincoln SUV or maybe a Ferrari. He's not saying they could compete using their current standards. If you read all the words, he even suggests their buying back the Focuses so they are only associated with the Ferrari.

I realize that. If people only use your professional service because you’re the cheapest, it means you’re not competitive. If you start charging Lincoln prices for your Ford people will just start buying the Lincoln.

Try accepting contrarian opinions for once. It’s a hypothetical scenario, after all.
I’m not nearly as dumb as you think.

jmlanzaf · January 10, 2021 6:25PM

In a more general sense, it would be very difficult to crack the top two for two reasons that may appear contradictory:

To win on "coin value" you need to have stricter standards than the big two.
If you have stricter standards than the big two, no one wants to send their coins to you.

It was, in part, that attempt to compete on submission volume that caused the problems at ANACS and ICG. They tried to drive volume by making submitters happier with the results. The problem is those same submitters got slaughtered in the secondary market because of the lack of respect for the plastic.

So, if I really want to spend money building a grading company, I'm better off just buying one of the existing two.

I think the only way someone new could crack the market is if a major dealer presence started certifying the coins they sell. If, for example, Heritage started slabbing coins and then putting them in their own auctions, they could build the brand. But I don't know that they'd want to.

jmlanzaf · January 10, 2021 6:26PM

@clarkbar04 said:

@jmlanzaf said:

@clarkbar04 said:

@jmlanzaf said:

@clarkbar04 said:
Start buying anacs and icg coins for top tier prices and see what happens when you sell them.

In other words, no.

This has nothing to do with what the OP is suggesting.

It has everything to do with it.
There’s a reason they’re cheaper.
It’s base model Ford Focus versus Lincoln SUV. People will always pay more for higher resale value.
“Completely irrelevant” reply in 3..2..1..

The OP is asking about them turning the Ford Focus into a Lincoln SUV or maybe a Ferrari. He's not saying they could compete using their current standards. If you read all the words, he even suggests their buying back the Focuses so they are only associated with the Ferrari.

I realize that. If people only use your professional service because you’re the cheapest, it means you’re not competitive. If you start charging Lincoln prices for your Ford people will just start buying the Lincoln.

Try accepting contrarian opinions for once. It’s a hypothetical scenario, after all.
I’m not nearly as dumb as you think.

That's not a contrarian opinion. You changed the entire scenario.

But, go in peace.

logger7 · January 10, 2021 7:26PM

Ok, thanks for the thoughts on this topic that I have thought about a lot. It would probably be too expensive and complicated.

MrEureka · January 10, 2021 7:39PM

I think that the Achilles heel of the leading TPGs is their holders. If a new and credible firm created a substantially better and dramatically different holder, they could grab substantial market share. Obviously easier said than done.

Zoins · January 10, 2021 7:53PM

@MrEureka said:
I think that the Achilles heel of the leading TPGs is their holders. If a new and credible firm created a substantially better and dramatically different holder, they could grab substantial market share. Obviously easier said than done.

I'm surprised we don't have better holders. 3 of the top 4 TPG holders still have labels that can't be read from above.

leothelyon · January 10, 2021 7:58PM

A profitable grading company is only as good as it caters to every collector or business clientele. From my point of view, there are many glaring flaws in every GC I'm aware of but I search for coins that I want/like. But an opinion will be different with just about everyone although they can be categorized.

'The Coke and Pepsi analogy is a good one.'

I like coke over pepsi and vice versa....depends on who's having the 6 for 10 sale.

Leo

ShaunBC5 · January 10, 2021 8:35PM

Is there room in the market for a “top 3” or 4 (who compete fairly equally)? Or can we only support a Big 2 and little 2?
Coke and Pepsi are the giants, but I’ll take Dr Pepper any chance I get. Maybe there’s a place for a DP within a bigger niche?
7Up/DP isn’t close to what Coke or Pepsi is, but they make a nice living and make a lot of customers happy. Perhaps a grader could try to cater to a specific large segment of the hobby and, for instance, make a slab and have a standard that the majority of Morgan or ASE fans love.

messydesk · January 10, 2021 9:00PM

@Zoins said:

@MrEureka said:
I think that the Achilles heel of the leading TPGs is their holders. If a new and credible firm created a substantially better and dramatically different holder, they could grab substantial market share. Obviously easier said than done.

I'm surprised we don't have better holders. 3 of the top 4 TPG holders still have labels that can't be read from above.

SEGS sued ANACS over theirs several years ago, I believe.

Zoins · January 10, 2021 9:04PM

@messydesk said:

@Zoins said:

@MrEureka said:
I think that the Achilles heel of the leading TPGs is their holders. If a new and credible firm created a substantially better and dramatically different holder, they could grab substantial market share. Obviously easier said than done.

I'm surprised we don't have better holders. 3 of the top 4 TPG holders still have labels that can't be read from above.

SEGS sued ANACS over theirs several years ago, I believe.

Being sued is just a cost of doing business. Just about every successful business of reasonable size gets sued.

For example, Google's trillion dollar market cap was threatened by a Yahoo lawsuit over violation search engine text ad patents. What did Google do? Give Yahoo! hundreds of millions in stock and continue with their business. Yahoo didn't make it as a stand-alone business in the end.

Was the SEGS suit successful?

From a business perspective, ANACS still has holders that can be read from above.

emeraldATV · January 10, 2021 9:50PM

@koynekwest said:
When SEGS started out they had great potential. It never came to fruition. ICG lost their credibility during the Teletrade days when they graded too many coins MS70 and PR70. I think most ICG coins are spot-on but once a slabber loses their reputation it's nearly impossible to get it back.

The Coke and Pepsi analogy is a good one.

Now take Pepsi.
Remember this slogan..
.......................................Pepsi, GOT TO HAVE IT.
GONE but not forgotten. I think because, yes, some got to have it.
I saw why this happened, and no credibility lost.There are many more with reputations trusted.
Please note I do like the Pop or soft drinks of all brands of soda.
I did not mean to pick on any one product.
Sometimes you just feel like a nut. Lol

messydesk · January 10, 2021 10:39PM

@Zoins said:

@messydesk said:

@Zoins said:

@MrEureka said:
I think that the Achilles heel of the leading TPGs is their holders. If a new and credible firm created a substantially better and dramatically different holder, they could grab substantial market share. Obviously easier said than done.

I'm surprised we don't have better holders. 3 of the top 4 TPG holders still have labels that can't be read from above.

SEGS sued ANACS over theirs several years ago, I believe.

Being sued is just a cost of doing business. Just about every successful business of reasonable size gets sued.

For example, Google's trillion dollar market cap was threatened by a Yahoo lawsuit over violation search engine text ad patents. What did Google do? Give Yahoo! hundreds of millions in stock and continue with their business. Yahoo didn't make it as a stand-alone business in the end.

Was the SEGS suit successful?

I don't believe so.

neildrobertson · January 10, 2021 11:34PM

@MrEureka said:
I think that the Achilles heel of the leading TPGs is their holders. If a new and credible firm created a substantially better and dramatically different holder, they could grab substantial market share. Obviously easier said than done.

Absolutely. It's cool when I see new holders like what GENI is using.

Zoins · January 10, 2021 11:41PM

@neildrobertson said:

@MrEureka said:
I think that the Achilles heel of the leading TPGs is their holders. If a new and credible firm created a substantially better and dramatically different holder, they could grab substantial market share. Obviously easier said than done.

Absolutely. It's cool when I see new holders like what GENI is using.

The Geni holders are nice, especially when they are seen together.

Moxie15 · January 11, 2021 7:48AM

someone early on said what is perceived.
There was a day when ANACS was just about the living end, now it is just about at the end.
With the changes in our host lately it is possible that the perception of their service could lower in the future. In fact I remember a day when I asked like 5 dealers about PCGS and 3 said they over graded and would not last long, now they lead the industry.

I guess what I am trying to say is no one is number one forever. A day will come when our hosts are not considered as highly as many consider them now. So as a short answer to the OP, yes a lower rated TPG will someday be rated higher than PCGS and NGC

scubafuel · January 11, 2021 8:07AM

GENI is still way too plastic-y. A low profile, high quality holder (Corning gorilla glass perhaps) with cert prices starting at $100+ could likely gain traction.

Your box of 20 would now fit 40 or so, and they’d look beautiful on felt. Chip it, keep the grading conservative (cac standard) and keep the label minimalist. Maybe laser etch the data into the glass itself.

Use silicone feet to hold the coins, and don’t bother with odd shapes at first. Have a high quality photo dept and each cert is accompanied by high res photos in the database to combat counterfeits.

Could a service like this survive without the mass modern cert flow though?

MrEureka · January 12, 2021 12:57PM

@scubafuel said:
GENI is still way too plastic-y. A low profile, high quality holder (Corning gorilla glass perhaps) with cert prices starting at $100+ could likely gain traction.

Your box of 20 would now fit 40 or so, and they’d look beautiful on felt. Chip it, keep the grading conservative (cac standard) and keep the label minimalist. Maybe laser etch the data into the glass itself.

Use silicone feet to hold the coins, and don’t bother with odd shapes at first. Have a high quality photo dept and each cert is accompanied by high res photos in the database to combat counterfeits.

Could a service like this survive without the mass modern cert flow though?

I don't have a solution on the exact design, but smaller is definitely better. And an aesthetically compatible do-it-yourself version without grading and authentication would be a big plus, so less expensive coins unworthy of certification costs could be collected alongside the gems, in a more satisfying way.

Catbert · January 12, 2021 2:26PM

The start up grading company will have its conservatively graded slabs cracked or crossed to the big two leaving the over graded and run of the mill coins leftover. This result will create a negative brand market presence.

Catbert · January 12, 2021 2:27PM

This is already happening to ANACS and ICG.

Edit - or has happened.

logger7 · January 12, 2021 6:22PM

Major auction companies seem to resort to the view that the second tier slabbed coins should be judged as raw, even some of them have a negative bias even if the coin is all there for grade. Superior images should be able to elucidate what the actual grade is. If coins are undergraded or overgraded was this a case of a lack of intellectual rigor, quality control or the finalizer taking a second look? There are plenty of examples of each in all the service holders. Try to go a guarantee or warranty submission to the top tier grading services, and it takes a long time in some cases as I have experienced, and the best you get if they agree a mistake was made is a credit, occasionally a check for the low wholesale value differential.

So top quality images go a long way toward establishing grade, eye appeal and desirability which PCGS has obtained through many millions of dollars for all their upgrades and high tech improvements.

jdimmick · January 12, 2021 6:53PM

I have submission forms for anacs and icg around here somewhere, and in all honesty, the grading fee rates are just as high as the big two, so why anybody would send to them is beyond me . I guess , the big two you either have to be a dealer or club member to submit

koynekwest · January 12, 2021 6:53PM

I think a smaller slab would be much better. Whether something like that would fly I don't know. Of course the reputation of the slabber would be paramount.

stockdude_ · January 13, 2021 1:21PM

I think we have enough grading services. Unless they start a computer grading service i think we have what we have

stockdude_ · January 13, 2021 1:23PM

I like the PCGS holder the best.

TwoSides2aCoin · January 13, 2021 1:41PM

I'd like to pay for the crossover service. Nah, on second thought, you go ahead. I'll just crack them, if I must.

BryceM · January 13, 2021 3:30PM

I love the idea behind the Geni holder design. It's almost like the coin becomes the focus.

As for grading, it strikes me that there are essentially two different markets. There's the MS/PF 68-70 market for bullion, modern proofs, SAEs, and such, and there's the grading of classic coinage. I imagine the volume of the first exceeds the second but that value of the second exceeds the first. An emerging company that stuck to just one of the two areas would stand a better chance.

Imagine the chaos if CAC started stickering modern bullion issues.....

logger7 · January 13, 2021 5:20PM

I recently sold a Peace dollar in a second tier holder to a gentleman who found it was a much better vam; plus he mentioned a bulk crossover service to get it into a PCGS holder.

Crypto · January 13, 2021 5:33PM

@jdimmick said:
I have submission forms for anacs and icg around here somewhere, and in all honesty, the grading fee rates are just as high as the big two, so why anybody would send to them is beyond me . I guess , the big two you either have to be a dealer or club member to submit

Going off younger me, the difference is you don’t need to be a member to submit like you do for pcgs and NGC. ANACS really died when they went to the blue holders and the big 2 opened up submissions to non dealers. That is a part I think is need in this conversation

koynekwest · January 13, 2021 5:40PM

I like the GENI holders. But I think labeling on the face of the slab should be done as well as labeling on the top edge.

PerryHall · January 13, 2021 5:42PM

If you are an ANA member you can submit your coins to NGC without joining any clubs.

jmlanzaf · January 13, 2021 6:31PM

@PerryHall said:
If you are an ANA member you can submit your coins to NGC without joining any clubs.

Assuming you don't consider ANA to be a club.

It is definitely cheaper than joining NGC directly, although you don't get the "free" submissions.

KSorbo · January 13, 2021 6:47PM

ICG and ANACS already occupy a niche due to their being cheaper. They are far from being basement slabber and I disagree with the assertion that their coins should be viewed as raw. Perhaps they are getting the best return on capital by staying where they are. For some people it’s enough to know that their $100 coin has been graded by a competent person and not made in China.

jmlanzaf · January 13, 2021 6:49PM

@KSorbo said:
ICG and ANACS already occupy a niche due to their being cheaper. They are far from being basement slabber and I disagree with the assertion that their coins should be viewed as raw. Perhaps they are getting the best return on capital by staying where they are. For some people it’s enough to know that their $100 coin has been graded by a competent person and not made in China.

You might want to emphasize authentication rather than grading. If you can't trust the market accuracy of the grade, it is of very limited utility. That is why in the sight unseen market, they trade at a significant discount to NGC and PCGS.

Zoins · January 13, 2021 10:31PM

@scubafuel said:
A low profile, high quality holder (Corning gorilla glass perhaps) with cert prices starting at $100+ could likely gain traction.

I'm guessing Corning Gorilla Glass would still be considered to crack too easily.

KSorbo · January 14, 2021 7:26AM

@jmlanzaf said:

@KSorbo said:
ICG and ANACS already occupy a niche due to their being cheaper. They are far from being basement slabber and I disagree with the assertion that their coins should be viewed as raw. Perhaps they are getting the best return on capital by staying where they are. For some people it’s enough to know that their $100 coin has been graded by a competent person and not made in China.

You might want to emphasize authentication rather than grading. If you can't trust the market accuracy of the grade, it is of very limited utility. That is why in the sight unseen market, they trade at a significant discount to NGC and PCGS.

Wouldn’t that depend on the situation? I agree that if a coin is in an ANACS slab graded MS66, and a 66 trades at twice the price of a 65, then the market would not value the coin as a 66. I’m thinking more that if someone wants an XF seated half for their type set, or an MS62 Carson City Morgan, they are a lot better off buying one off EBay in an ANACS slab than raw. Not only does it give assurance of authenticity, but it also reduces the risk of getting stuck with a coin with problems not captured in a photo. At least someone other than the seller who knows what they are doing has looked at it.

jmlanzaf · January 14, 2021 8:27AM

@KSorbo said:

@jmlanzaf said:

@KSorbo said:
ICG and ANACS already occupy a niche due to their being cheaper. They are far from being basement slabber and I disagree with the assertion that their coins should be viewed as raw. Perhaps they are getting the best return on capital by staying where they are. For some people it’s enough to know that their $100 coin has been graded by a competent person and not made in China.

You might want to emphasize authentication rather than grading. If you can't trust the market accuracy of the grade, it is of very limited utility. That is why in the sight unseen market, they trade at a significant discount to NGC and PCGS.

Wouldn’t that depend on the situation? I agree that if a coin is in an ANACS slab graded MS66, and a 66 trades at twice the price of a 65, then the market would not value the coin as a 66. I’m thinking more that if someone wants an XF seated half for their type set, or an MS62 Carson City Morgan, they are a lot better off buying one off EBay in an ANACS slab than raw. Not only does it give assurance of authenticity, but it also reduces the risk of getting stuck with a coin with problems not captured in a photo. At least someone other than the seller who knows what they are doing has looked at it.

Except that again assumes that the XF isn't a VF30 at PCGS or, worse, that the XF isn't an XF details at PCGS. The whole reason that ANACS and ICG trade at a discount is that the market doesn't trust their grades. Personally, I would not trust an ICG XF to be a true no problem XF.

The only thing that I, as a part-time dealer, would use ANACS for is determination of authenticity. I would pay more for a raw XF that I assessed as an XF than I would for an ANACS XF based on the holder grade alone.

MasonG · January 14, 2021 9:16AM

@jmlanzaf said:
I would pay more for a raw XF that I assessed as an XF than I would for an ANACS XF based on the holder grade alone.

Yep- sight seen vs. sight unseen. I have cracked coins out of ANACS 64/65 holders that graded 66/67 at PCGS/NGC. You can't always go by the labels- you have to look at the coins if you want to be sure.

Zoins · January 14, 2021 9:39AM

@BryceM said:
I love the idea behind the Geni holder design. It's almost like the coin becomes the focus.

Agree. It's done that way on purpose to focus people on the coin.

The second tier grading services could they compete with top tier?

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