Is Third Party Grading good for numismatics?
Newmismatist
Posts: 1,802 ✭✭
There’s a lot of hype on this forum about which grading service is the “best”. We repeatedly see forum members here complaining that NGC can’t grade - my crossover was down-graded, BB’d, wouldn’t cross, etc. The complaining certainly isn’t limited to NGC - as we all read the complaints about why’d PCGS grade this XX instead of XY? Then there’s the few shills shouting: PCGS is the best (or even the only) grading service to the point were they actually argue that the plastic on the outside is more important than the coin on the inside. On the NGC forum you’ll similar threads, usually asking how could PCGS grade this coin MS65FH or MSXX, but all with the same general theme - ie PCGS got it wrong. After reading these various threads, both on this forum and across the street, a newbie would conclude (with ample support by lots of forum members) the following:
1. PCGS accurately grades coins
2. PCGS undergrades coins
3. PCGS overgrades coins
4. PCGS bags coins that should have graded (example coin is NT, bagged as AT)
5. PCGS grades coins that should have bagged (example coin is AT, bagged as NT)
6. NGC accurately grades coins
7. NGC undergrades coins
8. NGC overgrades coins
9. NGC bags coins that should have graded (example coin is NT, bagged as AT)
10. NGC grades coins that should have bagged (example coin is AT, bagged as NT)
In fact, if our Newbie were to believe all the comments and opinions expressed in the various threads that deal with grading, including those that question such things as color (RD, RB, BN) strike designations (FH. FL, FS, etc) and toning (AT, NT, AT but market acceptable), our Newbie could easily conclude that buying coins graded by EITHER of the major grading services was about as risky as jumping into pool filled with hungry sharks.
Originally the concept of third party grading was promoted as a means of protecting collectors from the risks of buying over-graded coins or coins that had been “played” with to give the appearance of a higher grade. The corollary benefit to dealers was that if collectors could rely on the protection of a RELIABLE third party grading opinion, they would be more comfortable in buying coins, thus spending more money for coins (presumably rare coins). Dealers would then be able sell more coins to more collectors, without the controversy as to whether they had overcharged the collector for an over-graded coin. Third party grading (TPG) was an expansion of the authentication service then provided by ANACS, which had been promoted by the ANA as a way of eliminating counterfeit and altered coins from the numismatic market place.
The concept of third party grading was started in 1986. After 17 years of Third party grading, the questions are:
1. Have the two major third party grading services (PCGS and NGC) helped the collector?
2. Has third party grading been beneficial to the hobby of coin collecting?
3. Is third party grading just a clever marketing scheme and the collector is no better off than he (or she) was prior to third party grading?
4. Is third party grading more beneficial to dealers or collectors?
5. Are we better off with third party grading? or was it better before third party grading?
1. PCGS accurately grades coins
2. PCGS undergrades coins
3. PCGS overgrades coins
4. PCGS bags coins that should have graded (example coin is NT, bagged as AT)
5. PCGS grades coins that should have bagged (example coin is AT, bagged as NT)
6. NGC accurately grades coins
7. NGC undergrades coins
8. NGC overgrades coins
9. NGC bags coins that should have graded (example coin is NT, bagged as AT)
10. NGC grades coins that should have bagged (example coin is AT, bagged as NT)
In fact, if our Newbie were to believe all the comments and opinions expressed in the various threads that deal with grading, including those that question such things as color (RD, RB, BN) strike designations (FH. FL, FS, etc) and toning (AT, NT, AT but market acceptable), our Newbie could easily conclude that buying coins graded by EITHER of the major grading services was about as risky as jumping into pool filled with hungry sharks.
Originally the concept of third party grading was promoted as a means of protecting collectors from the risks of buying over-graded coins or coins that had been “played” with to give the appearance of a higher grade. The corollary benefit to dealers was that if collectors could rely on the protection of a RELIABLE third party grading opinion, they would be more comfortable in buying coins, thus spending more money for coins (presumably rare coins). Dealers would then be able sell more coins to more collectors, without the controversy as to whether they had overcharged the collector for an over-graded coin. Third party grading (TPG) was an expansion of the authentication service then provided by ANACS, which had been promoted by the ANA as a way of eliminating counterfeit and altered coins from the numismatic market place.
The concept of third party grading was started in 1986. After 17 years of Third party grading, the questions are:
1. Have the two major third party grading services (PCGS and NGC) helped the collector?
2. Has third party grading been beneficial to the hobby of coin collecting?
3. Is third party grading just a clever marketing scheme and the collector is no better off than he (or she) was prior to third party grading?
4. Is third party grading more beneficial to dealers or collectors?
5. Are we better off with third party grading? or was it better before third party grading?
Collecting eye-appealing Proof and MS Indian Head Cents, 1858 Flying Eagle and IHC patterns and beautiful toned coins.
“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
Newmismatist
“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
Newmismatist
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Comments
2. I don't think so. It has added an unnecessary layer of value to coins that they shouldn't have. Coins are coins and should be worth X at grade Y regardless of what holder is around them...that's just not the case. It has also given many collectors (and dealers) an excuse NOT to learn how to grade properly.
3. In most cases, true. With often counterfeited issues with high value, once again a third party opinion is helpful, but should NOT change the value of the coin.
4. Neither...it is very beneficial to the grading company.
5. For rare and extremely valuable coins, there's a good reason for it. For the typical stuff people are having graded, it's a waste of money and time. People should be focusing their time and energy toward spotting cleaning, counterfeits, and grading - not on what slab they can overpay for next.
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1: slabs are nice holders with good protection.
2: grading and graders are not perfect. They are better than I am. The crackout game will burn you if you play enough because of inconsistency. People say" buy the coin, not the slab", well the crackout game is "all" about the slab. I will say that dealers can profit from the right grade and slab, but the coin stays the same.
3: they provide authentication, important these days. I won't go into provenance, that's been beaten into the ground already.
4: I am more comfortable buying a reputable slab than a raw coin. I don't have a lot of availability where I live and have to buy most things over the internet so that's important to me.
None of the services are 100% perfect but they are a definite plus as i see it.
Dave
I prefer raw coins but I do have some coffined coins in my collection. I do belive if I were to purchase a rare coin I would go with a certified coin.
<< <i>1. PCGS accurately grades coins
2. PCGS undergrades coins
3. PCGS overgrades coins
4. PCGS bags coins that should have graded (example coin is NT, bagged as AT)
5. PCGS grades coins that should have bagged (example coin is AT, bagged as NT)
6. NGC accurately grades coins
7. NGC undergrades coins
8. NGC overgrades coins
9. NGC bags coins that should have graded (example coin is NT, bagged as AT)
10. NGC grades coins that should have bagged (example coin is AT, bagged as NT) >>
I agree with 1, 4, 7 and 9. No...wait...I agree with 2,4,5 and 9. No..wait...I think that 2,8,9 and 10 are...no wait....
<< <i>our Newbie could easily conclude that buying coins graded by EITHER of the major grading services was about as risky as jumping into pool filled with hungry sharks. >>
No, what you describe is going to a coin show. LOL
Seriously:
1. Have the two major third party grading services (PCGS and NGC) helped the collector?
No. As a real collector wouldn't need a grading service, right?
2. Has third party grading been beneficial to the hobby of coin collecting?
See #1
3. Is third party grading just a clever marketing scheme and the collector is no better off than he (or she) was prior to third party grading?
I suppose it is clever as it seems everything within these forums (being a good representive of what the market is think) and at coin shows revolves around the GRADE of the coin. Not the history, or pedigree or anything. Who cares, what will it slab?!!
4. Is third party grading more beneficial to dealers or collectors?
Dealers. In fact, it is really ONLY for dealers. It doesn't do a service to collectors in making the dealer "better" that's for sure. Why? Because now any nitwit can be a dealer.
5. Are we better off with third party grading? or was it better before third party grading?
It's a distinct possibility that grading was BETTER before the services. Without the "crutch" then maybe people would actually learn to grade themselves.
Remember the GRADE of a coin is simply something that was used to REPRESENT that coin to someone who could NOT see it in person. It was originally intended to be somewhat of a communication system in numismatics. Today, unfortunately, it is all blown out of proportion and the whole market revolves around the GRADE. Is this necessarily a good change in dynamics?
jom
<< <i>grading services have helped stop the collectors from being fleeced by some very sharp coin doctors and counterfeiters that are always present >>
This is the bottom line for me. While none of them are perfect....I feel pretty comfortable that when buying a coin from NGC, PCGS, or ANACS I'm getting a genuine and reasonably accurate grade...and if I don't agree I won't buy it.
Is it a panacea that eliminates all problems? Of course not. Nor, should we expect it to be.
Regardless of what one thinks of the grading (standards, consistency or lack thereof, etc,) in the case of PCGS, NGC and some others, at least, it is being done by people who do not own the coins or have a financial interest in them. Accordingly, the graders and evaluations are likely to be far more objective, than the owners of the coins would be.
PCGS and NGC also offer guarantees. And, while people aren't always satisfied with them, consumers receive considerable financial protection, especially with respect to counterfeits.
Sight-unseen trading is not what some hope, but I'd sure rather have an NGC or PCGS coin than an uncertified one, if I or a family member had to sell it.
I think it's great, that in many cases, someone can pick up the phone or send an email and get a sight-unseen offer on a coin or collection, almost anywhere around the country. Granted, sight-unseen offers wont help a seller realize top dollar for PQ coins, extra pretty ones or more esoteric items that don't really lend themselves to sigh-unseen offers, but it sure beats the old days.
Due to third party grading, the hobby and business have come a long way, with respect to liquidity, consumer protection, a more level playing field for the non-experts and the sophistication of and respect for the rare coin industry.
There are still plenty of problems today, but as a whole, I think today's environment is MUCH preferable to what we had before third party grading came into being.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Neither service if perfect or fool-proof. You can't just blindly buy a coin with a given grade on it and assume that your are getting a good or fair value. If you are dealing with the two top services and some of the others, especially ANACS, you can be sure the coin is genuine 99.99% of the time and that the service will make good on it if the 0.01 of time occurrs.
Are collectors better off? Definitely. Before buying coins was almost like one big Ebay. Anything could happen. The only limiting factor was if you were an expert or at least very good at grading coins and spotting problems and could see them at a shop or a show BEFORE you bought them. Otherwise you were TOTALLY dependent upon the dealer's honesty and expertise.
Third party grading has benefited dealers, collectors and even investers. It was caused the hobby to grow faster than it would have, and it has put more trust into the product. Unfortunately some of the marketing aspects of the slab business, like the registries, have created markets for high grade material that may or may not prove to be stable.
Has third party grading fixed ALL of the problems? NO, it's still best to look at the coins BEFORE you buy. But it sure beats the old days when people got taken a lot worse than they get taken today.
third-party-grading is TREMENDOUSLY GOOD for numismatics. in fact, getting a 2d opinion (which is all 3-p-g is) on anything involving a transaction is good.
HOWEVER,
SLABBING is NOT GOOD for numismatics.
SLABBING is VERY VERY GOOD for business.
the point is, you asked specifically about "third party grading", note that "slabbing" DOES NOT EQUAL third party grading (usually).
K S
<< <i>Originally the concept of third party grading was promoted as a means of protecting collectors from the risks of buying over-graded coins or coins that had been “played” with to give the appearance of a higher grade >>
actually that's only a small part of the truth. of more significance, 3-p-g was (& is) promoted as a way of making coins marketable on a sight-unseen basis. there are other ways it's promoted as well. obviously, not all the "promotion" is based on reality.
K S
I recently had a number of key date coins that I bought raw, had slabbed and sold. I remember the anguish of trying to sell coins pre-third-party. Its a lot more fun this way.
Yes, because coins in those slabs are authentic and have not been altered.
2. Has third party grading been beneficial to the hobby of coin collecting?
Yes, because newbies can have a level of confidence that they aren't buying a piece of junk for big money. The ability of shady dealers to outright swindle people with fakes is greatly reduced.
3. Is third party grading just a clever marketing scheme and the collector is no better off than he (or she) was prior to third party grading?
Marketing is certainly involved like any other business. But the protection that newbies get makes TPG worthwhile.
4. Is third party grading more beneficial to dealers or collectors?
I don't think it leans either way. TPG is available to everyone and since the graders don't know who is submitting the coins (in theory), everyone gets the same treatment. It helps the new collectors, but it probably hurts the sleazy dealers. It hurts the older collectors who bought high-end stuff when Gem was simply Gem, only to find out now that some of those Gems are 68s and some of them are only 65s - and they are holding the 65s. It helps new dealers who can acquire instant credibility via selling TPG coins, when in the past it would have been difficult to break in to the business trying to sell expensive raw coins if nobody knew you.
5. Are we better off with third party grading? or was it better before third party grading?
It's far better. Whizzed coins no longer get sold as gems, and 63s aren't sold as 68s. (But on the other hand, some coins fluctuate between 58 and 63.) The downside which nobody expected is the huge premiums that evolved for one-point differences. That's definitely bad. We accept the fact that a coin can be cracked out and regraded differently, yet turn around and pay 10x premiums for a one grade point difference. That makes no sense to me. If that hadn't happened, no one would ever talk about grading tight or loose, or cracking out.
It's too bad that grading of MS coins degraded into one-point increments because too much money is attached to a very, very tiny difference in quality. I think it's inevitable that we will see continued "fine-tuning" of grading and designations. The notion that TPG would establish a never-changing benchmark didn't pan out. Someday the entire 1-70 scale will be tossed out when some "industry group" develops something they claim is better, and we will get to start all over again.
New collectors, please educate yourself before spending money on coins; there are people who believe that using numismatic knowledge to rip the naïve is what this hobby is all about.
question.
I was around in the "bad old days," and if you think the collector gets screwed now, you haven't
seen anything! The BU coin you bought from a dealer was an Unc. as soon as money changed
hands. The guy who sold it to you would tell you to your face that it was an Unc. OTOH, if you looked hard, you were always able to find an older guy with a shop who would be happy to speak with you about coins if you were a kid like I was at the time.
Your only other options were selling a coin at the occasional auction which took place in a larger city
and hoped that people would actually show up & your lot wasn't sold at the end of the show (I ripped
a set of Unc. silver Roosies this way) , or putting it on a bid board, where if it was a really nice coin, you would rarely get an acceptable offer.
These same auctions could be good venues to buy coins, assuming you knew how to grade.
There were plenty of whizzed and cleaned coins to go through before finding something attractive.
It was also a good idea to bring your own lamp to look at the lots. Because I didn't do this, I missed
a scratch on Miss Liberty's cheek on what what otherwise a beautiful 1931 D Dime. Wound up pissing
away good money on that coin I never got back when I sold it years later. OTOH, I did pick up
a $1,200 coin for which I paid $100, 30 some years ago.
******************************************************************
Re PCGS & NGC coins (I won't address the other services), at least now, no one can look you in the eye and tell you your Unc. coin is a slider, etc. The only point of contention is if your particular
coin is nice for the grade. If you know how to grade said coin, you don't need a dealer to tell you
this; you know.
You also don't have to worry about eating it financially if your 1916 D Dime is a fake.
Grading is done by people and people make mistakes. I'd guess 90% of the time, they get it right.
Getting it right is no big deal, so no one talks about it. People talk about exceptions, so in this case,
an overgraded or undergraded coin is what gets the attention of people who read these boards.
Where there is a big price jump between grades, however, it is still the buyer's responsibility to
determine where a particular coin sits in its given grade and price it accordingly. If a coin has been
undergraded, it will be bid up to market, irrespective of the number on the slab. If it's overgraded,
you don't want it.
"Seu cabra da peste,
"Sou Mangueira......."
Yes, in a huge way. Now I can complain and moan on their boards about their mistakes, inaccuracies, etc., instead of complaining about my own inability to grade and negotiate good deals.
2. Has third party grading been beneficial to the hobby of coin collecting?
It brought a lot of people back to the hobby who may have engaged in this kind of collecting in the 50's, 60's, 70's and early 80's and who finally got tired of buying BU and selling AU.
3. Is third party grading just a clever marketing scheme and the collector is no better off than he (or she) was prior to third party grading?
It is one of the most clever innovations in the history of the hobby because it offers good storage and third party supposedly expert opinions that are beyond question (OK, that we can all beat up on endlessly). He who cleverly innovates also cleverly markets if he is lucky enough to bring his innovation to market and keep it when the competitors (who are neither clever nor innovative) start chiming in.
4. Is third party grading more beneficial to dealers or collectors?
Each benefits substantially. Dealers can make a market and have a real basis for comparison if we are talking about PCGS and sometimes NGC. The collector gets what he or she pays for -- a protective slab with a grader's guess which is respected enough in the marketplace to support huge price gradiations for surface preservation quality differences which often cannot be seen or detected by the normal, mortal human eye.
5. Are we better off with third party grading? or was it better before third party grading?
We wouldn't be here blabbing away about this if it wasn't for third party grading (and, oh yes, Thank You Al Gore for inventing the internet, which is the real reason why we can all come here to our clubhouse in syberspace. I am so much happier paying through the nose for slabs that catch my eye than buying BU and selling AU. Also, PCGS is better than me at detecting AT, cleaning, counterfeiting and all the other fun problems in this hobby.
I have some thoughts on the questions raised also, and later tonight I'll try and post my opinions on these issues (Can't right now, my wife expects me to buy and decorate that pesky little green tree - you know the one that the cat climbs, into plays with the ornaments and sometimes times even knocks the tree over)
“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
Newmismatist
the only thing really wrong with third-party grading is that is etches the grade in stone. Prior to the TPG's, the grade was the subject of debate, and consequently so was the value. There was not "A" value, but rather a range of value. The current system promotes the notion that one can consistently distinguish between a MS65.9 and an MS66 coin with enough certainty to pay a 10x premium for the second coin. Honestly, if both coins were raw, would the second coin be worth 10x? Would the first coin only be worth MS65 money? Dealers and savvy collectors know the MS65.9 is worth more than an average MS65. If they can buy it without the premium, good for them. They will likely reholder the coin. Those who know don't assume all 65's are equal, but the general market does. That's what's wrong with the current system. I don't blame the TPG's for this. They're generally doing their job. It is the uneducated buyer who is to blame. The old system was fuzzy. The current one is a newbie-trap.
and it sets us apart from practitioners and consultants. Gregor
Run up of pricing can still happen but for the most part there is no run up of grades. The chance is still out there to lose your rear in this hobby but atleast you will not lose it because every coin you own is improperly graded by some smuck that cares nothing about the hobby but only his pocket book.
Still you must pay attention to what you buy and let the sharks swim alone in their cess pool of greed.
Ken
It's definitely made it much more interesting.
How much different would this forum be without it?
As far as the accuracy in the grade goes, part of the fun is being to independently judge the coin and make a determination on the grade.
The growing problem currently is getting prices on coins. There can be big gaps between one source and another. It's kind of refreshing when a dealer can name his price without having to look up the price in a guide, add a premium, double check what he paid and then five minutes later give you a quote that is not going to happen, you counter and then after some thought they counter back. It's almost like buying a new car or something.
1. Have the two major third party grading services (PCGS and NGC) helped the collector?
Overall, I think the answer is a yes. But this answer is multi-faceted. It has helped new collectors tremendously, the average collector a lot and the expert collector very little. New collectors seldom know how to grade properly - grading is an acquired skill, new collectors traditionally are the easiest collectors for an unscrupulous dealer to sell over-graded, whizzed and problem coins. Both PCGS and NGC do an excellent (but not perfect) job in preventing those types of coins from being put in slabs, in addition to preventing altered and counterfeit coins from being placed in the market place. Although the average collector usually has good grading skills, (generally in the area that he or she specializes in), third party grading allows the average collector to expand his interests in to areas in which he is not as knowledgeable, without having as much risk that he is being sold coins that are over-graded. There is still risk, but the chances of being outright swindled are much lower (but not eliminated). Expert collectors have probably benefitted the least from third party grading. Generally expert collectors have acquired good to excellent grading skills for a wide variety of coins, are familiar with strike designations (Full head SLQs, Full Band Mercury dimes, etc.), understand the interrelationship between strike, luster, eye-appeal and the value of coins. Expert collectors were generally the type of collector that skilled and reputable dealers enjoyed dealing with - they knew coins and when treated fairly, returned time after time to buy more coins for their collections. When they made mistakes, they tried to learn from their mistakes, not simply give it up because of one bad purchase. I think one of the downsides of third party grading is that dealers no longer have to rely on the expert collectors to maintain a steady clientele and thus collectors are not encouraged to acquire good grading skills as there seems to be a sense that its not needed.
2. Has third party grading been beneficial to the hobby of coin collecting?
Overall, I think the answer is a RESOUNDING yes. We have more collectors today than ever before and I think this is largely because of third party grading. I think many collectors believe that by buying coins that have been slabbed by PCGS and NGC, the inherent risk of owning and collecting coins is lowered. Altered and counterfeit coins are virtually non-existent in PCGS and NGC holders, and when the rare mistake happens, both services make every effort to get that coin off the market. The same is true with whizzed coins.
Unfortunately the same is not true with regard to mis-graded coins, nor with coins that have been expertly “doctored”. Although overall, both PCGS and NGC do an excellent (but not perfect) job in preventing those types of coins from being put in slabs, this is the area that is most problematic and causes the most controversy between collectors, dealers and the third party grading services. This is also the area in which everyone takes sides. You have the die-hard PCGS camp which is completely convinced that no service except PCGS can properly grade coins. The NGC camp is equally adamant and takes gleeful delight when any PCGS mistake is uncovered. Then there are the die-hard third party grading service haters who constantly point out the mistakes of both services, to them proof that the third party grading services can’t properly grade and they are the sworn enemies of coin-collectors as all they (PCGS and NGC) do is rip us off!
Whose right? The answer: NONE OF THE ABOVE. In this debate everyone seems to forget that grading is an OPINION. It’s not mathematics. I’m not certain both grading services even agree as to all the various definitions of the different strike designations. And, when you’re dealing with high grade MS & PR coins, I’m likewise not certain both grading services use the same criteria for coins graded above 66. If you have different standards, there will never be uniformity and agreement as to the grade of a particular coin. Furthermore, as grading is opinion, you will have variations between the individuals that grade the coins. Because of this you will ALWAYS have differences in grading, even within the same grading service; and when you have 2 different third party grading services with even slightly different grading criteria, you will have disagreement, not consensus.
Here’s my analysis of this situation. Grading is an opinion of the quality of a coin based upon four basic criteria:
1. The number of marks or abrasions,
2. The quality of the strike,
3. The toning and luster of the coin and
4. The overall eye appeal of the coin.
These criteria are NOT mathematically quantifiable. Therefore, it is a human interpretation of these always different observable conditions (like snowflakes, no coin is exactly like any other) that result in a numerical quantification of grade. As all humans will process this information differently, it is mathematically impossible to have all graders grade all coins exactly the same all of the time. So once you understand what and how numerical grades are assigned, you can deduce why the same coin will receive a different grade from the same service when re-submitted, and why the same coin can receive a different grade when cracked out and sent to the other grading service.
By way of example: if you took a statistically significant number of coins (it would probably have to be at least 300-500 coins, maybe even as many as 1000 coins), sent them to each of the grading services to be graded several times (minimum 3 times, maybe even as many as 5 times) over a period of say one year, here’s what you would see (what follows is my educated guess based on statistical samples): Both services would agree on the exact grade about 50-60% of the time - so for 1,000 coins graded, about 500-600 would be graded the same nearly 100% of the time. (For those familiar with statistics, this is a “Bell Curve” example). Then you would have the “problem” coins: My (educated) guess: Approximately 25-30% of the coins would be undergraded and 15-20% of the coins would be over-graded. I would further guess that neither service would be more “accurate” than the other, assuming that the graders at each service are skilled coin graders. Why? Because each service has human beings who render their best judgment as to their opinion of the grade for that coin on that particular day - this is a variable that cannot be perfectly replicated on different days by different individuals over diverse periods of time.
What we have done as collectors is concentrate on that percentage of either under-graded or over-graded coins that BOTH PCGS and NGC invariably will mis-grade, and we draw the conclusion that the services are incapable of getting it right. What we miss is that both third party grading services get it right more often than wrong AND even when they get it wrong, it’s within the statistical margin of error (eg: if a coin is a high-end MS64 or a low end MS65, about 1/2 the time it will be mis-graded perhaps by a margin of less than 1/10th of a point). That type of error is statistically insignificant and within the standard of human deviation for rendering an OPINION. So most criticism of the grading by PCGS and NGC is not even warranted as it is within the margin of human error. Therefore, I believe that PCGS and NGC are more accurate in grading large quantities of diverse coins than any collectors would be on an individual basis. They’re not right all of the time, but they are more accurate more consistently than any individual collector would be for the many different coins that they grade. Conversely, an individual collector with good grading skills who specializes in a particular series would likely be more consistently accurate than either PCGS and NGC for that particular series - for the simple reason that the collector has made a greater effort to understand the subtle nuances of that series of coins and he/she would have an advantage over a third party grader who has to know how to grade EVERY series of coins.
3. Is third party grading just a clever marketing scheme and the collector is no better off than he (or she) was prior to third party grading?
I believe a knowledgeable collector is better using the positive aspects of the third party grading services to assist in acquiring high quality collectable coins. Unfortunately, any collector who basis his collecting decisions on only what the piece of paper in the slab say is headed for disaster. Unfortunately, neither PCGS nor NGC is 100% right 100% of the time for 100% of the coins they grade.
4. Is third party grading more beneficial to dealers or collectors?
I believe both dealers and collectors have benefitted from third party grading. Dealers can more easily sell coins to the collecting public and when collectors go to sell their coins, they are far more marketable than they were prior to third party grading. I would add that third party grading has probably benefitted PCGS and NGC more than either dealers or collectors, but NOT to their exclusion.
5. Are we better off with third party grading? or was it better before third party grading?
I believe we are much better off with third party grading, particularly if you are a knowledgeable collector who takes the time to learn how to grade and makes an effort to understand what grading standards PCGS and NGC use when they grade coins. Third party grading can and does assist collectors in putting together wonderful coin collections.
However, those who erroneously think that the name on the plastic is more important than the coin inside will invariable prevent themselves from purchasing many outstanding coins. Anyone who says I won’t buy PCGS graded coins or NGC coins for whatever reason has just prevented himself from acquiring a significant number of outstanding coins that are
available in the marketplace. My question is why punish yourself because they both make mistakes? Learn how to grade and don’t make the same mistakes!
In a recent thread one of our forum members stated: “NGC can't grade coins.” I asked this question in response: “Really? Can You?” Now it is fundamental: If you yourself can’t grade, how can you possibly know if someone else can grade? Here was the response: “I don't need to know how to grade coins. That is what the professional graders are for. That is why I only buy PCGS coins. They are the best coins!”
The above statement: “I don't need to know how to grade coins” is absolutely a recipe for disaster. It is a pathological refusal to utilize the minimum of human intelligence to be a successful coin collector. It suggests a frontal lobotomy, visual impairment and deafness so as to be incapable of using those senses to know what you’re buying. First you should at a minimum LOOK at what you’re going to buy. Second, many dealers and collectors will tell you whether a slabbed coin is a PQ coin for the grade, accurately graded or over-graded in relation to what is listed on the slab. Some will be brutally direct, some will be more circumspect, but virtually every dealer and collector will give you their 2 cents worth if asked.
If you enjoy collecting coins here’s a few simple rules that will help you to acquire a world class coin collection when buying any third party graded coins:
1. Learn how to grade so you can make your own independent assessment as to the quality of the coin.
2. Buy the coin not the plastic.
3. Avoid the slabbed coins that are over-graded mistakes and
4. Buy every mis-graded coin that you can afford that is under-graded, whether by PCGS or NGC.
My apologies for this long post, but in the past year that I’ve participated in this forum I’ve read thousands of words bashing the third party grading services, bashing their mistakes, complaining about the over-grades, the under-grades, the mis-attributions, that service X can’t grade and service Y is too lenient, and that all the third party grading services want is to screw us collectors. Often the many forum members who make excellent comments regarding both the positive and negative aspects of third party grading are drowned out by those few who argue that the only way to collect is to choose up sides in the grading service war. My purpose in this post is to suggest that we collectors will be better served by passing on the “war’ and using the both PCGS and NGC to help us acquire great coins.
We win when we use their services as another tool to assist our collecting efforts. We gain nothing by arguing that one is better than the other, and we certainly lose if we blindly refuse to use their knowledge and opinions to help us become more knowledgeable collectors.
Just my humble opinion for whatever it’s worth, (based on over 50 years of collecting everything from circulated Lincoln cents to proof $20 Gold).
“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
Newmismatist
When you can have the same coin cracked out and resubmitted several times and with 2 or 3 numerical points difference from the same service, that speaks volumes.
Graders with specialization in certain series would go a long way towards getting some consistency. Perhaps if not series specialization, a range of condition specialization would be an improvement. Taking a few seconds to grade numerous coins ranging from poor to MS-70 and an endless number of differing series would make consistency impossible.
When we are planning for posterity, we ought to remember that virtue is not hereditary.
Thomas Paine
One last thought, FOM is obviously jerking chains, poking fun at a certain collecting mentality and best to ignore him/here as they modus operandi is not funny and boring. Hopefully they will realize this and quit, but doubtful.
<< <i>Is Third Party Grading good for numismatics? >>
Just ask any newbie or veteran that has bought overgraded, cleaned and counterfit raw coins. Third party grading is not perfect, but it can be a safety net for those who can't grade.(and those who can grade)
definitely not. however they have helped out the casual coin buyer. a collector basically by def'n knows how to grade to his own standards, & simply does not need someone else to tell him how nice he should think a coin is.
the term "collector" gets confused w/ "coin buyer" all the time, the 2 terms are not interchangeable.
2. Has third party grading been beneficial to the hobby of coin collecting?
"third party grading" and "third party grading services" are NOT the same thing, so if your REALLY asking about plastic co's, the answer is still no, see my answer to #1. plastic is beneficial to the casual coin buyer, but definitely not a collector. the truth is that someone who can't grade should not be buying expensive coins. coin-collector-wannabes are the only 1's who benefit from plastic, and the ability to buy plastic does NOT a "coin collector" make.
3. Is third party grading just a clever marketing scheme and the collector is no better off than he (or she) was prior to third party grading?
yet again, "third party grading" is not the same as "plastic co.". no, i don't think a plastic co. is just a clever marketing scheme, becuase they do provide value w/ authentication. the benefits to the collector pretty much end there.
4. Is third party grading more beneficial to dealers or collectors?
neither, but plastic is definitely more beneficial to dealer-wannabe's. it makes it much easier for a dealer-wannabe to sell generic stuff on an unwitting public, because "gee, it's certified". again, real collectors reap very little benefit from plastic.
5. Are we better off with third party grading? or was it better before third party grading?
who's "we"? do you mean "collectors" or the casual coin buying public? collectors are definitely not better off, i'd say we're worse off because prices on common coins that years ago cost common prices are now at ridiculous, absurd levels. i was able to acquire far more coins 20 years ago than i can today. too many people now think they are "experts" because they can just buy the number printed on a plastic slab, so they are loose w/ their $$$. witness the stupidity w/ high-grade moderns, buffalo dollars, outrageous prices paid for "condition rarities", the completely moronic humongous premiums paid for an alleged 1-point difference in grade, the list goes on & on. if you think that "better off" means paying 10x today for coins as you did pre-slabs, i wish you would get a different hobby.
it's amazing how people can think pre-plastic was the "bad old days". look at prices YOU have to PAY for coins today! &, all the complaints how SOOOO many coins were whizzed back then, & SOOOO many altered coins were on the market, & SOOOO many of you got ripped off, & SOOOO many people lost their homes, cars, bank accounts wiped out, life-savings depleted, & on & on & on. c'mon gimme a break. the only fools who got ripped off back then by scam artists are the exact same fools who get ripped off by plastic. it's those collector-wannabe's who simply refuse to become the slightest bit knowledgeable about coins, & just jump in w/ fistfulls of $$$ to spend, & not a clue how to collect.
plastic really hasn't changed things all that much for collectors. but it sure has made some people rich, now, hasn't it.
K S
1. Learn how to grade so you can make your own independent assessment as to the quality of the coin.
2. Buy the coin not the plastic.
3. Avoid the slabbed coins that are over-graded mistakes and
4. Buy every mis-graded coin that you can afford that is under-graded, whether by PCGS or NGC.
I thought it was worth repeating.
and it sets us apart from practitioners and consultants. Gregor
Excellent post, as always. I read every word (some parts twice). I think my favorite line was "My question is why punish yourself because they both make mistakes? Learn how to grade and don’t make the same mistakes!"
Karl,
As always, you bring up some excellent points as well.
As someone who made the transition from newbie to average (but focused) collector over the last 18 months, I believe that the third party graders have had an overall neutral-slightly positive impact on me and my collection. At first, I purchased a number of coins sight-unseen with only the grade on the slab as a guide. I ended up buying several ugly coins, which may have been technically properly graded, but were low-end or otherwise undesirable. As I refined my grading skills and my interests, I can now pick out coins that have the look that I am seeking, and I will buy them, if I like them, regardless of the grade on the holder. I cannot distinguish with any consistency between, say AU-53 and AU-55, as an example. I avoid the area on the price curve where the price rises steeply based on a one grade difference. Life is good.
Thanks again for starting an excellent thread.
Canadians trust this company more than any other. You can't diss yet because they did not get graded in that whatever article they had awhile ago.
I have all the grading books back to the old Brown and Dunn. The Official ANA Grading Standards for US Coin Books with all the excellent photos is the most helpful to me. The standards are obviously as you identified them. I like to remember them as SSLE:
Surface preservation
Strike
Luster
Eye appeal.
These are well explained in Halperin's How to Grade US Coins.
What I don't understand is how PCGS, for example, makes the calls on the MS 60-70 gradations which are so crucial to sometimes giant price differentials. I have vainly tried to buy the old PCGS grading book which seems now to be out of print. I have often wondered why PCGS does not have a book that we who try to read the tea leaves could study and understand better how they do it. I have no objection to them doing it, mind you. Somebody who is well respected in the marketplace has to make the call. But, what are the real criteria to tell an MS 66 from 67? 62 from 63? 69 from 70?
I have put together grading sets of a few coins. My best is Lincoln cents, where I have a number of examples of what PCGS regards as MS60, 61, 62, 63, 64, 65, 66, 67, 68 and 69, at least in full red modern coins. I try at every show to look at as many comparables as I can to see how accurate my grading set really is. Digital photos with realistic color and an accompanying monograph would be a book I would gladly pay for.
Your thoughts? Also, where can I buy a copy of the out of print PCGS grading book?