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Does the fact that DGS sells the coins they grade...
Billet7
Posts: 4,923 ✭✭✭
(a Longacre add-on)
I think the whole idea of a TPG is that they will be unbias...if DGS is grading AND selling the coins, doesn't this nullify the basis for being unbias. I would never claim that this is the case, but what keeps DGS from overgrading and selling at inflated prices to the unsuspecting novice.
I am sure they are trying to be as strict as possible to build market credibility, but do you see the conflict that might arise through their grading-auction ties?
I think the whole idea of a TPG is that they will be unbias...if DGS is grading AND selling the coins, doesn't this nullify the basis for being unbias. I would never claim that this is the case, but what keeps DGS from overgrading and selling at inflated prices to the unsuspecting novice.
I am sure they are trying to be as strict as possible to build market credibility, but do you see the conflict that might arise through their grading-auction ties?
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-Paul
Every one I've dealt with there, from this year and going back 20+ years, has been nice and knowledgable. That's a combination not often found in coin-land.
What I'm saying is: Maybe if y'all put down the Kool-Aid and submitted some coins to DGS, they wouldn't have to do this to get their product visible to the market.
<< <i>Any coins sent to DGS by DLRC have a "D" in the serial number to make it as transparent as possible.
-Paul
<Really? Do you have an image of this?> >>
Example of DLRC Auction with DGS-graded coin for sale exhibiting 'D' in serial number.
<< <i>While I see the *potential* for a conflict of interest, the way I see it is: Where else can a market for a new TPG be made? Given the huge market bias toward PCGS (and to some degree, NGC), many other dealers would not want to market coins in other holders and perhaps no other entities would submit to this service.
What I'm saying is: Maybe if y'all put down the Kool-Aid and submitted some coins to DGS, they wouldn't have to do this to get their product visible to the market.
What would be my motivation for doing so?
<< <i>What would be my motivation for doing so?
See, that's my point -- most people have no reason to submit coins to a new TPG no matter how good they may be, and not many dealers will market the coins in their holders. So I think that explains why they grade their own coins -- who else will be the "guinea" pigs to put their coins in their holders and market the coins in those holders? No one else would, so they have to...
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
<< <i>
<< <i>While I see the *potential* for a conflict of interest, the way I see it is: Where else can a market for a new TPG be made? Given the huge market bias toward PCGS (and to some degree, NGC), many other dealers would not want to market coins in other holders and perhaps no other entities would submit to this service.
What I'm saying is: Maybe if y'all put down the Kool-Aid and submitted some coins to DGS, they wouldn't have to do this to get their product visible to the market.
What would be my motivation for doing so?
Your SAEs will tone better in those holders than in the PCGS ones?
I've been told I tolerate fools poorly...that may explain things if I have a problem with you. Current ebay items - Nothing at the moment
<< <i>Those that worry about a conflict of interest should realize that DLRC would destroy their DGS grading service if they started to overgrade their own coins. I don't think they became a successful coin company by being stupid. >>
Yup! I think that John is all too well aware that if DGS coins were overgraded junk, and that fi they weren't conservatively and accurately graded that it would not only become a debacle as far as the grading company goes, but it would also hurt DLRC which is a very respected company. I don't think that they can afford to blow this.
<< <i>Billet, what stops them is you! Screaming at them on this board. Some of their employees hang out here and they certainly don't want you (I mean us), blasting away at them.
Every one I've dealt with there, from this year and going back 20+ years, has been nice and knowledgable. That's a combination not often found in coin-land. >>
Whoa...who's screaming? I was making a logical argument (and not blaming anyone for doing anything wrong I might add.) I simply see the potential for a conflict of interest. I also understand that in the long-run, it is in the best interest of DGS to grade as accurately as possible. I hope they leap that big hurdle they have in front of them and become one of the most respected in the business...time will tell.
<< <i>
<< <i>Billet, what stops them is you! Screaming at them on this board. Some of their employees hang out here and they certainly don't want you (I mean us), blasting away at them.
Every one I've dealt with there, from this year and going back 20+ years, has been nice and knowledgable. That's a combination not often found in coin-land. >>
Whoa...who's screaming? I was making a logical argument (and not blaming anyone for doing anything wrong I might add.) I simply see the potential for a conflict of interest. I also understand that in the long-run, it is in the best interest of DGS to grade as accurately as possible. I hope they leap that big hurdle they have in front of them and become one of the most respected in the business...time will tell. >>
Billet---In regards to your claim of "the potential for a conflict of interest", would you agree that there is the same potential of a conflict of interest when David Hall sells PCGS slabbed coins?
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
<< <i>
<< <i>
<< <i>Billet, what stops them is you! Screaming at them on this board. Some of their employees hang out here and they certainly don't want you (I mean us), blasting away at them.
Every one I've dealt with there, from this year and going back 20+ years, has been nice and knowledgable. That's a combination not often found in coin-land. >>
Whoa...who's screaming? I was making a logical argument (and not blaming anyone for doing anything wrong I might add.) I simply see the potential for a conflict of interest. I also understand that in the long-run, it is in the best interest of DGS to grade as accurately as possible. I hope they leap that big hurdle they have in front of them and become one of the most respected in the business...time will tell. >>
Billet---In regards to your claim of "the potential for a conflict of interest", would you agree that there is the same potential of a conflict of interest when David Hall sells PCGS slabbed coins? >>
He probably never really looked. Drunk on Kool-aid.
I see the DGS operation as a convienent way for DLRC to slab material for their auctions without the timelag of submission thru some third party. Its simply may be an economy of scale. They are not competetion for a TPG like PCGS with its market share, expertise, reputation, and the Coin Facts Tool which in my view helps them breakout further in front of the pack. The TPG business is highly competetive - its like a tough marathon like Boston.
It might actually be easier to say what we're not...
We're NOT a major third party grading service and we aren't trying to be. DGS is the in-house grading service for DLRC (as you've pointed out) and we invite submissions from collectors, as well. Typically, we grade (in house) those coins that are circulated, or light clean mint state, etc that we feel PCGS and NGC don't give enough credence to. Or coins in which we see no advantage to PCGS or NGC holders.
For example, we believe that a gorgeous gem Morgan dollar with a cleaning "wipe" deserves respect, so we give it thus.
Or how about this coin... an amazing 1799 Bust Dollar Double Struck, that also has been cleaned and has minor damage. We recently graded this coin for a client who asked us to sell it in auction for him with a "guarantee", which we did.
In all cases, we apply the same very high standard. The same standard I learned from my father back in the 1970's which puts a high emphasis on surface quality, details, etc.
We would never expect that you would see hundreds (or even dozens!) of DGS coins at a show. The volume is for the big guys. We're simply providing an added service for our clients who are seeking an inexpensive grading/slabbing alternative.
Regarding the "conflict of issue" question of which I hear most often: What better way to resolve the conflict than to be completely transparent? We image ever coin that is DLRC-submitted -- no matter what the value -- to the Authentiview (image-based pop report). If we wanted to play games, it would be far easier to create another "owner" for DGS. That's of no interest to me. DGS is no get-rich-quick scheme on our part. It's merely a way to provide an affordable manner to buy/sell collector coins.
In the meantime, at DLRC we are one of the most active players in the entire coin market. We'll sell over $24 million this year alone of PCGS and NGC coins to collectors like you. Which also means we're buying that much in coins from dealers, auction houses and collectors like you. The DGS component is so small it's hardly worth mentioning. But I can assure you that the rare coin marketplace needs marketmakers like CAC, Heritage, Hall, DLRC, etc to establish levels for their coins.
I for one love the AuthentiView program. I think the big boys should adopt the same program. I guess I understand reluctance at adopting a program as such, since there is a potential for money making with photographic services. I feel like, with the increased problems asssociated with counterfeiting, a program like AuthentiView is going to need to become the standard. Coin imaging and magnetic strips are likely the TPG security of the future.
Regarding David Hall and his coin company (as per PerryHall) I can't say I ever gve it any thought. They have both been in the business longer than I have been collecting slabs. In my mind David Lawrence Rare Coins is the parent company, and DGS is the extension of the company....but David Hall Rare Coins is NOT the parent company of PCGS, the only thing related is the man David Hall.
Just my 2 cents.
<< <i>Regarding David Hall and his coin company (as per PerryHall) I can't say I ever gve it any thought. They have both been in the business longer than I have been collecting slabs. In my mind David Lawrence Rare Coins is the parent company, and DGS is the extension of the company....but David Hall Rare Coins is NOT the parent company of PCGS, the only thing related is the man David Hall. >>
Even that connection would be enough for a conflict of interest if the entities were directly engaged in business with each other.
But, as been said here repeatedly, DHRC does NOT "make" PCGS coins, and to my knowledge they don't crack them out or resubmit, either; they merely buy and sell existing PCGS-graded coins. There would be a legitimate conflict of interest if it were otherwise. But as long as everything between PCGS and DHRC is "arm's length" there is no significant conflict of interest, only the "appearance" of a conflict to those who don't realize that DHRC doesn't submit coins to PCGS.
Many thanks for your comments and participation, and double thanks for posting a link to that double-struck Bust dollar, which is incredibly neat!!
David Hall has maintained his reputation in the coin industry because he has not abused his role in his companies. (For the record, I don't know what his involvement is at DHRC, if any.) As consumers of PCGS coinage, you are trading largely on his good name and the reputation of PCGS. It's the same logic we use for all good business practices.
I believe conflicts of interest exist everywhere, in all industries. Whether or not you realize it. Especially the financial services industry as we've clearly seen in the last few days with revelations of the Fed and Goldman Sachs, etc, etc. I'd rather everyone own up to the conflicts and handle their business responsibly.
I didn't do hard number analysis here but i would say at least 90% of the DGS coins they are selling fall into this category.
FYI, DLRC does have permission of PCGS for them to use PCGS' price guide.Of course,DLRC inventory is heavy with PCGS graded coins.
The inventory images are great on DLRC's site.The collector could actually go to school here and learn about what a "lightly cleaned" coin,for example, really looks like in their series of interest.
Mr. Feigenbaum, if everyone did as you suggest there would be no conflict of interest; full disclosure is the only ethical way to transact business. I for one have enjoyed your explanation, and it makes sense to me. I personally like the fact PCGS will not holder coins they deemed below their standards, and I understand that many people still want to buy these so called “problem” coins. The service you have explained makes good business sense, and I will probably be doing business with you soon.
"Money does not care about speeches on morality. Capital asks whether the rules will remain the same tomorrow. With inflation, people assume price is the problem, and propose regulation—but price is simply the message." - Martin Armstrong
Garrow