EDITORIALS

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In the May 26 2003 edition of Coin World, the hobby newspaper announced that they had conducted an investigation of PCGS, NGC and ANACS, three of the leading grading services along with several other grading services. In this investigation, several coins were sent to each grading service. In no case did the grading services agree on the grade of any given coin, and in some cases the difference in grading was seven points off. In one case ACCGS had graded a coin as "cleaned" and several grades lower than PCGS which PCGS had not noted that it was "cleaned". It is standard in U.S. numismatics to grade coins on a point-scale from 1 (poor) to 70 (perfect).

In 1990 the FTC (Federal Trade Commission), which oversees business ethics and fraud, filed a civil action against PCGS alleging exaggerated advertising claims. PCGS did not admit wrongdoing, but agreed to submit its advertising for review for a period of five years. In a filing in Federal district court in Washington, the company agreed to include a statement in its newspaper and television advertising affirming that certification by P.C.G.S. does not guarantee protection.

Jeffrey Hall
Dallas, Texas

 


A couple of collector friends of mine have fallen into the common trap of thinking that a scan or pictures of a coin can capture the true color and texture of coins. They both bought some on eBay last month, even though the sellers offered no return privilege and stated "what you see in the scan is what you get". This is often NOT the case, and I know from about a dozen bad experiences of my own. The coins we bought were either darker, pitted or more porous than the scans indicated. I would like to caution all coin collectors when making purchase decisions based on viewing scans of coins. My experience, and the experience of many other buyers I know, has been that scans are often easily manipulated in terms of brightness, shade, tone, etc to artificially enhance the appearance of a prospective purchase. A 5 to 15 day return privilege should be the only criteria that we should rely on, not a "scan" of the coin. Some dealers also offer a lifetime guarantee of authenticity, which is also great for those of us who don't want to collect a bunch of bulky slabs.

Greg Winters
Detroit, Michigan

 

 

Grading Services 

I have to agree with many of the editorials concerning the lack of credibility the expensive grading services have. 

In the May 26, 2003 issue of Coin World, their editorial staff reports on an investigation that they conducted with the most popular grading services. This was an elaborate scientific blind test in which the same 15 coins were submitted to all eight of the major grading services, including PCGS, ANACS and NGC during 2002 and 2003.  Eleven months were required to complete the test as each coin was sent to each of the eight services.  No single coin was graded the same by all eight services.  One coin which should have been the easiest to grade, a 1943 Walking Liberty Half Dollar, garnered grades ranging from AU 58 to MS 65 and many other grades in-between, a seven-point spread !!   In one case PCGS graded a 1901-O dollar as MS 61 that PCI a less popular and less expensive service, graded as AU 58.  Effectively, PCGS was therefore claiming the coin to be worth twice as much as one of its competitors, based on its final grade value.    In another case, PCGS graded a 1893-CC $5 Liberty as XF 45, where ACG graded the same coin as VF 35 and SEGS stated that the coin had been cleaned.  PCGS and ANACS graded it without noting that it had ever been cleaned.  In yet another case, ANACS and PCGS graded an 1853 Gold Dollar as AU 55 whereas ACG would not give it a grade, noting that it had been "cleaned, surfaces brushed".  Either PCGS obviously cannot tell sometimes when a coin has been cleaned or not, or they are showing favoritism, or they just don't mention it because they would rather collect the grading fees.  Further evidence of all of this was brought to bear a couple of years ago when they graded the Brother Jonathan shipwrecked coins, most of which had been cleaned.  Although PCGS and other services claim that they do not know who owns coins that are submitted, this cannot be true in many cases concerning coins of great rarity and significant collections or hoards.   In many cases such as the Brother Jonathan find, they knew who owned the coins.  To many dealers and collectors we've spoken with, the grading on many of the ANACS, NGC, PCGS and other services appear inconsistent when compared side by side at various shows.  For this reason and more, we should all encourage collectors to learn to grade for themselves, and not spend needless time and money on expensive grading services, which are losing their credibility.

 

David Ambrey,

Wichita, Kansas 

The grading services are expensive and costly in more ways than one.  I will no longer spend the time and money to have coins slabbed. According to the Coin Dealer's Newsletter, (June 21, 2002 and other issues) most slabbed coins are selling for only 80% or less than unslabbed coins, as many dealers and investors are losing faith in the grading services. According to an article on grading posted on the newsgroup at the PCGS site: "Kevin Foley sent 10 different coins to four different professional grading services. Not a single coin did the four services agree on the grade, and for one coin, a 1919 Standing Liberty quarter, professional opinions ranged all the way from AU-55 to MS-65". Most investors I've talked to about this are not surprised, they all have similar horror stories. Seems like the so-called unbiased grading services are a lot more biased than they think they are. The best way for people to buy coins is to learn to grade for themselves, and take advantage of return privileges if they don't agree on a grade. Otherwise, they are eating into their own investments by paying for high-priced grading services that actually make the coins worth LESS than what they would be if the coins remained unslabbed.

-Dr. James LaCour
New York City, NY

Grading coins by value, not condition:

  Price should be the determining factor more than grade, because grading differs so widely not only from collector to collector and dealer to dealer, but even from all the Grading Services to Grading Services.    William C. Noyes,  a lifelong numismatist and author of  the scholarly "United States Large Cents",  perhaps puts it best in his book when he writes:  "You never have to agree on grade (underlining is his) with the seller - I rarely even discuss grading when buying coins - but only on price.   If I call it F-12 and want $100, and you call it VF-20 and are willing to pay $100, nothing else matters.  I may think you are crazy, and you may think I am, but the fact remains we agreed the coin "GRADED" $100. "
    In other words, if the price is compatible with the grade or eye-appeal of the coin and the price represents a fair value for the coin, that is all that matters.  Getting into debates about who graded what and why or who is the "final authority" of the grade and quality of a coin is really getting in the way of enjoying what coin collecting and investing is all about.  What matters is what YOU think the coin is worth and valued.  You might think that it matters what other dealers say as well, but you will find that probably 9 out of 10 of these dealers will all have different viewpoints and assign different values to the coin, no matter what the "Greysheet",  "Redbook" or even the more accurate "Value Guide of U.S. Coins" publishes.   These are good guides, but these are only guides.  Value is determined by much more than just grade and published prices because every dealer's inventories and demands are different.   If a dealer is overstocked in certain coins, they may tend to subconsciously downgrade coins.  Whereas if a particular coin is very much needed, and the dealer has ten people waiting for it, the dealer's subconscious evaluation of  the same coin in different times and circumstances, might be very much higher.  These complicated factors are coupled with the even more complicated factors of how important each individual measures the number of bagmarks, size of bagmarks, location of bagmarks, spots, toning, etc., along with their evaluations of how well the coin is struck, how nice the luster is and how attractive the color is in their opinion.    Some individuals may prefer light toning, medium toning, heavier toning or no toning at all.   For example, some collectors I know prefer Brown Indian Cents because they know the "Red" will not "stay put" naturally, and over the years, all early copper coins eventually turn shades of brown, so they don't want to pay an extra premium for red coins, but will pay more than usual for brown coins just to save money form the higher priced "Red" coins.  
    And any group of three coins, that grade, say MS 65 and have the same frosty original mint blast, will not all have the same overall quality of appearance.  Although the luster and bagmarks may be NEAR the same, no two coins have the same number of bagmarks in exactly the same place and size.   So even if they are "near" the same in appearance, the three most likely will vary in terms of strike or sharpness.  Thus, grading by value and grading by price is all the more important, because even if you think a roll of 20 coins are all MS 65, they will vary slightly in location and size of bagmarks, and even strike, from coin to coin. 

Donald Regan,
Chicago, Illinois
February 14, 2004

 

When the very rare Adams 1804 Draped Bust $1 coin was sold in 1993 the coin was in a PCGS Proof 45 holder. In 1997, NGC graded and encapsulated the same coin as Proof 50, in 1998 the same coin was graded by PCGS as a Proof 58. Stack’s auction house in New York sold it in 1989 for $242,000. Then Heritage sold the coin in 1993 for $485,000. The coin then graded PCGS 45. In 1998 the coin was in a PCGS proof 58 holder. In just four years (1993 through 1998) this coin increases from a grade of proof 45 at $485,000 to a grade of proof 58 in excess of $800,000. This what they call “gradeflation”, and I believe all the grading services practice some form of assigning grades, based upon price. In other words, the real difference between a 45 and a 58 graded coin is NOT that one is better than the other, but that you paid more for the 58 in 99.99% of the cases.  The lesson here is that people should learn how to grade coins for themselves, and stop relying on the expensive grading services that charge high prices for their inability to decide for themselves what the true grade of a given coin is.

D.G. Sleina

 

 

Beware of Ebay

I was recently suspended from eBay after I filed a complaint against eBay because one of the bidders posted "negatives" from several accounts because "he didn't get the coins". I told him I would file an insurance claim and sent him scans of the insurance receipt.  Instead of being patient and understanding, he drew the worse possible negative conclusions and posted 6 negative feedbacks even though I had well over 300 positive feedbacks.  It was later revealed that his secretary had forgotten that she received my package and she had thus been holding my package for 30 days.  Both of us contacted eBay, and the negative-poster stated that he would be willing to withdraw the negatives but eBay's response was, paraphrased:   "We do not retract negatives except under extreme circumstances. Bidders will take into account all of your 300+ positives, and the 6 negatives would thus be of minimal consequence."  Neither we nor our attorneys understand the logic of this, since undeserved negatives are still undeserved negatives.  We have refused to pay them and we are suing them for defamation of character and loss of business as my sales went down after the erroneous negatives were posted. We have heard too many similar horror stories with eBay and refuse to deal with them except through the civil courts. If anyone has had similar such nightmares with eBay, please do not hesitate to e-mail your editorials to the ACC/BHCC

David Johnson
Los Angeles, CA

 

I read with interest the editorial by David Johnson.  I am not a dealer, but I have seen many abuses of the so-called rating system on eBay.  I overheard two dealers at the Florida United Numismatist coin show talking about exchanging positive feedbacks based on them exchanging incomplete transactions.  When I confronted one of the dealers and told him that I overheard his conversations, his response was that "a lot of dealers are exchanging positive feedbacks to boost their ratings."  He said this was done by dealers from different states bidding on each other's coins for low-ticket items that only cost a buck or two, this way, the dealers are able to buy positive feedbacks from each other and it doesn't cost them much at all to build up a good reputation.  I don't think this is ethical, and it no doubt goes against eBay terms of service, but hundreds of dealers are getting away with it and there's nothing anyone can do to adequately enforce it.  I think from now on I will stick to my old mail-order dealers.  At least they have decent websites that clearly post their terms of sale and their return privileges.  I and most of the members of my coin investment club have found that about 90% of the dealers over-grade and/or falsify their coin photo scans on eBay, and most of them don't have a return privilege or only allow you less than a week to return a coin.


Craig Austin,
Miami, Florida

 

I've been a serious collector for twenty years and enjoy buying coins through the mail for the same reason many other collectors and investors do, I can't find the coins I need, even in big cities such as Miami and Orlando and local dealers often won't give me the time of day even though I spend thousands of dollars on my collection. I began buying coins on eBay a few years ago, and have bought from about 25 eBay sellers who I thought I could trust because they had either perfect or almost perfect high ratings. In 24 of these cases, I either did not get the coins or had to return them because they were vastly over-graded, even from sellers with high ratings. The few coins that were delivered didn't match the pictures posted on eBay. Some of the sellers took months to deliver and were very unprofessional and rude. I no longer can trust the eBay rating system. I had written to eBay time and time again and nothing got done from their end. Obviously, there are a lot of amateurs selling on eBay, and even more amateurs buying on eBay, based on the high ratings that many of these con men are getting. More recently, I've been fortunate enough to find some professional mail order dealers who have nice websites and decent inventory. I have had very good experience with two, one in Boston and one in Los Angeles. These guys have been around a while and know how to grade and get my coins to me in two weeks. This is in sharp contrast to most eBay dealers who consistently overgrade and take three months or never at all. I've learned a hard lesson: Anybody and everybody can post coins on eBay, regardless of their criminal background.


George O'Reilly
Miami, Florida