As John is more experienced than I and into US coinage
I coppied his report from another forum and am pasting it here for all to read
I'm not completely unpacked yet, but I'll comment on the PCGS lunch discussion. Also present at our table for lunch were Rick Snow, Scott Travers, and James Sego, whose top
Ike dollar set was on display at the PCGS table, so I have to chuckle when Richard uses the word "master" in the same sentence as my name.
It was good to meet Richard and to get a view of what appears to be the uncomplicated innocence of darkside (specifically Australian in this case) collecting as compared to U.S.
The historical perspectives given by the panelists were interesting. It may have been a setup to show us the benefits of third party grading, but there were all valid points given as to things that were made (more or less) obsolete as a result -- grades like "Looks Unc," and "Commercial Unc.," the 5000 different grading systems that existed in the country (one per dealer), easy passing of counterfeits and alterations, etc. Julian Leidman talked about the old "30-30-30" guarantee regarding coin purchases in the old days
-- 30 seconds, 30 steps, or 30 percent. Also gone, however, are the days when you could cherrypick for quality since all uncirculated coins were considered more or less the same before .
The last panel question before the topic everyone wanted to hear was about what you'd change about third party grading. David Hall's comments were that he'd improve consistency and that he'd like to have there be only one third party grading service, "but not for the reason you'd think." The benefit to the collector of having only one grading service would be that the grading services wouldn't use shifting grading standards as leverage against each other, and it would help with consistency. He even mentioned that they had originally considered setting up PCGS as a non-profit, but that didn't happen for various reasons.
You could hear everyone's attention focusing back on the panel once it was apparent that the 100 point grading scale was going to be discussed. I had the biggest problem with Q. David Bowers response that he doesn't see a problem with using a different scale, where 70 becomes 100. It didn't seem like he really prepared an answer to the question or a good defense to his position, which he should have known everyone would have expected. (All questions were given to the panel ahead of time so they could prepare their
responses.) Sitting next to him was Scott Travers, who was clearly more prepared to answer. He polled the audience as Richard illustrated below, and then talked about how it didn't solve any of the problems that exist, and exacerbated the problem of consistency. He went as far as favoring a smaller scale with fewer quanta. Jim Halperin, who seemed the most technologically savvy of the panel, generally agreed that there were other things that could be done to improve third party grading, including a permanent image database of graded coins that could be used as a reference to improve consistency of grading. This was one of the premises of CompuGrade back in 1990, but is much more feasible today. Such a database could be accessed by anyone over the internet, not just by graders.
The answer everyone was waiting for came last, from David Hall. This was either for ceremonial reasons or so that he could decide which answer to give after seeing the response to Scott Travers' poll, but I'll give him the benefit of the doubt and say it was ceremonial. He finds the 70 point scale illogical, but that alone is not grounds to replace it with something else.
He said that with so many scales being 1 to 10, from sports cards to boys rating girls, 70 really didn't make much sense. He then asked if anyone knew where the 70 point scale came from, let everyone say or think it had to do with relative values as perceived by Sheldon, then said it was the average IQ of a coin dealer. It was pretty clear that he is currently much more concerned with the problem of consistency and the black eye that the perception of inconsistency is giving the third party grading industry than he is the scale that is used. He's also aware that changing the scale won't solve that problem, and it seems like only once that problem is solved would it be something he'd like to consider.
The Q&A period was rather short, partly because of long panelist responses, and partly because of a long audience question that nobody on the panel could understand. I had the opportunity to discuss my feelings about the issue with Scott Travers in the PCGS limo (big bus) on the way back to the show. A third party grade was meant to facilitate sight-unseen trading of a coin. It was therefore meant to communicate as much disinterested information as possible about the coin to a potential buyer. The problem is that when beauty is in the eye of the beholder, a single number doesn't do this effectively. I told him how I thought that a hierarchical grade would be a great improvement over what we're given today. You have a composite grade of, say, MS65, which comes from a split grade of MS65/65, which comes from a scorecard for luster, surface, eye-appeal, and strike. This should sound painfully familiar to anyone with an old ANACS certificate in their hand, and would give much more information to the consumer. There's room on the slabs for these scores if only they'd do away with stuff like big logos and bar codes that nobody uses. While many transactions are no longer sight-unseen, thanks to technological advances of imaging and electronic communications, they are still only "sight-somewhat-seen." You'd still have the single-number grade at the top level of the hierarchy to facilitate a "rough search" for what you want or for how much to pay, but the additional information would be available and probably improve liquidity.
In all, it was an interesting event, and I'd like to thank PCGS for the invitation and apologize for any misattributed or inaccurate quotes, since I'm going from memory on this.
John Baumgart
Posted 01/07/2006 1:44 pm
