Buy Coin In CAC Holder Or Not?

Here's my Two Cents on this.

CACG came onto a scene already dominated by two grading services (PCGS & NGC) with another that's a relatively decent alternative (ANACS...and one I've been very satisfied with for slabbing many coins). The CAC "green bean service" was one that sort of separated the chaff from the wheat and highlighted coins in a holder for being high-end for their grade.

I'm not sure what drove them to create their own grading service (as, in my personal opinion, I've come to find their "beaning" service to be of good value for the coin collecting community). Maybe a mix of showing up how the other services are slipping on their quality and maybe a little greed?

I've seen on some YouTube videos (and now backed up with some of what's said on this thread) that their grading services are brutally conservative. If I thought I had coins that were already in holders high-end for their grade or some decent raw stuff, I would consider them. I think a coin in their holder in a given grade would be worth at least a bit more than a coin in the same grade from another service because you can be pretty darn sure that coin will not be a liner grade for the next grade down (a just-made-it-for-the-grade coin). I would never send in anything toned to them as they're very likely to not agree it's natural toning nor a coin with any obvious hairlining.

Would I pay MS65 money for a CACG MS64? NO! Would I be a bit more willing to pay a strong price? Sure.

CACG is definitely creating a new market for crack-outs, though. Although, I've heard a lot of noise about how difficult it is to crack open their holders.

I would definitely be in the market to buy CACG coins if I was in the market for the coins to begin with.

One of the main reason CAC and CACG exist is the overtaking of the rare coin market by investors, namely, to create a new higher price point (premium) vs. NGC/PCGS, so that CAC member dealers will be able to turn higher profits, attract more investors, and establish market position.

Several things happened (not necessarily in strict order) - these are my opinions. You may disagree, and that's fine.

1. Albanese and DiSilvano co-found PCGS.

2. Albanese quits PCGS and founds NGC. DiSilvano cashes out for multiple times his original investment, goes into business with Manley, then later founds one of the first rare coin hedge funds.

3. ANACS loses its status as the official grading partner of the ANA / is bought out by Amos Press. The ANA forms a partnership with NGC and begins to heavily promote NGC.

4a. A nascent and rising ebay signs "official TPG status" agreements with ICG, PCGS, and NGC. The nearly-insolvent ANACS is not invited to the party. ebay soon becomes the top Internet destination for online coin sales, driving business to those TPG's and further crippling ANACS's market position. Dealers who sell on ebay - which is a lot of them - now need to send more raw coins to NGC/PCGS to achieve higher sell-throughs, better sale prices, and reduce the risk of returns / SNAD / counterfeits / etc.

4b. This "grading frenzy" soon takes over the market for currency, sports cards, sports memorabilia, comic books, and collectible card games, all of which soon have TPG's or begin to see rapid growth in the TPG's that already existed: SGC, BCGS, PSA, JSA for sports cards/memorabilia, CGC for comics, etc. Some of these services are started by, backed by, or acquired by coin grading TPG's.

5. CDN begins to track the price spread on TPG-certified coins vs. raw coins. This shows that NGC and PCGS-graded coins are already trading for premiums on CDN and other networks, a price increase driven almost entirely by large dealers who appreciate the benefits to sight-unseen swapping and trading that the TPG confers (basically, dealers have more faith that a coin is graded accurately if it's in a TPG holder, so they bid more for it because they have less risk.)

6. PCGS and NGC launch marketing campaigns emphasizing trust, authenticity, and reliability while also mentioning the value added by one of their holders and backing them up with buyback/regrade guarantees. The aim is more or less to encourage investors to buy their coins, to "scare" collectors by building a perceived need for their services, and to allow collectors a "safe" way to get their foot in the door without having to learn how to grade coins or study books.

7. PCGS and later NGC launch Coin Registry Sets, backing them up with awards and competitions, and this drives even more business their way both in new submissions and crossovers. ANACS settles into a "budget grader" niche and also benefits greatly from the expertise of John Roberts as Director of Attribution Services (NSDR/SSDC); this allows them to become one of the top Morgan dollar TPG's and also one of the top TPG's for VAM attribution.

8. Albanese and a select group of about 20 prominent rare coin dealers and numismatic professionals float the idea of a " TPG verification service" that would become CAC in 2007, with the aim of quantifying coins which are graded to CAC's stricter standards. In order to create a market for their new sticker service, and get investors and dealers on-board, CAC member dealers both CAC bean their own inventories and then begin buying millions of dollars of higher end NGC/PCGS coins based on being strong in the assigned grade or even undergraded; CAC beans are given out accordingly. The elevated price premiums being paid by member dealers as they trade among themselves is reported back down the pipeline through PNG, CDN, and other channels. CAC member dealers then buy CAC coins from each other at those same elevated price levels. The end result is that CAC quite literally buys their way to respectability and then inflates prices for CAC coins by buying their own CAC-approved coins at a premium. Other "sticker services" such as QA and MAC suffer accordingly. This also has the knock-on effect of slightly eroding confidence in PCGS/NGC's grading standards or how they are perceived, while ignoring or minimizing the fact that CAC is not infallible either.

9. Rare coin hedge funds become more widely available. Gold and silver coins are pitched as "hard money" safe investments, riding the coat-tails of goldbugs and silverbugs following the 2008 crash. These rare coin investment funds allow wealthy individuals who have no interest in numismatics and are not coin collectors to bring their wealth to bear on the rare coin market. Coin prices start rising around 2019, concomitant with surging silver and gold, as more and more high-end TPG coins are purchased by consortiums/funds, either by fund managers working for major financial institutions, or by fund managers working in conjunction with rare coin dealers, or both.

10. CAC is now widely recognized as a premium "addon" for a NGC or PCGS-graded coin. Having now established the notion that a CAC bean makes a coin more valuable, and having proven this by buying their own coins for a few years to ensure price increases, CAC decides to add a slabbing service - CACG - to their existing sticker service, to capitalize on both the reputation of the CAC brand, and to open up a large new revenue stream by regrading coins that were already in PCGS or NGC slabs. Once again, the market is hit with advertising which is designed to foster the notion that CACG is a "premium" option for collectors, dealers, and investors who want only high-quality coins that exceed the standards set forth by NGC/PCGS. Dealers, who have now convinced themselves and everyone else that adding a green sticker to a coin makes it inherently more valuable, find a ready market with deep-pocketed investors and rare coin funds that want to maximize profit and minimize risk/exposure, but have little or no interest in numismatics as a hobby, collecting coins, grading coins, or researching coin series.

CAC uses marketing tactics to continue to position CAC/CACG as an elite grading service by taking the stance that NGC/PCGS grading standards are not as strict as CAC's and that CACG coins are worth more money than coins in NGC/PCGS holders, using the scientifically sound methodology of "because we're the experts and we said so." This is to encourage non-collector investors to "buy the holder, not the coin" which should probably be CAC's mission statement.

BH1964, that's exactly the point I was trying to make - much of the perceived "extra value" of a CAC/CACG coin has been artificially created by CAC themselves via market manipulation strategies. This is not dissimilar to the marketing practices of pharmaceutical companies, who develop expensive new drugs to treat conditions, then inundate consumers with tons of "educational" advertisements designed to encourage those same consumers to seek medical treatment with the new drug; all the while, doctors are being financially incentivized (kickbacks and co-branding) by the same companies making the drugs so that they will prescribe and market them to their patients, even if there are existing effective yet more affordable prescription medicines that achieve the same results.

I advocate for trying to keep this hobby affordable and interesting to collectors with or without means. It does not sit right with me to watch as the "without means" group is seeing their position in the market being steadily eroded under the pressure of investors, hedge funds, or deep-pocketed collectors, and I am concerned that CACG just adds more fuel to the fire by encouraging collectors and dealers and investors alike to "buy the holder" and not perform due diligence or gain a numismatic education. I don't think it's ethical or fair to use scare tactics to try to gin up business by implying that PCGS/NGC/ANACS are not "strict graders" without any scientific foundation to underlay such bombastic claims.

Which is why

* ANA grading standards were created - so everybody was grading coins to the same standards

when that proved unworkable, that's why

* TPGs were created to grade consistently to ANA grading standards

when that proved unpopular because grading is believed to be subjective

* that is why TPGs moved to market grading

"Those who cannot remember the past are condemned to repeat it." George Santayana.

Don't forget the rampant grade inflation phase. I don't know where that fits into the formation of CAC. PCGS even went so far as to remove all their coin facts images because of the evidence displayed there. At least I think that's pretty well known. I can't recall when that happened.