TPGs solved some problems that were pervasive in the US coin market in the 1980s. They have caused other problems in the meantime.
The problem that TPGs assisted with the most is resolving the perennial dispute about a coin's condition: in haggling over a deal, buyers would undergrade, sellers would overgrade. The
TPG provides a neutral third-person opinion of the grade and if both parties agree to the trustworthiness of the
TPG, then this removes or at least greatly reduces the wiggle room buyer and seller can haggle around.
One of the key aims behind the concept of
TPG slabbing was to aid in the commoditization of coins - allowing people to buy and sell coins sight unseen, even in bulk, as if they were barrels of oil or stock market shares. The theory was, if a
TPG graded a coin "EF-45", you'd be able to derive in your head a reasonably accurate picture of what the coin looked like, without actually needing to see a picture. This was important when buying from mail-order dealerships in the pre-Internet era, when printed sale catalogues contained few or no pictures; the TPGs wer supposed to reduce to near-zero the amount of returned coins from unhappy customers. In this respect, TPGs failed - because as we all know, not all EF-45 coins look alike - some are beautiful (for which we'd happily pay a premium), others are ugly (which we'd only buy at a discount) - and not everybody's definitions of "beautiful" and "ugly" are identical. Very few people today would advise buying a coin totally sight-unseen, based solely on the
TPG grade.
Authentication is often touted as a big advantage for slabbed coins, and when you're the one submitting the coins yourself, it's great peace of mind. However, when buying slabbed coins, it is not a perfect shield - fake coins still get slabbed in genuine slabs, and plenty of fake coins get slabbed in fake slabs - a criminal organization capable of making a passably realistic fake piece of metal, would have no trouble making a passably realistic fake piece of plastic. Fake coins in slabs, both fake slabs and real slabs, have long been a much bigger problem than the TPGs have ever admitted to. Which in turn led to a false sense of security. I recall seeing a discussion over on the PCGS forum many years ago; someone posted an obviously fake coin in a fake slab, but everyone was saying "but it's slabbed, it can't possibly be fake". Wariness over fake slabs then leads to the requirement that a collector needs to learn how to tell fake slabs from genuine slabs - and if I'm going to go to the trouble of learning fake things from real things, I'd rather learn it about the coins themselves, than pieces of plastic.I notice the TPGs seem to be walking back their authenticity guarantees for certain coin series - the fake-masters are just too good sometimes.
Finally, there's the matter of preservation. Slabs are pretty good at preventing the environment from affecting your coins, and good at absorbing damage during shipping that might otherwise have damaged a coin - but they're not bulletproof - nor are they airtight and moisture-proof. Meanwhile, the un-openable slab places a physical barrier between the collector and their coins. Slabs are also quite bulky, compared to most other coin storage systems - so one of the few advantages of coin collecting over other collectable hobbies - the need for minimal storage space - is somewhat negated.
This then leads us to the new problems that the saturation of TPGs has created. The following list is just a few of the "problems with TPGs" I have observed.
- "Condition rarity" - the phenomenon of paying ridiculous prices for common coins, just because those coins were in a "rare" grade.
- The related phenomenon where a tiny increase in grade can result in a massive increase in price - which in turn leads to the "crackout game" of constantly re-submitting coins for that small chance of a grade bump. Which in turn leads to unreliability of the population reports.
- The imposition of gradeflated US grading standards onto non-US coin series. This was a major argument many local coin dealers took against TPGs a couple of decades ago here in Australia. A coin graded as "EF40" by an American
TPG simply isn't "EF" by Australian grading standards - it'd be lucky to make VF. This in turn means either abandoning the local standard in favour of the American one, or the necessity of teaching two similar but non-compatible grading standards: "Yes, the slab says it's EF, but for local pricing, you need to look up the VF price".
- Competitive Lowballing - where people deliberately try to wear down a coin to try to attain the elusive "P-1" grade. Deliberately degrading a coin to make it more sought after (and profitable) is the antithesis of what coin collectors should be doing to their coins.
- Rather than seeing a premium for slabbed coins, when slabbed coins become "normalized", non-slabbed coins are given a steep discount and/or treated with suspicion. "If it's a problem-free coin, why isn't it slabbed yet?". Which in effect punishes people for not keeping up with the latest in slab fashion, or spending money in slabbifying their collection.
- Registry sets. I'm not entirely sure that coin collecting as a whole, benefits from being turned into a competitive sport.
- The canonization of falsehoods. If a
TPG says a coin is of a certain mintmark, variety or finish, then it must be so - even if other experts disagree as to the
TPG's assertion. I recall some discussion about certain non-existent Australian predecimal proof coins, which the TPGs have graded examples as "proof". There are catalogues that now list the existence of those proof coins - even though none were actually made - all on the say-so of a
TPG.
- The encouragement of numismatic laziness. The first edition of the Coin Collectors Survival Manual (1984) had good, solid advice for newbies about grading: learn to grade. Don't trust anybody's word for it, look at the coin yourself. The current edition of the Coin Collectors Survival Manual tells newbies not to bother learning about grading yourself, you won't be able to do it properly, so just trust the TPGs, for they can do no wrong. But the only thing keeping the TPGs in check is a sceptical, educated collector base that can tell when a
TPG is wrong, and that can't happen once TPGs become a cult.
- Shipping. Coins might get delayed, lost in transit, or damaged. This is exacerbated by collectors in non-North-American countries, where shipping rare coins can be slow, expensive, bureaucratic and risky.
Don't say "infinitely" when you mean "very"; otherwise, you'll have no word left when you want to talk about something really infinite. - C. S. Lewis
Posted 09/16/2023 10:21 am
