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 Replies: 30 / Views: 3,474 |
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Pillar of the Community
United States
3486 Posts |
Oi Vey, what a day it has been!
It all started out innocently enough:
Jaymon74 asks a question about the New York Mint.
He gets a bunch of great answers.
THEN I took a closer look at his photo.
"Perfection for your collection" see page 5.
Well, I just had to take a break.
I spent the rest of the day answering REAL coin collecting questions.
WARNING, a small rant is coming ...
IF I WERE THE DIRECTOR OF THE MINT,
I would hire a group of graders. Their sole job would be to grade the current run of the Mint.
And their instructions would be, simply:
Separate them into MS-68, 69 and 70.
I would then price them as follows:
MS-68 at twice spot.
MS-69 at four times spot.
And MS-70 at TEN times spot.
I would then have them entombed in plastic, with a flag and presidents and whatever.
Bypass the third party graders.
Make a hefty profit.
And get to work on another dozen designs!
THAT'S how you make a profit!
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Bedrock of the Community
13014 Posts |
Thats not a terrible idea. However that is a lot of extra work for the mint which has a hard enough time keeping up with demand. That also would drive the price of 70s down as more people would just order those and most of the 68s would just have to be melted down again. Id suspect thered be a lot of unhappy collectors with the delays that would cause and theyve had enough QC issues lately without those added steps
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Pillar of the Community
United States
1080 Posts |
Wouldn't change anything regarding the TPGs. They would put CAC-style stickers on everything and they would repackage stuff after collectors bust them out of the OGP for various reasons.
Just my 2 cents.
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Moderator
 United States
23522 Posts |
Like.
Obviously this would be only for Proofs, plus a random selection of Business Strikes destined for sale to the collecting public. You don't have to grade the whole run, just enough to tilt the cost/benefit balance in your favor to whatever degree you wished. They could trade on the cachet of being The U.S. Mint, and achieve instant credibility as a result. Heck, you could sell them above market for grade just for their provenance.
Grading would be easy - hire a few handlers with appropriate training to place grids of coins on a portable velvet stage. Proofs, at least, have to get individually handled straight off the press, and you could have a handler stationed randomly at Business Strike presses for a sampling. Move that stage under an appropriate camera projecting onto a 24"+ LCD at a magnification that will fill the screen with the coin, and I tell you plainly that at $3 per coin I would live comfortably indeed on the income from grading them. Obviously, you'd need quality grading, but with that kind of display and a reasonably sharp grader, that wouldn't be difficult.
Then, sit back and watch PCGS/NGC gnash their teeth. Sweet.
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Bedrock of the Community
13014 Posts |
Lets also not forget they are a government organization. Theyd either completely over complicate it to lose money on it or would subcontract it out to PCGS/NGC
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Pillar of the Community
United States
1374 Posts |
I would be hesitant, because then the Mint would be more interested in keeping the quality of the strikes down. Theoretically, their goal is to produce the highest quality coins possible. If they are able to make a large premium on MS70s or PR70s, then it would be in their interest to keep the occurrence of those coins down. If the ratio of 70s to 69s and 68s is too low, then coins graded 70 will not command a premium. In this case, if the Mint realized they produced too many 70s, they would have to destroy them to create a shortage until their price point is met. Or use their subjectivity to call them 69s... which would make it all pointless and require TPGs to sort it out.
Opens a whole can of worms, in my opinion.
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Moderator
United States
188440 Posts |
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Heck, you could sell them above market for grade just for their provenance. Yes!  Quote:
Lets also not forget they are a government organization The only government organization that is self funding. I say, with the right team, they could do this and do it well, but... Quote:
... would subcontract it out to PCGS/NGC This is the real threat. Subcontracting would negate every benefit. |
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Pillar of the Community
United States
531 Posts |
Probably a good idea to have an established (read credible) TPG assign the grade but, unfortunately they would probably bid it out and end up with ANACS or worse. |
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Bedrock of the Community
13014 Posts |
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Theoretically, their goal is to produce the highest quality coins possible. If they are able to make a large premium on MS70s or PR70s, then it would be in their interest to keep the occurrence of those coins down. Thats a great point. They should be striving to make as many 70s as possible. Big conflict of interest if they self grade and sell on a sliding scale Quote:
The only government organization that is self funding. I say, with the right team, they could do this and do it well, but... It is self funding for now, the added expense of grading and slabbing could change that or at least eat into the profit margin. The staffing for that would have to be substantial with the massive influx they would get from each run of a new series. Plus you would probably have to set up an operation at each mint so you would have different standards for the different mints I also cant help but think that someone would try and sue them knowing the government has deep pockets for something as well. But I agree the subcontracting would take away any potential gain and probably even end up costing them money Edited by basebal21
09/25/2012 9:26 pm
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Moderator
United States
23522 Posts |
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It is self funding for now, the added expense of grading and slabbing could change that or at least eat into the profit margin. The staffing for that would have to be substantial with the massive influx they would get from each run of a new series. Plus you would probably have to set up an operation at each mint so you would have different standards for the different mints The expense of grading would be compensated by the huge additional return. It's known that MS70/PR70 is no longer difficult for the Mint; any study of populations of newer issues will confirm that. Yet, the 70's still trade at a substantial premium. You wouldn't have to - nor would you want to - produce these slabs in huge numbers. A few thousand per issue would suffice. I'm thinking (pessimistically) that a truly appropriate grading time per coin (using the equipment I mentioned above) would generate close to 500 coins per shift, almost 2,000 per work week. Heck, I'd do that for $1 per coin.  With that in mind, one grader could generate enough slabs during the production run to have them ready for the release date. So (again pessimistically) we'll estimate that half the graded coins will qualify as 70's. Known pops of almost every recent issue exceed that percentage, and no, I don't think many submitters are cherrypicking - they're submitting untouched boxes. Per the usual pessimism, let's say those 70's go for $40 each. I see better than that at Heritage every day. So, if I, the grader, do a 10k run for the issue, there will be 5k "70" coins generating a total of $200k on their own. At $1 per coin, $10k of that gross will come to me. I'll figure 3 additional "handlers" for each grader - one to bring from the press, one to bring from me, and one to run the slabbing machine. Each of those handlers will cost (total cost - salary + employer commitment for taxes etc.), say, $25/hr or $1000/wk. That means $15k over the 5-week run to grade the coins. Mind you, I'm completely ignoring any revenue generated by anything that isn't a 70. After paying me and my handlers, the Mint has just moved $200k worth of coins for a net after labor of $175,000. Think it costs them $1 to mint a $1 face coin? I don't, but we'll call it that. Think it'll cost them $1 to slab a coin? I don't, but we'll call it that. That's another $20k off the gross. So, the Mint just moved $200k worth of coins for a net profit of $155,000. Consider this a hint, like any other business, of just how lucrative "removing the middleman" can be. |
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Bedrock of the Community
13014 Posts |
Theoretically that would work, but its the government nothing happens for a dollar. This is the same government thats spends 16 dollars a muffin for meetings and grossly over pays for everything because it has to be done through contracts. Even if they hire the graders themselves youre looking at a 60-100+K salary for every grader. And of course there would have to be someone in charge of the grading as well well as do this at every mint. The amount they will work will also be standard government work weeks. Either production will have to decrease significantly or they will have to have a massive staff to stay on schedule. Much like the last ASE set its also not out of the question that they will just take mint to order for grades as well. The conflict of interest will either be that theyll have a financial incentive to either keep the 70s low, or theyll get lose with a 70 grade if they take them to order and start realizing thats what everyone wants. While massive orders of slabs should cost a dollar, they wont. Again its the federal government not once have they ever made anything more efficient or more cost effective. Slabs will probably be more like 10 dollars each if not more when the bids for them come through since its not like theres a glut of companies that could provide them. Then theres also the issue of different grading standards at different mints that will be bound to happen with their separate staffs unless they plan to move every coin to 1 location first significantly increasing transportation costs. The only way theyd approach a 1 dollar per coin grading fee would be by subcontracting it out, even then it probably wouldnt be that low, and then again youre left with just the TPGs again only grading gets done faster and who ever wins the contract may not even be that respectable of one since it would have to be open to everyone and go to the lowest bidder. In the end while it sounds good in theory, implementing it would produce far different results than most people would think. The mint is profitable but theyre still subject to government rules. You would also hope that if they were going to do it theyd get the best graders they can which will cost a lot of money to get them to leave the TPGs, otherwise you just end up with a bunch of grades that mean nothing anyway if they just hire who ever will take what theyre offering. Personally I think its better they stay out of grading and avoid the conflicts of interest, I've also never once seen anything be better run or improve cost effectiveness by having the feds take it over. It always means more red tape and a lot of wasted money |
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Pillar of the Community
United States
1227 Posts |
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Again its the federal government not once have they ever made anything more efficient Ahem. I feel the need to note that the federal government is responsible for the implementation of the interstate highway system and the construction of the first freeways, and that without a freeway system my city would literally be a hair's width from completely unnavigable (as would LA--ask any of my friends who live there to try and get around without their freeway system and I think you might actually be able to make them cry). Anyway, carry on. I just felt the need to point this out. Moving on, I think this could be a great idea, but we can take it one step further, and in a manner that will remove the concerns about driving down the number of PF- and MS-70 coins: only grade the first part of a run. Let me explain: let's say the Mint makes one million proofs of the 2013 Sac (just go with me, I'm bad at math so we're using nice, round numbers I can easily understand), and that of these, a grand total of 100k are PF-70. That's 100k across the whole run--not 100k right off the bat. Your handlers/graders are handed a palletful of coins to grade--say 20k coins on the pallet--and that's all they grade for PF Sacs. Of those 20k, 2k are PF-70. The Mint can now sell these as "a limited, guaranteed-authentic PF-70, graded and mounted by the Mint's own specialists" because, as I think it was jbuck who noted above (sorry if I got that attribution wrong), people will pay the premium just because it's the Mint. I'm not a slab type of girl, but if I was, I would put more weight on a Mint slab just because I know there is absolutely no chance whatsoever that a very clever, very well-done fake slipped past. As we discussed all over CCF last month, this is becoming an increasing concern, and while it might not be a problem immediately right now this minute, it is something to consider (and I used to be a PR director--this is exactly the kind of thing I would use to promote my product, if I were promoting this hypothetical product). Now that we have our 20k graded, what happens to the other 980 000 coins in the run? Easy--they get sent out unslabbed, ungraded, just like they do now. They might grade PF-70 when submitted to PGCS. They might not. Either way, it's a tossup--and having the "guarantee" from the small part of the print run, over the "maybe, maybe not" from the rest, would be enough for it to sell out FAST--and then folks would just have to take their chances. As for who should do it, I nominate CCF  Government pay is good and so are their benefits, and I'd trust y'all's grading over the "collectors" who come into my store any day (I have one genius repeatedly trying to tell me that buff nickels that are all beaten up and partially dateless are worth more than buff nickels in gem UNC). |
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Bedrock of the Community
13014 Posts |
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I feel the need to note that the federal government is responsible for the implementation of the interstate highway system and the construction of the first freeways They did make them and they are the perfect example of a federal government project. They were made out of national security concerns and are a great idea, but in most of the country they are woefully inadequate for the amount of traffic. The southwest and Cali has been pretty good about having them expanded but thats about it. 66 the main highway in and out of DC is 2 lanes and traffic is absolutely miserable. Not to mention every single high way project in the country runs over time and over budget. Quote:
only grade the first part of a run. Thats one solution, but the problem is the fewer coins they grade the less financial gain their is. The start up costs will be the same is they grade 1 coin or 100 million coins, limiting the amount will just increase the per coin costs. Plus is you have most of the coins still going to TPGs it defeats the purpose as people will still prefer those as they will still be the top dogs. For it to really be worth it theyd need to make every coin available to be graded which will cause substantial delays. Think back earlier in the year when they released 7 silver products in 10 days. The backlog from that would have caused significant delays in those products and been such they would have never caught back up without pushing products back or stopping production for a while. TPGs if they get back logged can suspend submissions or expand with little to no effort. Expansion for the mint would mean more full time government employees thats cant be fired or subcontracting to PCGS/NGC ect until they catch up. Either way it either eats into profits or defeats the purpose. Quote:
I'm not a slab type of girl, but if I was, I would put more weight on a Mint slab just because I know there is absolutely no chance whatsoever that a very clever, very well-done fake slipped past. Fakes do from time to time get past the TPGs and obviously if you make the coin yourself you know its real, but those arent the problem. The real problem is the fake slabs being made that just fake the entire thing eliminating the need to try and slip anything past the TPGs. The fake slab problem will apply to the mint as well. Once they get their hands on a real mint slab theyll get to work making fakes of those and it will only be a matter of time before the same issues the TPGs face the mint faces as well. The only difference will be the mint wont buy back fake products, and if they did it would once again eat into there profits if they are even making one at that point with all the other costs. It sounds good in theory but the actual implementation will produce far different results than the theory would suggest. A lot of things sound good in theory but dont work from a practical standpoint. The Mints better off staying out of it and just producing the best products they possibly can and letting others sort out the grades letting the free market decide who does the best job. |
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Pillar of the Community
United States
1227 Posts |
Basebal, when the system was implemented it was perfectly adequate. I don't think anyone in the 60s anticipated the level of rapid urban sprawl or the huge upsurge in traffic, and unfortunately, the resources are no longer with us thanks to years of overspending on defense, pork, and fat-cat tax cuts. I personally think we should restart the WPA to upgrade the system, but that's just me.
As for faking Mint slabs, it seems to me there would also be ways around that. It astonishes me that in an age where we can digitally carve a coin, none of the TPGs seem to have thought of a comprehensive database of issue numbers (or even, as much as I despise these stupid things--QR codes). There ought to be some kind of electronic footprint in the slab that can't be mimicked. I'm fully aware this would be a problem for slabs that predate the program, but since the Mint would be starting this right up now, they could get a jump on the process by having the database from the word go. You can't fake a slab with a unique footprint unless you can also hack the Mint website, insert your fake footprints, create the barcodes necessary to make the footprints . . . etc. and so on.
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Moderator
United States
188440 Posts |
Just a gentle reminder... Numismatics, good. Politics, bad.  Quote:
Consider this a hint, like any other business, of just how lucrative "removing the middleman" can be. |
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Bedrock of the Community
13014 Posts |
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Basebal, when the system was implemented it was perfectly adequate. Very true, but I dont see how mint grading would be any different. They seem to release more and more products every year (aka the glut of S products this year) so without a lot of money invested into it it wont be long until they have to many coins to grade and not enough man power. Quote:
You can't fake a slab with a unique footprint unless you can also hack the Mint website, insert your fake footprints, create the barcodes necessary to make the footprints . . . etc. and so on. As of now the holographic labels on the TPG slabs havent been perfected on the fakes yet but theyre getting closer which I'm sure will lead to more changes. A chip or something could solve the fake problem, but again the cost would be substantial. The whole idea would be to keep costs down. Fakes mint products would also become the business of the Secret Service so they would have to in turn expand to investigate fake slabs as well. Youd be surprised what can and does get hacked. A database like that would be millions of dollars to set up securely and properly monitor. There are ways you could make it very very difficult to fake but the cost of slabbing would either go through the roof or you would start eating money during the process. As of now a few faked slabs is less detrimental to them than sky rocketing slabbing costs with high tech security measures. I wouldnt be surprised if some of those 100k or million dollar coin slabs had a few extra security things in them that they wont reveal but for the average 50-100 dollar coin its just not cost effective |
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Replies: 30 / Views: 3,474 |
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Posted 09/24/2012 9:44 pm
