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 Replies: 38 / Views: 3,900 |
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Valued Member
United States
344 Posts |
Here is a very well written article onn May 30, 2005 and in reading this Ohio news I found it to be very educational at best. Even though some of it was written about Mr. Noe as an example,the article in it self is educational and shows what all of us that are involved in the hobby are up against. Below is an excerpt from the bottom of that article. the link is slow to open http://www.toledoblade.com/apps/pbc...24/505300302But Scott A. Travers, a coin-book author and consumer advocate who used to work at Numismatic Guaranty as a grader, said that succeeding at big-money arbitrage can be difficult in part because some graders are reluctant to earn someone else thousands of dollars just on their decision. The author also edited The Official Guide to Coin Grading and Counterfeit Detection. Adding value to a $50 coin that is a borderline 64/65 grade didn't bother Mr. Travers when he was grading. But to truly produce wealth is a responsibility, and faced with a "liner," he automatically became more conservative. He was not the grading arbitrager's friend when tens of thousands of dollars were at stake, he said. Graders also have been accused of being stingy with upgrades to preserve the rarity of coins that dwell near the top of the scale and to protect the interest of others and the market. "I was a grader at [Numismatic Guaranty], and it's not to preserve the rarity of it, you're concerned about creating wealth," he said. "If I look at a coin and it was graded 64, or it would likely be a 64-high end, and as a 64 it was worth $40,000 and as a 65, it was worth $400,000, then I would be very concerned about calling it a 65." "If I thought it was a marginally low-end 65, I would opt to grade it a 64," he said of his example. "It has nothing to do with honesty. You look at a coin and you don't want to create wealth. I don't want to bear that responsibility, and I would give it the lower grade." Grading, grading firms, and arbitrage; coin collecting as business, rather than hobby; rare coins as commodity rather than history have stolen the purity of the market, Mr. Hoge said. Some purists believe the profit-based grading system has turned the hobby into a grading game, enriching those dealers in the know, he said. "I think a lot of the pleasing aspects of the hobby of coin collecting are pretty much gone," he said. "It's largely for investors or dealers, and values are pretty much inflated by this grading thing. Every coin reaches the highest grade it can attain." ***Edited by Forum Mom to move to Main Coin Forum*** |
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Valued Member
United States
206 Posts |
and thus the problem with slabbed coins. if a slabbed coin was undergraded and a dealer is asking a price in line with the "correct" grade, than no one will buy that coin - the slab says it's only worth the lesser grade. it's a 2 way street, no dealer is going to sell a coin that is slabbed as an MS67 for MS65 prices.
when I buy a coin, I look at the slabbed grade, review the coin and judge for myself if it's at the correct grade. if I think it has been undergraded, I can buy it, break it out, and resub it - but wouldn't a dealer already have done just that if it was a slam dunk?
-steve
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Valued Member
United States
459 Posts |
Great article, thanks for posting. At least it gives you an idea on that goes through their head.
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Pillar of the Community
United States
1173 Posts |
I confess I hadn't thought about TPG's as the unwilling marketmakers in the world of coin investment (vs coin collecting), so this article gives valuable insight. I guess I can understand a certain hesitancy to "make" someone (an investor) thousands or tens of thousands of dollars by boosting the grade of a coin, but I really struggle with the idea that it is ethical to grade a coin down a bit, just to prevent an investor from making money. In the general scheme of things, how is it moral or ethical to bump up a "low price" coin to a higher grade unless that grade is accurate? This guy seems to be saying that two identical condition coins from a selected series, one a common date, one a key date, might be graded differently, with the key date receiving a lower grade, just to keep someone from profiting on his/her investment. That's a little bit like having someone knock several thousand dollars off the price of your house because otherwise you'll make too much money when it sells. |
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Pillar of the Community
United States
2335 Posts |
I have to agree with hunter20ga on this. I buy & sell real estate on a very limited basis as a sideline. A few years ago I bought a house from a bank that had foreclosed. They offered the house at 32K, I thought it was worth 50k as is, and about 65k after very minor rehab, so I contracted to buy it. Before I closed on the house I had an offer for the 50k I thought it was worth, so I accepted the offer.
I closed on the house & started going through the process of selling to the people that offered me 50K. Their appraiser(Grader) refused to appraise the house any higher than 42k. I ended up paying for another appraiser, who gave a value of 48K. I renegotiated & sold for that. I found out later from someone who knew the appraiser(Grader) that he had told several people that he would not appraise my house any higher because he thought I was making too much profit.
I may be biased, but it would seem to me that the appraiser or grader should not be concerned with someone's profit or lack thereof, & that they should do their job based solely on the facts. In the case of coin grading that should meaning giving the coin the grade it deserves.
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Valued Member
 United States
344 Posts |
In the article Mr. Halls comment below I believe can be construed in such a way that if a coin dealer not doing the grading is ethical to own all or part of the stakes in this endeavor. Seems if the fox is guarding the hen house who's to say the same in the article couldn't happen again? I guess it would be like insider trading if two or more coin grading companies formed with inside knowledge that the other under grades and the other over grades, ficus cycle. were by they play the ups and downs of the market ... to make only more monies by which the public foots the bill. Mr. Hall, the president of Professional Coin Grading Service, said dealers owning stakes in grading firms is ethical, in his opinion, as long as the dealers are not doing the grading. --------------------------------------------------------------------------------------------------------------------------------------------- While we are on this subject I will add more info to the subject for reading. The article below from the 2005 collectors guide in forbes magazine is also interesting on the subjectivity of grading where in the article if I am reading it right seems to suggest that halprin and Ivy have made millions by cracking slabs knowing the slabs were under graded or promoted them has higher after cracking them out of slabs.. Though by what I read it appears they have always flirted with the law. Makes one wonder about the grading game by all the grading companies. I believe it comes down to if you can make enough money to hire lawyers to fight the FTC until you've made enough to not have to worry about being your past as being unscrupulous. Seems in the article Mr. Halprin and Ivy love this game of passing around graded slabs and cracking them. When there is millions to be made someone will always figure out a way to beat the system. If you put them all in a fish bowl would any of them look different swimming around. http://www.forbes.com/forbes/2004/1...6_print.html |
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Pillar of the Community
United States
1283 Posts |
Those are all excellent points and very eye opening. Great article! But now here's the other side of the coin.. (give me props on the pun!) Properly grading, determining authenticity, and spotting problems takes YEARS of experience. So how do I, as the average collector, invest my money with confidence when I'm at the mercy of dealers who know waaaay more than I do? In my opinion the grading services have been good for the hobby overall. Obviously there are some major drawbacks. As the little novice collector I appreciate "big brother" checking my coins for me. I'm quite sure as a confident, compitent veteran of the Coin World they would be a thorn in my side. Edited by USArmyParatrooper
07/04/2007 01:14 am
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Pillar of the Community
United States
1247 Posts |
"So how do I, as the average collector, invest my money with confidence when I'm at the mercy of dealers who know waaaay more than I do?" IMO, you may be more at the mercy of future coin collectors who next year or the year after or whenever, may not value todays grading fashions the same way or with the same weight as TPGs do today. Assuming that TPG's correctly authenticate coins, that would be the only value they add to anything. If it's authentic today it will be authentic tomorrow. "Market" grading on the other hand is something they should just out source to Abercrombie and Fitch.  |
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Valued Member
United States
306 Posts |
Asciibaron: "no dealer is going to sell a coin that is slabbed as an MS67 for MS65 prices. " Yes, but they will sell an MS65 for half price. Supposidly. ;) A website is selling an MS65 1886 Morgan for half of Red Book value. I asked in an other post and locally about it. It was graded by ICG and that may be the reason it's so cheap. Now I realize it must have been overgraded and the site and everyone knows it. (Or it would have been bought by now.) |
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Pillar of the Community
United States
1283 Posts |
quote:
IMO, you may be more at the mercy of future coin collectors who next year or the year after or whenever, may not value todays grading fashions the same way or with the same weight as TPGs do today.
That doesn't quite make sense to me. We all know grades can be subjective, but there are cases where there is no question or argument. In most cases I have a tough time telling the difference between a 58 and a 63, let alone a 64 vs 65. Let's say (by today's standards) I paid too much for an obviously overgraded coin. No matter how many times the standards change it is STILL a lesser grade than I could have received for the same money. quote:
Assuming that TPG's correctly authenticate coins, that would be the only value they add to anything. If it's authentic today it will be authentic tomorrow.
So you do not think it's of value for a novice/intermediate collector to have an opinion from an experienced third party about the grade? Or about whether or not a coin has been cleaned? Edited by USArmyParatrooper
07/04/2007 05:15 am
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Valued Member
United States
344 Posts |
The coin business has so many eyes watching it now that any little clue as to areas of concern, everyone will focus on it and it will either make it go away because it is illegal or find out its legit.
In my opinion from the two articles is that here is three people that are deeply involved with what seems to be ownership or part ownership of some of the largest coin slabbing companies that also own or are part owners of coin selling companies that also sell or auction slabbed coins. They have the ability to still fluctuate the coin market. All have been fined large amounts of money and probation probably in lieu of jail time..
If You or I did this would we be considered a criminal ?
My question is what is difference from the three names above and how they got started than this person or persons at Howard's Rare Coin Gallery ,Silvertowne Auctions LLC or any other grading company out there. \/
()Like Morgan Fred said once your coin company gets a reputation, change and move away from it as far as you can.()
Change names, form more companies and so forth. Do the shuffle of the shell game. These are all part of the buisness expense.
Seems what I got from the articles from forbes magazine , the FTC and other sources tells the story of unscrupulous endeavors in which they had to pay fines etc in lieu of jail time.
If they are what this market is about then it tends to suggest to anyone that if you can take the heat you may one day make enough monies off of being unscrupulous to hire lawyers to form multitude of LLC companies and fight the FTC and lawsuits. Most of what I read seems as by the time the FTC or anyone else figures out what is going on in the shuffle there is enough monies in the kitty to pay the fine.
When the heat comes change names to avoid the reputation that will always follow them and keep changing it to continue the money making system. Most these companies are were they are at by playing shuffle the three shells to hide the money, name and reputation.
Granted today they may be the best we have or at least think so.
We the collectors actually are the oversight for the market to a big degree, So always ask questions and don't be afraid to speak out..
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Pillar of the Community
United States
2335 Posts |
Let me go back to my real estate analogy. I know my area & what houses are worth, & also have a construction background so I can tell condition. I don't need an appraisal to know when I am getting a deal, so I will buy property "unslabbed". However, when it comes time to sell I want the appraisal, solely to reassure the buyer & their lender of the value. This lets me sell for the highest price. Coins are the same way, except I don't have the knowledge(yet) to buy high dollar coins unslabbed. I'm trying to get that knowledge by reading & researching, & by participating at this forum. I don't have any really high dollar coins, but I am interested in some. Before I make any large purchase I will be looking for an expert opinion from someone I trust, or a reputable TPG slab. I'm not looking at coins as an investment, but I don't want to overpay either. If/when it comes time to sell, any high dollar coins will be in slabs if the market is still paying a premium for slabbed coins. |
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Valued Member
United States
306 Posts |
Wow. I just read that Forbes article. Heritage is where that Morgan is I mentioned above. I guess I dodged a bullet by not buying it.
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Pillar of the Community
United States
1247 Posts |
-------------------------------------------------------------------------------- IMO, you may be more at the mercy of future coin collectors who next year or the year after or whenever, may not value todays grading fashions the same way or with the same weight as TPGs do today. -------------------------------------------------------------------------------- * "That doesn't quite make sense to me. We all know grades can be subjective, but there are cases where there is no question or argument. In most cases I have a tough time telling the difference between a 58 and a 63, let alone a 64 vs 65. Let's say (by today's standards) I paid too much for an obviously overgraded coin. No matter how many times the standards change it is STILL a lesser grade than I could have received for the same money." ** TPGs act like they made some sudden discovery with "market grading." It has always existed even in the days when there were two grades --circulated or uncirculated. Two coins technically graded Uncirculated could bring two very different prices because collectors have never needed anyone to tell them what it was they should like. TPGs got their start catering not to collectors but investors who didn't care what the coin looked like. They cared about whether is was "good investment" and not why. So this is what we have today in millions of slabs. Graded and thus priced not by the aggregate market of coin collectors but by what TPGs say we are suppose to like and how much we are suppose to like it. Market grading was never necessary in situations where collectors could see what they were buying and could simply decide what they liked or disliked. It happened automatically in auctions that had prior lot viewing. With the Internet, diffusion of information and better and better imaging technology what is going to stop collectors from doing that again? They might wake up one day and not agree that coins with a bit of extra strike are worth an extra $10,000 because LOOK! they have full rivets on the shield. Maybe on that morning they'll like coins with less contact marks. It would be the very chaos market grading tries to eliminate. And to a great extent, through TPGs, has eliminted. But a chaos free "market" is not a market. It's just commodification riding on the back of authority figures which, IMO, along with centralization and commodification, have a rather bleak future. quote: -------------------------------------------------------------------------------- Assuming that TPG's correctly authenticate coins, that would be the only value they add to anything. If it's authentic today it will be authentic tomorrow. -------------------------------------------------------------------------------- * "So you do not think it's of value for a novice/intermediate collector to have an opinion from an experienced third party about the grade? Or about whether or not a coin has been cleaned?" **No I don't. Allowing yourself to be dependant on TPGs or anything else is not a value to me. It's a value to TPGs. But if you wish to buy or sell a high priced coins that require slabs do you have any other choice but to embrace the suck? We did it to ourselves and now we're stuck with it. Still, it's never too late to be held in rebellion against the Crown. Happy 4th.  Edited by longnine009
07/04/2007 7:38 pm
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Moderator
 United States
23522 Posts |
quote:
So you do not think it's of value for a novice/intermediate collector to have an opinion from an experienced third party about the grade? Or about whether or not a coin has been cleaned?
In my honest opinion, it's a detriment. A hindrance. What incentive do you have to learn for yourself if some anonymous slabber somewhere, operating in a completely unregulated market, can make that decision for you? How do you suppose that anonymous slabber learned to attribute and grade? They learned the same way you should (not meaning you specifically, of course). They spent years learning. They handled thousands of coins. They got burned, probably repeatedly. With luck, they listened to those who came before them, and avoided some mistakes. If you base your entire numismatic experience on slabs, what will you have to teach the next generation? Look, the point I'm making here is that I believe TPG's are making the hobby more, not less, dangerous by their existance. Slabbed coins mean easier accessibility to unknowing rookies, and impart a false sense of security by their implied infallibility. With or without TPG's, numismatics is entirely, completely subjective. Not only do you have to believe the coin is MS64, you have to believe that coin is worth more at MS64.1 than it is at MS63.9. That is the foundation of the whole hobby - your perception of the quality, desirability and value of the coin before you. And you cannot base that perception on the opinion of someone else. So, if you conclude from my words that I'm saying there are certain coins, and certain grades, that a newbie should simply stay away from, you're absolutely right. Anyone can collect AG-VF stuff on relatively little experience. You can form circulated sets of relative Moderns all day without getting taken to the cleaners. What you can't do, though, is make an accurate arbitration between an AU58 and an MS62 1829 Bust Dime, when the value increases 300% with that distinction, and expect a return on your money when selling to someone who can make that distinction. Or, I should say, who can make that distinction 75% of the time. That's the best you can expect from all but the handful of top people in that specialty, and they ain't necessarily working for PCGS or NGC. TPG's cannot be trusted except in the broadest generality. I'll be more than happy to repost my personal proof of that fact, if desired. It only cost me $130, because I'm cheap ( ), but the same thing could have as easily happened with a $5000 coin and then I'd be out some serious bucks. Can you honestly expect consistent superior attribution and grading from a person who gets 10 seconds to make a decision? I don't think so. Furthermore, getting to the original topic of this thread, you cannot either expect utter personal altruism on the part of the major TPG players, regardless of the huge contribution they may have made to the hobby as a whole. They're human beings, with faults like you and I, except they're playing in big-league money circles. The temptation is intense, and not everybody who can call themselves a nice guy is about resisting that temptation. Their focus on making money has caused much of the problems we have with TPG practices. To sum up, we are involved in an activity here where the only person you can absolutely trust is yourself, and you're going to screw up as well. Heck, I just made an $80 mistake a couple weeks ago, and just last night I may have pumped 20% too much into a coin I might have wanted too much. Partly based on a TPG opinion. Get my drift? |
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Pillar of the Community
United States
1283 Posts |
From Longnine: quote:
Graded and thus priced not by the aggregate market of coin collectors but by what TPGs say we are suppose to like and how much we are suppose to like it.
Then explain to me why, when you look up slabbed a NGC AU-58 3-Legged Buffalo you will find (recent) prices ranging from $1300-$2100 on Heritage. And coincidentally the higher priced examples have nicer eye appeal. The TPGs did not develop the 70 point system. They simply provide their professional opinion about where a coin lies among that scale. Whether or not you respect their opinion, they DO have a lot more knowledge than me, the buyer. quote:
They might wake up one day and not agree that coins with a bit of extra strike are worth an extra $10,000 because LOOK! they have full rivets on the shield.
And if they do that would have little or nothing to do with the TPGs. The TPGs didn't come up with the concept of things like Full Bands, DMPL, etc. The consumer did, and the consumer is who added monetary value to such features. OK, now... let me simplify this. It is a fact that, as a novice, I can be easily taken advantage of. I can fail to spot cleaning, I can pay waaaay too much for an over-graded coin, and heck, I can flat out buy a fake. When I buy a coin certified from a reputable company, it dramatically reduces the risk. So please explain why greatly reducing risk in an otherwise risky market is NOT of value to me. From SuperDave: quote:
What incentive do you have to learn for yourself if some anonymous slabber somewhere, operating in a completely unregulated market, can make that decision for you?
I am a strong supporter of certified coins, and if I'm spending over $100 I will ONLY buy certified coins. I don't think it's possible for me to work any harder trying to learn about my hobby. I've already read the Whitman Guidebook to grading. I recently put in an order at my most trusted dealer for some wheatbacks grade Good - MS so I can learn to grade them better. I honestly don't believe the TPGs are making new collectors lazy. Edited by USArmyParatrooper
07/04/2007 11:46 pm
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Replies: 38 / Views: 3,900 |
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Posted 07/03/2007 1:03 pm
