In an earlier Coingrader Capsule, “Genuinely Concerned about PCGS,” we covered what appeared to be an increasing number of grade-worthy coins being returned in “Genuine” no-grade holders.
PCGS uses a numerical code for no-grade coins that may have been cleaned, tooled, doctored, artificially colored, scratched or otherwise flawed. The company’s rival, NGC, also holders no-grade coins under its “Details” label, specifying the condition as well as the coin’s grade.
A cleaned coin in a PCGS Genuine holder would carry the code 92 on the label. NGC would label the coin “cleaned” and assign a grade, such as “UNC DETAILS: OBV Improperly Cleaned.”
Both companies also provide detailed population reports on the number of coins assigned a specific grade; however, they do not include the number of Genuine or Details labels assigned to specific types, varieties and mints—and they should.
Some hobbyists and coin dealers suspect that the major grading companies assign too many no-grade labels. To be sure, many such coins have been cleaned, re-colored, scratched or even tooled. But some are borderline. On a good day, they earn a grade. On a bad one, they do not.
We’re discussing those in this post.
Borderline coins include ones with “slide marks” caused by Dansco and similar albums leaving lines on otherwise beautiful coins from repeated contact of the plastic strip being removed and re-inserted over coin holes. (We covered slide marks and how to spot them in a previous post.)
In the first eight months of 2010, 26% of raw coins I submitted to PCGS were returned in Genuine holders. That’s about 1 in 4.
In the past six months, however, 20 out of 123 coins were returned as Genuine, or 15%. That’s about 1 in 6.
To earn that new percentage, I ceased submitting coins with slide marks, no matter how strong the strike or lovely the luster.
I just wanted to test if slide marks were at the root of some no-grade labels. My data are not comprehensive, of course; but they point to a reason that may be helpful to other hobbyists. To increase your slabbing percentage, don’t submit coins with slide marks.
That aside, we can debate the subjectivity of grading, the different standards of companies, the controversial methods of dipping, and the damage caused by improperly stored coins. We can argue against my perception that PCGS is assigning no-grade labels to coins with evidence of slide marks.
However, it is difficult to argue against including Genuine and Details data in population reports. If companies do not archive those data, they can begin doing so.
Those figures not only may verify or refute suspicions that we are receiving too many no-grade labels; they would also be useful in understanding what types and years most frequently earn such designations.
Moreover, if questionable authenticity numbers also were shared, we would be able to see counterfeit trends associated with types, mint marks and series.
Those are valuable data. After all, we’re underwriting no-grade labels with our submissions and deserve to know the information.
One problem would be in knowing whether no-grade coins have been submitted multiple times. A marginal problem with a high end coin could possibly mean the same coin has been resubmitted raw and rejected a few times but eventually graded. That might tend to skew the population reports for no-grades since it would seem more likely this could happen more often with potentially more valuable coins. If it was combined with a digital “fingerprint” service to eliminate this then we would know the numbers represent individual coins and not just resubmissions.
Excellent point, Bob. Thank you for comment about digital fingerprints; you’re right. That would provide tiptop data.
I would also recommend implementing a security system within each slab that would enable PCGS and NGC the ability to locate coins with a GPS sensor embedded within the slab. This would enable PCGS and NGC the ability to help the FBI and Secret Service track down those coins that have been stolen.
Another suggestion is to find a way to prevent the resubmissions of these problematic coins. A coin that grades “GENUINE” with PCGS may receive a grade at NGC. This is added to the population report at NGC. I have always wondered how many coins are correctly tabulated in these population reports. There are many coins out there that have been graded multiple times by the same grading company through resubmissions. A population report may reflect a certain coin graded MS65 as having 600 examples graded in that condition. Actually, there may only be 350 examples in that grade floating around in the entire market. I have only witnessed one subtraction from a population report. It was the PCGS subtraction of the 1893-S Morgan Dollar graded MS67. PCGS once recognized 2 examples graded MS67. Now, there is only one due to the unfortunate incident of a collector allowing NCS to clean this coin and regraded by NGC as MS67 with the exact same Jack Lee 2 Pedigree.
-Richard Stinchcomb
Once again, Richard, you have enriched the post with your astute comments and suggestions. Thank you very much.
I have read your commentaries, and believe that many collectors will find them helpful. Regarding TPG grading, however, you have missed an important point. TPGs are for-profit companies, and the ‘big two’ have collectively graded more than 30 BILLION in coins but have only bought back less than 0.1% ($7M in the case of PCGS). Potential financial liabilities are HUGE (greater than $100M), given the overgraded slabs on the market right now. The liability issue does impact current grading, causing professional graders to be more conservative regarding NT vs. AT, ‘liner’ coins, etc. This is also why the copper color guarantee went out the door. Nobody should be surprised by the large numbers of ‘Genuine’ slabs at this point.
Thank you for your viewpoint, which not only is valid but also puts the liability issue into perspective. In previous Coingrader Capsules, I had mentioned the caution that PCGS seemed to develop as its concern for coin doctors grew. What remains generally unknown by the submitting public, especially set registry participants are the vast numbers of Genuine and Details coins being graded by the two major companies.On that, we agree, and this has been a forum to probe that.
I do appreciate your perspective and hope you will comment again on future columns.
Regarding my comment above, David Hall recently estimated that individual PCGS graders err about 5% of the time (hence 2 graders plus a finalizer for each coin examined). Part of the reason for this error rate lies in the fact the a grader may have 1,000 coins to examine in a workday—not much time is devoted to each coin (on average). The error rate is somewhat skewed (not evenly distributed between over- and undergraded coins) because of the influence of liability on a grader’s opinion. Cracking out seemingly undergraded coins is understandable. But…how many owners want to crack out an overgraded coin at this time, to have it regraded at a LOWER (but more realistic) grade? These coins simply accumulate in the marketplace, and lie in wait for unsophisticated buyers. As the current market evolves, some of these will be cracked out for regrading simply to make them more liquid. At this point, I don’t think that the problem with inaccurate population reports can be solved. Part of the problem lies in the fact that grading standards used by each TPG have shifted up and down since these reports initially appeared. Without constancy in grading standards, what do the pop reports really mean? There may be a place to start, however—the ‘+’ grades are new enough that pop reports for these may have real value (whether the rationale for ‘+’ grading is based on anything beyond a new revenue stream for TPGs is another issue). I would also place more trust in pop reports for the PCGS SecureSeal coins and similar products.
Dear WRE,
Terrific comments. Thank you again for sharing your views as they truly enhance this post.
Michael