Grading Services

[webbrent 10]

Hi All,

 

So I am rather new to the Coin Market, but took the time to order coins graded by different Grading firms. Most of them happen to be the 90th Birthday Mandela Coin.

 

I know very little regarding these grading firms, but seem to have a preference for NGC graded items. There seems to be less controversy around NGC, but also their casings just feel so robust.

 

Am I being naive? Are there better grading firms out there? The SACGS graded coin I have seems on par with the NGC grading, however the casings feel and look a little cheap.

 

What advise do you have for individuals that want to send coins for grading? Who would be the best, cost and value based?

 

I did some reading up on the NNC and a little worried on the items that I bought that were graded by them. Can I send these graded items to the NGC to regrade? Will they open the case, remove the coin, regarde and place it in one of their containers?

 

Later,

Webbrent

[kyle2 10]

Sorry about your 90th birthday coin purchases, please do a forum search to find info on these coins and gradings services, you'll be horrified by the info on the 90th coins, there is a local grading company in the Cape, but I would stick to NGC, they seem to be the most consistant and hold their value. Seriously, there is a ton of info in previous posts, just do a search.

[jwither 11]

The Numismatic Guarantee Corporation (NGC) and Professional Coin Grading Service (PCGS) have the widest market acceptability, are the market leaders and for equal coins, coins in their holders usually sell for more. NGC is the market leader for non-USA coin grading though for SA coins, I have seen many PCGS coins that are better quality for the same grade.

 

I do not consider NNC to be a grading service at all. I have only seem one seller (on eBay), though a large one, who offers coins in these holders. My assumption is that this seller owns NNC. Collectors such as myself consider these sellers "self slabbers". In other words, they create their own "grading service" to encase the coins they sell. Some of these coins probably would grade with a real grading service but many or most probably would not or if they did, with a lower or much lower grade. If you track NNC coins on eBay, you will see that SA coins invariably sell at a significant discount to one graded by NGC or PCGS.

 

I know nothing about SACGS but I believe that what most collectors will find is that the coins in their holders are less liquid than an NGC or PCGS equivalent, regardless of their grading accuracy. As a buyer and collector outside of SA (I live in the USA), I would not pay the same for a SACGS coin because I have no first hand knowledge of their grading and this liquidity. I would only buy one from a seller I know well at a discount and possibly a substantial one. From a seller I do not know, I might not buy one at all.

 

On the 2008 5R you bought, I hope you did not pay a large premium for them because they do not deserve one. From what I can tell, there was a mania in SA which drove prices up to ridiculous levels but those prices have either crashed or are significantly lower than recently. Given how common they are, I do not believe any of them deserve more than a very modest premium. And by any, I am including a grade of 70.

 

In terms of submitting coins for grading, depending upon what coins you have in mind, you might just be better off buying them already graded. I buy coins ungraded and have them graded because the premiums are much larger but already, I see them shrinking as the census numbers increase. Proportionately, I suppose the price premiums can be considered large but not neccesarily in absolute terms. For example, the census numbers have increased a lot for many KGVI dates even though the absolute numbers are still not that large. However, because there is not that much demand for these coins, there are MS coins that I probably would not even bother to send in for grading now in many instances.

Edited January 14, 2011 by jwither

[RISadler 10]

What I would like to know is why people who collect coins don't learn to grade the coins themselves, rather than literally entrust their fortune in the hands of an unknown stranger who might just be overly grumpy because he's been grading Mandela R5's for three straight weeks, his wife just left him, the neighbour ran over his cat and he just slammed his shins against the desk?

[Little Miss Muffet 41]

What I would like to know is why people who collect coins don't learn to grade the coins themselves, rather than literally entrust their fortune in the hands of an unknown stranger who might just be overly grumpy because he's been grading Mandela R5's for three straight weeks, his wife just left him, the neighbour ran over his cat and he just slammed his shins against the desk?

 

You describe moodiness very accurately. It must come with experiance.

[RISadler 10]

You describe moodiness very accurately. It must come with experiance.

 

To tell the truth, most times I'm either P.O.'ed, off to the P.O., or both.

[jwither 11]

What I would like to know is why people who collect coins don't learn to grade the coins themselves, rather than literally entrust their fortune in the hands of an unknown stranger who might just be overly grumpy because he's been grading Mandela R5's for three straight weeks, his wife just left him, the neighbour ran over his cat and he just slammed his shins against the desk?

 

There are two primary benefits to a REAL third party grading service. An independent opinion on the grade and improved liquidity which makes it easier to buy and sell coins.

 

The TPG are hardly perfect but I consider them a vast improvement over what existed before and I was not even an active coin buyer before graded coins became popular, even in SA. (PCGS was founded in 1986, NGC in 1987 and ANACS started grading I believe in 1979.) Those who have been collecting longer than I have here or more specifically, who did not have the option of buying graded coins before will know what I mean.

 

There is no question that grading companies such as NGC and PCGS have increased the confidence of buyers substantially and without them, prices would almost certainly be MUCH LESS. You can see that even now when buying a raw coin as the price difference is substantial.

 

Learning to grade accurately on your own will enable you to avoid buying overgraded coins and decrease the likelihood of overpaying, but its not going to solve the liquidity problem for most people because few of us have enough of a numismatic standing to generate that level of confidence.

 

From the limited experience I have from buying from raw coins, I would not pay "full price" from ANYONE for any coin which sells for "real money", even well known SA dealers. I have bought from two SA dealers. Alec Kaplan priced their coins reasonably and the NGC grades were approximately in-line with his. The other dealer (who will remain nameless), sold me some overgraded coins and some of them were also rejected by NGC as problem coins. I bought them sight unseen due to their reputation but would never do that again. The last time I checked, they also still sell their coins on their website with some of them at the exhorbitant (and inaccurate) prices listed in the Hern catalog. I imagine that at least some of these are also either overgraded, problem coins or both.

 

Though the grading companies are not always consistent, they are not as bad as some claim they are. If they were or are, then eventually the market will penalize them when they lose market share and this will also be reflected in the price of the coins in their holders.

 

NGC and PCGS also provide a grading guarantee and they will also cover any coin if it turns out to be a counterfeit. The details of the guarantee are specified on their websites.

[RISadler 10]

... improved liquidity which makes it easier to buy and sell coins.

 

There you have just drawn the line between the collector and the investor.

[jwither 11]

There you have just drawn the line between the collector and the investor.

 

Not sure what you mean but this liquidity benefits ANYONE who buys and sells coins, not just supposed "investors" who in actuality are speculators.

 

If there was no third party grading, then prices would almost certainly be lower or much lower, depending upon the particular coin. For South African coins, I believe that it would impact Union more than ZAR because the liquidity is much worse. This would enable buyers to acquire coins cheaper which is what many collectors prefer. However, most or all of the benefit would be negated when it came time to sell because the reduced liquidity would make price even less predictable than now and particularly for Union, they are already unpredictable in many instances because of infrequent sales..

 

Some who are purists may claim that collectors are or should not be concerned with the financial side of coins but that is plain nonsense. Whether a buyer of coins is a collector or "investor" is arbitrary in most instances but few to none (I would argue almost none) who have made any significant outlay do not carefully consider the financial side. And those who do not invariably end up doing worse than those who do or even lose money.

 

Personally, I am some of both collector and speculator. I have become more of a speculator recently especially with my South Africa coins but its definitely not the only reason I collect. However, I'm not about to ignore the financial side because the money I spend on coins represents time and effort that could be allocated elsewhere. So wasting money unnecesarily would mean wasting part of my life and I am not about to do that.

Edited January 16, 2011 by jwither

[RISadler 10]

Not sure what you mean ...

 

I collector collects - whether it's stamps, coins, books, medals, or whatever - with the objective of building a collection. Purchase price and condition of the item is important as it impacts future growth of the collection, but not so much the "Return on Investment" (or ROI). This is because a collector would rarely sell his/her collection. (I exclude trading with other collectors from this statement.)

 

An investor doesn't care about the item, only how much is paid for it and how quickly it can be sold for a substantial profit. Whether the item is a coin, a stamp, a piece of swampland or whatever is unimportant. Only the "ROI" counts.

 

In my opinion, grading companies cater for the investor. How many of the people who bought Mandela R5's actually collect coins and have a collection of RSA coins? I'd venture to say very few. These coins were sold and bought to make a quick buck.

 

Unless you have a frenzy, like we had with Mandela coins, coins and stamps are like wines - they take years and years to mature. Show me one investor who is willing to slab a worth-face-value circulation coin just so he/she can sell it for a 50% profit in ten or twenty years' time (if he/she can sell it for a profit, as you have to factor in the cost of grading said coin).

[jwither 11]

The example you gave of the buyers of Mandela coins is not typical at all. That was a MANIA and yes, I agree with you that those people are only speculators and did not care about what they bought. However, most supposed "investors" in my experience try to become knowledgeable to some extent in what they buy if for no other reason than to improve their odds of making money. And yes, they may keep their coins for a long time which is why some or most people call them "investors" and not speculators. As you say, few to none are going to hold a Mandela coin for a long time and wait for it to go up from the ridiculous prices that existed in recent years.

 

Sure, collectors prefer to pay less so that they can buy more for the same money but find me someone who has spent six or seven figures on their collection who is only interested in price because they can use the same money to buy more material. There are few to none. I do not know how many six or seven figure collections there are in South Africa (not many probably in USD) but there are plenty of them in the United States, probably THOUSANDS easily given that almost 100 coins have an estimated value of $1MM USD and a much larger number are worth six figures.

 

Let me give you a personal example. One of the series I collect is Spanish colonial pillar minors. I discussed it in Geejay's topic with the cobs. I ultimately intend to acquire a complete set of Peru 1/2 and one real in AU or MS. My guess is that, assuming I can actually find these coins at all, it will take me years to do so because I have been working on it for about five and have very few of them. My guess is that it will cost in the vicinity of $30,000 to $50,000 USD in MS. By US standards and even for a ZAR collection, that is no longer a significant amount of money. But I can tell you that I am not going to pay this much for any set of coins if I can only sell them for less (or at least much less) than I paid for them and most others I do not believe are going to either. I would buy something else.

 

Perhaps by the definition of others (maybe yours), that person is an "investor". From my standpoint, the distinction is rather arbitrary because I believe a substantial minority (probably not a majority) to be both. For those who are not "investors", it is of course their money and as long as they do not mind treating their collection as a substitute among alternate forms of consumption, it does not matter.

 

As for the grading companies, I agree with your assessment, more or less, but not entirely. If you ever have time, you should go read the NGC Message Boards. You will see that most of these collectors are more collector than "investor". Most of them appear to have a preference for graded coins, though by no means all.

Edited January 16, 2011 by jwither

[RISadler 10]

Somewhere we agree with each other, but are also talking past each other...

 

Yes, an investor will acquint himself with the field, otherwise he'll lose money fast. But my point is that an investor is only interested in the valuable pieces and how fast he can make a certain profit.

 

A collector, on the other hand, collects whatever he collects and (excluding the fabulously rich) extends his collection through careful purchases of all relevant pieces, irrespective of value. (Value, not price.)

 

The Mandela frenzy is, in my opinion, typical of the get-rich-quick greed of a certain segment of the population. It was Mandela R5's, now it's paintings of asses, next it'll be ZAR coins... and grading works this in hand.

 

But here's a question for you... will you pay US$50K unseen for that MS condition doubloon just because it is graded? Or will you prefer to inspect it yourself before handing over all those frogskins?

[dennrein 10]

NNC - fail!

 

Just proving the point made by jwither: if BOB will allow, here is a link to an auction of an 1892 cent (!): SOUTH AFRICA 1892 CENT CHOICE UNCIRCULATED BR - eBay (item 110635898147 end time Jan-18-11 17:55:13 PST). Not only does NNC have horrendous slabs, they also make horrendous mistakes!

 

I have stated elsewhere that I think slabbing takes the fun out of collecting. To me the interesting thing of going to a coin dealer or checking out auctions is precisely discovering interesting items that don't have an official stamp of approval. It's like an archeologist, digging into a hill and seeing what turns up. If every mystery this world has to offer were simply lifted to the surface and given an official stamp of approval, this would certainly be a dull world. Slabs take the excitement and mystery out of collecting (though it is true that they make sense from an investment side - just this only makes sense for coins that are really, really valuable).

 

Regards

dennrein

[webbrent 10]

Just proving the point made by jwither: if BOB will allow, here is a link to an auction of an 1892 cent (!): SOUTH AFRICA 1892 CENT CHOICE UNCIRCULATED BR - eBay (item 110635898147 end time Jan-18-11 17:55:13 PST). Not only does NNC have horrendous slabs, they also make horrendous mistakes!

 

I have stated elsewhere that I think slabbing takes the fun out of collecting. To me the interesting thing of going to a coin dealer or checking out auctions is precisely discovering interesting items that don't have an official stamp of approval. It's like an archeologist, digging into a hill and seeing what turns up. If every mystery this world has to offer were simply lifted to the surface and given an official stamp of approval, this would certainly be a dull world. Slabs take the excitement and mystery out of collecting (though it is true that they make sense from an investment side - just this only makes sense for coins that are really, really valuable).

 

Regards

dennrein

 

 

I agree here. See the true "collector" will go looking for the illusive City of Gold and is not too particularly phased if it is graded or not. The excitement is knowing that the coin is worth something and in good enough nick to have Graded once in your possession. Then once graded, it is like a stamp of approval on your knowledge on the particular item at hand. with true collectors it is a EGO thing.

 

Investors, want the items that they can sit on and make the best return. Not saying they are cold hearted numismatics, but looking out for their business interests. Which is the way business is run. Some though are in it for a quick buck.

 

My concern though, are these novice Numismatics, who get taken for a ride. Someone can easily list an item and swing some hogwash on return etc... A novice will ****** it up, not knowing any better. But with time, I am sure they will learn from these mishaps. We all do Hence they will go for the graded items on a regular basis not knowing all there is to know about the coin.

 

I purchased a NNC Graded PR70 Kennedy Half Dollar 1986. I purely bought the coin based on the image that was displayed. So I guess presentation is everything when trying to make a sale. BTW the Kenendy Half Dollar is in prestine condition. So I guess they don't get it wrong all the time I might just send it for NGC Grading to break it out of that Nasty Capsule

 

Thanks for all the responses. I like a hot debate

[unicoin 10]

I wonder what will Paul Kruger think about his 1892 "cent" coin. It is suppose to be a penny.

Edited January 18, 2011 by unicoin

[webbrent 10]

I wonder what will Paul Kruger think about his 1892 "cent" coin. It is suppose to be a penny.

 

LOL!!!! I only just saw that now!! That is insane :sowsuser:

 

Yeah okay. NGC all the way for now, well for me at least.