Online auction site eBay sent out a notice today to sellers of coins to remind us that their new listing policies for coins go into effect on May 31. They also announced that ANACS and ICG has met their new standards allowing coins to be sold as graded.
Coins from other services must be listed as raw including those old PCI slabs with J.T. Stanton’s autograph, which some believe are collectible in themselves.
In eBay’s last note to sellers, they wrote, “We’ve heard from both buyers and sellers that they’d like to see more coins on eBay graded by companies who meet high standards. These new requirements are an important step toward meeting these marketplace demands.”
I am still waiting to asked by eBay what I think as both a buyer and seller.
It is good to see that ANACS and ICG were able to work with eBay to be included in their new policy. Unfortunately, the policy still places restrictions on a competitive market for legitimate collectibles.
When I wrote “eBay to ANACS and ICG: You Lose!” it was based on the release eBay provided to sellers. This was not the complete story as reported by CoinNews.
According to the release published by CoinNews, eBay worked with John Albanese to develop the standards that will be used for graded coins. Albanese is the founder of the Certified Acceptance Corporation, a third-party grading verification service, and Numismatic Consumer Alliance, which calls itself a numismatic protection corporation. Albanese is one the the original founders of Numismatic Guarantee Corporation, one of the leading third-party grading services.
On the surface it may look like a good idea to work with someone of Albanese’s alleged stature to set these standards. However, if you look at Albanese’s business interests, Albanese is not working for the ordinary collector.
The standards eBay is adopting are almost aligned with the submission policies of the CAC which Albanese is president. The difference is that modern coins (coins struck after 1964) and bullion coins graded by the acceptable third-party grading services can be listed as graded. Any other coin is considered a raw coin and cannot be listed or described as graded. While a picture of the coin in the holder is allowed, the listed cannot name the grading service or the numerical grade.
I have never met John Albanese and have been told that he is respected by those who know him. I do not know him and only know of his current efforts with the CAC. The CAC is a company owned by high end dealers who had complaints with the work of the grading companies. While a verification service is good, the CAC and its partners are working hand-in-hand to buy, sell, and trade these coins which, in essence, drives up the prices of the coins.
It is part of the CAC business model only to accept coins graded by NGC and PCGS for evaluation. It is part of the CAC business model not to accept modern coins with the exception of certain Lincoln Cent errors. And up until the last year, collectors could only submit coins through CAC affiliated dealers. The business model skews to higher-end coins with the partners creating their own trading market based on the CAC opinion.
Let’s look at the business model of the CAC using a different market. A stock broker buys a series of loan interests he wants to valuate based on a criteria held by those who are not happy with the current valuation services. Rather than look at everything, they start with a series of loan shares whose valuation are certified by certain services because they have a biased opinion against other services. They evaluate shares, put their seal of approval on it, bundle them and trade them amongst themselves create a new market that is currently not existent. Once these shares are traded in this closed market, their value is set then traded to the public. If this sounds like the derivatives market that crashed the economy in 2008, you would be correct. It also parallels the rise of the CAC and its creation of an artificial market.
If the CAC was working as an independent organization without its market-making activities, there would be nothing wrong with what it is doing. However, its market-making activities leaves open questions about its objectivity.
In the securities business, there are laws against artificially building up the price of a stock and then selling them for profit. It is called “pump-and-dump.” Those not in the securities business cannot collude to artificially fix or advance prices, as the airlines have been accused of doing. This is a potential violation of the antitrust laws of the United States. Specifically, it can be alleged that their practices are violations of the provisions of The Clayton Act. The purpose of The Clayton Act is to protect against price discrimination by using influence over markets using exclusive dealing agreements and tying arrangements. Recent cases involving antitrust applies the law to the manipulation of markets to create exclusivity.
Rather than find a better solution to cover the entire market, eBay spoke with someone who has an economic stake in the market for which eBay is trying to regulate. Thus, the new rules adopted by eBay is an attempt to influence the market and create a tying arrangement to manipulate the market to the business model and agenda supported by Albanese, the CAC, and its investors.
Coin collecting is more than the market promoted by Albanese and the CAC. Ebay, Albanese, the CAC, and those who support the CAC do not think in the context of the average collector. I am amongst the average collector. I am the one who sees ICG holders signed by the artist of the New York State Quarter and has to add it to his specialized collection of New York items. If I decide to divest this collection, I would not be able to mention anywhere in the listing the grading service or the numerical grade assigned by ICG. While I can include a picture, I would have to create a listing that would border on being fraudulent for not being able to disclose the actual details of what I was selling.
I am for sensible guidelines that would be inclusive of the ordinary collector as well as protection for those buying higher end coins. However, the route eBay has used to consult with someone who has a fiscal agenda in the market appears to be shaping the market into that agenda that will leave the rest of collecting community behind.
If you think that eBay has gone too far, I urge you to contact their customer support and express your opinion. I also call on the American Numismatic Association to step in on behalf of its member, not all are rare coin collectors, to work as an independent organization to protect the seller against an agenda-based policy. Finally, if you feel that this is the beginning of a restraint of trade violation by eBay, I urge you to file a complaint with the Federal Trade Commission and ask them to look into hampering the sale of legal collectibles.
This week, eBay sent a message to sellers who listed coins and currency for sale on the site to announce new listing policies for coins.
As coin collecting continues to grow and thrive on eBay, customers have told us time and again that knowing they can buy and sell with confidence is important. “We’ll be updating eBay’s Stamps, currency, and coins policy to help foster that confidence—this update may impact your coin listings,” read eBay’s note.
Starting May 30, all new listings and relistings in coin categories will need to meet the following requirements:
- First, listings for coins will be allowed to include a numeric grade in their listing title or item description only if the coin grading company meets certain objective standards.* Coins that haven’t been graded by these companies will be considered raw or ungraded. Currently, eBay has determined that only the Numismatic Guaranty Corporation (NGC) and the Professional Coin Grading Service (PCGS) meet these standards.
- Second, for US Coins only, grading by companies meeting these standards will now be required for all coins listed with a Buy It Now, reserve, or start price of $2,500 and above.
A footnote for the asterisked line says, “These standards will be posted on eBay’s website shortly.” The policy page has not been updated to explain the standards which the decision is based.
By this rule, coins certified by ANACS and ICG have now been reduced to second class status even though there may be nothing wrong with them. Nice coins still in old PCI holders with J.T. Stanton’s signature are also reduced to “irrelevancy” becuase of eBay’s undisclosed decision.
This is not the first time eBay has made arbitrary decisions about coin collecting based on questionable advice. In January, eBay banned the sale of replica coins where they said they worked in conjunction with the Professional Numismatic Guild to come up with a policy.
“We’ve heard from both buyers and sellers that they’d like to see more coins on eBay graded by companies who meet high standards,” read the eBay release. “These new requirements are an important step toward meeting these marketplace demands.”
As both a buyer and seller, I have never been asked.
By making this statement, eBay and not experts or the numismatic public is telling the marketplace that they know better. By making this statement, eBay will not allow me to search for or buy that old ANACS photo holder or the ICG graded error coin verified by CONECA because ANACS and ICG cannot be used in the title and description.
Rather than managing its market place, eBay has now turned themselves into an enforcement bureau making policies that could be considered a restraint of trade by telling independent sellers what they can or cannot sell that would be legal elsewhere.
Ebay has a right to limit the type of item sold on via its service. Ebay has extensive policies regarding prohibited and restricted items as well remedies for violating these policies. Now, eBay has branched out from prohibited and restricted items to practically banning LEGAL products because they do not meet arbitrary and capricious standard that they have yet to divulge.
Restraint of trade is a common law doctrine relating to the enforceability of contractual restrictions on freedom to conduct business. By eBay telling me and other sellers that we cannot properly list and sell any other coin but those encapsulated by PCGS or NGC is restricting my freedom to conduct business. Ebay will not let me sell or advertise the ICG graded error coins or the artist signed state quarters also slabbed by ICG. In other words, I would be restrained from appropriately advertising LEGAL inventory by contractually restricting my freedom to conduct business.
If there is an alternative to eBay for selling legal coins, I would like to know. The extra coins from the divesting of part of my collection will be listed there. Ebay is no longer a viable outlet to sell collectible coins.
In a late press release on April 17, it was announced that after two years, the members of the Professional Numismatists Guild approved a three-point definition of “coin doctoring.”
“This is a complex issue, but we needed to have a concise definition to help combat the deliberative and unacceptable alteration of coins in an effort to deceive,” said PNG President Jeffrey Bernberg.
As the hobby has grown and the ability to sell coins have become easier, the problem of coin doctoring has been one of those issues simmering just below the industry’s radar. But as the prices of key and semi-key coins have risen, the temptation by some to cash in has caused coin doctoring to be a more significant issue.
“We’ve been working on this for over two years with Numismatic Guaranty Corporation and Professional Coin Grading Service as well as a committee of dealers and collectors to formulate an industry-acceptable definition,” said PNG Executive Director Robert Brueggeman.
According to PNG, coin doctoring refers to the alteration of any portion of a coin, when that process includes any of the following (emphasis added):
- Movement, addition to, or otherwise altering of metal, so that a coin appears to be in a better state of preservation, or more valuable than it otherwise would be. A few examples are plugging, whizzing, polishing, engraving, “lasering” and adding or removing mint marks.
- Addition of any substance to a coin so that it appears to be in a better state of preservation or more valuable than it otherwise would be. The use of solvents and/or commercially available dilute acids, such as Jeweluster, by qualified professionals is not considered coin doctoring.
- Intentional exposure of a coin to any chemicals, substances, or processes which impart toning, such that the coin appears to be in a better state of preservation or more valuable than it otherwise would be. Naturally occurring toning imparted during long-term storage using established/traditional methods, such as coin albums, rolls, flips, or envelopes, does not constitute coin doctoring.
While much of this makes sense in the current environment, there are some things that the collecting public must remember. First, not all doctored coins are an effort to deceive. One example are Buffalo Nickels that have been treated with a chemical to make the date readable. These “acid coins” are easy to detect since the chemical leaves a stain where used and, in the vast majority of cases, are advertised as being altered coins.
Another issue is that at one time coin doctoring was an accepted practice. People did not want ugly coins, so dealers would use various methods to polish he coins to make them look better. It was also common for some to use the same abrasive copper polish that was used to clean copper cookware to clean older copper coins to try to make the coins look mint red. Others embraced the natural oxidation of copper that turned them brown and coated them with lacquer to preserve its rich, dark color.
When blatant altering of the surface fell out of fashion, dipping the coins in chemicals to improve the surface continued, especially for copper coins. While not as easy to detect, it is possible to find better and semi-key Indian and Lincoln cents that were dipped a long time ago when the practice was acceptable. An experienced eye can tell if a coin was once dipped, but it is not easy. If you have any question, either ask that coin be graded by a third party or do not buy the coin.
One item that is objectionable is in the second definition where it says, “the use of solvents and/or commercially available dilute acids… by qualified professionals is not considered coin doctoring.” What this says is that if I have coins that have been contaminated with polyvinyl chloride (PVC) from being improperly stored, I cannot buy acetone to rid the coins of the damage. Rather, it appears that NGC has preserved the business of its sister company, Numismatic Conservation Service by saying only NCS can do the job and a vigilant collector is a coin doctor.
Dear PNG: I am going to continue to carefully remove the deteriorated foam from a set of improperly stored 1939 World’s Fair tokens using olive oil and acetone. Just because I do not work for NCS does not mean I am doctoring these coins.
A collector who uses a dilute or neutral acid that does not alter surfaces like acetone to remove PVC, dirt, or other contaminants is not a coin doctor!
Toning is a controversial topic because toning is he result of the oxidation of the coin metal accelerated by environmental contaminants. Oxidation alters the irreversibly alters the surface of a coin. Usual causes of toning comes from storage using non-neutral materials. Since toning can give coins a pleasing or pretty look with many interesting colors, there are collectors who seek out toned coins.
Artificially toning a coin can be used to hide the work of doctored coins or make the coin more desirable. The problem is that there is no definitive way to tell the difference between artificial and natural toning. There are ways to tell the difference between deliberate attempts at toning, but there has been anecdotal evidence demonstrating that it is possible tone a coin that has fooled the grading services.
Now that we have he definition of coin doctoring, what do we do with it? While PNG can use this definition to police its own members, what happens to dealers who are not PNG members? Will PNG work with the American Numismatic Association to adopt similar ethics rules? If so, will ANA members be allowed in this conversation?
“It frankly took longer than some of us expected or wanted to get something substantive finally approved, but the overwhelmingly vote now by PNG members to support a specific coin doctoring definition is an important, major step for the hobby and the profession. It needed to be done,” said Brueggeman.
Maybe they should have waited longer and put out their definition for general comment before enthusiastically adapt a message with questions.
Last month, PCGS announced they will open an office in Hong Kong to help Asian dealers authenticate and grade coins for their market. With the flood of counterfeits from that area of the world, providing access to a third-party grading service could help in reducing the proliferation of fake coins.
Recently, PCGS announced that their new Hong Kong company will be grading coins prior to and during the Hong Kong International Coin Convention and Antique Watch Fair beginning on March 24 and continuing through April 6, 2012. If you are interested in submitting coins to PCGS Hong Kong, read the story at coinnews.net.
More interesting are the sample of the holders PCGS published with the press release. PCGS will continue to use slabs similar to those used in the United States without the edge-revealing prongs. The medium sized slab in the image (right) appears similar to those used to encase the 5 ounce America The Beautiful Silver Bullion Coins. What appears to be new is the large-size slab for those large silver coins issued for the new lunar year, for example.
To identify coins graded by the PCGS Hong Kong subsidiary, the label used on the slab apparently will have a circular logo colored in red.
This is reported with mixed feelings. While I prefer raw (ungraded) coins, I understand the the necessity to authenticate coins especially from that area of the world. If you do not know about the extent of the problem with Chinese counterfeit coins, this article by Susan Headly includes detailed images of a Chinese counterfeiting operation and should be a scary reminder.
Can you name the third party grading services?
When I thought about this question I came up with NGC, PGCS, ICG, and ANACS. I did think about DGS, but they were shutdown last year. But recently, I received an email with an advertisement from another third party grading service that may not be on most people’s RADAR: SEGS.
SEGS started as Sovereign Entities Grading Service but seems to have dropped the full name. While not considered one of the top-tier grading services, SEGS was known as the service that would best attribute the variety of the coin in their holders.
In the past, I have said that competition is good in any market, including amongst the third-party grading services, but who is SEGS competing against? Right now, NCG and PCGS are at the top of the heap. The new ANACS seems to have sold its soul to the television hucksters while ICG showed promise a but lost ground in the shakeup caused by ANACS. Where does SEGS fit into this ecosystem?
SEGS boasts their consultants include Larry Briggs, Jeff Oxman, and Bill Fivaz—all well known numismatic experts in their areas. But is that enough? How is SEGS’ grading abilities compared to the other services? How does the market feel about their service?
Based on the 2006 survey conducted by the Professional Numismatic Guild (PNG) and Industry Council For Tangible Assets (ICTA), SEGS Was rated “Poor” along with the now defunct PCI. NCG and PCGS were rated “Superior” while ANACS and ICG were rated as “Good.” There seems to be little market movement that has changed the perception of those ratings.
Competition is good and should be welcome in any market. However, if SEGS is going to survive in this already tight market, they must figure out how to differentiate themselves from their competitors. All of these grading services have noted experts and consultants. They all provide attribution services and their prices range from the affordable to the premium. Just being better is not enough.
NOTE: This is the first post I created on my new iPad. As a touch typist, it will take some getting used to since there are no real keys to touch. Also, I need to download the app that allows me to type short codes I use on my Mac for better formatting of these posts. Otherwise, I think I can take the iPad on the road and still write blog posts—including reviews of coin-related iPad apps.
It is not often I receive comments on posts older than a few weeks. But I found it curious that I would receive a comment on my post “PCGS Demonstrates Its New Technology” from last January. When I read the reply, I thought it deserved more attention than a response to a five-month old post.
The comment is from Christopher Neal Wyatt, President of Superior Bullion from Cincinnati, Ohio who has not had a good experience with PCGS SecurePlus service. Rather than have me explain the problem, Mr. Wyatt has given me permission to make his comment as a main post:
I am a coin dealer on eBay and I have been submitting coins to PCGS for years.
Regarding the new SecurePlus service, I am growing less enthusiastic with each and every submission.
I have come to the conclusion that the there are two critical problems with the PCGS SecurePlus service:
1.) The coin grading staff is now able to see an extremely high-resolution scan of each coin, such that tiny, minor imperfections- which would not have been visible even under 10x magnification- are now being blown out of proportion, and as a result I am now receiving grades which are lower than I believe I would have received under the old method.
2.) Now that PCGS has a ‘fingerprint’ of my coin, I feel as though it is no longer possible for me to re-submit the coins in hopes of a higher grade, as my duplicate submission will immediately be detected, and they will likely send the coin back to me with the same grade as before, without taking the time to properly reconsider the coin for a possible higher grade.
Up until this past month, I felt as though PCGS was giving me consistent grades on every coin I submitted. More recently, however, it seems as though the grades have not been fair; one coin should have been an MS 68, but was given a 67, and a second was graded PR68DCAM, when it clearly should have been PR70DCAM- this coin has no scratches, a full strike, and beaming mint luster. I have the photos to prove it.
I have never posted my thoughts about third-party grading since I have mixed feelings about this type of service. I see justification for both sides of the argument. One aspect about third party grading I worry about is the concept of “market grading” and how some high volume dealers try to play on the subjective nature of market grading to try to get coins graded higher with each submission. I understand this is why PCGS created the SecurePlus service, but the need for it strikes me as a bit unseemly.
My collection includes graded coins and I participate in NGC’s Registry Set competition. But the vast majority of my collection consists of raw (not graded) coins and will probably remain that way. This is how I feel today, but I may change my mind in the future.
Mr. Wyatt said that he will be resubmitting his coins for review and will let me know what happens when they return. I will post the results when I receive them.
Coin World has announced the available of their app for the iPad. “The free app offers rich content such as the News and Marketplace features that are available at Coin World’s website.” The app is free and can be downloaded from Apple’s iTunes App Store.
As part of the release, Coin World announced that Coin Values and Making the Grade are available as an in-app purchase. Coin Values, sometimes referred to as “Trends,” is their comprehensive value guide of more than 65,000 U.S. coins. It will cost $4.99 to purchase in the app. At this time, it may be the only price guide for mobile platforms.
Making the Grade is the electronic version of their popular grading guide book. It provides color image grading for 50 of the most widely collected U.S. coin series. The app leverages the iPad capabilities to zoom in on the images and adds the information about wearing for a coin. The book lists for $39.99 but will sell for $9.99 as an in-app purchase.
The Coin World app is only available for the iPad leaving those of us with only an iPhone out. iPhone users can download the PCGS Photograde app for the iPhone. Hopefully, Coin World will port this app to be used by the iPhone.
I will review the app when I purchase an iPad.
Last March, the Professional Coin Grading Service announced the PCGS Secure Plus service. Coins graded through Secure Plus will be scanned by an optical device that will map the surface of the coin creating a digital signature of its characteristics that can be used for later reference. The digital signature is a unique identification of the coin that can withstand potential coin doctoring and to prevent the users from removing the coin from the slab to try to have it graded higher. It can also be used to determine if the coin was doctored from its previous submission such as being artificially toned.
Recently, PCGS created a video demonstrating the scanner used to fingerprint and detect re-submitted coins. In the demonstration, PCGS shows how it detected a coin that had previously been submitted then artificially toned before being re-submitted. Here is the video:
I thought the device would be a little bigger. But that is the beauty of modern technology. In the past, I wrote, “Computers are great tools. Imaging technologies enhanced by computers can do wonderful things. To apply this technology to coin grading and analysis would be a fantastic addition to the industry. Can you imagine being able to take the technology to major shows and for a small fee, provide on sight diagnostics for coins before submitting them to the grading services?” PCGS is one step closer to that possibility!
Dominion Grading Service is now closed. After David Lawrence Rare Coins purchased the remnants of PCI from a bankruptcy auction, relocated the service to Virginia Beach, and began to accept grading submissions in May 2008. DGS offered two new services to collectors: AuthtiVIEW, a free imaging service for coins valued over $100; and the Visual Population Report. Both services made use of technology to bring new services to their customers.
But this was not enough. Over the last two years, DGS has stagnated. There have been no new services, no new innovations, and nothing to excite their potential customers. At shows, while DLRC’s booth is a bit sedate compared to other auction companies, DLRC did little to improve and promote DGS. DGS acknowledge their stagnation noting that “both PCGS and NGC have made great strides and improvements to their grading technologies and practices and we no longer feel that our services are needed.”
In a previous post, I discussed that the long term health and existence of other grading services matter. It is important for other grading services to exist because competition is good. Competition makes every service better. Competition forces grading services to innovate to try to distinguish themselves from the others in their field. This is good for the consumer who will get a better value for their fees.
There was a lot DGS could have done to distinguish themselves from the other services with only expenses in technology. Yes, I know the economy is not doing well. I also know that most MBA programs teach that building the infrastructure will pay dividends in the future. It takes a little imagination and marketing to break through the crowd and distinguish themselves from other serves. John Feigenbaum, president of DLRC and DGS whose biography says that he earned a Bachelor of Science degree in Marketing Management from Virginia Tech (not a slouch school!), should have known better rather than let the service stagnate until it withered away almost unnoticed.