- Professional Coin Grading Service
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PCGS is the acronym for Professional Coin Grading Service a third party grading service for grading rare coins. Founded in 1986, and located in Newport Beach, CA., it is a subsidiary of Collector's Universe, Inc. (NASDAQ:CLCT), a company that also buys and sells rare coins and operates a rare comic book certification service and a grader of paper money. PCGS charges a fee for an opinion as to the condition and authenticity of each coin it grades to provide consumers with a rating on which to judge the coin, and encapsulates coins in sealed see-through plastic holders. Such opinions are not universal and according to a May, 2003 article in Coin World, many PCGS coins are broken out of their holders by many major dealers at various coin shows, where dealer trash cans were observed by freelance reporter David Harper filled with broken PCGS, ANACS and NGC "slabs", the plastic holders that grading services "encapsulate" coins into.
An early PCGS slab.
PCGS claims it was founded in response to perceived inconsistencies in the appraisal of rare coins, however in truth PCGS can have little if any impact on coin appraisals since dealers base their appraisals on supply, demand and their inventory needs and surpluses. Though the American Numismatic Association had published by 1977 its standard grading rules using the 70-point Sheldon coin grading scale, individual interpretation of a particular coin's placement on this scale in terms of degree of preservation and condition was found to be highly subjective. Between any given prospective buyer and seller, a difference of opinion could, in the case of particularly rare coins, represent differences on the order of hundreds, thousands, or tens of thousands of dollars. Several prominent coin dealers and numismatic professionals in 1986 decided to form the Professional Coin Grading Service as a way of providing an independent grade to aid in the transaction.
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Influence
The introduction of allegedly "objective" grading attracted considerable new interest in rare coins by investors such as those from Wall Street firms. This led to a dramatic rise in rare coin values from 1988 to 1989, followed by a collapse of what became an economic bubble in 1990. Since then, the average value of coins has stabilized and shown a slow and steady gain, though the market continues to exhibit fluctuations.
Coin Holder Design
The PCGS holder is made of transparent, colorless plastic and is designed to be stackable. Anti-counterfeiting measures include a holographic emblem on the back, the design of which has changed over time. The current design depicts the name "PCGS" and the Collector's Universe NASDAQ stock symbol, and a Saint Gaudens double eagle. On the front in pastel blue, the coin information provided includes its type, denomination, grade, and a unique serial number assigned to that particular coin, as well as a machine-readable barcode. Coins that are improperly cleaned, have altered surfaces, or are otherwise damaged will not be graded by PCGS but will still be certified as genuine; such coins are placed in holders that specify "GENUINE" on the front label in place of a grade, and on the back below the holographic emblem will have the phrase "GENUINE NOT GRADABLE" printed. The holder is formed from two parts that are joined over the coin and a paper insert by way of sonically generated heat. Note that though the holder is airtight, it is not vacuum-sealed.
Original first-generation PCGS coin holders are smaller and lack the raised stackable edges of later issues. The original label insert was printed on plain white paper. In some of these early holders, the coin on occasion will be loose enough to produce noise when the holder is handled, thus giving rise to the affectionate nickname of "rattler" to these holders by the coin-collecting community.
The appearance of counterfeit holders early-on led PCGS to introduce a redesigned holder with a holographic emblem next to their logo on the back. Subsequent improvements in technology gave rise to several minor redesigns since, including a transition from the original light green labels to blue ones. PCGS was at one point in time named the official grading service of the Professional Numismatic Guild; during that time, the PNG logo was included on the back as part of its holographic design. This feature was replaced with the current design when PNG switched their affiliation to NGC.
Population Report
PCGS maintains a census of all coins they have graded since their inception, revealing the incidence of each date, mint mark, and reported variety of particular coins, as well as prominent feature designations such as "prooflike" Morgan dollars or "full bands" found on the reverse of better-struck Mercury dimes. Access to this report is available to dealers and paid members of the PCGS Collectors Club, an annual membership service that allows non-dealer individuals to submit coins for grading. The report is updated continuously on their web site, though a printed version is published at regular intervals.
Analysis of this report and a similar one published by NGC has allowed numismatic professionals to estimate the rarity of specific coins, and over time these two data bases have revealed some coins once thought rare to be remarkably common, whereas others thought more common have shown to be likely few in number. The population reports are followed closely by numismatic professionals, but they also recognize that their numbers can be inflated through multiple submissions of the same coin, broken out of its holder and re-submitted with the hopes by the sender of receiving a higher grade, or deflated through reluctance to submit a common coin of little value for a service that costs more money than the coin is worth.
Controversies
In the May 26, 2003 edition of Coin World, the hobby newspaper had announced they had contracted investigators to conduct a year-long, comparative study of PCGS, ACCGS, NGC (Numismatic Guaranty Corporation) and several other grading services, each known as a Third Party Grader (TPG). In their investigation, several of the same coins were sent to each grading service over the course of a year, each graded by all Third Party Graders sent to. In no case did the grading services agree on the grade of any the many coins sent in, and in some cases the difference in grading was seven points off on the standard Sheldon coin grading scale of 1 to 70. The Coin World article cited several examples, such as a case where ACCGS had correctly noted that a coin had been cleaned. ACCGS graded the coin several points lower than PCGS, while PCGS had not noted the same coin was cleaned although it clearly had been, evidenced by wire brushing. This was neither the first nor last time PCGS had failed to note when coins had been cleaned. In June 1998, PCGS had failed to note on their holders that thousands of shipwreck coins had been cleaned, although the coins slabbed by PCGS had been encrusted with sea debris and barnacles, and subsequently cleaned in acid baths prior to grading by PCGS. It is standard for professional numismatic dealers to note when coins have been cleaned or treated in acid baths. Not doing is often considered unprofessional and unethical by most professional numismatists, according to Coin World's May, 2003 articles. Further, in U.S. Numismatics, it is standard to grade coins on a point-scale from 1 (poor) to 70 (perfect) and to note on the coin holder if a coin has been cleaned or poorly mishandled, or in many cases, to reject it for encapsulation or "slabbing" if the coins have been cleaned harshly.
In 1990 the FTC (Federal Trade Commission), which oversees business ethics and fraud, filed a civil action against PCGS alleging exaggerated advertising claims. PCGS did not admit wrongdoing, but agreed to submit its advertising for review for a period of five years. In a filing in Federal district court in Washington, the company agreed to include a statement in its newspaper and television advertising affirming that certification by PCGS does not guarantee protection.
In September 2004, members of the American Numismatic Association reported seeing counterfeit PCGS slabs at the Long Beach Coin Show. More were reported on eBay in the years following, but PCGS did not address the issue until March 27, 2008 with the following acknowledgments on the PCGS website:
- "The counterfeit PCGS holders are well-executed, but with minor differences from a genuine holder. PCGS anticipates that authentic coins will eventually be placed into counterfeit PCGS holders in the future, perhaps with elevated grades and/or inappropriate designators.
- The following list of coins and certificate numbers have been seen in fake PCGS holders:
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- China (1916) Silver Dollar, Y-332, Cert #10712316 (valid)
- China (1923) Silver Dollar, K-677, Cert #11354470 (valid)
- China (1923) Silver Dollar, K-678, Cert #11285683 (valid)
- China (1923) Silver Dollar, Y-336.1, Cert #13835186 (valid)
- China Republic (1912) 20 Cents, Cert #21981173 (invalid)
- China (1916) Gold Dollar, Pn-44, Cert # 11072163 (invalid)
- China (1923) Gold Dollar, Tsao Kun, K-677, Cert #11354470 (invalid spec, valid cert�used above)
- US 1858-O Half Dollar, Cert #03884338 (valid)
- US 1800 Silver Dollar, Cert #03859118 (valid)
- US 1795 Silver Dollar, Off-Center Bust, Cert #22030856 (valid)
- Mexico 1761-MoMM 8 Reales, Cert #05763936 (valid)
- "Valid" means that the correct information shows up under Cert Verification."
The above listing consists of only the counterfeits known or reported by PCGS as of March, 2008. Other PCGS counterfeit holders have been reported in eBay forums and more may be reported by other firms and individuals, since PCGS anticipates that authentic coins will eventually be placed into counterfeit PCGS holders, and counterfeit holders may multiply and improve over time. PCGS offers no reimbursement liability for the prices paid for coins in their counterfeit holders. PCGS has an online link to verify the Cert numbers. On January 7, 2008 Numismatic Guaranty Corporation (NGC) posted a notice on their website that high-quality counterfeits of their holders had been purchased on eBay : "Most frequently Trade Dollars and Bust Dollars are found, although Flowing Hair Dollars and foreign coins have also been seen. A range of grades is also represented." Caution is advised when purchasing coins in PCGS and Numismatic Guaranty Corporation (NGC) holders as the seller can disclaim liability due to the "third party" nature of the counterfeit holder. Additionally, it may be too late to request refunds from eBay sellers before Cert numbers can be verified as counterfeits. Many coins are posted on eBay "as is" and with no return privileges.
See also
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References
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