Third Party Grading Companies - Part 4

January 7, 2009

PCGS MS62 Australia Penny

The Problems with TPG's (Third Party Grading Companies)

The real problem with TPG's is that graders are still human, and the grades assigned to coins are still subject to human opinions and the grade of a coin cannot be expressed adequately with just some letters and numbers.

  • The numerical grades adopted by TPG's do not inform purchasers of other factors affecting a coin value. For example, two MS64 coins may have the same numerical grade, but one may exhibit the remnants of a fingerprint, or have unattractive toning. These factors are not noted on a coin holder.
  • The grade given to coins of a given series is very dependent on the experience of a grader with that coin series. Typically the TPG's are very experienced with US series and less so with world coins. This can leave non US collectors scratching their heads when getting non US coins graded.
  • The numerical grading system used by TPG's does not translate directly to the adjectival grading system used in some non US countries, leading to confusion and possible deception on the part of coin sellers.
  • Grades between TPG's are not the same. For example PCGS is renowned for being a tougher grader of coins than NGC. So a NGC MS64 grade does not neccesarily mean the same coin will receive the same grade in a PCGS slab.
  • Grading standards change in time. For example, PCGS is currently very tough on US Morgan dollars, and many collectors acknowledge that coins graded in the 90's by PCGS would likely receive lower grades if graded today!
  • The coin slabs themselves can be counterfeited leading to either incorrectly graded coins or counterfeit coins entering the market.
  • The TPG's can just get it wrong. I have seen examples of Australian coins in TPG slabs listed as proofs when it is well known that no proof coins of that coin and year were ever produced.

In the final part of this series I'll draw some conclusions and provide you with some further reading.

Posted by mnemtsas at January 7, 2009 7:29 AM
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