If you submit coins for third party grading to PCGS or perhaps you're a member over at the PCGS forums then you may be aware of the 'big one' that PCGS was due to announce on 25 March. This 'big one' was supposed to revolutionise the coin grading industry and what the 'big one' was had been the source of constant speculation on the PCGS forums for weeks. Well the announcement was made and all we can really say is *yawn*. PCGS have introduced what they're calling the "Secure Plus Service".
This comprises two main features, firstly a digital fingerprinting service for coins that PCGS can use to identify coins that have been submitted to the Secure Plus service. So if you submit a coin for the Secure Plus service they'll image your coin and use digital indicators to uniquely identify your coin. Theoretically if your coin gets stolen, broken out of a slab and later sent for re-grading PCGS can pick this up straight away and let you know. Oh, incidentally they can also tell if the same coin is being submitted (quite legitimately) over and over again and make sure that coin gets the same grade over and over again, but more on that later.
The second feature of the 'secure plus' service is the plus part. This is a premium grade designator (a '+' symbol) that PCGS will apply to coins that they believe fall into the top 10-15% of coins within a certain grade level. There's no doubt that some coins within a certain grade are better than others and trade for greater values because of this, the plus designation is a way of setting this in concrete. By the way, this isn't a new idea, NGC used to apply a star (*) designation to coins they believed were premium examples within a grade and in recent times a group of high end US coin dealers have started a new grading service called CAC that evaluates PCGS slabbed coins and puts a silver or gold sticker on coins it believes to be premium examples.
So how much does this cost? A minimum of US$65 per coin. Ouch. PCGS is clearly aiming this at the pointy end of the collector market and the common thinking is that if your coin isn't worth $1000-$2000 or more then there's really no financial justification for the US$65 per coin cost. PCGS has also (quite intelligently) offered bonus points for plus designated coins in the PCGS Registry Sets. People who participate actively in these electronic coin league tables will pay ridiculous money for top population coins and the new plus designation gives them something else to chase after and will help fuel those submitting common coins to the Secure Plus Service.
So what do we think of all this? Well we like the Secure part of the service and can see how this will be useful. However we think the real motivation on the behalf of PCGS is to stop what they call 'gradeflation'. Gradeflation happens when someone submits a coin over and over again in an effort to get a higher grade for it. In the US collector market where the value of an MS64 and MS65 coin can be thousands or tens of thousands of dollars different this can be a profitable exercise. Someone submitting a coin over and over is relying on PCGS making just one mistake or perhaps slackening their grading standards slightly and scoring that extra (and very lucrative) grading point. If such a coin had been submitted under the Secure Plus service this just wont happen anymore. PCGS will just identify the coin as being graded previously and assign it the same grade every time and they are not left with egg on their faces. We bet PCGS will happily pocket the grading fees each and every time though.
And the plus designation? It's been done before, it's not new and it's not revolutionary. And it's awful that you have to pay to just to receive the possibility of getting it! Talk about gambling! We'd also question how PCGS can legitimately apply the plus designator to low population coins. If your coin is the first of a year and type graded how can they possibly know if it is or isn't in the top 10-15% of all coins for that grade? Well they can't.
We don't think we'll be submitting any of our coins for Secure Plus grading at any time in the future. It's just too much money and too much of a gamble with regards to the plus designation. What we'd like to see is the Plus applied to all PCGS service levels and the Secure part of the service applied as an optional extra.
Posted by mnemtsas at March 27, 2010 7:47 AM
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