Third Party Grading

Third Party Grading is a term used to refer to coin grading, authentication, and encapsulation companies. Often abbreviated TPG, these companies will, for a fee, "slab" a coin. Some companies offer a guarantee covering the grade or authenticity of the coin.

History

Third Party Grading was pioneered by [http://www.ANACS.com/ ANACS] , which was founded by the American Numismatic Association (ANA) in 1972. The board of governors realized the need to have a guarantee of authenticity, and so offered the first authentication service. At that time, the coins were not graded, only confirmed as genuine. Encapsulation had not yet come about, either, and so the coins were returned with a photo certificate.

In 1986 Professional Coin Grading Service (PCGS) [http://pcgs.com/] opened, pioneering encapsulation with a plastic slab now known as the Old Green Holder, or rattler, because of its color and the way coins would sometimes rattle inside. PCGS was followed by Numismatic Guaranty Corporation (NGC) [http://www.NGCcoin.com/] in 1987. As of 2008, there are four prevalent coin grading services, which include PCGS, [http://www.ACCGS.org/ ACCGS.org] , run by the [http://www.bhcoinclub.org/ Beverly Hills Coin Club] , NGC, and ANACS. There are subtle variations in the grades assigned by each of these major services, and prospective buyers are encouraged to seek professional or expert advice before making any important rare coin purchase.

An interesting contender among grading services was Compugrade. They sought (ultimately unsuccessfully) to remove the human from the loop, and have a computer grade their coins. It is uncertain whether this technology was ever successfully employed. Ultimately people decided that computers weren't very consistent in their grading of coins and they lost favor.

In the May 26, 2003 edition of [http://www.coinworld.com/ Coin World] , the hobby newspaper had announced they had contracted investigators to conduct a year-long, comparative study of PCGS, ACCGS.org, and NGC, along with several other grading services, each know as a Third Party Grader or TPG. In their investigation, Coin World sent several of the same coins were sent to each grading service over the course of a year, each coin being graded by all Third Party Graders sent to. The findings were; "In no case did the grading services agree on the grade of any given coin, and in some cases the difference in grading was as much as seven points off". By way of example, a finding published by Coin World involved one case where ACCGS had graded a coin as "cleaned", which lowers the coin value, Additionally the coin had been graded several grades lower than PCGS while PCGS had not noted the same coin was "in fact, cleaned". It is standard in U.S. numismatics to grade coins on a point-scale from 1 (poor) to 70 (perfect)and to note if a coin has been cleaned or poorly mishandled, or in some cases, to reject it for encapsulation.

In September of 2004, members of the American Numismatic Association (ANA) reported seeing counterfeit NGC and PCGS holders (also known as "slabs") at the Long Beach Coin Show. Members of the Beverly Hills Coin Club (BHCC), an affiliate club-member of the ANA, had reported counterfeit coin slabs as early as December 3, 1998. As a direct result, BHCC partnered with ACCGS, manned by unpaid club volunteers, as a pre-certification service for coins and to "guarantee the authenticity of slabs or Third Party Grader holders". More counterfeit PCGS and NGC holders were reported on eBay in 2005 and later years, but NCG did not address the problem until 2008, after high-quality counterfeit holders had been seen and purchased on eBay. NGC published the following acknowledgment on January 7, 2008:

"NGC has identified and confirmed that (counterfeit replicas) of its holder has been produced.......The holder has been seen housing counterfeit dollar or foreign crown size coins. While the enclosed coins are also counterfeit, the label information matches the coin type enclosed. The label information is copied from actual NGC certification labels, and the certification information therefore will match the NGC database. 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." Citequote|date=August 2008

NGC and PCGS counterfeit holders have been reported in eBay forums and more may be reported by other firms and individuals. The PCGS website notes that they "anticipate that authentic coins will eventually be placed into counterfeit holders". Third party graders are taking measures to resist counterfeiting, however, counterfeit holders may multiply and improve over time. Numismatic Guaranty Corporation and PCGS offer no reimbursement liability for the prices paid for coins in their counterfeit holders. Both firms have online links to verify the holder numbers. However, many buyers may not be computer users or may be unaware of such links. Caution is advised when purchasing coins in PCGS and 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 holders can be verified as counterfeits. Many coins are posted on eBay and through other venues "as is" and therefore with no return privileges.

Process

At each of the Top Three companies, a similar process is used. When coins are received, they are reviewed independently by several (usually about three) graders. The coin is then assigned a final grade by a finalizer, based upon the recommendation of the graders. It is then slabbed. Depending on the company, various descriptors may be added, such as Full Bell Lines (FBL) or Proof-like (PL). Also depending on the company or the service requested, an attribution by die variety may be performed.