Grading Service Guarantees
Examination and Comparison
The contents of this article are based on the best information currently available to me. As I find new information, I will update this article. Check back occasionally for better information. I do not consider it near to finished at this point, but in order to get the best information, I believe it is helpful to have this in a publicly accessible location.
Professional grading services provide a valuable service to the collecting community by helping to standardize grading practices. Anyone who looks at enough slabs will learn a great deal about grading. Collectors who examine enough slabbed coins will soon detect consistent overgrading by dealers. All of the grading services, PCGS, NGC, PCI and Anacs provide this valuable educational service.
Much debate exists over which of these services is "best" at grading. Important aspects of their service include consistency in grading, seldom overgrading (being conservative) and the ability to authenticate accurately. Detecting problems with coins, particularly adjusted mintmarks and dates is also extremely important. The ability to detect cleaning, artificial toning, repaired and engraved coins also enters into the picture. I will not attempt to enter into this argument for this article. It is sufficient for this article to say that there are no night-and-day differences between the four main services, it is all fairly gray.
The subject of this article is the "Guarantees" offered by the various services. When you pay for a coin, there are four things of significance with respect to the slabbing process. These may include any or all of the following:
Overview
When someone gives you an opinion as to the authenticity or grade of a coin, there are several significant things you should pay attention to. First, what is the expertise of the person giving the opinion? Second, how much time do they spend in the authentication process. Even the most expert authenticator can make mistakes if he only spends a few seconds looking at a coin. Third, what does the authenticator stand to lose if he is wrong? If you ask for a free opinion, you might get what you pay for.
In the opinion game, a guarantee means if the opinion rendered is incorrect, the person rendering the opinion stands to take a loss. A full guarantee means that he takes the full loss. A guarantee of authenticity should guarantee the full value of the coin. A guarantee of grading should guarantee the difference in value between the stated grade and the actual grade.
Opinions vs. Guarantees
When someone renders an opinion, they risk their reputation. There is clearly value to an opinion. Especially when the person rendering the opinion has a significant reputation. This is, after all, all you get from Stack's or Heritage (with respect to grade).
When someone gives a guarantee, they are risking their money. Depending on the amount of money, this can be more or less important than reputation. As a matter of practicality, this means that when guaranteeing something more valuable (in terms of the guarantee), the services spend more time on forming their opinions.
Now let's present the deals of each of the major grading services individually.
Professional Coin Guarantee Service (PCGS)
PCGS offers the most comprehensive coverage of all the grading services. Here is their story in their own words:
"Guarantee Of Grade and Authenticity
PCGS guarantees that all coins submitted to it shall be graded by a minimum of three PCGS grading experts in accordance with PCGS grading standards and under the procedures of PCGS. In the event the purchaser of a PCGS graded coin believes that the coin has been over graded with respect to such standards and procedures, he may submit such a coin to PCGS for regrading under a procedure which insures that graders are unaware of the grade originally assigned. The fee for such regrading shall be $20. If the grade determined under such regrading procedure is lower than that originally assigned to the coin, PCGS shall pay the difference between the highest then-current bid by any PCGS dealer for the coin in question at the newly established grade and the highest such bid for the coin at the grade originally assigned. PCGS will also refund the $20 regrading fee and postage and insurance costs incurred by the coin owner in sending the coin to PCGS. This guarantee shall not apply to any coin as to which an obvious clerical error has been made with respect to the description or grade of the coin.
GUARANTEE RESUBMISSION $ 25
Available when you purchase a PCGS coin which you feel has been over-graded. Fee is refunded if grade is lowered. PCGS offers this service to assure consumers of the proper grading of PCGS coins as stated in the PCGS Guarantee of Grade & Authenticity.
FAIR MARKET PRICES.
The customer can call PCGS at 1-800-447-8848 to report any instance in which an authorized dealer, in offering to buy a PCGS coin from the customer, attempts to justify a lower than market purchase or bid price for the PCGS coin on the basis of allegedly improper grading by PCGS, or provides the customer with an unreasonably low purchase or bid price for the PCGS coin (with or without any allegation relating to PCGS's grading of the coin)."
Numismatic Guarantee Corporation (NGC)
NGC offers coverage almost as complete as PCGS. Their main caveat is with respect to copper coinage. Perhaps PCGS has a similar exception, but has not noted it in the literature available to me at this time.
Here is their story:
"NGC guarantees that all coins submitted to it shall be graded by a minimum of three (3) NGC grading experts in accordance with the NGC grading standards and procedures. In the event the purchaser of an NGC coin believes that the coin has been over-graded with respect to such standards and procedures, the purchaser may submit any such coin to NGC regrading under a procedure which assures that graders are unaware of the grade originally assigned. The fee for such grading shall be $20. If the grade determined under such regrade procedure is lower than that originally assigned to the coin, NGC shall pay the difference between fair market value of the coin, as determined by arms-length current bids of NGC dealers, at the newly established grade and the grade originally assigned to such coin.
WARNING: EXCEPTION TO NGC GUARANTEE. COPPER COINS CAN OXIDIZE AFTER SEALING. IN SUCH AN EVENT, THE COIN GRADE MAY DIMINISH. THEREFORE, THE NGC GUARANTEE SHALL NOT BE APPLICABLE TO COPPER COINS."
ICG
I haven't taken the time to fully research their guarantee, but ICG at http://www.icgcoin.com/ is a highly reputable coin grading service. They are highly recommended for their ability to grade, and they have a published guarantee at http://www.icgcoin.com/guarantee.htm. If you have any stories or feelings about their guarantee, please contact us.
PCI
Here is the best info I can find on PCI, from their homepage:
"PCI accepts direct submittals from the general public, collectors and dealers. There are no minimum or maximum submittal requirements.
PCI recognizes that all coins are not "generic." We grade, authenticate, verify and list attributes for errors and varieties such 5, 5+, and 6 steps for Jefferson nickels, DM (deep mirror), DMPL (deep mirror proof like) for Morgan Dollars, and we apply our exclusive attribute PQ (premium quality) to those coins that qualify.
PCI provides our original "Red Label" capsule for "problem" coins and assigns the grade right on the label (exceptions are: altered, counterfeits, etc).
PCI offers the most affordable rates of any "third party grading service"--and we provide the fastest turnaround time of any grading service...for the applicable fee of $7.50 per coin, plus postage and insurance.
PCI excels at providing the highest quality customer service. We will go the extra mile to meet the needs of our customers, and our service is backed by our guarantee.
As a special bonus, PCI provides a free storage box when twenty (20) coins are submitted. ($5.00 charge for storage box on orders of less than $20.00.)
After our 7th year of new and innovative ideas and technology in setting the pace for third party grading, we at PCI have come to rely upon business practices that you can consistently count on. Your coins will be accepted, authenticated and graded at the lowest rate and the fastest turn around time of any service...guaranteed!!
PCI Coin Grading Services
PO Box 8609
Chattanooga, TN 37411
1-800-277-2646
423-622-3856
e-mail: pci@chattanooga.net "
They haven't answered my e-mail yet, and they don't publish their guarantee, at least not on the web.
Anacs Guarantee
Anacs has no detectable web presence. So I created an unofficial ANACS page for them. I just copied their information from some literature I found. Here is their guarantee.
Anacs guarantees that each coin submitted to it for grading shall be graded by Anacs grading experts in accordance with Anacs grading standards, policies and procedures.
In the event the purchaser of an Anacs coin believes it has been overgraded under Anacs standards and procedures, the purchaser may submit the coin to Anacs for re-examination under a procedure which precludes the graders from being aware of the grade originally assigned.
The re-examination fee is $15.
If the re-examination grade is lower than that originally assigned by Anacs, Anacs agrees to pay to the owner of the coin the difference between fair market value of the coin at the re-examination grade and the fair market value at the grade originally assigned by Anacs. For purposes of this guarantee, the fair market value of a coin shall be established by using the most accurate pricing guide(s) as determined by Anacs for the specific issue at that time. Anacs will also refund the re-examination fee.
This guarantee shall apply only to gold and silver coins and shall not apply to (1) any coin submitted for re-examination in a damaged or unsealed coin holder or (2) clerical error as to the description or grade of the coin which would be readily noticed on inspection.
Any dispute under this Guarantee will be resolved by binding arbitration in Columbus, Ohio, pursuant to the rules and regulations of the American Arbitration Association.
Raw Coins
When you purchase raw coins, you also get some of the four benefits to some degree depending on whom you buy the coin from. Nearly everyone will give you an opinion as to grade and authenticity. I wouldn't buy a coin from someone who doesn't. Sometimes, depending on the reputation, skill and honesty of the seller, the grade can be a bit off. Since the grading services started, grading is more accurate than they use to be. Occasionally, coins of questionable authenticity enter the marketplace. Most of these are easily detectable. In my experience, counterfeit coins are not a huge problem. Especially when purchased from reputable dealers.
Most dealers will guarantee the authenticity of a coin they have sold. That is, if you find that a coin you have purchased from a dealer is a fake, you can take it back later for a full refund. You must prove that you purchased it from them, unless they remember the coin, then they will generally make good. Always get and keep a good receipt on coins of some value. Keep it even after you have sold the coin.
If you purchase a coin from an individual who is not a dealer, they can say that they don't guarantee authenticity, but when the Secret Service gets involved in tracing a coin back to its source, nobody is really immune from some form of guarantee. It is important to try and keep track of where you buy coins from so you can pass the buck back if there is a problem. So, in essence, when a dealer says he guarantees the authenticity of a coin, it doesn't put him at extreme risk most of the time.
There are exceptions. For example, a friend of mine sold a great deal of material that he bought directly from a forger. The forger went to jail, and wasn't able to pay financially for his crime. Since he refunded his customer's losses, he ended up almost going out of business. Most of the forgeries were documents and paper money, however, it is conceivable that the same thing could happen with coins.
Most dealers will not guarantee grade. They will all provide an opinion on grade, but won't guarantee it. When a coin isn't in a protective slab, it is difficult to know if it has experienced further degradation. For example, it is easy to scratch a coin once out of a holder. Even the grading services won't guarantee grade once a coin is removed from their protective holders.
If you don't know how to grade coins yourself, slabbed coins can provide an extra level of confidence. Any of the slabbing services can provide this, to a degree.
The presence of slabs in the market helps avoid counterfeit coins, so the slabbing industry helps you whether your specific coin is slabbed or not. You may also send a questionable coin to the ANA for authentication services if you are a member of the ANA. Since they deal with fewer coins, that are, in general more questionable to begin with, I think the ANA authentication bureau is likely to do better than any of the slabbing services.
Conclusions
I would have to conclude so far that if you have copper coins, PCGS is the way to go. They may have a copper exclusion as well, but it isn't very prominent if they have one.
Of all the guarantees for non-copper coins, I tend to like ANACS' guarantee the best. The reason being that the "fair market value" isn't dependent upon a set of dealers, but rather on industry standard pricing guides.
I still don't have any stories from people who have actually participated in the guarantee process, but as I get them, I'll add them here. Some concrete examples would greatly enhance the ability to compare the various services.