Buying coins from a so-called "reputable dealer" might seem like a good way to find a bargain, but it can also be a good way to get ripped off! One of the most rampant coin-related frauds is the "graded coin value" fraud.
The graded coin value fraud works like this: The unscrupulous seller will post an auction for a coin that has been graded by a "third tier" grading service, and then claim the value of the coin according to PCGS graded values. This is frequently done in lots; you'll see a photo of a small collection that the seller claims he inherited or bought at an estate sale. The photo will usually have several encapsulated coins in it. The seller will then link to, or quote, PCGS values for these coins as if they had been graded and encapsulated by PCGS, when in fact, the coins are greatly overgraded and in third tier slabs.
An $8,000 Coin for $400? For example, a seller will list an encapsulated 1968-D business strike Washington Quarter, graded MS-68. He will encourage potential bidders to visit the PCGS coin values page to verify his claim that the coin is worth $8,000 in MS-68. The buyer checks PCGS, and sure enough, the 1968-D MS-68 quarter is listed, for $8,000 (the price as of this writing.) His asking price of $400 is seemingly a bargain! After all, the coin is graded and slabbed. But there's a problem here...
The Coin Grading Service is WHAT Company?! The problem is that the coin was graded by SGS. SGS, (Star Grading Service), is a "third tier" service that, according to its website, "specializes in grades 60 through 70." Apparently, these are the only grades they issue! So, a coin graded by PCGS as AU-50 would grade somewhere between MS-60 and MS-70 at Star, probably near the higher end, as my own testing indicates.
MS-68 by Any Other Name is Not PCGS MS-68 - The old saying, "A rose by any other name would smell just as sweet" does not apply to the world of coin grading! Each grading service has its own standards, and just because SGS grades a coin MS-68 does not make it worth the same amount of money as a coin graded by PCGS as MS-68! The reason for this is that PCGS has very conservative grading standards. So the next time you see someone claim PCGS values for slabbed coins, consider the holder it's in. If it's not in a PCGS holder, PCGS values do not apply.
The Three Tiers of Grading Services - Coin grading and encapsulation services are generally regarded as belonging to one of three tiers:
- Top Tier - PCGS and NGC
- Second Tier - ANACS and ICG
- Third Tier - All others, including ACG, INB, NTC, PCI, SEGS, SGS, etc.