News and Analysis regarding scarce coins, coin markets, and the coin collecting community #28

A Weekly Column by Greg Reynolds

On March 25, 2010, David Hall and Don Willis, the top officials at the Professional Coin Grading Service (PCGS), announced and explained the PCGS SecurePlus™ program, known for weeks before as “The Big One”! For most grades between EF-45 and MS-68 inclusive, the PCGS begin assigning plus grades when warranted, such as 45+ or 63+. As the rival of the PCGS, the NGC, incorporated plus grades into their system two months afterwards, and the PCGS later allowed for standard submissions to be eligible for plus grades, not just coins submitted via the SecurePlus tier, plus grades now seem to be a secondary aspect of the program. In my view, the emphasis should always have been, as it is now, on the ‘Secure’ aspects of the SecurePlus program, which are truly revolutionary and have tremendous implications for the future of markets in rare coins.

I hope that those who are not entirely familiar with the PCGS SecurePlus program find this column (part 1) to be very clear and educational. In my opinion, the explanation of the PCGS SecurePlus program on the PCGS website is not extremely clear and, over the past six months, I have found that many collectors are confused about this program.

Collectors who are already very familiar with the PCGS SecurePlus program, and with PCGS policies in general, may wish to wait for part 2, next week. In part 2, Don Willis, the president of PCGS, responds to my explanation and a proposal for the reform of PCGS submission policies is put forth. The views of John Albanese, Mark Feld and Ira Goldberg are included.

In the first section, I provide a definition of the SecurePlus program. In the second section, I explain the benefits of the coin identification part of the SecurePlus program. In Section III, I emphasize that submitters of coins to be graded by the PCGS may choose between the SecurePlus program and standard submission options.

I. The PCGS SecurePlus Program

The SecurePlus program brings three new technologies to coin grading. (1) The introduction of a new technology for scanning and coin identification, through the use of CoinAnalyzer devices that are produced by Richard Haddock’s CoinSecure firm. An image and data from each scanned coin is entered into a database, and, if the same coin is scanned at the PCGS in the future, it will be identified as a coin that was previously scanned.

(2) The use of ‘Sniffer’ technology to detect added foreign substances and changes in the surfaces, the metal, on coins that have been deliberately harmed by coin doctors for the purpose of deceiving experts and others into believing that doctored coins merit higher grades than were (or would have been) assigned before such coins are doctored. Additionally, the adding of metal to the surfaces and/or the deliberate heating of the metal on the surfaces of a coin will, hopefully, be detectable by ‘coin sniffer’ technology as well. The PCGS has already begun using ’sniffer’ technology to an extent, and will be phasing additional sniffer applications into the PCGS SecurePlus grading program over time. I will devote a future piece to coin sniffer technology. The subject is so complicated that it must really be treated in a long article.

To gain some understanding of coin doctoring and the urgent need to contain the coin doctoring problem, please read five previous pieces of mine. Last year, I devoted a series of three articles to the reasons why naturally toned coins are preferred and the topic of coin doctoring is discussed at length therein (part 1, part 2 and part 3). This year, I wrote two columns that address the PCGS lawsuit against alleged coin doctors, on June 3rd and on Sept. 8th. In these two columns, coin doctoring is defined, the lawsuit is analyzed, and the seriousness of the matter is emphasized.

(3) The third ‘Security’ issue relating to the PCGS SecurePlus program is the anti-counterfeiting technology incorporated into the new inserts. In each PCGS holder, there is a paper insert that provides information about the coin contained therein. A gold eagle with a shield is pictured on an insert in the PCGS holder that houses each coin that has been graded under the PCGS SecurePlus program. Unethical businesses in China have produced forgeries of PCGS holders with misleading grades printed on fake inserts. New anti-counterfeiting features are important, though less so than the coin identification and sniffer technologies that constitute the core of the PCGS SecurePlus program. (more…)

Billionaire George Soros declares: “Conditions for gold are pretty perfect”

Gold’s holding pattern is a gift to bargain hunters

Gold prices stood near the $1,350 range today on news that China’s central bank acted to slow inflation but fell short of raising interest rates outright. Gold’s holding pattern is a gift to bargain hunters because gold “should continue to remain well supported too, both by the growing debt crisis in the euro-zone peripherals, which could spill over to other countries at any time, and the expansion of liquidity on the back of renewed quantitative easing of U.S. monetary policy,” Commerzbank analysts said. Richcomm Global Services’ Pradeep Unni agreed, saying a weak dollar and a firmer euro “will continue to provide a bullish bias to the metal.”

The trend is “back up again”

Gold prices surged back Thursday as the euro rose against the dollar on optimism of a bailout for Ireland. “Having held $1,330, and with the dollar a bit weaker … we are just following the trend back up again,” the Bank of Nova Scotia’s Simon Weeks said. VTB Capital’s Andrey Kryuchenkov noted: “Should fear in the eurozone escalate, gold would draw fresh support from risk-averse buyers similar to what happened earlier this summer when investors scrambled for the safe-haven asset on fears of sovereign default.” Investors also are watching China for potential news of an interest-rate rise, which would only create a buying opportunity for bargain hunters.

Billionaire George Soros tips his hat to gold

With quantitative easing going full-steam ahead and U.S. interest rates low for the foreseeable future, billionaire investor George Soros said the precious metal still has plenty of kick to it. “The conditions for gold are pretty perfect,” he said Monday. Soros also said the present world order is on the brink of breaking down. “There is now a rapid decline of the United States and a rapid rise of China,” he said. “It is happening very quickly. … If they persist in their present course, it will lead to conflict,” he said, adding that China’s neighbors are already getting nervous about its rising global influence. Read more

Inflation surfaces at Walmart, not in feds’ data

Offering up its statistics Wednesday, the Labor Department said the core consumer price index, an inflation indicator that excludes food and energy prices, was unchanged in October. However, a new pricing survey of 86 products sold there – mostly everyday items like food and detergent – showed a “meaningful” 0.6 percent price increase in just the past two months, according to MKM Partners. At that rate, prices would be close to 4 percent higher a year from now, double the Federal Reserve’s mandate. “I suspect that when [Fed Chairman Ben Bernanke] thinks about reflation, he has a difficult time seeing any other asset besides real estate,” said Jim Iuorio of TJM Institutional Services. “Somehow the Fed thinks that if it’s not ‘wage-driven’ inflation then it is somehow unimportant. It’s not unimportant to people who see everything they own (homes) going down in value and everything they need (food and energy) going up in price.” Read more

The Fed sticks to its quantitative-easing guns

Ben Bernanke had to defend the Fed’s actions on Capitol Hill, where he briefed skeptical lawmakers on the QE plan’s merits on Wednesday, and some of his colleagues said the bank is likely to follow through on its entire $600 billion bond-buying program, citing weak economic data. “It looks like we’ll be purchasing at this pace through the end of the second quarter to add up to $600 billion,” St. Louis Federal Reserve Bank President James Bullard said. (more…)

By Jason Feldman – The E-Gobrecht

The Simpson dimes were being broken up. [ Heritage Long Beach Sale #1144] This would be a great opportunity to upgrade dimes in an advanced Seated Dime collection. The big problem was there were so many coins that few buyers would be able to purchase them all and no one did surface who did. Even more amazing are some of the coins left in the collection like a MS66 1844 Dime. Legend (Numismatics) has made available to me so many wonderful dimes that news of this sale created euphoria.

It would come as no surprise that most of the coins were either crossed over to PCGS at the same or in many cases a lower grade. Seeing the secure plus holders and Simpson pedigree would make this obvious. There was a lot bidding research needed prior to bidding. There were cases where buying too many coins early would limit the ability to chase coins later. One the highlights of the sale being a simply gorgeous 1872-S, I was not the only one to think so as the coin went to the moon.

One of my regrets of the sale was not being able to purchase the 1845-O dime in mint state. This is a very rare opportunity indeed but as a rule if you set a maximum bid and exceed it by 10% you have to know to stop. Being the under bidder was really not satisfying and maybe a higher bid was warranted. Another highlight of the sale was a gem 1860-S. Prior to the sale, Laura (of Legend Numismatics) and I spoke as to where the coin would sell. It was another on my short list. I think we both underestimated the demand for this coin. It went far over preauction estimates but I don’t doubt it to be well worth the hammer price $40,250. A nice return on investment considering one sold for roughly $7,000 in 1994.

One of the interesting notes about these coins is how many were not picked up by Seated Dime registry collectors but rather a just collectors and dealers. I know one dealer picked up roughly 10% of the coins and most all have been sold. There were many bargains in this sale too. Mostly the coins following the Simpson dimes went too cheap. One example is an 1858-O is a MS64 PCGS holder population 1 with 8 finer sold for just under $3,000 while the Simpson PCGS MS65 population 7 with one finer soared to $9,200. With the grade covered it was not really possible to call either coin much better than the other.

Some of the real steals in the Simpson collection came in the coins in NGC holders. The obvious assumption is these are coins that on a given day did not cross over at PCGS. A good many of them did regrade at NGC. In the case of the ultra-rare 1853-O MS64 the coin was simply overgraded. The coin did have a wonderful and original look to it but just had too many marks to be graded higher than MS62 in my opinion. The coin could easily be traced back with little effort to its previous holder. In general the ultra high grade trophy coins were the ones hitting the moon. Clearly one of two mint state 1845-O Dimes should be worth more than a other coins that sold in the low $20,000’s. This was a sale where knowledge was king. (more…)