Third Party Authentication and Grading of Coins

Authenticity and evaluation are vital matters for any collection; this chapter deals with having a third-party grading service authenticate your collectibles. These services are most widely available for coins, sports cards and comics. Use them as needed, but it is important to consider the cost, quality and value of grading services for your collectibles. For many items, especially lesser-valued pieces, grading is probably unnecessary.

For coin grading, the American Numismatic Association (ANA) adopted Sheldon's 70-point grading system and, between 1973 and 1977, worked to establish standards for all series under the leadership of numismatic luminary Abe Kosoff. Experts from all coin specialties collaborated with Mr. Kosoff, and the first official ANA grading guide was published in the 1977-1978 time frame. Initially, it recognized three grades to evaluate Mint State coins: Uncirculated or MS-60; Choice Uncirculated or MS-65; and Perfect Uncirculated or MS-70. Unfortunately, the third grade (MS-70) was mostly theoretical, and the two remaining designations quickly proved inadequate for the marketplace. MS-63 (Select Uncirculated) and MS-67 (Gem Uncirculated) were added and worked for awhile before the demand for closer evaluation required even more grades. Eventually, all numbers between MS-60 and MS-70 were employed and the adjectival equivalents often dropped.

NGC and PCGS remain the acknowledged leaders for coin grading. The secret of their success is that to date, they alone have maintained sufficient dealer confidence to be traded routinely on a sight-unseen basis. As such, while we will list the contact information for several grading services in the Appendix, we will address only NGC and PCGS in the text.

Comics and cards are generally graded on a ten-point scale, with a '10' being the most perfect quality for that particular item. Several grading services are listed with their contact information for each of these collectible genres in the Appendix. For comics, Comics Guaranty, LLC (CGC) is recognized as the most trusted grading service. Heritage Comics (HeritageComics.com) offers a discount off of standard CGC grading costs, and more information can be obtained from the company website.

Sports card authenticity is often trusted to one of three major grading houses: Professional Sports Authenticator (PSA), Beckett Grading Services (BGS) and Sportscard Guaranty LLC (SGC). Talk with your local card dealers about which grading service they give the most credibility to. Collectors of Sports and Celebrity autographed items use PSA/DNA to authenticate their collectibles. Again, their website (see Appendix) is the best place to find submission instructions.

Stamp collectors frequently rely on the grading services of Professional Stamp Experts (PSE). The PSE website (see Appendix) contains detailed instructions and an online submission kit which are good guides on how to safely submit stamps for grading.

What Should You Certify?

Certification is an expensive proposition that should not be approached hastily. At $15-$85 an item, the total bill for even a small collection can easily run into the thousands of dollars. Few people are prepared to make that kind of commitment. Naturally not all collectibles benefit equally from being certified. The rule of thumb, of course, is that the finished product has to be worth more than the raw (ungraded) item plus the certification fee. But just what does that mean?

There are two practical reasons to certify a collectible: determine authenticity and to add value. When a dealer considers buying an uncertified collectible, he is trying to guess how the grading service is going to grade it, always giving himself the benefit of the doubt in case of error. For example, if a dealer is looking at your 1886-O Morgan dollar and he is trying to decide whether NGC is going to grade it an MS-63 (valued at $1,780) or MS-64 (valued at $5,300), he is going to figure it as an MS-63 coin to be on the safe side, and offer a price commensurate with an MS-63 coin. This is only fair, as the alternative would leave him with both the risk and the expense, and that is not a formula that works in business. You, however, could have the coin certified before attempting to sell it. Your upside is that if the grading service calls it an MS-64, you have a $5,300 coin. The downside is the cost of the grading fee. The bottom line is that this issue has a significant value spread between grades and (in our opinion) the risk is worth the expense.

Submitting Your Coins

NGC and PCGS both operate primarily through authorized dealer networks. Most of these dealers will gladly submit your coins to their respective grading services on your behalf. The dealer is often compensated with a rebate of approximately 20% of the grading fee. Don't ask him for part of the rebate, but do ask him to preview the coins and help you decide which coins to certify. Most authorized dealers are familiar with both services' standards and can warn you off submitting coins that are most likely headed for a "body bag" (due to damage).

If you live within driving distance of an authorized dealer, make an appointment to be sure he is available to preview them. If you are not within a reasonable driving distance, you may ship your coins to an authorized dealer of your choice. As this situation adds an additional element of trust, you should pick someone you feel is trustworthy. A good rule of thumb is to select an authorized dealer who is also a member of the Professional Numismatists Guild (PNG). The PNG is the most prestigious numismatic fraternal organization because each new candidate must undergo a detailed background check and be approved by the entire membership. They must then operate under a strict Code of Ethics and accept binding arbitration in the event of disputes. Contact information for the PNG is also included in the Appendix.

Declaring Submission Value for Insurance

When you prepare to submit your collectibles for grading, you will be asked to declare a value for insurance purposes in case the package is lost or the items are damaged either in transit or at the grading service. Since grading and shipping fees are impacted by this decision, you need to weigh the value ranges of the service levels with the likelihood of loss or damage, then select a liberal, yet realistic value for the items.

TIPS FOR HEIRS: As a non-collector, getting 3rd party grading for the significant items in your inheritance may give you a far greater comfort level in assessing the real value of the collection. Because you are probably unfamiliar with the "language" of the hobby, to say nothing of the nuances, we recommend that you spend additional time in qualifying the authorized dealer you consult. Speak plainly about your goals and ask lots of questions. If you're not sure about the meaning of an answer, don't hesitate to say so and ask for a more detailed explanation. You can't know too much about your inheritance; only knowing too little can hurt you.