PCGS Coin "Values" - why inflated?

It is widely-acknowledged that PCGS values are inflated. Although PCGS-certified coins appear to be worth more than a comparable coin from another grading service, a quick survey of ebay or Heritage listings for just about any coin shows even certified examples selling for much less than the PCGS listed value.

Does anyone know why PCGS values are inflated and whether there is a standard correction one could apply to arrive at the actual market value of a coin?

 

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PCGS would argue that their prices are based upon retail dealer sale prices.

I would argue that for classic coins, their prices are fairly accurate. For moderns, not so much so. Go to a dealer and look at a classic coin, then look at the price guide. I think you will find the price guides to be an accurate assessment of dealer's prices for a fairly-graded coin.

In short, these prices should not be confused with how much you would pay on e-bay or how much you can sell your coins for, but rather how much you would pay if you went to a dealer and paid retail price...Mike

 

I do not think that they are that inflated. It is a PCGS guide for PCGS SLABS. It is not that uncommon for me to see PCGS slabs go for more than they list at PCGS. Just as a for-instance; 1938-S Lincoln MS-66 red lists for $275, sells at Heritage for $250, but the same for NGC is as low as $60. It is probably high for the PCGS slabs, but in the ball park. It is not and should not be used for other TPG's or raw coins.

 

"Worth" is relative. I mean, what the exact "worth" of a 1938-S Lincoln in any grade (last I checked, a cent). How much is it worth if someone says it's MS-66? What about if someone else says it's MS-66? So let's say there were no "price guides" and someone actually tracked what these things actually sold for at auction (for that of course, there'd have to be enough sold to actually make the statistic valid). Then one took all those values and (for the sake of argument) averaged them (not the only way to determine "worth" but probably the easiest way for this example).

Thing is, at some point the list of averages becomes the "price guide" and "worth" of the item.

Now, it makes sense to inflate these figures so that anyone considering getting a coin graded will see that a PCGS 1938-S MS-66 slabbed coin is "worth" more than a NGC 1938-S MS-66 slabbed coin, according to the "price guide." Once you see that, where are you going to have your coins slabbed?

It's a bunch of meaningless numbers. Anyone who's ever bought or sold a coin knows that. Personally I look at past auction results and determine that price I'm willing to pay, over looking though guides or sheets.

 

I would have to agree that on "classic" coins PCGS is fairly commensurate to retail. As for the modern stuff I think the "population" comes into play.
With advances in technology at the mint I think we all know there are a TON of PR69DCAM coins out there. I'm sure I have multitudes. Problem is will I spend $30 or so to "prove" it? Not unless I'm a multi million dollar dealer or TV salesman.

Case in point. About 6 months ago I sold a 1998-S Silver Proof Quarter. REALLY a nice coin that I felt might get PR70DCAM. Instead I let it go raw and it sold for over $30 on Overstock. I really did not expect it to get that high and the buyer was thrilled.
NOW, had I slabbed it and it came back as a 70DCAM I could have really made a killing. I guess I sold the coin and not the holder as it were. Drop that coin to a PCGS69 and it gets $15-20. I'll never know for sure but I made a few bucks and the buyer was happy.

Also factor in the Registry sets. For all I know the buyer has had it slabbed for that precious grade. Hope he got it if he did. So many people competing for the single point in grade. Kinda makes you wonder doesn't it?

 

I find their prices seriously inflated....

One idea I heard for this is that they price the coins based upon the prices they are given by the senders of the coins.

What is meant by this ... is .. when one sends them a coin for grading and slabing, one places a price on it. The sender of the coin actually values the coin. PCGS grades the coin and have a graded coin with that given value. But the sender mostly has over valued the coin in that ... if the shipment gets lost...that is the value for insurance. Also, most of the time coins will grade at or below what the sender was dreaming the coin would grade at....ie another reason the values are inflated.

It would be nice if PCGS would confirm this theory I have heard.

Clearly PCGS values in the area of my collection are over actual market.

Retail stores I know sell at red book ...which is lower than PCGS value.

 

Per PCGS;

"The prices listed in the PCGS Price Guide are the average dealer asking prices for properly graded United States coins. The prices are compiled from various sources including dealer ads in trade papers, dealer fixed price lists, significant auctions, and activity at major coin shows. Prices for the most actively traded coins are updated daily. Other issues are updated as needed."

 

I presume you're talking about the prices on their website.

Yes, those numbers are very high - usually 40% or more. I have never paid anywhere near those prices for any coin.

Those prices have nothing to do with retail. I'm guessing here... I think they are for estimating insurance value for shipping purposes. You want a high number to guarantee replacement cost.

And since almost every order requires shipping, thay have to have a set of prices. They want 'em high so that if the market swings up a little their customers don't get caught short.

Also remember... PCGS does not sell coins. Those are not "their" prices in the sense that a dealer has prices.

As far as a standard correction value to arrive at a real price... forget it. Use market pricing sources, such as greysheet and auction listings.

 

Yes, those are the numbers I was referring to. What other PCGS values are available?

I would argue that the most important use of the PCGS listings (at least what I use them for) is to estimate what a coin is worth so I can make a realistic bid at an auction and avoid paying more than it's worth (which I would define as what I would be able to sell it for if I wanted to sell it after I bought it). But I know I shouldn't pay as much as the PCGS listed value. I always decrease the value by one grade to get a more realistic estimate.

What the coin world needs is something analogous to real-estate "comps" used by appraisers. The value of a house is, by definition the price it sold for recently and as a next best estimate, the price houses sold for that are as similar as possible.

Heritage Auction Gallery has a very nice feature for comps. Each coin listed has the "hammer price" of the last several coins sold of the same type and grade as the listing. I find that very helpful. Since the grading service is specified for each one, it helps to assess the the impact of the grading service on the price.

 

That makes sense.

I've noticed that not all PCGS slabbed coins of the same grade are equivalent. Some of them are ugly, some really beautiful but they both have the same grade. In some cases, the nicer looking one might sell for more, but not always.

 

Hmmm... personally, I wouldn't do that.

The PCGS values tend to be about 40% high. Changing grade by one point can swing the value either much MORE than that, or much LESS. In either case, it often gives a misleading price.

For instance, let's look at a 1923 Saint. In lower MS, it's worth not much more than bullion. The price barely changes with a point or two in grade; it's common stuff.

Here are the real values (I'm using greysheet).

AU58 $690
MS60 $700
MS62 $720

Let's say you were considering a MS62. If you use PCGS guides and dropped down a point to MS61, PCGS says that's worth $900 ! WAY overpriced. You could pay too much.

That's b/c in these grades, we're in a "flat' region of price, where +/- 1 point has almost no effect, so dropping a point won't overcome PCGS' 40% inflation.

But let's say you're considering a MS65. For this date, that's the "break point" where the price skyrockets. It's a condition rarity. The real greysheet value is $3,300. Drop down a point to MS64 price, and PCGS says $1,325. No way you get a 65 for that, so again the method breaks down.

Better to forget PCGS entirely and use their prices only for shipping insurance values, where unrealistic high prices mean a little extra insurance cost at worst.

That's where I go for values. That and Teletrade and greysheet.

 

900fine...great analysis....well done

 

I agree. Thanks.

 

PCGS Price quote vs. reality.

OK, here's their "price guide"...

http://www.pcgs.com/prices/

Now here is a link to David Hall's retail salable items....

http://www.davidhall.com/gallery.aspx

I feel like the rest is simple math.
Just a matter of understanding how "marketing" works, and putting two, and two, togather.

 

This very question was brought up on the CU Forum a few weeks ago. Finally David Hall " homerunhall ", founder of PCGS, chimed in with his opinion which I tend to agree with. It seems if you search the Heritage site in most cases you can find a PCGS coin that sold for close to what the PCGS price list states.
Here is a link to that conversation.
http://forums.collectors.com/messag...alk prices, is PCGS price guide overinflated?

 

Grading companies charge more to grade coins that have a higher value. If they tell you the value is higher, you pay more to have it graded, they make more money. That's why.

 

When buying raw coins, I refer to the Grey Sheet. I don't buy many slabbed coins if I can help it, but there is a Grey Sheet for those too.

I have found, when buying raw coins from a dealer, the Grey Sheet has never failed me once. For easily found coins, the actual price is usually close to "bid"; for harder to find coins, closer to "ask."

Anyone have any experience using the Grey Sheet edition for slabbed coins?

 

Reason:
Because they can.