THIRD PARTY GRADING --- YOUR PERSONAL EXPERIENCES

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I thought it would be elucidating to start a thread dealing with members' personal experiences with Third Party Grading (TPG) ---- not your subjective opinions or feelings about TPG in general but the actual experiences (both positive and negative) that you've encountered when buying TPG notes.

I've just received two PMG-graded notes that I bought on eBay and I will relate my impressions very soon!

We often forget that "American" grading standards have traditionally been much more liberal (i.e., much looser) than "Canadian" and "International" grading standards. Since the biggest third-party grading companies (PMG & PCGS) are American operations it's logical to assume that these companies will be applying the looser American grading standards when they grade Canadian and foreign notes. The inevitable result of all this will be an undesirable erosion of the more conservative Canadian and International grading standards.

In view of the above, an impartial Canadian-based grading company having the stature and recognition of ICCS is badly needed. However, if Canadian dealers and collectors insist on sending their notes to American companies for grading this will never happen! However, I can certainly understand the appeal of sending out an EF note to a US grading company and having it come back as an AU .....  

I recently bought a couple of PMG-graded notes on eBay (one Canadian, one foreign) just to satisfy my personal curiosity. When I receive them I'll submit my report.

I recently took one for the team and bought a PMG-graded $1 1937 Osborne-Towers note on eBay. It was described as follows: "BC-21a 1937 $1 Bank of Canada PMG 40 XF EPQ Nice!". It cost me US$89.99 with Buy-It-Now/Best Offer. I should have checked the Charlton catalogue before bidding as an EF is priced at only CDN$75.00 but that's another story ......

I do like the PMG holder which is constructed from stiff clear plastic. However, I most certainly don't like the grade assigned to this note. The front of the note certainly looks EF at first glance so I was initially quite pleased. However, a detailed inspection of the back reveals unambiguously that this EPQ ("Exceptional Paper Quality") note has been washed/pressed and generally "tidied up". The back displays several of the tell-tale signs of processing, i.e., ripply horizontal margins, dark fold lines when holding the note up to the light, dirty corner tips and edges but clean (likely erased) margins, and no embossing of serial numbers evident. I would grade this note myself as "VF-EF (Pressed)". The back of the note is very "tired" looking, not clean, bright and fresh as a true EF should look. It has three vertical folds, one horizontal fold, two diagonal corner folds and evidence of crumpling near the centre.

The quality is basically what I expected (albeit not what I hoped for!) as an American EF is typically equivalent to a Canadian VF-EF. However, I was very surprised that this less-than-fresh note would qualify for an EPQ designation. I used to assume that EPQ implied an original (never washed/pressed) note but now I'm not so sure. I suspect that the EPQ rating was given in this case because Bank of Canada 1937 notes were printed on a very durable (virtually indestructible) paper and they retain their crispness even after a significant amount of circulation.

Out of the holder I would value this note at CDN$65.00 at the very most so I'll be taking a loss on this one.

This initial experience has made me very wary and I don't think I'd want to buy another PMG-graded note at full catalogue value on a "sight unseen" basis. It might be different if I was at a show and had the opportunity to view the material in person.





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The second PMG-graded note that I bought on eBay was from Uruguay. It was described as follows: "1887 20 cent Uruguay Banco Nacional Oriental PMG50 AU".

This note wasn't awarded the EPQ designation which I found to be interesting since the note appears to be entirely original to me (i.e., never washed or pressed). However, it does have a 3 mm nick in the top edge and a 1 mm nick in the bottom edge, which are not mentioned on the holder. Also, the paper is slightly toned. The paper toning and the edge nicks are probably the reason for the lack of an EPQ designation.

The eBay seller described this note as "A very pretty note with light circulation and no tears, pinholes or other problems." He obviously didn't spend much time inspecting it and he merely accepted the PMG grade at face value. Caveat Emptor!!

Except for the edge nicks, I found the overall grade to be acceptable in this case although EF+ or perhaps EF/AU would be the proper grade on the Canadian and International scales.

The conclusion to be drawn from my (admittedly limited) foray into the world of PMG grading is that if you want your notes to be graded according to the more liberal (i.e., looser) US grading standards then send them to an American grading company. However, if you want your notes to be graded according to the more conservative (i.e., stricter) Canadian/International grading standards then you should send them to a Canadian grading company. No ifs, ands or buts!

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First of all, I have to say that I am a very picky collector. The first TPG note I bought was graded UNC 64 by a Canadian grading company and I was extremely satisfied.   Then I saw an UNC 64 note graded by the same company for sale on Ebay. I thought I would receive a perfect note like the first one I bought. When I got the 2nd UNC 64 note, I was so dissapointed because three corners were round and there was a counting crease. I had to sell back the note on Ebay because I didn't like it.  

At the last Nuphilex show I bought an UNC 66 note graded by a US company and I am really satisfied. I had the chance to carefully verify the note before I bought it. I think the lesson I learned from my experience, is to buy in person and to learn how to grade. This way you know exactly what you're buying. If you agree with the grade, buy it, if you don't agree, buy something else !

The second PMG-graded note that I bought on eBay was from Uruguay. It was described as follows: "1887 20 cent Uruguay Banco Nacional Oriental PMG50 AU".

I could not resist removing this "AU50" Uruguayan note from its PMG holder in order to satisfy my curiosity. It cost me "only" US$60.00 so the downside risk is minimal. As I correctly surmised, the note is entirely original (i.e., never washed or pressed) and it is crisp and crackly. However, there is very significant evidence of circulation and the grade is nowhere near AU according to accepted Canadian grading standards. It is definitely only EF at best on the Canadian scale.

I wish to stress that I am not criticizing PMG grading per se as PMG grading is entirely accurate relative to accepted US grading standards and criteria. However, as noted in my first post above, US grading standards are much laxer/looser than Canadian grading standards. Thus, if you want to "enhance" the grade of your Canadian notes you should definitely send them to PMG or PCGS as your Canadian-graded EF note would undoubtedly come back with an American AU rating and a Canadian-graded AU note with one or two counting creases would probably come back as an UNC-60 or possibly an UNC-63.  

I suppose the day will eventually come when American grading standards will prevail over Canadian and International grading standards and perhaps we should prepare ourselves for that day. Ultimately, the most important thing is that everyone, in every country, uses the same grading standards, whatever standards those may be.

Another important thing to remember is that if you have a note that is graded, say, EF by an American grading company then it is not really kosher to use the EF price in the Charlton catalogue to determine its actual value .... !  

Another important thing to remember is that if you have a note that is graded, say, EF by an American grading company then it is not really kosher to use the EF price in the Charlton catalogue to determine its actual value .... !  

I recently took one for the team and bought a PMG-graded $1 1937 Osborne-Towers note on eBay. It was described as follows: "BC-21a 1937 $1 Bank of Canada PMG 40 XF EPQ Nice!". It cost me US$89.99 with Buy-It-Now/Best Offer. I should have checked the Charlton catalogue before bidding as an EF is priced at only CDN$75.00 but that's another story ......

As Ottawa mentioned above, the Canadian prices should not be used for notes graded by US standards. But what is actually happening is that a premium is being charged to the Canadian prices for the notes graded to the laxer US standards. That's a double whammy!

As Ottawa mentioned above, the Canadian prices should not be used for notes graded by US standards. But what is actually happening is that a premium is being charged to the Canadian prices for the notes graded to the laxer US standards. That's a double whammy!

Jasper makes an excellent point. Many eBay sellers are asking a significant premium over Canadian catalogue values for notes graded by laxer American standards (I got caught myself with the $1 1937 Osborne-Towers note illustrated above!). This inconsistency may be obvious to experienced collectors but it would be much less obvious to new collectors ....

I used to love the excitement of eBay when it was a conventional auction site but now it seems to be in danger of being taken over by the "Buy-It-Now/Best Offer" way of doing business with unsold (i.e., overpriced) material being recycled ad infinitum ....  

I recently took one for the team and bought a PMG-graded $1 1937 Osborne-Towers note on eBay. It was described as follows: "BC-21a 1937 $1 Bank of Canada PMG 40 XF EPQ Nice!". It cost me US$89.99 with Buy-It-Now/Best Offer. I should have checked the Charlton catalogue before bidding as an EF is priced at only CDN$75.00 but that's another story ......

I do like the PMG holder which is constructed from stiff clear plastic. However, I most certainly don't like the grade assigned to this note. The front of the note certainly looks EF at first glance so I was initially quite pleased. However, a detailed inspection of the back reveals unambiguously that this EPQ ("Exceptional Paper Quality") note has been washed/pressed and generally "tidied up". The back displays several of the tell-tale signs of processing, i.e., ripply horizontal margins, dark fold lines when holding the note up to the light, dirty corner tips and edges but clean (likely erased) margins, and no embossing of serial numbers evident. I would grade this note myself as "VF-EF (Pressed)". The back of the note is very "tired" looking, not clean, bright and fresh as a true EF should look. It has three vertical folds, one horizontal fold, two diagonal corner folds and evidence of crumpling near the centre.

The quality is basically what I expected (albeit not what I hoped for!) as an American EF is typically equivalent to a Canadian VF-EF. However, I was very surprised that this less-than-fresh note would qualify for an EPQ designation. I used to assume that EPQ implied an original (never washed/pressed) note but now I'm not so sure. I suspect that the EPQ rating was given in this case because Bank of Canada 1937 notes were printed on a very durable (virtually indestructible) paper and they retain their crispness even after a significant amount of circulation.

Out of the holder I would value this note at CDN$65.00 at the very most so I'll be taking a loss on this one.

This initial experience has made me very wary and I don't think I'd want to buy another PMG-graded note at full catalogue value on a "sight unseen" basis. It might be different if I was at a show and had the opportunity to view the material in person.

[size=12]I've just sold the above-mentioned note on eBay in an unrestricted/unreserved auction (Title: "BANK OF CANADA $1 1937 OSBORNE, PMG CERTIFIED EF-40 EPQ") and it realized a mere $64.01. Thus, I lost about $30 on this PMG-graded note! I for one won't be rushing out to buy more PMG-graded notes ..... !!![/size]

One thing I can say specifically about BINs is that, most of the time, the asking prices are too high, leading to a loss of interest by bidders.  When I list notes with fair prices and below-book prices, I find my items tend to get overlooked because most people assume that the item is overpriced.

So true!  And many sellers are also listing notes at a high starting bid which also turns off potential buyers.  Fewer sellers seem to have enough confidence in the market to use low starting prices... However-- this is understandable as sellers do get turned off/ and there seems to be a slump.  

BIN is not the enemy... "Best Offer" is

Well I think they're both problematic.  Unfortunately there are a few unscrupulous sellers who are asking high BIN prices and astronomical Best OFFER ceiling prices (which a lot of people just don't get).  I have bought a few items (only 1 time per seller) at high starting bids and have almost always been turned off as the notes have either been pressed or over-graded. I thought I was avoiding a bidding frenzy... but in the long run it wasn't worth it.

I, for one, used to watch eBay on a regular basis, and have had a hard time tuning into it at all lately.  I might look at their listings a maximum of 1 X per week (as compared to everyday back in 2003/04).  

Buyers are getting wary of poorly graded notes, not buying in person, TPG, and speculative US $ prices.  Its pricey to list the items too.  And then there's Paypal!
IMO: The above is not good for the market - nor the hobby.  Now that the shows are so good, and there's so many better live auctions, I wonder how online auctions will do?  IT seems as if there's a never-ending-supply of redundant common "filler" stuff, and only a few interesting desirable notes.

UPDATE
Apparently an HPA insert was sold on eBay for about $40 (condition unknown).
UNC notes of this insert have been selling between $500 - $600
Does that low winning bid imply there really are less people following eBay?

I've just perused the dealer ads in the latest issue of that great monthly magazine "Bank Note Reporter" ( www.banknotereporter.com). I used to think that Third-Party Grading would have the effect of stabilizing and consolidating grading terms and grading standards but the two major US grading companies (PMG & PCGS) seem to be conspiring to do just the opposite!

Firstly, PMG uses the terms "Uncirculated" and "About Uncirculated" whereas PCGS uses "New" and "About New" respectively. One naturally wonders whether "New" and "Uncirculated" are synonymous. They probably are, or at least I hope they are. However, what's the difference between a PCGS "Gem New" and a PCGS "Superb Gem New"?! ---- Holy cow, what will they think of next!

Secondly, PMG uses the term "EPQ" which denotes "Exceptional Paper Quality" whereas PCGS uses "PPQ" which I believe denotes "Premium Paper Quality". However, to the best of my knowledge, neither company defines unambiguously what EPQ and PPQ really mean as they are frightened to address the sensitive issues of washing, pressing, cleaning and doctoring. I was always taught in my science courses that whenever you introduce a new scientific term you have to define what it means!

By way of example, should we assume that a PMG MS67 EPQ is the same as a PCGS Superb Gem New 67PPQ  

I thought I'd seen everything but now I'm not so sure! If eBay is anything to go by, it seems to me that a lot of notes that have a small "problem" or two (trimming, staining, rounded corners, etc.) but are otherwise in high grade are ending up in PMG and PCGS sealed holders and that a lot of people are buying the grade stated on the holder rather than the note itself, but that's another story.