Private note grading ruining the hobby?

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RS dude has a good point, but shows exactly one of the problems. That is the habit of pulling notes from holders to inspect them and return them when complete. This over fondling of paper turns them into lower grades. Uncs become AU's.

The best part of third party grading is the protective holder which prevents fondling: it also prevents good grading by the would - be buyer. As there is no school to attend to learn how to grade notes, we all are taking a chance when selecting the grading company. Time will cull out the really bad ones, hopefully by not hurting too many people.

Rick

rachelsprivates,I stated I was not trying to be confrontational and you responded with:

Did you even bother to read the essay given in the link to the original message of this thread?  Doesn't sound like it.  You don't mean to sound confrontational, but you're certainly coming across that way.  My distaste is not personal whatsoever.  Read the essay before passing judgement please

I did read the article,another OPINION,as is mine.And that is all it is.Then again you state I should read the essay before passing judgement? Who is passing anything.I started this conversation with"I can see both sides" I have stated I HAVE NEVER BOUGHT A GRADED NOTE. Have you even "BOTHERED" to read any of my previous writings on this subject.I have stated on numerous occasions I DETEST GRADED NOTES but that is a personal thing.

Another thing mentioned in my post was I am not trying to be confrontational.You chose not to believe that then state I'm coming accross that way!! Lets get one thing straight,here and now.I say what I mean and mean what I say. You can accept it or not,just as grading is taking the market in new directions.

You picked out a few statements in my reply to you,yet you ignore about 20 pertinent questions.That says volumes about where you wish this discussion to head.

Is this about the money? It would seem that way.from your article?:from your?article:

There was a time in Canadian coin collecting when 11 grades of mintstate did not exist. When standardized grading was introduced to coins, collecting changed forever. It became possible for people all over the world to compare collections if they all had their coins graded independently by the same company. Comparing coins created envy as someone else invariably had nicer pieces than you. Thus began the race to find the highest graded coins of each year and type. Prices soared for the top grades as the most elite collectors traded the best pieces among themselves. At the opposite end of the grading scale, circulated coins suffered. Attempts to scale their values against the highest-graded pieces failed. Who wants a collection of second- or third-rate coins? Also, population statistics proved that most coins exist in bigger numbers than there are people to collect them, and so the coin market stalled, and it is now commonplace for most coins in grades below MS-63 to trade for big discounts against "Trends".

          The relative scarcity of quality paper money was underrated until recent years. As more collectors entered the market for paper money, prices moved up across the board. This adjustment is perfectly natural in response to simple supply and demand theory. Private third-party grading will not change the supply side of the market. All it will do is change the perceptions of collectors who will chase after the top-graded pieces and pay exponentially more for them than lower grade pieces. The result will be the same as what happened to coins in the past two decades, i.e. circulated paper money will trade for big discounts against catalogue values. What's worse is that this may have a detrimental effect on new collectors who typically start buying cheaper material before progressing to choicer material. If new collectors start by paying too much for cheaper material and become aware of their mistakes later on when they try to upgrade, they may feel deceived or lose confidence, with the inevitable result of quitting the hobby.

The underlying themes of both paragraphs are monetary imo.I disagree with the article almost 100% but I will not determine the future the buying public as a whole will.That's really what we're talking about here,is it not?

Tools such as auctions,grading services, formulas, etc. do not determine price, they are only tools to help manage risk. If these tools determined price, there would be no risk and with no risk comes no reward. If any particular tool helps people they should use it, as long as they know it's only a tool and it is not the market.
Market always determines true price regardless of the above.


 Anyone that cares to do due diligence on a note graded by ANY grading service can and should BEFORE purchasing it.I have and did for my wife.Call them up,give them the # and you get it all.I will not go into detail as this is an exercise every buyer can and should do before purchasing a note they can not view in person.
If memory serves PMG has a grading panel of 3 individuals,there is history.

Is it any different with a car? Do you check it out even if it's a used certified BCAA vehicle? Uh,if you don't your crackers aren't salted! Of course you take it to an independent auto mechanic,he certifies it and you own a new vehicle.
Do you purchase a new home without a inspector?Try it,you're banking institution will have a thing or two to say if you don't.Independent "GRADING",another name for it folks.Done in almsot anything of tradeable worth.

Do you buy a stock without independent research to verify company claims? Or you pay someone to do it for you.In either situation you have an "Independent GRADER" working for you.
Your job becomes to verify the info to the best of your ability the "GRADERS " opinion.
For five years I have paid ZERO attention to the opinions of others outside of the market prices I see camp and it has paid off handsomely.

Here's another opinion:http://cgi3.ebay.ca/ws/eBayISAPI.dll?ViewUserPage&userid=themonetaryman

Many of the comments here have been very worthy of consideration,agendas are another matter.

I can add so much more,but with that said I'm withdrawing myself from this conversation.It is a subject that has been 'talked' to death.Everyone has an opinion.Ultimately,what 300 members here have to say will not change market place perception,nor International pressure on our market.

Good night folks,have at 'er,Mexican Pina Colada's are whispering in the wind

My major concern is that I am not in Puerta Vallarta enjoying the warm winds as BN is !!

While I have not had a chance to continue the eBay experiment with PMG notes there was a very, very good result from the first group. Additionally, there has been strong demand from my PMG notes on the price list. Without an exact calculation I am certain that 75% have been sold and the average price would be at least 25% MORE than the same note non-PMG. These were almost all premium notes that I thought would grade in the 65 range and that is how they came back, ranging from 63-67 with a few higher and most at 65 or 66. At this kind of premium it is well worth the effort and the grading fees, which averaged about $30CDN pernote.

The lack of grading skill among collectors ( & dare I say dealers ??!!) makes collectors move toward graded notes. Would it be fair to speculate that if you opened and graded a hundred PMG notes that you might find 15-20% overgraded by Canadian standards ? I will venture that % range, at least for discussion.

OK, now view a hundred "raw" notes from auctions, dealer tables, dealer lists etc. My experience says that a solid 35-50% are overgraded - AND THAT INCLUDES SOME OF MINE. We all have a % of error but hopefully nothing near 35-50% !!

If these ROUGH percentages are true and I thing they may be, then a collector who does not have total confidence in their grading ability will get hurt financially less often with graded notes. Comments ??

On another vein, when eBay got going many predicted the demise of shows and dealer lists. Not so, but eBay has a segment of the market. Same will be true of graded notes. It will be a solid piece of the market but whether dominant, as in coins, remains a question. With notes there is a greater desire and need to touch the note and see it raw to grade it. That may have an adverse effect on the prevalence of graded notes, but only a moderrating effect.

I am selling graded notes and will sell steadily more of them. I WOULD RATHER WE DID NOT HAVE GRADED NOTES PERIOD. But I am not going to change or stop the move toward graded notes. A lot of my customers like them and that % will increase. As a dealer, I would be unwise and ill-advised to ignore graded notes.

I can see that a collector would prefer raw notes, I do too. But market forces will dictate that graded notes will grow as a presence and a share of the notes sold.

Cold and rainy here tonight - how much is a flight, BN !!!

OleDon

I have few graded notes in my collection. I have rarely returned notes, with an AU-50 graded note being one that I returned. I was not expecting to find 4-6 pinholes, ink stains and folds in the note. I would have graded it about EF at best.

I think it is a matter of having a thermostat, so to speak, in knowing the grading party and how they grade, just like we know the dealers and how they grade or various sellers on ebay.  At least, most sellers on ebay don't grade and we know from experience that scans usually look better than the notes. With graded notes, we do not expect to get that note that Archey showed when we buy an AU-50 as I did not expect to get the note I got. I think Archey's is more aggressively graded though. However, at least his above mentioned the foxing. This one did not mention the pinholes, creases, etc. I thought that note was an exception but now I would assume AU-50 is a euphemism for about EF or VF+.  The problem is some dealers/auction houses will not accept returns on graded notes while returns are accepted on raw notes making 3rd party grading MORE risky as far as managing risk.  

The general perception I assume is that current 3rd party graders (TPG) cater to their clients (those who are grading notes in order to sell them) and will be the most optimistic in grading if there is a gray zone. If we already have a note we are keeping, why would we want to have it sealed unless the intention is to sell it for more than it would otherwise fetch as a raw note.

What we now need for the "checks and balances" is a grading firm that will protect the buyer's interests, just like there are buy-side analysts as well as sell-side analysts in the equities industry. Perhaps every note should be doubly slabbed (lol), once by the sell-side and again by the buy-side so we have a range of a low- and high grade that can be potentially assigned to a note.   In reality, when buying a note, collectors are more harsh in grading than when selling a note just as are dealers. Just like in quantum mechanics, atoms have probability clouds, so are the grades of notes a probability cloud representing the group of probabilities that a particular note may be assigned a particular grade by the universe of graders. The current 3rd party grades most often represent the upper bound of this range of grades that may be assigned. We need a party to assign a lower bound too now so we have a real idea of what we are getting. Perhaps I say this tongue-in-cheek because it is just too awkward in practice.

When you get an overgraded TPG note, you have bought the grade, not the note. You have overpaid for the actual note and paid some for the "goodwill" in the TPG grading. Unfortunately, you may or may not be able to pass that on to the next person who buys it as for me there is no intrinsic value in having the TPG aside from the note itself. I assume most buyers will also return an overgraded TPG note if they could.

These are just my opinions and I have no strong feelings either way. I am just not prepared to pay a premium for a TPG graded note when the buyer of these is subject to the same pitfalls that a buyer of raw notes may be.

rachelsprivates:
"I want to apologize for misinterpreting what you said in your posts. I realize you were not being confrontational and I had no right to say that"

Accepted and apreciated .

Although I stated I'd be withdrawing from this thread,it's pretty dam hard when you receive a sincere apology and the "DON" of Paper Money wades into the conversation  

rachelsprivates:

Sure, I'm concerned with monetary issues.  Most collectors are.  How many collectors buy notes without thinking about future returns?  Wouldn't we all love to know how it feel if money was just an object!
Standardization would be great if it didn't mean dropping our collective standards to meet the needs of a few bad graders.

Valid points,indeed.You make,imo,an irrefutable point,our standards will/are/do drop with the proliferation of graded notes in to the hobby.

Now Don,I have no idea of flight costs from your part of the Country,the Antartic as it were!!lol
What I can inform you of,and have in the past,accomodation is free.The sun tan lotion is $2000 a bottle but the sun tan lotion..... 8-)

back on topic.Don says:

OK, now view a hundred "raw" notes from auctions, dealer tables, dealer lists etc. My experience says that a solid 35-50% are overgraded - AND THAT INCLUDES SOME OF MINE. We all have a % of error but hopefully nothing near 35-50% !!

This has also been my experience as well,whether at auction,ebay,dealers stores,where ever.My suspicions are that far too many notes are overgraded because of a lack of skill and knowledge.
If I were to believe that all these notes were purposely 'bumped' up a grade or two,you'd have to conclude the hobby has been lost  the way of circus carnival game.

Although once in buying thousands of notes(ok!maybe A thousand),I RECEIVED A UNDER GRADED NOTE from a dealer.Couldn't believe my eyes so had 3 other CPMS members view it,all came to the same conclusion,the note I bought as AU was absolutely Unc.
That darn dealer,told him about it,tried to re-sell back to him for full Unc price but no dice,eh Don !!

jasper.
Excellent and well thought out comments .
Hope this discussion continues with the high quality of thought this thread had developed into!

Weather report-89.3 F at present-Mexico has not adopted  Celcius.You do the math! 8-)

jasper:

QUOTE:
I thought that note was an exception but now I would assume AU-50 is a euphemism for about EF or VF+.  

This reminds me of the time when I attended my first show in Singapore where there were English, U.S. and other dealers from all over the world. Each dealer graded their notes according to their respective standards and I found that a note graded as "good VF" by an English dealer would be "AU'' by the U.S dealer and "EF" by IBNS standards. But to be fair, prices were not all that different, only terminology.

justeo

Justeo:

How true.  We always have to remember we are buying the note, not the grade assigned as that is always relative to the grader's standards.

There's a couple of points that really concern me:

1st that its the opinion of very knowledgable members here that dealers/collectors have such poor grading skills which doesn't instill confidence in their abilities!!  

graded a hundred PMG notes that you might find 15-20% overgraded by Canadian standards

or

experience says that a solid 35-50% are overgraded - AND THAT INCLUDES SOME OF MINE

I find this troublesome because whenever a dealer inspects a note of mine, they tend to search/sniff it like RCMP narcotics dog for any flaw, and then talk about it as if its "not bad" or a grade lower than it should be when banting about a $ figure.  I know I don't have to sell it but this kind of inspection often goes after I'm interested in buying.   This thread/discussion doesn't instill any confidence I have in the whole process of grading.  I think my point is...that most of the members I know, and the panelist discussing this subject in this thread are fairly skilled at grading a note.  Sure its subjective (almost like Nuclear Physics --  as "Jasper" points out) and there certainly are "pros and cons" to TPG.  

What gets me too...is the number of times I've bought an UNC rare note and have had 1 or 2 dealers tell me afterwards that the note I bought wasn't UNC.  I find this insulting because I inspected the note and did see a small flaw (a counting flick) which I could allow since the price was flexible and below book.  But the comments from "the peanut gallery" certainly did nothing to instill confidence in my purchase.  

2nd: that TPG will spoil the hobby for the new collector as suggested rightfully by the essay.

I agree with this assessment.  In fact I believe that this TPG phenomenon only affects the top percentile of serious collectors (us) at the present moment but will have a negative effect on the common collector who doesn't seek trophy notes, or perfection in the future.  At one time there was a place for people who just enjoyed collecting paper money (even 1967 $1.00)!  I used to be a collector that just enjoyed getting a rarer note of any grade and I find myself pulled into this TPgrading/ UNC fever... which I don't like.  That's probably because as "2inV" mentioned we'er all concerned about our notes future values.  So TPG will have a negative impact on some of us (the established collector), the new collector, and collectors who are less "diehard" in their enthusiasm.  This cannot bode well for the hobby.

TPG may be here to stay...but we don't necessarily have to adopt it (especially if it remains to be an American enterprise-- with all those pitfalls).  

I think its also likely that TPG will bring book value down on most notes.  I used to think the opposite was true...but have re-assessed my first opinion of the practice since I've seen so many gorgeous notes go up for sale right at the same time TPG started to hit the Canadian paper market.  Perhaps its coincidental, but it does seem to be the general consensus here that "raw" notes are not looked on as favorably as slabbed or TPG notes. I'm sure there have been many a good bargain had too.  But those days are over.  As R-privates has noted...TPG could affect the hobby as it did with Canadian coins... not a good scenario.

Third party grading is still an infant. Few notes are transacted in the slab right now, however, that number is growing and will continue to grow.

The method of using Sheldon numbering, originally designed for price differences on early US copper coins, is what is being used. We have beat this subject to death here a few times. While there are differences in opinion on grading paper, and what to call them, the slabs will continue. When a particular grader consistently over grades or incorrectly attributes the notes, that company will gradually be dropped as no one will believe what is written.

What we need is a real third party grading company, with three to five graders, who are well known in the paper industry. Toss out some names of people known, not people who think they are great, but those that can grade.

Graders, for example, should not be able to grade and sell their own stuff. Dealers who do this now are grading their own notes, and when a person grades their own notes, perhaps it just might slip up a notch on the package.

To quote some opinion from another party who has no credit outside of their own opinions does a disservice to collectors. The bottom line when buying notes. If the seller and buyer have equal ability, a mutally agreeable price can be reached. A person told me this morning that the error note he has is unique. Big deal, all of them are.

Rick

I have had a hard time with this situation as many influent people in the hobby have strongly suggested CCCS start grading notes. My thoughts on the situation are this; although many collectors are accepting the TPG or CCGS grading system, many feel the note should be graded with the actual system. I think the best would be a compromise in between.

If the CPMS or the members of this forum are interested in discussion with me and some members from the Montreal area accepted by this community are willing to work on the grading (paid of course) there might be something that can be done.

I can be contacted on this matter by any members who wish it.

Louis Chevrier (CCCS) info@canadiancoincertification.com

Louis: there is a market for this service.
I know you have been looking into this for some time. Exact terminology, proper holders, computer generated data, info available, cost, number of graders. All this stuff and more to consider. This is a good place to discuss the issue.

Rick

I agree as well,

We need someone who collectors can turn to to have their notes FAIRLY and PROPERLY graded for a REASONABLE price from people they can TRUST.

I feel these are the MAIN factors that are most important to the General Collector. I know I am not the only one who feels this way...

I support the idea of a 3rd Party Grading Company who is NOT involved in Buying OR Selling of Canadian Paper Money in any way. JUST AN UNBIASED GRADING SERVICE (Nothing More, Nothing Less).

Possibly, list the items that are important to buyers and collectors that would be most important for a third party grading service.

A partial list by me to start.

1. Name the graders, such a 3 primary, two alternative graders.
2. List the price for this service.
3. Type of holder.
4. Data base expectations.
5. Speed of Service.

Rick

So far, I have recieve only one email from a member of the site willing to help on grading. I know him so will be able to discuss it more. I would like some more to show their interest.

Louis