3. COIN GRADING


The grading of coins by third party coin certification corporations in South Africa was introduced by S A COIN in 1995. We researched the largest market in the world the US rare coin market valued at billions and billions of dollars. What we were interested in doing was copying the most advanced strategies that were implemented in the United States and bringing them back to South Africa. The most important thing that we noticed about the US rare coin market that was not in practice in South Africa was the grading of coins by a third party coin grading company.


In 1995 in South Africa coin dealers graded the coins that they sold to customers themselves. This lead to massive fraud and abuse. There is a direct conflict of interest in the seller or buyer of coins grading the coins that they are dealing in. Coin dealers in 1995 used to over grade the coins that they were selling and by saying that the coins were a higher grade than they were got more money for them when selling. By the same token when they were buying coins they would say that the coins were of a lower grade the actually were and this would lead to them offering lower prices to buy the coins than what they were worth. This also led to some dealers that even sold forgeries to customers.


We found out that there were over 20 grading services in the United States. But there were only three coin grading companies that were accepted throughout the United States. They were in order of their market share PCGS (Professional Coin Grading Services), NGC (Numismatic Guarantee Corporation) and ANACS (American Numismatic Association Certification Service). Today that position 18 years later is the same PCGS, NGC and ANACS are the big three of coin graders in the United States. All three of these companies grade coins using a grading system called the Sheldon grading system. It was introduced to the United States by a coin collector of ANA (American Numismatic Association) called Dr William Sheldon in 1949. The Sheldon Scale is a 70-point scale for grading coins, developed by Dr William Sheldon in 1949. A slightly modified form of the Sheldon Scale has become the de facto standard for grading US rare coins today, and is used by the major third party grading services when assigning a grade to a coin.


The ANACS logo. They are the only rare coin company that has been in business for 40 years. PCGS has been in business for 28 years and NGC for 23 years.


In the United States PCGS is by far the largest third party coin grading company. It is listed on the NASDAQ as (NASDAQ: CLCT). Since the establishment of NGC in 1990 they have become one of Americas most respected coin graders and year by year have been capturing more and more market share from PCGS. ANACS was established in 1972 and is the oldest third party grading service in the United States. ANACS was the forerunner of the model that both PCGS and NGC was established on with few minor changes. ANACS was an in house grading service for the American Numismatic Association. Today ANACS is a private grading company which has steadily been gaining more and more market share from PCGS and NGC.


Although PCGS was the largest grading company in the United States in 1995 we did not select them to have or refer South Africans to have their coins graded for South Africa. We chose NGC as our preferred grading company. The reason that we did this was when we contacted PCGS we found that they were more suited to grading just US rare coins and not international coins, though they did grade international coins at the time. In fact it was their policy to focus on the grading of United States rare coins. They also did not offer the same level of attention or focus to international coins. You could for example have a US rare coin graded in 24 hours but you had to wait 6 weeks for international coins to be graded.


One of the hundreds of adverts advertising the services of ANACS in the United States.


NGC was much smaller than PCGS but there was no difference in their grading standards and they offered better service, lower cost and they offered population reports on international coins which PCGS at the time did not. The providing of population reports on international coins was vitally important. Population reports are the tabulation of the grading statistics for all the coins that are graded. What this means is that you are able to gauge the relative rarity of the coins that you send through for grading. The higher the grade of the coin that you have and fewer of them graded the higher the price that you can charge for the sale of these coins. Basically population reports let you see how rare a coin is.


Today we have we have selected ANACS as the preferred grader for South Africa. Their grading standards are identical to PCGS and NGC and they give us far better service. The turnaround time on graded coins from ANACS is the fastest of all three of the graders and they have far better service standards. We sell graded coins by all three of these grading companies. But we are sending most of the coins that we have graded to ANACS and we are advising South Africans that we deal with to do the same.


The staff of these three companies are all similarly trained and therefore you can find PCGS staffers at NGC and also ANACS. They basically interchange from one another all the time. These three grading corporations are also present at all of the coins shows in the United States. There are hundreds of coin shows held throughout the United States each year. PGCS, NGC and ANACS attend all of the major ones so there is the consistent contact of the three largest grading corporations all of the time. What this leads to is a great consistency and parity of all of their grades. You can also cross grade most coins that are graded by any of these corporations. What this means is that if you submit a PCGS coins through to NGC or ANACS they will change the coin to one of their own holders in the same grade. Different consumers prefer different graders and the holders that the coins come in. As long as you have your coin graded by one of the aforementioned corporations you have your coin well protected and in the best way to buy and sell your coin for the best price.


ANACS coin grading Englewood, Colorado United States.


There is no difference in the grading standards of any of these grading companies. Time and time we have submitted the same coin to all three of the grading companies and received the same grades. The only difference in these companies are in service and cost. We buy and sell coins that are graded by all three of these grading services. If you want to test out each grading company with your coins you are welcome to do so. We are certain that once you have tried all three of these companies that you will select ANACS to have all of your coins graded. The websites of these companies can be located at www.pcgs.com, www.ngccoin.com and www.anacs.com.


This is the finest known graded 2008 Mandela Birthday proof by ANACS.


In the United States rare coin market today there is no more powerful force and catalyst making the market larger and larger than the big three grading corporations PCGS, NGC AND ANACS. What the third party grading corporations introduced to the rare coin market for the first time prior to their advent was mathematics. Before they were around people had to guess how many coins there were in a particular year. For example if they produced 26 236 714 of the 1912 P nickels how many were left? Another question was prior to third party grading was how many of what grade were there? Everything that we do today is based on mathematics whether you are baking a cake or planning to build the Chunnel. If you are not able to apply mathematics to the area you are in you have to estimate everything that you do.


The very moment the first population reports showing the numbers of coins that had been graded and what grades they had the US rare coin market became a regulated financial market. It became a market where you could compare the prices of coins that were graded and in holders with other coins of the same grade that could not be done before. When dealers had in the past graded their own coins you could not compare one of their coins from a dealer in New York with another coin of the same quality with a dealer in Los Angeles. Today with the advent of third party grading you can. The irony of the holders of the third party grading corporations is that they did what the first coins manufactured thousands of years ago did. They stimulated commercial transactions. Coins made financial transactions without the use of barter facilitated. So too have plastic holders of the third party grading corporation made the coins financial instruments that can be sold 'sight unseen.' Meaning that as long as you knew what holder the coin was in and its grade you did not have to look at the coins before you bought it.


A 2012 US gold Eagle graded by ANACS in MS-70.


An Australian Koala graded MS-70 by ANACS.


Since the advent of large mass grading of the US rare coin market in 1985 there has not been anything that has contributed more greatly to expanding the market. The immediacy of mathematics being introduced to the rare coin market was a great increase in the prices of coins. The same is to be said here in South Africa. When S A COIN introduced NGC en mass for all South African rare coins the market expanded at the greatest pace that it had ever done. Today the South African rare coin market is a half a billion rand market per annum and it is rapidly expanding.


A gold American Buffalo grade Proof 70 by ANACS.


If you have coins that you want to get graded you should contact ANACS by going through to their website and get your coins graded through them. Their website is www.anacs.com.