PCGS and NGC Grading
Collecting coins can be a fun hobby or a profitable business, but no matter why you are collecting coins, getting exactly what you paid for is important. We have all experienced buying something that made claims, but when we got it home, we realized that it wasn't what we thought it would be. The same is true with buying coins, especially those with significant value. In order to minimized the risk of spending a significant amount of money on a coin that is said to be in a certain condition, coins are often sent away and graded by professional grading companies. These companies have made it their business to protect coin buyers by giving the coins a rating system or "grade" as they call it. While we like to trust that a person selling a coin is honest when they report the grade of a coin, without an independent body to give an unbiased opinion about the condition, we are accepting a risk by spending a great deal of money on a coin that may not be worth the asking price.
Two companies have emerged as the leaders in the coin grading process; Professional Coin Grading Service (PCGS) and Numismatic Guaranty Corporation (NGC). Their role is to examine a coin in great detail and report back with a grade that will set it apart from other coins of varying conditions. Both companies hire professionally trained coin experts with an eye for detail, that can distinguish fine details of a coin and thus help to set a value on a coin based on the grade. In the past, before the days of professional grading, disputes arose as sellers of coins tried to sell the coin for more money that it was worth, claiming it was in good condition, while buyers often tried to point out flaws on the coin that would help them buy it at a lower price. It was evident that a body of professionals was needed to establish guidelines which could be used to set the value of a coin. When coins are sent away to be graded by PCGS or NGC, the professionals at these companies set out to establish the condition of the coin, establish it's authenticity and set a reasonable value.
Professional Coin Grading Service, otherwise known as PCGS is a service that grades rare coins. Established in Newport Beach, California, in the mid 1980's, coins are sent to them for examination. Once the coins have been examined and graded, they are put into a specially designed case that indicates that the coin was graded by PGCS. They remain sealed in this case as a means of ensuring their authenticity and value.
The second popular grading service is called Numismatic Guaranty Corporation, or NGC for short is a company founded shortly after PCGS in Sarasota Florida. NGC has the advantage of being the official grading service of the large American Numismatic Association. With NGC grading, any coin that has been tampered with, or are not authentic will not be graded by NGC at all, but those that are graded are place in a holder that clearly states the condition as examined by their professional graders.
In recent times as the stock market has taken a tumble, coin collecting has again become popular as a means of investing. Unlike stock, coins have a physical value based on the metal content as well as a collectible value based on number of coins in existence and condition. With this renewed interest in collecting coins, buying coins that have been professionally graded by either PCGS or NGC has become important to ensure that a large investment in a coin is secure. Even with these controls put in place to assign a condition and value on a coin, fraudsters still exist. Some will try to make counterfeit cases which look similar to those provided by NGC or PCGS and pass inferior coins off as coins with more value. As with any major purchase, research and dialogue is required to ensure that your investment in a particular coin is safe and that you are getting exactly what you are paying for.
Whether you are a serious coin collector or a weekend hobbyist with an interest in history and coins, buying professionally graded coins is one way to ensure the authenticity of a coin and give a good basis for establishing value. With a professional grading in place, the coin gains instant credibility and will help in the negotiation process between a buyer and seller as an unbiased opinion will be in place.