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TPGs: The Basics

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NOTE: TPGs or third party grading companies offer an independent assessment of your note. Companies which grade and deal, by definition, dont meet the criteria of offering a third party opinion. Therefore when I refer to TPGs I ONLY refer to PCGS and PMG.



A number of posters here seem to be confused about TPGs, hopefully this thread will shed some light.


The value of any note ultimately depends on the interplay of 4 factors: the note (Fr number), the quality (grade), buyers and sellers. Obviously the buyer wants to get the lowest price the seller wants to get the highest price. Each party brings that fundamental bias otherwise known as a conflict of interest to table when bartering. The fr number is a fixed variable, and one can't really influence the number of buyers and sellers in the market. Therefore, the only factor that can readily and easily be 'played around with' to influence the value of a note is over/under grading. Why do people overgrade?


1. Grading is an acquired skill and like any other area even with a lot of practice only a small percentage of people truly become experts.


2. A lack of experience.


2. Graders are human.


3. Notes may be processed/doctored with difficult to detect flaws. This becomes particularly important at the CU and GEM CU grade.


4. To make money !!


An ideal TPG or third party grading company consist of the following:


1. Perphaps the most important factor is that the TPG should have no direct financial gain from the outcome of any individual transaction. If they do they are no longer operating as a third party. Therefore, companies which grade and deal dont meet the criteria of offering a third party opinion. Therefore when I refer to TPGs I only refer to PCGS and PMG.


2. They should consist of multiple recognized experts in the field each evaluating the note independent of the other. Obviously, the more experts looking at the note the better the chance of 'getting it right'


3. They should be blinded to the individual who is submitting the note.


4. They should stand behind their grade offering monetary compensation when they screw up.


5. They should live in vacuum having absolutely no contact with the outide world and renounce all worldly possessions. lol


What are the benefits of TPGs


1. As the name third party GRADING implies, The most important benefit of TPGs is one can get an independent high level opinion on the grade of a note.


2. They can make someone much more comfortable about undertaking a transaction.


3. They have brought many people into a great hobby who otherwise would be unwilling or may take many years before they feel ready to 'take the plunge'


4. TPGs make it much easier to transact through ebay, the internet, newspapers, auction houses etc as one has the companies guarantee on the grade.


5. Over time TPGs will collect population information which otherwise would never have been available to collectors.


TPG misconceptions:


1. Perphaps the biggest TPG misconception you'll hear is that there is no need for TPGs. While some may not want TPGs, may not like TPGs, would like to see TPGs disappear, saying that there is no need for them is misleading.


Why?? Because there are only a FEW people in this hobby who are that good and their descriptions of notes are that accurate to obviate any need for TPGs. Perphaps a couple of people out there can say they dont need TPGs but for the rest of the mortals out there TPGs offer a value added service whether they like to admit it or not.


2. TPGs drive up prices. TPGs dont drive up prices people drive up prices. Why blame TPGs for giving an accurate assessment of a note.


3. TPGs have made this hobby too expensive for collectors. Perphaps for the truly high grade large size stuff prices have shot up but one can still get quite nice mid-grades at reasonable prices. The price increase over the past 2 years for mid-grade notes has been much less explosive. Other areas of collecting like obsoletes are cheap. Prices of Nationals have also shot up recently and their value depends little on grade, so blaming TPGs is inaccurate.


4. I like my notes raw - There is no law saying you have to keep your notes in plastic, buy yourself a pair of scissors.



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