Coin Dealer Ethics - Authentication Diagnostics
Wednesday April 9, 2008
There has been a lot of talk lately about counterfeit grading service coin holders, (commonly called slabs,) which emulate the holders used by top-tier coin grading services PCGS and NGC. The fake holders are very well-made and extremely deceptive if you don't know what to look for. Both companies have issued consumer alerts about the fake slabs, warning their customers about the problem and providing certain information about the fakes. However, PCGS and NGC have taken dramatically different approaches to helping the collector community avoid becoming a victim.
NGC was the first to notify customers about the counterfeit slabs problem (see Beware of Fake NGC Slabs) back in January of 2008. In their notification, NGC gave exact details about how to tell genuine NGC holders from the fake NGC holders, and included a number of large, clear photographs so collectors could verify their own NGC slabs for authenticity.
PCGS notified the collecting community a little over a week ago about its own counterfeit slabs problem (see PCGS Warns Against Fake Slabs.) However, the PCGS warning included no diagnostics at all that would allow collectors to verify for themselves that the slab they bought last week on eBay is genuine. Instead, PCGS provided a list of certification numbers and coin types that had been seen in the fake PCGS slabs.
This week, I'd like to open the figurative floor to discussion about this subject. Some people feel that the grading services shouldn't provide any information at all about the counterfeit slabs and how to tell them from the real thing, because this information would help the counterfeiters learn what they are doing wrong. By pointing out the mistakes they are making, NGC is helping the counterfeiters improve their product.
Other people think that the grading services should share the full diagnostic information so that collectors and dealers can look out for themselves and avoid buying the bad slabs. This side of the argument says that the counterfeiters already know what the diagnostics are, so sharing the information with collectors isn't really going to benefit the fakers. They can learn their mistakes (assuming they were even intentional) from any one person who points them out. They don't need a PCGS press release to tell them. However, when PCGS withholds this diagnostic information, it seriously hurts the integrity of our marketplace by undermining confidence in PCGS slabs. If I can't tell for myself whether or not a PCGS slab is genuine, I'm going to be far less likely to buy a PCGS coin.
What do you think? Should the grading services share the diagnostics with everyone so that we can determine for ourselves that our slabs are genuine, or should they keep the information secret because the risk of educating the fakers is too high? Perhaps there are other considerations I haven't thought of? Please share your thoughts via the "comments" link below, and next week we'll have a look at your responses.
Update - Read the follow-up to this column about authentication diagnostics.
NGC was the first to notify customers about the counterfeit slabs problem (see Beware of Fake NGC Slabs) back in January of 2008. In their notification, NGC gave exact details about how to tell genuine NGC holders from the fake NGC holders, and included a number of large, clear photographs so collectors could verify their own NGC slabs for authenticity.
PCGS notified the collecting community a little over a week ago about its own counterfeit slabs problem (see PCGS Warns Against Fake Slabs.) However, the PCGS warning included no diagnostics at all that would allow collectors to verify for themselves that the slab they bought last week on eBay is genuine. Instead, PCGS provided a list of certification numbers and coin types that had been seen in the fake PCGS slabs.
This week, I'd like to open the figurative floor to discussion about this subject. Some people feel that the grading services shouldn't provide any information at all about the counterfeit slabs and how to tell them from the real thing, because this information would help the counterfeiters learn what they are doing wrong. By pointing out the mistakes they are making, NGC is helping the counterfeiters improve their product.
Other people think that the grading services should share the full diagnostic information so that collectors and dealers can look out for themselves and avoid buying the bad slabs. This side of the argument says that the counterfeiters already know what the diagnostics are, so sharing the information with collectors isn't really going to benefit the fakers. They can learn their mistakes (assuming they were even intentional) from any one person who points them out. They don't need a PCGS press release to tell them. However, when PCGS withholds this diagnostic information, it seriously hurts the integrity of our marketplace by undermining confidence in PCGS slabs. If I can't tell for myself whether or not a PCGS slab is genuine, I'm going to be far less likely to buy a PCGS coin.
What do you think? Should the grading services share the diagnostics with everyone so that we can determine for ourselves that our slabs are genuine, or should they keep the information secret because the risk of educating the fakers is too high? Perhaps there are other considerations I haven't thought of? Please share your thoughts via the "comments" link below, and next week we'll have a look at your responses.
Update - Read the follow-up to this column about authentication diagnostics.
Comments
You need to be a little fairer with PCGS and their announcement. Yes NGC gave much more detail in their January announcemnet, but the NGC fake slabs were first discovered back in August of 2007 and NGC took five months in which to examine them and come up with the list of diagnostic features before they made the announcement. In the case of the PCGS slabs they were first seen on March 25th and PCGS made their public warning just two days later. I’m sure if NGC’s warning had come just two days after their discovery it would not have been as detailed either.
Condor101,
You make a good point about the timing of the announcements, although I think your time frames might be off a bit. NGC apparently did investigate privately before making their announcement, but I believe the time frame was somewhat shorter than 5 months. On the other hand, PCGS has been aware of this problem, on at least a very small scale, since at least January but it was the sudden eruption of fake PCGS slabs being put up on eBay a couple of weeks ago that really broke things open for them. Once this occurred, they were definitely very speedy about posting their warning.
Time will tell whether PCGS will reveal more. The word from my PCGS contact was that they do not plan to reveal the exact diagnostics (at least as of last week) because they are of the belief that such action aids the crooks. It is my hope that creating a dialogue about this matter will change PCGS’s mind.
Susan Headley
About.com Guide to Coins
Edited later to add: Many of the comments below have the term “TPG’s” in them, so I wanted to define the term. It stands for (the) Third Party Graders and is usually meant to imply PCGS and NGC, the top two leading coin grading services, but it can also mean all grading services collectively (depending on context.)
BOTH NGC&PCGS SHOULD HAVE A AUTHENICATION SERVICE, REASONABLY PRICED, THAT ISSUES A COA. NO SLABS OR GRADING REQUIRED TO KEEP COSTS DOWN. LET’S SAY $10 INCLUDING S&H. TO DO THIS, THE COLLECTORS MUST BAN TOGETHER.
I don’t blame PCGS for withholding information. As Susan has stated, they would be giving the counterfeiters how-to information. The only problem I see is that they are going to have to address their problem through other methods, such as criminal prosecution. Ebay and other auction sites will have to do their part as well.
Hi Susan
IMO there is no answer to the Chinese fake slabs! It it going to cause major long term problems for both NGC and PCGS regardless of what kind of slab or system they try to develop for consumer protection.
The stranger to stranger sale of slabs is headed south, so auction houses like Ebay are most vunerable for counterfeit exploitation.
Essentially, trusted and knowledgeable dealers are going to come back into vogue, both for slabbed coins and raw coins.
I can see a future where buyers will buy a Chinese counterfeit by mistake and will then list it on Ebay, without mention as to counterfeit, so they can recoup their loss. Don’t expect a return policy.
Of course if you know your coins and can hold them in your own hands to view them before purchase you are okay.
Want protection? Any quality or major auction house will sort out the counterfeits as they have expert appraiser inspect each lot before listing it for auction. Such as Heritage, Stacks, Goldberg, Bower & Merena, and David Lawrence.
But lesser auction houses that do not employee professional numismatists, especially those auction houses that mix antiques with coins and ect, might be a different story.
Best regards - BB
I still find it difficult to tell a fake NGC/PCGS slab. How do you find a reliable dealer who will know a genuine from a fake slab? Please answer my E-Mail. thank you.
Sincerely,
Nicholas Newton
I hope the suggestion to have a service to authenticate slabs was a joke. The purpose of slabs was in large part to authenticate the coins. What is to stop the counterfeiters from counterfeiting the authentication forms?
The answer, if there is one, is in better anticounterfeiting technology. For example, the slab companies could place photos of all authenticated coins on a web site, or ID chips could be imbedded in the slabs.
This does not solve the problem of the thousands of slabs already out there. Unfortunately, a slabbed coin is in some ways now more suspect than a raw one. At least I can weigh a raw coin and examine it, including the edges, with a 20x loupe
I would love to see the TPG’s tell us exactly how the fakes can be detected. I would also like to see the Secret Service tell us exactly how the can tell fake 100’s that come out of color copiers. While all of you are figuring out if that 1922 Saint is real, I’ll spend my time in the copy room with the door closed. And while we’re at it, Pfizer should tell us exactly how to determine if all their drugs are fake. You know, the ones that come from Canada that will kill us if we import them here.
Put an RFID chip in each slab embedded in the holographic label. Store a picture of each coin and do a cert lookup to validate the coin, and see the picture. The RFID could be verfied by companies like Teletrade and Heritage, etc.
Stop buying off of Ebay. Just don’t buy there period.
I think the suggestion not to buy on EBay is throwing the baby out with the bathwater. EBay did not produce fake slabs, and fake slabs will continue to be produced with our without EBay. I live in a suburban area and do not have a reliable local coin dealer, nor do I have the time to travel to coin shows. That leaves EBay, teletrade, heritage, etc. I stopped dealing with Yahoo auctions, now defunct, when I got ripped off a second time by a highly rated dealer and they would not help resolve the cases due to their privacy policies.
I think common sense has to prevail here. Buy from reputable dealers as PCGS suggests and you minimize the risk of getting ripped off. Fred Weinberg, for example. Thousands of sales and (last time I looked) 100% positive feedback. And this is from a dealer who posts feedback as soon as you make a payment, not after you have already left positive for him. Jon Sullivan is another. There is no guarantee that they might sell you a high grade counterfeit coin unintentionally-in or out of a slab- but at least the risk is minimized, and probably lower than dealing with your local coin dealer who might have a much lower level of expertise.
Should PCGS tell us how to recognize counterfeit slabs? If it is a simple question of fonts, spelling errors, etc., I would say yes. If there are secret features like flourescent or magnetic inks, then maybe not. In the long run, if they cannot make a slab that the consumer can be confident is genuine, they are out of business.
I agree with gdnp. Out of business.
Put a microscopic serial number somewhere on the slabs, and keep better records of those serial numberd slabs.
That is 1 way to fight back against the counterfeiters. No one but the gradeing companys has to know where the serial numbers are. Who they’ve been sold to, and a c.o.a. should accompany the slabs as they change hands from owner to owner.
Any quetions arise, that should leave some room for investigating by law enforcement. Some recourse for the buyer.
The Treasury Dept. and secrete service should be looking at this a little bit closer now. After all — in a way, it is affecting American commerce. The F.B.I. should be getting involved as well.
An expressed opinion.
coiny
I agree that TPGs should bear responsibility for ensuring the security of their product–can this really be expected from dealers or collectors? As a collector, I certainly cannot be expected to authenticate both the coin and the slab. So, given a choice between the two, I prefer to collect coins. Personally, I think some of the draw in counterfeiting slabs is the undue importance put on slabs by collectors, or should I say coin “investors”. Forgers will understandably capitalize on the blind trust put in slabs by those who may not appreciate the actual nuances of a genuine coin. The ultimate protection against forgery is the collector who understands the coins they collect. However, if TPGs can properly address this challenge, they will partner with real collectors and rebuild trust in this hobby. Good luck to all!
If my time frames are off, it is not by more than a few days. The first fake NGC slabs were discovered on ebay and reported to NGC right about August 7th 2007. (Fake ANACS slabs were reported to ANACS in March 2007. Both PCGS and NGC were informed of these and PCGS was also informed when the NGC fakes were discovered.) The fake PCGS slabs appeared March 25th 2008 and the PCGS warning was posted March 27th.
I can understand not releasing all of the diagnostic differences between the slabs because it does help the counterfeiters. When the first NGC fakes appeared we openly discussed the flaws on their forums and a week later when another batch of fake slabs were listed some of the flaws we had mentioned had already been corrected. (Font problems)
BB mentions
“Want protection? Any quality or major auction house will sort out the counterfeits as they have expert appraiser inspect each lot before listing it for auction. Such as Heritage, Stacks, Goldberg, Bower & Merena, and David Lawrence”
But just this past December Heritage sold a peace dollar in one of their sales that was in a counterfeit PCGS slab from the first fake slab scare back in 1989. They did not recognize the fake slab. They also probably do not pay real close attention to the coins in slabs because if you read the terms of sale, slabbed coins are not returnable for any reason and if there is a problem you are to take it up with the slabbing service.
RFID chips have been suggested, but they are easy to fake as well. All you have to do is record what the chip on the genuine slab broadcasts and program your chip to broadcast the same thing. I don’t have to know what it actually says, I just have to duplicate the broadcast.
Most other suggestions have heir own problems. Features that only show up under UV, micro-printing, magnetic ink etc are all great if you have the equipment there and are able o see the slab in hand. But it does nothing for you if you are trying to buy the coin on-line or at a coin show. The best solution I have heard is for the services to have an on-line photo file of each coin with large clear images of the coin that is supposed to be in the slab so you can make a detailed comparison. Even better would be if it listed the identifying marks and their location for each coin. This is actually the technology ANACS was using back in 1972 with their photocertificates. Sharp photographs that you could magnify and compare to the coin to make sure they matched. This is the option that DLRC is going to be using with the newly resurrected PCI (Now called DGS) Every coin valued over $100 will have just such an on-line image.
Of course this safety feature fails once you get into the top MS and proof grades since by definition there really aren’t any identifying marks.
The final result will probably contain a mixture of several of these protective measure. A defense in depth approach.
But in the final view, the best protection against fakes in knowledge. You must know what you are collecting and how to authenticate it yourself.
I like the photo verification idea because attention is brought back to the actual coin. No matter what TPGs do, I think there will always be several levels of complexity between a coin and a slab, so ultimately efforts to out-do the diagnostics of a coin will fail. Authenticate the coin–not the slab!
The thing i like the most about micro sized serial numbers is, the list of numbers are endless. Second, no two serial numbers can be the same. So if theres a problem. You have only one serial to any given goin, for that coin only. When a duplicate serial numberd slab turns up. Then you know you have a problem. I think that would deter counterfeiters from trying the slab routine any more, once they learn about hidden serial numbers. A little extra spent to be able to read serial numbers shouldn’t be a big thing, checked against a data base for counterfeits.
We got serial numbers on everything these days. Why not coin slabs??
Just another great thought!
coiny
To Condor101
You made a very informative and fact filled post. (post 12) Thank you for clearing up the sequence of events.
You also stated: “But just this past December Heritage sold a peace dollar in one of their sales that was in a counterfeit PCGS slab from the first fake slab scare back in 1989. They did not recognize the fake slab.”
So here is my question: Was this one of the Gary Fernandez slabs? If it was, didn’t Fernandez place lesser graded coins (real coins) in higher graded PCGS holders? Also I am not sure how he did it. Did he somehow open an existing PCGS holder or did he actually manufacture a new PCGS holder?
Thank you - BB
Anyone who reads any post by “BB” should realize that his life revolves around bashing PCGS because he was removed from their coin forum for unacceptable behavior. Any input he gives only serves the purpose of degrading PCGS and not helping those in the coin community.
As far as Condor goes he is an expert on slabs and I would take his word over anyones.
As far as PCGS slab designs changes being top secret, visit the following web site to see a full display of past PCGS holders. Of course future changes are not displayed.
http://www.sampleslabs.com/pcgs.html
BTW . . I see I have another distractor posting as Tory above, and I think it appropriate that I have an opportunity to defend my reputation, or else I ask you to remove his post. I have not a clue as to who Tory is, but it is my understanding that Condor101 is not allowed to post on the PCGS CU forum, so I think it fair to state the obvious. Why does he single me out but not condor101?
In fact, a major complaint among many CU forum members is that the true numismatists and most knowledgeable have been banned from the PCGS message boards. That should say something to any reasonably intelligent person.
BiddlesBank April 10th
Bet you a dollar to a donut not one of my distractors above has a bona-fide email address or static ip address.
Often one person poses as several different persons by employing fake email addresses and using proxy ip’s.
Sorry my presence on this insightfull and numismatically relevant board of Susan’s is being derailed by a few distractors.
Best - BB
Okay you guys, let’s please try to keep this conversation on topic, which is the counterfeit PCGS and NGC slabs and their responses to the problem. I am going to delete comments which do not discuss the topic or things related to it.
BB, I took a second look at Tory’s post and I don’t see any name-calling or personal attacks. The fact that you were banned from the PCGS message boards is well-known; indeed almost a badge of pride for you.
Therefore, I don’t see how his comment warrants deletion. I think it is relevant to the discussion to mention that your opinions just might be colored by your negative experiences with PCGS. Likewise, his information that Condor101 is an expert on slabs would tend to make people consider Condor’s views in a better light (at least it does for me.) You are, of course, welcome to defend yourself within the context of the topic, just as Condor101 is welcome to deny that he’s an expert if he wants to. Let’s just all do it as part of discussing the very serious problem of the counterfeit slabs and how the grading services should deal with them.
Susan Headley
About.com Guide to Coins
Sorry Susan but you forgot to finish the final sentence of the tory comment:
“Any input he gives only serves the purpose of degrading PCGS and not helping those in the coin community.”
As far a PCGS is concerned, I have always maintained they are the best TPG in the business. And I have helped hundreds of collectors along the way.
However if you want to post the drivel these trolls are handing out then you can. It’s your board not mine.
But on my web site I will not cave into the kind of intimidation you are caving into.
BB
“But on my web site I will not cave into the kind of intimidation you are caving into.”
Now you’re attacking Susan?
BB,
I am not “caving in” to anybody nor favoring anybody’s opinion. I have a very clear set of guidelines I must follow regarding these things, and I am doing my best to follow them with objectivity. (Sigh, now you’ve got ME making off-topic posts, which I’ll have to delete later on after you all have had a chance to see them.)
I did do some checking, though, and we do have a troll here posting under multiple names. His posts the other day were as JJ, today he has been Tory, A.L., and freedomsrays. He comes from a static IP address (which I will be nice and refrain from posting) on the rioaccess.com IP in Mesquite, NV. I will ask everyone to please post under the same name each time you comment or your comments will be subject to summary deletion.
Thank you,
Susan Headley
About.com Guide to Coins
I am sorry to hear that the RFID chip is not practical. There must be someone out there that can think of a way that a slab can be made that cannot be duplicated, or at least not cheaply. DVDs have antipiracy features that prevent duplication, don’t they?
Unfortunately, the system must be such that the average collector can check the slab for himself. For example, imbedded flash memory with coded information could be included, with a socket for a USB adapter. The slab could then be plugged into a USB port and send encrypted messages to PCGS to confirm its authenticity. This would have the advantage over RFID that anyone with internet and USB could check the authenticity of the slab. The slab could even be registered to a specific person.
Whether this could be done at a price that we could afford is obviously an issue. But I suppose spending $50 on a slab is better then spending $1000 on a counterfeit coin.
The USB device idea will work. As you said, the cost is the issue.
Fake coins have been around for thousands of years. There were fake coins in Roman times. The Roman emporers watered down the gold and silver in the coins over time. People used to clip coins, hence reeded edges.
As long as there are ill willed people, there will be fakes. Fakes never killed collecting, nor will they this time.
Gdnp,
Your suggestion is an excellent one! Other categories of collectibles are already using RFID chips for authentication. The customers make a one-time purchase of the device that can read the chips (around $50 I think) and then they can self-authenticate any item from that manufacturer at will. No knowledge of fancy security diagnostics is needed at all. This would be an outstanding, if somewhat expensive, way for PCGS and NGC to combat the slab fraud.
Susan Headley
About.com Guide to Coins
and CLCT could sell the $50 device for $100 and make a bought load.
FYI,
Here is my posts on the CLCT yahoo forum from March 28.
Re: All bets off. Chinese Counterfeits here to stay. 28-Mar-08 10:42 am add an RFID chip embedded in every PCGS slab. Wave the slab over a special reader provided by PCGS and if the green light turns on, its good. Readers would be provided at coin shows, coins shops, Teletrade and Heritage would have their own to verify. Sales over Ebay would suffer.
This is so simple. There are millions of products today with RFID chips in them. The chips would only cost about 10c and are counterfeit proof as the reader and chip could have 128 bit encryption.
Sales could soar at PCGS if they could be the first to market with this. They have the capital. Maybe they will license it to NCG/ICG/Anacs for $1/coin. Rating :
(No ratings) dbtunr
Male
——————————————————————————–
Re: All bets off. Chinese Counterfeits here to stay. 28-Mar-08 11:15 am Not only could an RFID chip verify each coin as authentic, if the chip was read/writeable (more expensive, maybe $1 each), it could track the trade history of the coin.
ex:
coin graded by PCGS MS64 3/28/2008
return to Mr Joe blow
coin sold 6/28/2008 to Mr John Doe
coin consigned to Teletrade 9/11/2008
sold to Mr T 10/15/2008
Now if your coin is stolen, it could be more easily returned to you at some future date.
Companies use this same technology to track cattle and industrial equipment.
The chip could be embedded right in the holographic label encassed in the slab.
The cheapest way to tip these guys up is add an R. They can’t pronounce the R in our alphabet.
PCGSR — NGCR.
If you see slabs with PCGSL AND NGCL.
Then you know there fakes.
That’s true!
No offense to any Chinese people.
Just a fact.
That should read trip these guys up.
If you see tlip these guys up.
It wasn’t me.
coiny
Data Base, is the solution here. It’s simple & cost efficient. The PCGS or NGC tie into a master data base for serial numbers. The numbers can be categorized by coin type. Then when someone goes to buy a coin they simply access this data base to see if that number has been issued. The serial number should be visible so it can be verified by a picture from the seller. If the data base is set up properly the new issued serial numbers are automatically uploaded into the system as the coins are graded by PCGS or PCG. Doesn’t matter if you know the sequence or not because if it’s not on the list, it hasn’t been graded and entered yet, hence it’s a fake. Should you get a slab with a number that already exists that number could also be attached to a more detailed file giving more specifics about the coin/slab like owner, ownership tracking as mentioned above, etc.
It would be awfully difficult to create a forgery. I don’t think doing tricky or hidden stuff is the solution. In doing so you’re also hiding key information from the honest guy, which in effect plays into the forgers hand.
Granted the new serial number system wouldn’t help too much for slabs already created, but it would go a long way to stopping forgeries from here on out. It’s easy & cost efficient.
Just how I see it…
Yankee, I don’t see how a database system helps. What is to keep a Chinese counterfeiting operation from buying a slabbed $2000 Saint, then producing hundreds of duplicates and placing them in counterfeit holders?
We need some way that each individual slab can be proved genuine by a collector at home at reasonable cost. RFID sounds like it would be relatively cheap: a $50 reader is nothing, less than the cost of grading a couple of coins. It all depends on how easy the chips are to fake. Imbedded flash memory that could be checked via computer would have several advantages, however: No special reader, so they could be checked anywhere, high levels of encryption would be possible, and they could even track (as much as anything can be tracked on the internet) if a bogus or stolen slab is checked.
As others have said, there has always been counterfeiting and always will be. We don’t stop using $20 bills just because a few fractions of a percent of twenties out there are counterfeit. We just have to do our best to stay ahead.
I think (gdnp) if you think about what you said it makes sense. OK the lil’ guys make 1000 fakes, so what? There will only be one verifiable slab in the data base, which can be checked online, etc. by looking up the serial number for that particular coin. In that data base you can also have all the additional information you want to further verify that particular coin. Previous owners, date of grading, all sorts of stuff that CAN’T be counterfeited.
See what I’m driving at? It’s not a matter of stopping the counterfeiters, it’s a matter of verification of coins in the collectors market & since the NCGS & NGC are at the forefront of grading these coins, simply assigning a serial number & other pertinent information “as the coins are graded” shouldn’t be too difficult. The process would be very similar to a vehicle registration. The grading company could also issue a COA or similar kinda like a registration of sorts.
Another idea to help offset costs for the grading companies would be to charge a small annual fee (say 20 bucks) to have access to these serial numbers & information. People having coins graded get free access, etc.
Maybe I’m missing something here, but I really think it would work if the process were in place soon. NO it won’t have much effect on the coins already out there, perhaps legitimate coins could be sent back to the grading companies, they could check & if all’s good assign a sticker/serial number to that slab/coin for a reasonable fee. Since the coin has already been graded, etc. & No need to repackage it, it shouldn’t cost hardly anything.
Just a few thoughts…
One more thought…
If there were a data base & some sort of registration in place “Stolen” coins would be very difficult to sell as well.
Thanks.
Yankee
I still don’t see how a database protects from duplicated legit coins: you don’t know if you have the original or a counterfeit, unless the slab itself has some mechanism of authentication that cannot be duplicated.
Stolen legit coins can always be broken out and sold raw, or sent back for regrading. Unless the coin has a prominent distinguishing characteristic like unusual toning. I suppose if high resolution photos were saved then the bag marks would act like a fingerprint. Some day, perhaps…
This reminds me of the story of the enterprising art thieves. They stole a painting, which was widely reported, and then made 10 counterfeit copies. These they sold, while keeping the original, knowing that the buyers could never have the painting authenticated since they though they were buying stolen property…
If they go the database route, I know a database tuner they could use
Ahh, so that’s what “dbtuner” stands for! =) (I’m always trying to figure out people’s handles. I think “gdnp” is “gross domestic national product”? Or least the handle of someone who works in economics…?
I posted this idea for solving the slab counterfeiting problem on another forum, but I’ll copy it here for consideration:
———
I think implementing checksums would be a simple, low-cost but very effective solution. The checksum algorithm is kept secret, and is based on a factor that is constant and reproducible, but which can also be unique to each coin.
For example, PCGS could laser-scan each coin on a unique-to-each serial number computer-generated background (which looks similar to the authentication artwork on lottery tickets, checks, banknotes, etc.) This scan would produce a number that, when added to the string of digits on the insert in the slab that everyone sees, creates a total. This total is then used to generate a checksum which appears on the back of each slab as a code.
I really doubt the counterfeiters could replicate such an authentication system unless they had inside help. And the beauty of this system is that if they got the inside help, all PCGS has to do is change the algorithm for the artwork-background on future coin scans.
———
One thing I want to add to clarify this idea: the unique backgrounds are not in the slab itself, nor visible to customers. It is the combined digital values of the background plus the coin that generate the unique number. The reason for the background at all (rather than just lasering the coins) is that one PF-69 Silver Eagle looks like every other PF-69 Silver Eagle. Using the backgrounds makes each coins, even “identical” coins, appear unique.
Susan Headley
About.com Guide to Coins
Figuering out a way to stop the tampering would go a long way in keeping anyone from switching out graded searial numberd coins. A simple wire like a string would show if the slab had been broken into before. These big guys must have an R&D lab where they work on this issue. If not then they run their business very sloppey.
Doing something is better than waiting and be put out business.
Which isn’t our problem. The issue is keeping our supply of coins safe. People not getting ripped off.
Hey! Try both ways. Or in tandem. That sounds even better.
Just one more opinion
coiny
I like the registration idea with the data base. And electronic tags too.
“Wave the slab over a special reader provided by PCGS and if the green light turns on, its good.”
RDID chips could be cloned by forgers too, and a proper ID would require equipment/software/network link and the knowledge to use it. RFIDs could not by verified over the internet, which is a growing sales venue.
Many of the proposed solutions introduce new orders of complexity that create new problems. If something goes wrong with the technology, or the slab cannot be verified under increasingly complex methods, the value of the slab is again worthless. When that happens, the dealer or collector is back to authenticating the coin–sound familiar?
Susan! I like your idea even though i didn’t understand one word you said
My handle coinycomedian. Nah … just kiddin.
coiny
To my knowledge slab ownership is private information and TPG’s will not release ownership (name of individual) information on any coin they certified.
In times past I tried in vain to find out in what year a particular slab I purchased was certified. That was also private information according to the TPG.
This should not be confused with Registry Set owners who often proudly proclaim their ownership.
But many people would not have coins certified if they thought their ownership would be made public.
Anonmity is a valued element of collecting to many serious collectors. For instance, the person who purchased the complete “Al Overton” collection is still unknown, as per agreement with the seller. This has ticked off a lot of bust half collectors but that’s the way it is.
if you clicked on my yahoo profile, you could have found out what dbtuner was. Occupation: database admin.
The death knell for THPGs is ringing. Now is a bad time to (was there ever a good time) invest in their services. Within two years PCGS, NGC, ANACS, ICG, etc, will be simply unpleasant memories of the hobby.
Currently, the only weapon available is a good scale and knowledge about the series you collect. Crackout the coin and weigh it.
You first Grandpa. I’ll keep my PCGS/NGC slabed coins thanks.
BTW- if enough people think like you, that opens up a whole new revenue stream in the future for TPG’s to re-slab all the cracked out coins. Planned obsolescence
“RFIDs could not by verified over the internet, which is a growing sales venue.”
I don’t think that the inability to verify a coin over the internet is a deal-breaker. There will always be risks with internet (or for that matter, mail order) sales. I have been ripped off twice, once by a dealer from whom I had purchased half a dozen coins for hundreds of dollars who skipped with my and about a dozen other payments. The other was a dealer that sold me a counterfeit $3 gold piece (yes, I new the price was too good to be true) and when I returned it he kept my money and tried to sell the bogus coin again. So I’m not likely to be buying coins from Chinese dealers with no feedback whatever PCGS and NGC decide to do.
As long as I can authenticate the slab once it is in my hands, and as long as the dealer has enough of a track record that I can trust they won’t disappear overnight, I will continue buying coins over the internet. It’s not like I have many other options.
BTW, gdnp is simply my initials. My parents blessed/cursed my with 2 middle names. No problem except for standardized forms that only leave me one space for a middle initial…
When the Feds get involved, (and they will) you can be sure those tightly sealed files at PCGNS or whatever will find their way into some concerned attorneys hands (maybe Frattlaw) and they will methodically tear this TPG apart and I mean gut it!
Nobody wants to go to jail for what David Hall has done, especially since he’ll be basking in the sun on a Haifa beach
Grandpa:
You don’t think the counterfeiters have the technology to make a bogus coin with the correct weight? It would be particularly easy for a less-than-mint-state coin that one would expect to weigh less than the nominal value due to wear.
The one counterfeit coin I have (knowingly) handled was the above mentioned $3 gold piece. I was only able to recognize it because the entire production of this particular year had been made with a single set of dies, and counterfeits had been common enough that the PCGS guide to counterfeit detection devoted an entire section to recognizing them. Could I tell one of these Chinese counterfeits from the real thing? Given the two side by side, maybe. But with one mixed in with 10 genuine coins? Doubtful.
Which raises the philosophical question, if you can’t tell the original from the copy, why is the original so much more valuable?
(as a final aside, when I finally confronted the dealer that sold me the bogus $3 gold coin, police at my side, he argued that even if it were counterfeit it was still worth several hundred dollars. Apparently there is a market for these antique counterfeits.)
I understand why the TPG’s won’t give out “who” owns a coin and am surprised that someone would even try to get them to disclose the information.
Think about it, if a robber wanted to make a big score all they would have to do is log in or call NGC to see who owned what. I think the TPG’s are right on with that policy.
If you want to know what year a coin was slabbed it’s not a hard thing to do. Condor used to have a webpage showing every type of slab, year made etc. Maybe he can chime back in and verify.
Here’s an link to an old post on the PCGS forum from Condor101 (below) showing the progression of NGC slabs. I’d love to know his thoughts on how to make a slab that will defeat the counterfeiters. He is the most knowledgable person in the coin industry when it comes to slabs imo.
http://forums.collectors.com/messageview.cfm?catid=26&threadid=220185&STARTPAGE=1
True. A data base improperly set up could make coin owners vulnerable, however just like a vehicle, there could be an adjoining “coin registration” that could be verified without disclosing the actual owners information. IF the proper owner is selling the coin than disclosing this registration number shouldn’t be a problem, right?
I’m sure there could be a way of getting around it, just like buying/selling a stolen vehicle BUT some sort of data base would go along way to help a LOT of folks from getting ripped off simply because there’s NOTHING in place to address this problem at present.
In short I believe it would minimize risk to the unsuspecting.
Thanks…
The DMV dosen’t give out personal information for security reasons. I’m sure theses a way to insure to keep all personal information private if a buyer want’s it that way.
What i was thinking, put the informatin needed on the c.o.a., make it like a plastic credit card with all the encrypted information on the tape. Useing holagrams on the cards much like credit card companys do now.
Besides making the slabs tamper proof. If they don’t do somthing soon, alot of people are going to be scared off, for fear of getting ripped off at some point. Use the KISS process. I know theres a simple soloution. Who’s dragging their feet??
Thanks Coiny… My sediments exactly. It’s not a matter of STOPPING the forgers, it’s a matter of educating the buyer & in the process making it more difficult for the forgers.
It’s open season for the bad guy, right now, hell a baby could get a fake over on someone very easily simply because of poor management (I think).
Like IBM says on one of their commercials: “Quit Talking, Start Doing”
Anything would be a step in the right direction, then as the Mint & Treasury have done over the years, modify & improve. Ya gotta start somewhere though, right?
Thanks Again…
I will also agree with that. It’s all about educating the customer. This holds true for coins and all other collectables. I can’t think of many collectables that haven’t been knocked off by the Chinese but it never brought down the hobby as a whole.
Yes coin collecting will continue but it will morph.
Now it’s all about plastic. Not many years ago plastic was almost an unknown substance.
Now plastic is under attack. The question is, will plastic survive, at least in a form that serves a reasonable purpose for the average collector?
However for the investors that plastic has spawned it is a different story. It will require a new round price increase all across the board, including TPG costs and coin values to maintain viability.
The plastic is just what holds the coins. People pay for the TPG’s to grade the coin and authenticate it. The plastic is what the holder (also known as a slab) is made from.
Your welcome Yankee.
Your right. Doing somthing is better then doing nothing.
What we suggested is a good start.
BB: Plastics have been around for a long time in one form or another.
I think it’s in the packaging every one is concerned with.
Someone needs to improve their packaging.
And take the scare out of collecting/investing.
coiny
.
Well actually, believe it or not, many serious collectors despise plastic slabs and wish that TPG’s would disappear.
I am neutral in my assessment of TPG’s but I can assure you the hobby of collecting coins was a hobby before TPG’s showed up on the scene.
But IMO if plastic (TPG’s) disappeared and all the coins cracked out, then 90% of the investor buyers would disappear. The only investors remaining would be those with genuine numismatic knowledge.
Even the great Eliasberg was not considered a numismatist by John J Ford but he did have a fair amount of respect for Mrs Norweb.
Great collections were built before TPG’s came along and they can be build again without them.
It doesn’t solve the slab puzzle question but IMO this is a TPG problem to solve, not a problem collectors will solve. We can have fun trying but I think it will never be the same again.
Correct me if I’m wrong, here. The PCGS & NGC are both companies, right? Companies that have both gotten a good amount of press & a decent price for their services too, right? Well like all growing & successful businesses the Customer Base is the first concern. Business 101: No customers, no business. Pretty basic.
I do believe it’s time for these 2 companies, and any other company like them, to come to bat for the consumer. It IS their problem & in a big way, should they want to stay in business or they can turn a blind eye, count the cash they’ve made & go away.
There are several good ideas within this string and it’s quite possible that 1 or more will need to be implicated in order to keep things safe & secure for the consumer & the collectors world. I also see no reason for not educating the customer base as to what they may be doing to help resolve this problem. The treasury has a multitude of things they do (paper content, watermarks, ink, etc) & they educate the people about most of these things so that the people can protect themselves. Perhaps somewhere along the line the grading companies will realize it’s not all fun & profit (for them) in the money world & get off their duffs to help the collector & in turn will help stave off the counterfeiters as well. They may even consider consulting with the Treasury or Mint about possible solutions or teaming up with them with regards to security issues, etc. It may just well take some participation from the Treasury & Mint to solve this problem. I dunno.
Reckon I’ve said my peace on this subject & we’ll just have to see what the grading companies decide. Maybe Susan can forward this string on to some of her contacts including the grading companies to see if it joggles any results. We gotta start somewhere!
Thanks Again…
Hi Yankee!
Yeah … I’m not getting this foot dragging secrecy coming out of PCGS, NGC has been a little more forthcoming.
I thought the customer is always right?
So then why act like it’s YOUR problem, not ours!!!! That’s no way to run a business.
I don’t know either, could it be they are weary of possible law suits down the highway? Could be. To show good faith they should inform their customer base what to look for. How to look for it. When these companys were born, they hurt some, & helped others. If they don’t do something, people might start getting the idea, EY … they aren’t helping any body, us, the hobby, or my investments.
They them selves will chase customers away. If this were a co-operative instead of a listed NASDAQ corporation, the bottom line would be more importent to the co-op owners than to share holders. Less conflicts of interest. Right now the conflict is with the customer.
coiny
.
Lots of good posts above and the last two raise the important issue of what are the TPG’s actively doing to protect the consumer?
1st - It is my experience that corporations know about serious problems long before they acknowledge them publically. It is disingenuous for David Hall to say they discovered the PCGS counterfeit slabs by alert CU coin forum members. That is pure propaganda.
They have known of the potential for this scenario since the Fernandez case in circa 1990 where Fernandez produced fake PCGS slabs. So when the Chinese coins started showing up on Ebay a 2 or 3 years ago they obviously saw the writing on the wall.
But the old adage; “don’t fix it unless it is broken,” apparently holds true for these mega TPG’s.
2nd - They are now scrambling to cover their bases and want to keep it out of the spotlight and low keyed as long as possible until they implement a solution. It’s called damage control.
3rd. They will publically announce a solution they have adopted, even if it works or not. The objective is to bolster consumer confidence by claiming they have a solution.
4th. They will keep working to develope the best solution but at the same time they will be working on how to capitalize on the solution. Otherwise how are we going to make money on the solution and still have the consumer buy into it.
My opinion only. BB
It took NGC five months to even come out with the differences between the fake and real slabs when this happened to them.
PCGS was aware of their slabs being faked on the 25th of March. “Some” people started screaming “what is PCGS doing about this” 24 hours after they were first discovered.
I want to see what PCGS does about this also but why do some make this a PCGS problem and not a NGC problem?
What type on new slab had NGC come out with that’s tamper proof? They should be 9 months in front of PCGS on this problem. Am I missing something?
Ultimately, it is not NGC or PCGS that will determine the solution, it is the consumer. If the two big boys decide to maintain the status quo, then ANACS, ICG, or David Lawrence’s new service will come up with an alternative, and consumers will either decide that they like it and jump or that they don’t, in which case the status quo will be maintained until a better solution is found.
What is particularly disturbing to me is that a slabbed coin is more difficult to authenticate than a raw one: you can’t weigh it, look at the edge, etc. Once you crack it out the warranty is voided and you need to pay again and take your chances if you want it regraded.
Unlike some of the people above I actually like slabbed coins. The idea that I can handle the coin without worrying about fingerprints or dropping it, and can keep coins in a home safe without being so concerned about temperature, humidity, etc. What good is a collection locked away in a bank vault?
gdnp:
I’m with you on the slabbed coins. I like them.
To be honest the first fake slabs that hit the market where ANACS. Anyone know what they have done?
Also, does anyone even know how big of a problem this is? How many people do you know that bought a fake coin in a fake slab? I don’t know anyone and I know a lot of collectors.
I’ve seen Ebay shut down auction after auction of fake slabs from China.
Again. how many people does everyone know that’s been fooled?
That’s the problem with counterfeits: who knows how many people have been fooled? For all I know I have dozens of fake coins in my collection. I doubt it: most are too cheap to bother with, and I haven’t bought any expensive type coins since the counterfeiting started. Or, should I say, since the counterfeiting was discovered…
I said I was done… I lied. DOH!
Anyway, the past couple posts have made me aware of something: the coin grading companies don’t really care, do they?
Perhaps it’s because it will induce even more revenues by having to re-grade coins or authenticate slabs sent in to them?
Personally I think the whole “coin grading” slab thing is like a game of 3 cup shuffle. You know where the guy puts 3 upside down cups on a table, then places a bean under one of them & it’s up to you (after he shuffles them around a bit) to pick the cup with the bean under it.
I say this because it’s becoming painfully clear to me that it is becoming the consumers problem NOT the grading companies problem. It’s also becoming clear that none of the companies seem to want to communicate with the others for a solution. Why? Because it’s becoming a corporate race for the supreme slab holder, I guess. But while they’re diddling around the consumer gets to pay the price & the consumer will also pay for the changes. Talk about ethics? hmmm It’s greed, plain & simple.
Keep the slabs. I’ll continue on as I’ve done for years and as many collectors have done, years before me. I’ll store my coins in air-tites, flips, tubes & proper albums. Most Mint products already come sealed, too, so no problems there.
And yes, Mint products can be tampered with, too. I think knowing your seller or dealer & the coins you’re purchasing goes a long way to protecting your self.
Knowledge is the Key!
ok, now I think I’m done.
Thanks.
I decided to move this comment area to the forum for all who are interested.
See Forum Post: US Coins / Slabs ? ? ?
I also copy pasted all comments from this area to the first post should anyone need to re-read or need a refresher about these comments.
Thanks & see you on the other side…
Nobody else can skillfully butcher the English language like Speedy.
Morning Everyone,
I posted a question on the forum about slabs & I’m hoping some of you experts can shed some light on things for me.
Thanks.
Mornin Yankee! Ah … What kinda slabs would that be? Yer honor.
Do ya have a map to that thar place you speak of?
Thank you sir!
Two thumbs
coiny
David Lawrence Rare Coins has formed a new grading service DGS which makes it possible to view a photo of the graded coin in the slab when you enter the serial number on their website. While this sounds low-tech, it’s really a good idea, since part of the authentication involves something off-site from the counterfeiter. Anything based on the slab itself…RFID chips, holograms, etc can be counterfeited.
Unfortunately, ebay bans DGS slabs, and with ebay controlling $4 billion in coin auctions per year (Heritage is second, with $600 million) it would be almost impossible for a new grading service to launch without ebay’s blessing.
Wow. I am floored. For a young person who is already overwhelmed by the things you need to learn when you lose someone….I am beside myself with questions regarding things left to me, and how to properly handle them. I would like to thank you all for posting your opinions and genuine knowledge. To begin my research, I first found Heritage…I’ve always been leery re: Ebay…no bad experiences; it just seemed something like coin collections should investigated at a more devoted, specific location. I really hate to dumb this forum down a bit, but am so interested in learning all I can about my newfound collection, grading companies, counterfeits and such. Thanks for allowing me to listen in! My grandparents were smart, savvy investors…but this interest skipped a generation and I am in way over my head with a thirst for information in my new passion of collecting!