Coin Rarities & Related Topics: News and Analysis regarding scarce coins, coin markets, and the coin collecting community, #301

A Weekly CoinWeek Column by Greg Reynolds ……..

Last week, the 300th installment of this series was published. I have been having a wonderful time viewing, analyzing and writing about terrific coins, many of which I dreamed about before I became an adult. I continue to be concerned, however, that many coin rarities have been or will be harmed by coin doctors, rarities that present and future generations of collectors may wish to cherish.

Rare coins are part of our culture. There will be more demand for rare coins over the long run if people are warned about coin doctoring practices on an ongoing basis and the problem is further contained.

Publicly addressing this problem is beneficial to the coin business in addition to being beneficial to collectors. Doctored coins often chemically transform over a period of months or years such that they become obviously disturbed.

“A collector may buy a coin that looks great at first. Five or ten years later, doctor-added substances may become obvious,” remarks Warren Mills, who has been a full-time coin dealer for thirty-six years. “A couple of weeks ago, I looked at a PCGS graded MS-65 High Relief Saint $20 gold coin that had putty all over it,” Warren relates. “What I am supposed to tell the client?”

gr_coindoctorIn 2011, Doug Winter noted that “chemicals placed on gold coins [may] break down after they have been on the surface for a period of time. When you see a gold coin that has crazy color in a PCGS or NGC slab, this color didn’t exist on the coin at the time it was graded; it changed within the slab.” Here, the word ‘slab’ refers to a PCGS or NGC holder.

There are a large number of doctored coins that remain stable and deceptive. These will often eventually be revealed as such to formerly unsuspecting owners who consult experts. It is not unusual for a non-expert collector to show a coin to a straightforward dealer-expert or to a more knowledgeable collector. It is not beneficial for the coin business for a significant portion of coin buyers to have good reason to become very angry in the future.

The ‘good news’ is that, since 2010, the scale and quantity of coin doctoring activities has decreased. There are much fewer instances of coin doctors moving metal, adding metal or heating coins to the point that metal is notably transformed. The coin doctoring activities that continue to be ‘successful,’ in the sense that the doctored coins receive numerical grades from PCGS or NGC, are usually not severe and are often reversible in theory.

gr_traversAs the revised seventh edition of The Coin Collector’s Survival Manual by Scott A. Travers (NY: Random House, 2015) was just published, the present is an especially appropriate time to reflect upon the problem of coin doctoring, as this is a topic that is covered in different manners in multiple sections of this book. More so than in any other book, there is important and detailed information regarding coin doctoring.

An interview with a dealer who was associated with coin doctors is illuminating (on pp. 106-113). Furthermore, there is information about coin doctoring methods (on pp. 321-22). Moreover, there is much discussion about avoiding doctored coins (on pp. 119-120). Also, David Hall, the primary founder of PCGS, responds to questions that Travers asked about coin doctoring (on pp. 322-23).

There needs to be open discussion of specific coins that may have been doctored and of the topic in general, so that coin collectors can become more aware of the risks involved and be better able to strategize to avoid doctored coins. In past eras, a larger percentage of coin collectors and dealers of rarities learned about the physical characteristics of coins, rather than being heavily dependent upon grading services.

“Buy the coin, and not the holder,” Warren Mills reminds collectors. “It is not hard to get an education if you find ethical and qualified dealers to help you. An education can be cheap in this business, but it can also be horribly expensive if you do not go about making acquisitions correctly.”

What is Coin Doctoring?

It is wrong to suggest that coin doctoring enhances a coin and it is misleading to refer to coin doctoring as adding value, notions which are erroneously included in some widely cited definitions. Successful coin doctoring leads to people being misled about the quality of a coin and often results in a coin having a higher market value than it did before it was doctored because graders and/or prospective buyers have been deceived.

Coins ranging in value from less than $50 to more than $1 million have been doctored. Indeed, more than one 1885 Trade Dollar has been modified.

According to the PCGS lawsuit that was filed in 2010, coin doctoring “involves the alteration of the appearance of a coin to attempt to increase its value, and may involve: adding substances to coins (such as putty, wax, facial oils, petroleum jelly or varnish); treating coins with chemicals (such as potash, sulfur, cyanide, iodine or bleach); heat treating coins in any way to alter their appearance; re-matting (“skinning”) Proof gold; ‘tapping’ and ’spooning’ (i.e. physically moving surface metal to hide marks); filing rim nicks; or repairing coins (re-tooling metal).” The parentheses are in the original. I delete the phrase ‘among other things’ from my citations of the PCGS definition, as this phrase appears repeatedly in the original and is not illuminating.

Although the PCGS definition is fairly accurate, it is largely a list of activities rather than being logic-based. In essence, coin doctoring involves harming and/or modifying a coin for the purpose of deceiving experts along with prospective buyers into falsely believing that the coin is of higher quality than it was before it was changed. If experts are deceived, other interested people will be as well.

Coin doctoring does not necessarily involve permanent modifications of a coin. Reversible modifications often constitute doctoring, especially if they are aimed at deceiving experts and/or prospective buyers.

An obvious modification, like drilling a hole in a coin or painting it purple, is not doctoring. Although beginners and exhausted experts are occasionally deceived by obvious modifications, that is a topic separate from coin doctoring.

gr_dipDipping is not doctoring, partly because a recently dipped silver coin is easily identified by experts and by intermediate level collectors as having been dipped. Although dipping is harmful, there is wide scale agreement that the benefits of dipping outweigh the harm done in some cases. In any event, effects of dipping are readily apparent, if the coin has been dipped within the last seven years or so; the effects of coin doctoring often require a tedious, expert analysis.

Although I like to refer to John Albanese as the Ted Williams of coin grading, even Ted Williams struck out on occasion. Williams was the most accurate hitter in the history of baseball and the last to bat over 0.400. In baseball or in coin grading, no one can ‘bat one thousand.’

In April 2009, Laura Sperber maintained, “even if you disagree with the CAC concept, know one thing, there is no better group dedicated to saving the consumer from buying doctored coins. If you buy gold, you very much do want all your coins to be CAC [approved]. You’d be amazed how good the docs are and how many dealers on average will miss the teenie gobs of putty.”

Detecting doctored coins is extremely difficult. I have found that, in some cases, a coin has to be tilted under a lamp at a few different angles, and examined with a magnifying glass, before evidence of doctoring becomes apparent. No one can spot all instances of doctoring.

“It is very difficult to detect the new ways that people doctor coins,” Warren Mills points out. “The doctors keep trying new substances. It is hard for the services to keep up. By and large, PCGS and NGC do a really good job. They have been trying hard to detect doctored coins. They are better now than they were before. No service can detect all doctored coins,” Warren emphasizes.

As I emphasized in my discussion of the future of certified grading, there is typically a short limit to the amount of time that grading experts at PCGS, NGC or CAC will typically spend on each coin. In 2014, an official at PCGS stated, in answer to my question, that PCGS graders generally each examine “800 to 1250 coins” per day.

Recently, a former grader for one of the two leading services revealed to me that, while employed by that service, he would grade from “600 to 1200” coins per day. He was probably examining more rarities than the typical grader. He also revealed that he used a magnifying glass on “around ten percent” of the coins that he graded.

In my experience, a large number of rare coins can be identified as having been doctored with a magnifying glass, yet would be unlikely to be so identified without magnification. When I view a coin, it may appear terrific for thirty seconds and then I notice unwanted substances covering contact marks, hairlines or worn areas. The adding of such substances is usually much less serious than moving metal on a coin or adding metal.

The problem overall is not nearly as severe was it was during the period from 1997 to 2007 or so. Rather than add or move metal, coin doctors have been more likely to add films, sheens, liquid plastics, creamy coatings, women’s make-up and mysterious substances to cover or deflect attention from imperfections. In many cases, only a small amount of material is added, often just enough to cover a few gashes or deep hairlines.

Artificial toning, however, continues to be a serious problem, especially since it has become more common to add small amounts of artificial tones to coins that are already characterized by substantial natural toning. Subtle aspects of coins are discussed in Travers’s book.

Travers on Coin Doctoring

Travers’s manual is an overall guide for coin buyers, not a treatise on coin doctoring. The other material in the book is beside the point that Scott Travers deserves a great deal of credit for exposing the coin doctoring problem and enabling those who care about rare U.S. coins to learn about the seriousness of the problem. The selling of doctored coins by ‘reputable’ dealers who have tables at major conventions and the inclusion of doctored coins in major coin auctions by leading firms has been a topic addressed by Travers since the publication of the first edition of his ‘manual’ in 1984!

“By modifying – or doctoring – coins to conceal imperfections or otherwise [change] their appearance, clever individuals have frequently been able to fool even experts into certifying those scarce coins at higher grades than they really merit. This has caused uncertainty and suspicion in the marketplace and serious financial liability for grading services such as PCGS,” declares Travers (on p. 175). Indeed, “the certification services fall prey all too often to cleverly modified coins, which these ‘doctors’ have treated in various ways” (p. 106).

There is a report in the fifth edition (NY: 2006, p. 65) that did not remain in the seventh edition, which is pertinent and educational. This report involved “a number of Indian Head” quarter eagles. These were graded MS-61 and MS-62 “by leading grading services. After hiding scratches, [someone] resubmitted the coins for grading and apparently received grades of MS-64 and MS-65.”

In terms of public discussions, for many years, Travers was alone in exposing coin doctoring. Undoubtedly, there were hostile reactions from some people in the coin business. I have dealt with unfriendly reactions myself.

Publicly Addressing The Issue

During the 1980s and 1990s, Maurice Rosen courageously discussed coin doctoring in a subscription-based newsletter aimed at non-collecting investors. Travers, though, was the only expert then who brought the matter to the attention of a very large number of coin buyers and other interested people. If additional experts had publicly supported his efforts during that era, there would be fewer doctored coins now.

gr_hottopicsIn a “Hot Topics” commentary on May 1, 2007, Laura Sperber refers to “crackout dealers” who “destroyed more coins by thumbing, puttying, and recoloring them.” Laura was “disgusted that the grading services even allowed them to take advantage of their systems for so long, but at least they finally realized it needs to be cleaned up.”

Widely read, published articles on the Internet by Laura Sperber, Doug Winter and myself have addressed coin doctoring over the last eight years. I analyzed the PCGS lawsuit against alleged coin doctors. Even so, Travers’s books have sold hundreds of thousands of copies and were first published prior to the Internet era.

It was more difficult to reach coin collectors before the Internet became extremely popular. Web developer and CoinWeek Founder Scott Purvis was perhaps the first publisher in the mainstream of the coin business to allow articles that educate collectors about the nature and severity of the coin doctoring problem. Although the most serious problem in the coin community, coin doctoring was largely ignored in coin related, print publications, and still does not receive much attention from these publications.

On July 31, 2008, in an article by Doug Winter on an 1841-D $2½ gold coin, Doug emphasized the originality of a specific 1841-D coin. Most telling was his statement that “before the era of extensive coin doctoring it was not uncommon to see choice, high quality gold coins with this sort of natural haze on the surfaces.” Winter’s statements in that article and elsewhere are consistent with a theme of mine that the era from 1997 to 2007 or so was characterized by grade-inflation and coin doctoring.

Although this discussion is about doctored coins that have been unfortunately graded at PCGS or NGC, it is not implied here that collectors should purchase non-certified pre-1934 U.S. coins that cost more than $500 each. In fairness, experts at PCGS and at NGC do manage to reject the vast majority of the doctored coins that are submitted for numerical grading.

With the exception of some generic gold coins, a very large percentage of existing raw, pre-1934 U.S. coins, which are offered for more than $500 each, have failed to receive numerical grades or would fail to be graded if submitted to PCGS or NGC. On average, acquiring classic U.S. coins that are PCGS or NGC graded involves less risk than the purchase of classic U.S. coins have not been PCGS or NGC graded, for more than $500 each.

Even so, as PCGS was founded in 1986 and NGC in 1987, the total number of doctored classic U.S. coins that have unfortunately received numerical grades has significantly risen over time and has become substantial. It is relevant that coin doctors may re-submit, sometimes through intermediaries, the same coins over and over again. For example, a doctored coin that failed to receive a numerical grade in 1994, 1995 and 1996, might have been assigned a numerical grade by the same service in 1999 or later.

Incidence

“Over the past twenty-five years, I have seen more than a thousand ….doctored classic U.S. coins,” reveals Warren Mills. Similarly, I have seen far more than a thousand, classic U.S. coins during the past ten years that I believe have been doctored.

On April 3, 2007, Laura Sperber referred to “a major auction earlier” that year in which “there were numerous gold coins that had been messed with.” She was upset that, “instead of complaining, because most dealers live in fear of the services, they just told their customers to pass.” (I slightly edited her statements here for grammatical reasons.)

In July 2012, Sperber put forth a similar point. She was referring to a PCGS graded gold coin with putty. She was upset about “how people reacted to seeing it. Many dealers just shrug their shoulders and say ‘pass’ on the coin and walk away. And that is ‘if’ the dealer can tell, as most cannot tell because they are not really coin dealers, they just buy and sell plastic.”

gr_headsandI agree with Sperber that it is wrong for a dealer who spots a certified coin, which has been doctored, to just tell his respective clients to ‘pass on the coin.’ More needs to be said, as saying the word ‘pass’ does not contribute to education or counter-measures.

Doug Winter has stated that “an educated consumer is one solid way to begin eradicating” the “coin doctoring problem.” Sperber has encouraged dealers to complain to the grading services and has called for organizations to educate people. Travers seeks to educate through his books and presentations, as does Rosen through his newsletter. Mills spends an enormous amount of time providing explanations to coin buyers.

In some cases, an expert may just have a bad feeling about a particular coin that is unexplainable and maybe, in those cases, silence is ethical. In most cases, however, a true expert should be able to detect problems and should provide honest advice to a collector, if the respective expert had already agreed to advise that collector.

A ‘do not buy’ recommendation, without an explanation, may contribute to ignorance rather than knowledge. A non-expert collector may draw his own conclusions, with his own imagination, which might be very much wrong. When dealers offer coins on a bourse floor, prospective buyers should ask questions and request permission to show the coins to knowledgeable third parties.

“The best way to find doctored coins is to look through auction lots. A sharp grader who goes through a lot of auction lots might think that the coin doctoring problem is much more critical than it really is,” asserts Warren Mills. “There are not nearly as many doctored coins on the bourse floors at major coin shows,” Mills finds. Sperber, too, has repeatedly pointed out that doctored coins are often consigned to auctions.

The prevalence of doctored coins on bourse floors is very difficult to estimate, as it is not practical to closely examine a substantial percentage of them. Also, the overhead lighting above some bourse floors makes it more difficult to detect doctored coins.

In June 2010, I quoted Dr. Steven Duckor as concluding that, of “uncirculated better-date Saint Gaudens Double Eagles, in PCGS or NGC holders, 15% have been doctored.” Duckor is one of the most accomplished and sophisticated collectors in the history of coin collecting in the U.S..

On July 23, 2000, Scott Travers interviewed Jess Lipka, then a leading ‘crackout dealer,’ and that interview was published in a different book by Travers in 2001. (If the words in blue here are clicked, readers may find the precise reference.) Lipka made clear that, in his view, many coins in  holders at major shows had been doctored. Lipka added that coin doctors have been adding putty to coins since 1980 or earlier.

Consequences & Counter-Measures

Many collectors of classic U.S. coins have successful professional backgrounds in business, medicine, or finance. Most  understand the risks and imperfections in markets, but there is a need to continually address the coin doctoring problem. New collectors may be unaware of past discussions, and even veterans in the coin community may forget about the seriousness of the problem. Collectors probably can influence grading services, which should be continually vigilant and continue to implement costly counter-measures.

The best, practical counter-measure is a reduction in the “market” for doctored coins. “If coin doctors lose their audience for doctored coins, they will stop or at least cut back on their work,” Doug Winter concluded in 2011. Every collector who learns to better avoid doctored coins can contribute to,  and thereby reduce the market for doctored coins.

Collectors should seek out experts and dealers who are sharp, knowledgeable, straightforward, outspoken and have some courage. Someone who is afraid of offending the grading services, the auction companies or the coin doctors themselves may not be the best source for advice.

Silence in regard to coin doctoring worsens the problem. I will continue to investigate, learn, report, analyze and  encourage others who care about rare coins to contribute and to display some courage. New initiatives should be considered.

©2015 Greg Reynolds
insightful10@gmail.com

2 COMMENTS

    • The biggest problem by far is high grade repros. Exact replicas in diameter, thickness, weight,
      asw details etc. Restoration of an original coin by experts is not that bad.. Also bad are poorly graded coins in “slabs” with may have a much higher grade than they really are. I see this every day done by all grading companies.

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