Irvine Service Determines Whether Coins Make the Grade as Investments

To most people, the thought of being surrounded by stacks of gleaming gold and silver coins is just a daydream.

But for the staff at Professional Coin Grading Service in Irvine, it is an everyday event. The privately owned company each day handles millions of dollars’ worth of investment-quality coins, sent in by dealers from across the nation.

PCGS, founded in February, 1986, by six large coin dealers, has become the largest coin grading operation in the nation. To date, according to a spokesman, its professional coin appraisers have handled 797,102 coins with an estimated market value of $1 billion.

The service, which charges a flat $22 to grade a coin, was formed when the coin investing world was being rocked by unscrupulous telephone marketers peddling inferior coins as higher-grade, investment-quality merchandise, said Joel D. Rettew Jr., a Newport Beach dealer whose firm was one of the first PCGS member-dealers in the nation.

Rettew’s firm is one of three large investment-oriented coin dealers in Newport Beach and Costa Mesa. Between them, the three do an estimated $65 million a year in business and make Orange County one of the country’s major coin investing centers.

Coins are graded according to an international standard that relies largely on the experience of individual appraisers. There are 11 top investment quality, or Mint State, grades, ranging from MS-60 to MS-70. The latter grade represents a perfect, unblemished, uncirculated coin.

To the untrained eye, the difference between MS-63 and MS-64 coins of the same denomination, year and mint is sometimes undetectable. But a difference of a single grade can mean hundreds, even thousands, of dollars to an investor or dealer.

“Grading is everything in coin investing,” said Rettew, “because it is the grade that determines value.”

PCGS, which has never opened its doors to the public, recently invited The Times on a tour of the tightly secured facility.

Coins, which must be sent in by PCGS member-dealers, are stored in a high-security vault until they can be graded. Each coin is examined by at least three graders, and all must agree on a grade before one is assigned.

The coins are then hermetically sealed in clear plastic holders to protect them from damage. A PCGS label describing the coin and its assigned grade and a serial number is attached, and the coin is sent back to the dealer for collection by the owner.

About 400 dealers belong to PCGS, and each promises to honor the assigned grade for any PCGS-graded coin they buy or sell. Additionally, the service guarantees to pay the difference in market price for any PCGS-graded coin later determined to be of a lower grade than originally assigned.

PCGS has also established a computerized “exchange” through which 100 selected dealer-members daily enter their bid and ask prices for as many as 200,000 individual coins.

The exchange, called ANIE, or American Numismatic Information Exchange, is an effort to standardize pricing and increase the liquidity of investment-grade coins, Rettew said.