What is your opinion of market grading?

[spy88]

Spy88, I was surprised at your comment that eye-appeal should not be a consideration when determining the grade of a coin. Give me two identical, technically graded coins and I'd pick the one with the greatest eye-appeal everytime.

 

Victor, I agree with you concerning picking the one with the greatest eye appeal---but is my ideal EA the same as yours, or the next collector, or the coin store shop owner? Do I need a TPG to TELL me is has great eye appeal by bumping the grade 1 to 3 points whether the coin merits it technically or not? No!

 

Eye appeal is as nebulous and as individual as there are collectors. Granted there will generally be a concensus among said collectors as to the beauty of a coin that it should be worth more with nice tone, but this is a value issue assessed on an individual basis AFTER the coins basic grade has been given.

 

http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&category=3355&item=2198273483

]http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&category=3355&item=2198224926[/url]

 

Some of you may remember that I showed off these two commems that I got off eBay. It was also recommended that I NOT buy them as they APPEARED to be AT. And based on the pictures of the coins, the grade would have been fairly decent. THEY HAD GREAT EA!--- ATed or NTed. I thought I learned a lesson from you guys about toning. None of you could GUARANTEE me that these were AT and, in fact, COULD have been NT. Now I am hearing from some of you that EA should be part of a slabbed grade!

 

I am NOT upset at any of you for talking me out of getting these two coins (quite the opposite), my point is as above. There is no way to quantify tone on a coin with points added to the grade and have the majority agree with it. Of course, the same is true with a technical grade, but there are guidelines for a technical grade: requirements necessary in the CONDITION of the coin in order for it to merit a certain grade. How is someone going to come up with guidelines for tone and have the majority agree with it?

 

When you are online with this forum, you have choices as to which color scheme you wish to view it with. Does everyone use the same color? No. Does everyone using the forum agree with the way it is set up? No, BUT, the method of its setup is fixed (to a certain degree) and we almost all agree with it. If you had to pay extra to view the forum in the color of your choice, some may choose to do so while others would balk at the idea.

 

When the TPGs start giving points to coins based on tone, they are effectively throwing away the guidelines set down and generally accepted by all as a standard for the condition of the coin. Were I to be offered the MS66 Jeff that I originally started this post with, SIGHT UNSEEN, I quite probably would have wanted it, BASED ON THE GRADE. But I would have immediately returned it for a refund after viewing it--because it is NOT a MS66. It is at best, a 61. From PCGS own description of grade, "MS/PR-61---No wear. Multiple heavy marks/hairlines, strike may not be full." For a "MS/PR-66---Few minor marks/hairlines not in focal areas, good strike."

Ther is absolutely nothing there about tone or eye appeal, and any premium warranted by toning should be at the discretion of the individual collector, not by the TPGs. I would accept the * desig. but not added points.

 

 

Done!

 

[stman]

Ah, be careful there Stman, that's a coin that just sucks you in. Buy it if you'll enjoy and keep it, but I'd worry about resale on that one. That's some bucks to spend, better to get a solid MS65 with color bumped to a 66 then a 66 to a 67.

 

 

Frattlaw, Agreed, and I have already passed on it once. But starting thinking again about it. I'm hoping it's sold.

 

I only buy coins to enjoy, but yes you are correct this is a coin that one could possibly be buried in. But for discussion sake..... Since you know which one I'm considering, you are also aware we just don't get our choice on these all the time. Have you seen one like this that's technically graded 65 and bumped to 66? How many have you had to choose from? That's what I thought not many if any.

 

As you probably are aware, if it's a coin that sets itself apart from others, I will, and have "stepped up" for the right coins. I don't like to, but I have a certain taste these days in the coins I like to own. However, my checkbook doesn't appreciate this.

 

OK seller, I know you're reading this, are you enjoying it?

 

Wait till you see the "Old friend" that's coming back home.

 

 

[Wihlborg]

David,

 

Eye appeal is part of a coins grade. Let me explain. Think about what makes up a coins eye appeal, the number of marks a coin has, the placement of those marks, strike, and most importantly luster. These are the attributes that when combined gives a coin its eye appeal. Add to this planchet quality, and you have what IMO are the criteria that should be used to grade a coin. This should be true whether the coin is white or toned for all coins to be graded on a level playing field.

 

Now there is no doubt that toning if beautiful can add to the eye appeal of a coin, making that coin more desirable to some and consequently more valuable, but as GDJMSP has already so eloquently stated, coin grading should establish condition, not value because condition will not change, but value will depending on what is popular at the time. This is why I believe that ALL coins toned or white should be graded equally, using the same set of criteria for both, and let the market decide the premium it is willing to pay for toning

 

As for the two commems that you mention, the reason everyone was advising you not to buy them was not because of their eye appeal, but because the tone appeared to be AT, two very different things. Although they may have looked nice (AT often does), most likely no dealer or experienced collector would be interested in buying them from you should you have ever wanted to sell them. You would have had to try to sell them to someone who does not know how to tell AT from NT, or been stuck with them.

 

Hope this helps

 

John

 

[TonerGuy]

Stman

 

I know the coin, and I like it, don't get me wrong and if $$ weren't a factor I would certainly have bought it already. I am not one to sell coins from my A Box, and that is certainly an A Box coin, so I wouldn't be that concerned as you are as to the technical grade. However, I realize that you sometimes sell off or consider selling some of your best coins -- 1921 toned Peace $ for example. In resale I can see some arguing over the grade. But then again nicely toned MS66 are few are far between anyway. But that coin would require the right buyer if you were to resell it. (Basically someone like me without any $$ concerns) Which might make it difficult to find.

 

If your plans aren't in regards to resell, see if the seller will come down a bit. I understand he might think it's a little over graded anyway.

 

Michael

[stman]

In resale I can see some arguing over the grade

 

This is a point I have made recently. And yes this is why on an expensive coin, I consider the technical grade more than let's say a non expensive coin of the same that just has some eye-appeal.

 

I would like to caution anyone that does indeed buy a "Market Graded" coin that has been bumped up in grade for eye-appeal, or toning. Now this may not be the case (or the coin) that Frattlaw and myself have been discussing. The coin I am

considering has not been pushed or hyped to me in any way. Actually the seller has been forthright with me and very honest.

 

If and or when you go to sell these coins that are Market graded.... Many of these same dealers (or collectors) are going to forget all about the "Eye-appealing" and bumped up in grade coin they sold and hyped to you. They might just change their mind after-all, and all of a sudden give a low-ball price due to the technical aspects of the coin. Funny how that can happen. Let the buyer beware.

 

Frattlaw, as far as finding the "right buyer?" I feel that's the case on many coins.

I also like to think I have a good eye, and if I really think it's a stunner, someone else will as well.

 

I also feel a big problem out there is many collectors need to learn the hard core grumpy technical grading of a coin and make a better informed decision on buying.

 

All just my opinion of course.

 

 

[TomB]

Excellent discussion, I'm sorry that I only now have read it. There are so many points made that I will try to confine my opinions to the initial post by John.

 

The two coins originally mentioned in the thread, the '63-D Jefferson and St. Gaudens double eagle are, in my mind, simply overgraded coins and not marketgraded. To me, the term "marketgraded" has become a euphamism for "overgraded" or any other pejorative term that one might want to associate with a particular, third party graded coin.

 

The rest of this post will assume a definition for market grading as a coin that receives a grade that is higher than consistent for its surface preservation based only upon luster, strike, marks and position of marks while ignoring completely eye appeal derived from toning.

 

The quest for strict technical grading, without taking toning into consideration, has a certain grace and purity to it. However, I think it suffers from some of the same flaws that come out when toning is taken into consideration. Strike, luster, marks and position of marks are nicely quantifiable on a single coin, but maddeningly elusive to quantify for a discrete grade range. Each coin has these attributes mentally weighed by whomever is inspecting the coin and then the aggregate of these weights is tallied for a final value. The problem is in setting limits for each attribute within each grade range. Think about it, this is a computer programmer's fantasy or worst case scenario. The sub-routines would be so filled with "if then", "or" and "go to" that the repetitiveness would be mindboggling. To me, this is the single greatest impediment to computer grading of coins.

 

Please note that I am not advocating that a nicely toned coin be worth 2-3 points more than its theoretical exact match in every other aspect. Depending on the toning though, I wouldn't mind seeing a one point differential. Of course, the final decision to buy the coin should be up to an informed and knowledgeable numismatist.

 

The effective laxity in grading certain rare dates is nuts and I do not agree with it at all. These, too, are coins that suffer a double premium as they are priced according to their assigned grade and then given an additional boost in price because "you just don't find this tough date in this grade...".

 

The effect on the Registry is difficult to determine without seeing the coins in-hand. It could be argued that a technically graded MS66 may trade for less than a market graded MS66 of a particular date simply because of the perceived eye appeal for the market graded coin. If this is the case, then the person who has nicely toned market graded coins making up a large percentage of their collection would likely pay more than a similar set of technically graded coins. Which set is better? I don't know, do you like purely technical coins or coins with superb eye appeal? There is no wrong answer.

 

I believe most collectors have a heard mentality and are actually too lazy to do their own homework and to study coins before buying them. This is likely to be unpopular and is meant to be directed to no one in particular. In my opinion, it just follows human nature. In the end, it comes down to the decision that each of us must make when paying a premium for money, which is what we all are doing. Pay that premium for the money you think is worth it and avoid the others.

 

 

 

 

[Hoot]

Great points Doug. Thanks for the post. Here's my counter-couterpoint!

 

It's not often that I disagree with you Hoot but on a few of these points I do. I think more people realize this than you give them credit for. Just offer a collector the choice of a blah coin or a great looking coin of the same grade for the same money and see which one they buy. They'll take the great looking coin every time.

 

Here, you assume that people have a choice. Most of the time, they don't. Most of the time, I would argue, they are not even aware of the potential choices.

 

Hey, you spend too much time interacting on boards like these where many collectors give their habit significant thought! Also, the vast majority of collectors do not even enter coins shops, let alone go to shows! Why do you think the mail order companies (Littleton, etc.) and TV shows (HSN, QVC) are so damn successful? The old advertising hype will sell more coins any day of the week over deliberate consideration. "I'm gonna pass on this one... it simply does not have the look I'm after" QVC's nightmare.

 

There are millions of collectors in the U.S. and most of them are hoarders, not the likes of you and me.

 

You say technical grading falls short of establishing value - well it's not supposed to establish value. It's supposed to establish condition.

 

Well, unfortunately, it does not do this. Take strike, for example. Under the ANA guidelines, as a coin is struck and exits the striking chamber, it is perfect, ah!, except strike. And if it's an early U.S. coin (pre-1836), then it's still perfect, even after being handled and filed to adjust the weight (I'll get back to this). But damnit! that strike. I doubt seriously that many people here would agree that strike is not an important factor in grading. It is for all coins, all series. But it's comparative, i.e., within any single series, oh, and also for any given Mint. So, strictly speaking, the ANA guidelines would tell you that for, say, buffalo nickels, all strikes on coins of 1913 are compared only to the best struck coins of the Philadelphia Mint, and similarly those of 1914-16 and 1917-38. But they waffle, and so do all technical approaches to grading. NOBODY grades a 1921-S buffalo nickel in comparison to a 1938-D, although the latter sets the standard for the series in that date range! FOUL! Or is it? By the technical guidelines, this is a foul, but nobody, even Ken Bressett has implemented such standards, as there was not a single buffalo nickel from the San Francisco Mint in 1921 that could compare to the best of the 1938-D nickels in terms of strike. But under market grading, the recognition is that strike plays an important role on a year-by-year basis, mint-to-mint, and when it comes to strike, it matters what grade is finally assigned (thus VERY FEW MS67 1921-Ss)but those will still not compare to a 38-D. The kings of all strike leniencies: Dahlonega and Charlotte gold.

 

Now, surface marks: Big coins can have more on spacious devices than little coins and big coins can have BIGGER marks than little coins under the technical guidelines. How is this consistent? Only within a series but not between series. KNOW YOUR SERIES!!! But the expectation that a buffalo nickel can have as many marks on the cheek of the Indian as Jefferson can on his cheek and still obtain the same technical grade is wrong. Wrong, wrong, wrong. And those pesky pre-1836 coins! They can have adjustment marks and still get a technically high grade! As the Mint made it or best surface preservation? It doesn't matter when assigning a technical grade as long as the file marks are the Mint's! Huh?

 

What about weight? Alas! gold coins can have MORE marks in devices and fields than silver coins. Technically speaking. They are heavier and softer, thus the technical standards relent. Why? Doesn't this smack of market grading?

 

I suppose I could rant on, but I won't. The bottom line is that technical grading, in all of its scientific beauty is deeply flawed. It is inconsistent (as is market grading) and it changes over time. But that's next... Technical grading is also in the eye of the beholder. Even if we all become "bag mark counters" we will not all agree as to the number, the severity, and the distraction due to placement. It's like a million witnesses to a single car wreck. The ANA set the standards (thank goodness) and now there are a million interpretations of "the law." Moreover, we will also never agree on the degree of strike. Are we to get out our lasers and measure each coin to see if it can be designated gem 65 or not? Even the technical standard has a subjective interpretation.

 

Thus the problem with market grading - changes.

 

Thus the problem with technical grading - changes. From page 5 of the fifth edition of the ANA Grading Standards: "Grading has continued to evolve each year, and probably will do so well into the future." Ack! Changing technical standards! The only thing worse than a bunch of numismatists trying to agree on the same technical standards is a room full of physicists trying to agree on the best approach to the standardized model of the universe.

 

But let me be specific... Not too long ago, the MS grades were pretty much MS60, MS63, MS65, and MS67. Then along came more and more market demand and these got split up. A high MS63 was now a 64 and a low MS65 was a 64. Others who are intimately familiar with their series like to talk about MS65.7 coins, etc. Oh no! Are we hopelessly lost in the technical confusion of assigning numerical grade to the ticks, dings, rubs, ripples, lustre, and etc. of each and every coin, to the point where if I whisper the grade into your ear you will have all knowledge of the technical aspects of the coin, less a few details, like strike! placement of contact marks, severity of contact, rub (roll or bag vs. light handling), toning (or lack thereof) eye appeal, and low or high end of the grade? The technical grade, in other words, offers up so much subjectivity that it simply must be only part of the grade! The rest is up to the conditions prevailing in the collecting world of current day. We are fortunate to live in a time when that means something. (Modern communications such as they are).

 

Coin grading should establish condition - not value. Condition will not change - value will.

 

But as we see, condition and how its interpreted does change over time. Condition also changes physically (not just in the eye of the grader or in the words of the ANA) since coins dynamically interact with their environment. We would have to strip the blackish toning from every Lafayette dollar to give it the "proper" technical grade! Then let it come back.

 

Perceptions of what constitutes value change as often as time changes.

 

As do perceptions of what the proper technical approach is. If you doubt this, simply look at our approaches to the physical sciences, let alone our approaches to technical grading. We are hopelessly doomed to individual standards, and collectively these translate to a healthy combination of "technical plus" grading, what I like to think of as market grading.

 

And I'm pretty sure that Sheldon would have been surprised that his scale meant what it does today.

 

Hoot

[Hoot]

"...the term "marketgraded" has become a euphamism for "overgraded" or any other pejorative term that one might want to associate with a particular, third party graded coin."

 

GREAT point, Tom! Indeed, a market graded coin is nearly as likely to be bumped down as up for qualities of strike, placement and appearance of nicks, etc., lustre, and toning. (As has been mentioned, a pure white coin can have just as much or just as little eye appeal as a toned coin.)

 

And I agree (still) that the 63-D nickel and 32 Saint appeared overgraded by the scans. Wish I could see them in person.

 

"Strike, luster, marks and position of marks are nicely quantifiable on a single coin, but maddeningly elusive to quantify for a discrete grade range."

 

 

Hoot

[Elcontador]

I got in on this late & others have made my points more eloquently than I can, but I agree with John that grading for the most part should be technical & let the market decide what a coin in worth. IMO, a wildly toned Morgan, if it is a technical MS 65, then that's the grade which should appear on the slab. The fact that beautifully toned 5s are rare for the particular date should increase its value accordingly.

 

I get very annoyed with weakly struck Uncs. in 5 holders, or type coins that are in 6 or 7 holders because they have attractive luster, but have the contact marks you'd expect would come with such a coin in 4 or 5. Ditto re the supergrade 1887 P dimes, in all of which I've seen, Miss Liberty has a dished head.

 

In 1996 Scott Travers wrote that a type coin in MS 67 iwas as good as it gets, and placed far more weight on a coin's strike than is placed today (today, eye appeal is weighted much more heavily than before). By his standards, most type coins you see in 7 holders are overgraded, and that a coin which was not fully struck could not grade higher than MS 64.

 

Look at virtually all Capped Bust Halves in Unc. A full strike is VERY rare, yet you'll see a number of them in 5 holders that lack detail in the obverse's lower curls, maybe the clasp isn't full, etc.

 

Market grading is good for the TPG, as it encourages resubmissions. It is good for coin dealers, as it provides them with a larger array of products to sell. To a lesser extent it is good for collectors, as when you want to sell the coin, the dealer can't claim you're gem (MS 65) coin is really an Unc. (MS 60-3). However, to the extent different values can be assigned to specific slabbed coins of the same grade, it is caveat emptor for the buyers of such coins. Know how to grade a coin before buying it.

[Oldtrader3]

I am entering this discussion at rather a late stage. However IMHO, market grading mainly affects the commercial (investment) side of collecting. The practice appears to be more of a marketing and hedge tool (to protect dealers) than a technical tool. Most advanced collectors seem to have a generally consistant concensus on a coin's technical grade. Eye appeal will always be a part of grading and, as such, can add or detract from a coin's value.

 

I have noticed that in Bear Markets, grading is tighter and in Bull Markets, grading is looser. Somewhere in between is technical grading. I guess the only protection that collectors have is to be fussy about the technical merits of a coin purchase and be aware of the market conditions when buying and selling. The TPG's will always market grade to protect dealer commerce and collectors will always try to financially survive the up's and down's.

[jom]

The quest for strict technical grading, without taking toning into consideration, has a certain grace and purity to it. However, I think it suffers from some of the same flaws that come out when toning is taken into consideration. Strike, luster, marks and position of marks are nicely quantifiable on a single coin, but maddeningly elusive to quantify for a discrete grade range. Each coin has these attributes mentally weighed by whomever is inspecting the coin and then the aggregate of these weights is tallied for a final value. The problem is in setting limits for each attribute within each grade range. Think about it, this is a computer programmer's fantasy or worst case scenario. The sub-routines would be so filled with "if then", "or" and "go to" that the repetitiveness would be mindboggling. To me, this is the single greatest impediment to computer grading of coins.

 

If any paragraph I've read in this thread that explains things this is the one. BUT it does so indirectly. Tom's explaination here is certainly accurate but if you just sit back and read it it really shows how truely the subject of grading has been blown WAY out of proportion to what it was originally intended to be. All of the analysis and thoughts that are going into this subject just goes to show, IMO, that we've taken this FAR beyond what it SHOULD be. If anything is true it is that grading needs to be SIMPLIED not made more complex. My god people...grading is really only supposed to be a communication "device" for people who can't see the coin. That's it...nothing else. Why make it so complex you need a friggen computer to grade the coin for you? Geez...we taken this to the point of absurdity and beyond!

 

Again, I want to emphize that I do NOT mean to imply that Tom's post suggests this but it does show how complicated we've made grading because of Tom's explaination.

 

To me simplification is the answer. Do I think this will happen? No, because the TPG's DEPEND on creating something so complicated that only THEY can do. Hence, gives them the ability to CHARGE premiums for their work. Ever wonder why there seems to be a new TPG popping up every few months? Maybe because it can be a lucrative business...like auction houses. If the collectors took over the coin market the TPG's would slowly disappear over time....

 

jom

[jom]

BTW, what 63-D and 32 Saint are we talking about here? I seemed to have missed that....

 

jom

[Leothelion]

BTW, what 63-D and 32 Saint are we talking about here? I seemed to have missed that....jom

Don't look too far! Here's a most beautiful coin that ANACS graded only as a MS65 and rightly so due to some pinpoint nicks. But sadly, let a coin like this slip into PayCGS and they'll exploit the grade to a MS66 perhaps a MS67 easily. Because they know while the market is in this so-called bullish state, they know that there are enough puppies out there who will drink it up.

Click to view supersized image

 

Click to view supersized image

 

 

 

Reliable image hosting provided by Vendio. Unlimited images for $12.95.

Leo

[RobertB]

BTW, what 63-D and 32 Saint are we talking about here? I seemed to have missed that....jom

Don't look too far! Here's a most beautiful coin that ANACS graded only as a MS65 and rightly so due to some pinpoint nicks. But sadly, let a coin like this slip into PayCGS and they'll exploit the grade to a MS66 perhaps a MS67 easily. Because they know while the market is in this so-called bullish state, they know that there are enough puppies out there who will drink it up.

Click to view supersized image

 

Click to view supersized image

 

 

 

Reliable image hosting provided by Vendio. Unlimited images for $12.95.

Leo

That nickel is amazing. For such a new issue it is dynamite. What a find you have. The tone is amazing.

[Wihlborg]

Jom,

 

Here are the pics of the 63d

 

And here is the link to the thread about the Saints

Saints

 

John

[Leothelion]

BTW, what 63-D and 32 Saint are we talking about here? I seemed to have missed that....jom

Don't look too far! Here's a most beautiful coin that ANACS graded only as a MS65 and rightly so due to some pinpoint nicks. But sadly, let a coin like this slip into PayCGS and they'll exploit the grade to a MS66 perhaps a MS67 easily. Because they know while the market is in this so-called bullish state, they know that there are enough puppies out there who will drink it up.

Click to view supersized image

 

Click to view supersized image

 

 

 

Reliable image hosting provided by Vendio. Unlimited images for $12.95.

Leo

That nickel is amazing. For such a new issue it is dynamite. What a find you have. The tone is amazing.

Thanks RobertBesides the bullseye toning, other aspects include a very clean profile, prooflike fields and 6 steps. Best of all, this coin also sports a very strong to EDS strike! The wide rim can easily be seen in the pics.Thanks,Leo

[pmh1nic]

TomB's post covered some of my thinking regarding market grading with part of the problem being the attempt to bring precision and an exactness to a subject that just isn't conducive to extreme precision. We don't have a universal set of grading criteria. The criteria we do have includes that subjective aspect of eye appeal. Even when we're not discussing toning there can be differences of opinion regarding just how much of a distraction and reduction in grade a particular mark in a particular location warrants.

 

As TomB said much of what is called market grading is just overgrading. I've heard it said when it comes to relatively rare coins that one mistake of overgrading early on results in having to push up the grades of other coins graded afterwards in an attempt to correctly adjust their market value in relationship to the overgraded coin. I'm wondering if that might be the basis of some of the debates I've heard regarding the grading of various 1804 Dollars.

[jom]

That's an amazing nickel tone for a 1999. Where was it stored? In someone's steam room? heh

 

As to the Saints, I suppose the 66 grade is a bit high on the 32-P BUT since it is a photo you can't really judge since the luster needs to be evaluated LIVE. If the luster is mind-blowing (and not picked up by the camera) then a 66 might be appropriate.

 

jom

[BillJones]

Market grading is like price inflation in a nation's economy. If an economy has been stable before, it's a shock when starts. This was how is was in the late 1980's with inflation was running at 20% annually.

 

Once the economy comes to accept these high rates, people plan on it. It's not totally healthy because it disrupts capital markets and the like. But it's the best people can do.

 

Market grading or "grade-flation" works in a similar way. Dealers and informed collectors realize that, they make adjustments. The bids on the Gray Sheet go down or do not increase as quickly. Dealers realize that MS-61 or 62 will often mean the coin is an atractive AU-58 and the honest will inform their knowledgeable customers about that. In other words the people who knows what is going on will adjust. Those who don't not the score stand a good chance of getting hosed.

 

Do wish we lived in a market that called the grades for what they are. Absoluetly! But we don't, and I can't change it. I can only adjust to it.