should TPG be able to change grading standards?

[Schatzy]

YES.....you are paying for an opinion!!

[James_OldeTowne]

I vote "yes". After all, as numismatic research advances our knowledge of how coins were struck, etc., then we learn more about how a coin's future appearance, might be affected by wear. Also, the TPGs apply the principle of "market grading", whereby they are really pricing coins. Thus, grading factors must fluctuate with the whims of the market.

[Hard Times]

In theory, no, in practice, well that is the reality of human grading, things will change, even in the most perfect of conditions, grading standards will change. That is why CAC is in buisness, because grading standards do change, the more opinions one has that are consistent, the more confidence one has in the grade. Even the grading guides have changed for a given grade over the decades.

 

The truly sad thing is that TPG apply market grading. But I am not sure there is a better way?

[TomB]

Yes.

[Coindude]

Yes, and yes they have.

[RUSS BEGA]

Yes, Market grading changes, we just have to adjust.

 

-Russ

[coinman_23885]

I vote "yes". After all, as numismatic research advances our knowledge of how coins were struck, etc., then we learn more about how a coin's future appearance, might be affected by wear. Also, the TPGs apply the principle of "market grading", whereby they are really pricing coins. Thus, grading factors must fluctuate with the whims of the market.

Market grading is one of my biggest criticisms of third party grading services. I do not believe that any grading service should reference anything more than the technical grade on its label except perhaps for the star or analogous eye appeal designation that does not affect the numerical modifier. This, however, is admittedly not the practice and coins with superb luster or exceptional toning are often given a “bonus” of up to one point in technical grade. See, e.g., PCGS’s Eye Appeal Guidelines available here. This poses several problems, and can indeed be misleading.

 

 

I have several concerns about this grading methodology. First and foremost, I think that eye appeal, even more so than technical grading, is exceedingly subjective and the desirability of a particular attribute or lack thereof and any price enhancement should be determined by the collector in the contemporaneous market. A failure to recognize this inevitably leads to numerous problems. For instance, price premiums and market fads often change eye appeal considerations. One only has to look to the Treasury Department's sale of GSA Morgan and Peace Dollars in the 1970s. Coins with toning, irrespective of how desirable or eye appealing, were not treated as uncirculated coins. Obviously this is no longer the case. Major shifts and market fads can change and suddenly that (arguably) justified one point boost in technical grade may only be worth one-quarter to one-third of a grading point. Also look at “market acceptable cleaning” and how this inevitably changes. Coin is yesterday’s AU or low MS holders may really be cleaned coins that would receive a “details” grade today.

 

 

There are additional considerations that should be viewed as well. Even in a market where a one-point grade bonus is appropriate in pricing a particular coin, market pricing can still be bothersome. The grading service has already awarded a premium, and it is not unusual for collectors to pay additional premiums above the already inflated (or “adjusted,” depending on your view) grade. The net result is somewhat of a double price enhancement. While many will argue that this is one of many reasons that collectors should buy the coin and not the holder, it is undeniable that a technical MS66 in a 66 holder with exceptional toning is worth less than a coin in a MS67 holder with the same attributes. The grading services should refrain from engaging in this questionable practice.

 

[coinman_23885]

I voted no. In general, I do not think that this should change unless new numismatic knowledge (i.e. about die states, striking practices, etc.) become available, and even then, a change in grade should be exceptionally rare.

[PerryHall]

Yes. If they didn't change their standards occasionally, how would the crack-out artists make a living?

[AegisIII]

As someone who believes that slabbing with grading inevitably leads to gradeflation (caused altogether by the natural variability of grades, re-submissions, and new graders being used both to grading sets and the coins seen in the marketplace), I'm not really sure how to answer the question. "Should"/ethical questions seem to assume that both outcomes are in some meaningful sense possible (which admittedly seems to be getting close to the is/ought fallacy), and so I'm not sure we have a meaningful question here.

 

[DC Dawg]

I vote "yes". After all, as numismatic research advances our knowledge of how coins were struck, etc., then we learn more about how a coin's future appearance, might be affected by wear. Also, the TPGs apply the principle of "market grading", whereby they are really pricing coins. Thus, grading factors must fluctuate with the whims of the market.

Market grading is one of my biggest criticisms of third party grading services. I do not believe that any grading service should reference anything more than the technical grade on its label except perhaps for the star or analogous eye appeal designation that does not affect the numerical modifier. This, however, is admittedly not the practice and coins with superb luster or exceptional toning are often given a “bonus” of up to one point in technical grade. See, e.g., PCGS’s Eye Appeal Guidelines available here. This poses several problems, and can indeed be misleading.

 

 

I have several concerns about this grading methodology. First and foremost, I think that eye appeal, even more so than technical grading, is exceedingly subjective and the desirability of a particular attribute or lack thereof and any price enhancement should be determined by the collector in the contemporaneous market. A failure to recognize this inevitably leads to numerous problems. For instance, price premiums and market fads often change eye appeal considerations. One only has to look to the Treasury Department's sale of GSA Morgan and Peace Dollars in the 1970s. Coins with toning, irrespective of how desirable or eye appealing, were not treated as uncirculated coins. Obviously this is no longer the case. Major shifts and market fads can change and suddenly that (arguably) justified one point boost in technical grade may only be worth one-quarter to one-third of a grading point. Also look at “market acceptable cleaning” and how this inevitably changes. Coin is yesterday’s AU or low MS holders may really be cleaned coins that would receive a “details” grade today.

 

 

There are additional considerations that should be viewed as well. Even in a market where a one-point grade bonus is appropriate in pricing a particular coin, market pricing can still be bothersome. The grading service has already awarded a premium, and it is not unusual for collectors to pay additional premiums above the already inflated (or “adjusted,” depending on your view) grade. The net result is somewhat of a double price enhancement. While many will argue that this is one of many reasons that collectors should buy the coin and not the holder, it is undeniable that a technical MS66 in a 66 holder with exceptional toning is worth less than a coin in a MS67 holder with the same attributes. The grading services should refrain from engaging in this questionable practice.

AMEN!

 

I couldn't have said it better myself!!

 

[cpm9ball]

I vote "yes". After all, as numismatic research advances our knowledge of how coins were struck, etc., then we learn more about how a coin's future appearance, might be affected by wear. Also, the TPGs apply the principle of "market grading", whereby they are really pricing coins. Thus, grading factors must fluctuate with the whims of the market.

Market grading is one of my biggest criticisms of third party grading services. I do not believe that any grading service should reference anything more than the technical grade on its label except perhaps for the star or analogous eye appeal designation that does not affect the numerical modifier. This, however, is admittedly not the practice and coins with superb luster or exceptional toning are often given a “bonus” of up to one point in technical grade. See, e.g., PCGS’s Eye Appeal Guidelines available here. This poses several problems, and can indeed be misleading.

 

 

I have several concerns about this grading methodology. First and foremost, I think that eye appeal, even more so than technical grading, is exceedingly subjective and the desirability of a particular attribute or lack thereof and any price enhancement should be determined by the collector in the contemporaneous market. A failure to recognize this inevitably leads to numerous problems. For instance, price premiums and market fads often change eye appeal considerations. One only has to look to the Treasury Department's sale of GSA Morgan and Peace Dollars in the 1970s. Coins with toning, irrespective of how desirable or eye appealing, were not treated as uncirculated coins. Obviously this is no longer the case. Major shifts and market fads can change and suddenly that (arguably) justified one point boost in technical grade may only be worth one-quarter to one-third of a grading point. Also look at “market acceptable cleaning” and how this inevitably changes. Coin is yesterday’s AU or low MS holders may really be cleaned coins that would receive a “details” grade today.

 

 

There are additional considerations that should be viewed as well. Even in a market where a one-point grade bonus is appropriate in pricing a particular coin, market pricing can still be bothersome. The grading service has already awarded a premium, and it is not unusual for collectors to pay additional premiums above the already inflated (or “adjusted,” depending on your view) grade. The net result is somewhat of a double price enhancement. While many will argue that this is one of many reasons that collectors should buy the coin and not the holder, it is undeniable that a technical MS66 in a 66 holder with exceptional toning is worth less than a coin in a MS67 holder with the same attributes. The grading services should refrain from engaging in this questionable practice.

AMEN!

 

I couldn't have said it better myself!!

 

+1 (thumbs u

 

Chris

[JStull]

 

[Conder101]

Each service grades by their own standards. How could you stop them from changing their own standards?

[coinman_23885]

Each service grades by their own standards. How could you stop them from changing their own standards?

 

No one said that you could stop them; the interesting thing is that all the services purport to use the ANA grading scale which has been relatively static, yet I wonder how many deviations there are in grading criteria? Just to note - I'm not criticizing them for deviating from the ANA scale. If it weren't for this deviation, we wouldn't have grades like XF 45, G6, VG10, AU53, etc., etc.

[coinman_23885]

Yes. If they didn't change their standards occasionally, how would the crack-out artists make a living?

 

You seem to say that with a touch of disdain.

[James_OldeTowne]

all the services purport to use the ANA grading scale which has been relatively static

Actually, I have very often wondered about this, though inertia has prevented me from investigating. Do the grading services actually claim to grade to ANA standards? or is that implicit to their use of ANA grading descriptors.

 

Technically, since they have added on appellations like CAM, UCAM, FBL, etc., I believe they actually do deviate even from the proscribed ANA terms.

 

I guess that if a grading service serves as the "official grading company" of the ANA, then that might be tantamount to agreeing to abide by ANA grading standards.

[coinman_23885]

all the services purport to use the ANA grading scale which has been relatively static

Actually, I have very often wondered about this, though inertia has prevented me from investigating. Do the grading services actually claim to grade to ANA standards? or is that implicit to their use of ANA grading descriptors.

 

Technically, since they have added on appellations like CAM, UCAM, FBL, etc., I believe they actually do deviate even from the proscribed ANA terms.

 

I guess that if a grading service serves as the "official grading company" of the ANA, then that might be tantamount to agreeing to abide by ANA grading standards.

 

Interestingly, you are right. Most have always assumed that the standard used by the top four third party grading services is the ANA system, but a modified or completely new system would explain a lot. Here is what I discovered by perusing the various organizations' websites:

 

The PCGS website mentions Sheldon’s scale, but does not expressly state that they adhere to ANA standards. Instead, “PCGS utilizes a grading scale based on published standards and an extensive grading set of coins.” See The PCGS Story. The question becomes what exactly are those “published standards”? The only (relevant) published standards that I am aware of are the ANA grading guide and James Rudy’s Photograde. All are based on the ANA-Sheldon system. I recall that an older grading service owned by James Halperin in the 1980s, NCI I think, published a set of standards, but were admittedly more liberal than those employed by NGC and PCGS. Clearly, it is not the NCI standards that are being applied. Even the PCGS grading standards page makes no specific mention of the exact scale, but if my memory serves me correctly, I thought I saw a reference to Photograde a few years back (not to be confused with their new online image/grade catalog).

 

 

NGC makes reference to a numerical 1-70 numerical grading scale employed in the 1940s (i.e. clearly the Sheldon Scale). “[T]his numerical scale was adapted for use by NGC when it began operations in 1987.” See (NGC) Grading Scale. Also as you mention, NGC is the official grading service of the ANA.

 

Interestingly, neither ICG nor ANACS makes an express statement concerning the Sheldon-ANA scale although they do use a 1-70 numerical scale. Maybe this explains why the two may be considered by many to be liberal (i.e. are they using the same scale?)

 

http://www.pcgs.com/thepcgsstory.html

http://www.pcgs.com/grades.chtml

http://www.ngccoin.com/coingrading/grading-scale.aspx

 

 

Edited to add: I forgot to include the NGC and PCGS grading guides that were published. Nevertheless, the term "published standards" could include either of those or other standards at large. I'm concerned about a firm commitment of what entails the grade for purposes of the guarantee.

[coinman_23885]

Playing devil's advocate here, if PCGS refuses to expressly identify those "published standards" then it is logically possible that PCGS is using its own hybrid scale. If this is the case, then how can anyone maintain a lawsuit against PCGS for allegedly not buying back coins under their reparation program (i.e. the one referenced in Coin World). If it is PCGS's standard then clearly the coin would mean exactly what PCGS says it is (or could reasonably get away with given their broadly written grading definitions published online). What prevents PCGS or any other grading service from completely refusing to guarantee a coin (other than negative feedback) or to make such a guarantee trivial? The guarantees of ALL major third party grading services are already dubious insofar as the grading services determine whether the coin comports with those "published standards." Shouldn't we at least be told what those published standards are (see edit below) P.S. I'm not trying to start anything; these are just a few questions that I have always had regarding certified coins.

 

Edited to add: I forgot to include the NGC and PCGS grading guides that were published. Nevertheless, the term "published standards" could include either of those or other standards at large. I'm concerned about a firm commitment of what entails the grade for purposes of the guarantee. I guess one could rely on the common law rule that contracts (i.e. the guarantee) must usually be construed against the draftsmen, but it would seem important to have this explicitly stated, especially when your companies control the billion dollar rare coin market. I still wonder how the proposed law suit in Coin World will survive legally.

[coinman_23885]

Before people flame me, I wanted to add that I have nothing against PCGS or NGC personally, and I like both of them very much. Every contact that I have with each service has been professional.

[James_OldeTowne]

it is logically possible that PCGS is using its own hybrid scale. If this is the case, then how can anyone maintain a lawsuit against PCGS for allegedly not buying back coins under their reparation program (i.e. the one referenced in Coin World). If it is PCGS's standard then clearly the coin would mean exactly what PCGS says it is (or could reasonably get away with given their broadly written grading definitions published online). What prevents PCGS or any other grading service from completely refusing to guarantee a coin (other than negative feedback) or to make such a guarantee trivial?

The TPG guarantees don't state that a coin meets a certain grade. Rather, the guarantee is that the coin would grade the same upon regrade, and that if it fails to do so by grading lower, you are due compensation. (Incidentally, the guarantees say nothing about the instance where a coin grades higher upon regrade, which means the previous owner may have lost out on value due to an incorrect, lower grade.)

 

In other words, there is no published standard that the guarantee references, that I am aware of. Rather, it's implied that the existing, vast "body of work" is the de facto grading standard.

[$ilverHawk]

Oh, it's a vicious left hook to NGC. James, in the main body of ANA grading standards the appellations you list are absent. Those terms are presented in the Dictionary of Grading Terms in The Offical ANA Grading Standards.

 

It would appear that any of the TPG s using ANA Standards are well within ANA guidelines to use those aforementioned descriptives in the grading of coins.

 

I'm not saying anything about the accuracy of the designation, simply stating that ANA does in fact recognize the terminology.

 

Carl

[grade it-migration]

Point about upgrades. I sent in 7 PCGS coins and got 5 upgrades

 

Also sent in 4 and got 2 upgrades.. Upgrades where a cost to me.

[lehigh96]

Point about upgrades. I sent in 7 PCGS coins and got 5 upgrades

 

Also sent in 4 and got 2 upgrades.. Upgrades where a cost to me.

 

For the love of God, can you please find a coherent sentence!!! What the hell is that post supposed to mean.

[michael]

grading is subjective so they change like the wind

[michael]

to suit the current market acceptibility/profit parameters

[lehigh96]

to suit the current market acceptibility/profit parameters

 

Care to prove that statement?

[PerryHall]

Point about upgrades. I sent in 7 PCGS coins and got 5 upgrades

 

Also sent in 4 and got 2 upgrades.. Upgrades where a cost to me.

 

For the love of God, can you please find a coherent sentence!!! What the hell is that post supposed to mean.

 

I think he misspelled "were" as "where". He had to pay the grading service twice to get 7 coins properly graded.

[JStull]

Point about upgrades. I sent in 7 PCGS coins and got 5 upgrades

 

Also sent in 4 and got 2 upgrades.. Upgrades where a cost to me.

 

For the love of God, can you please find a coherent sentence!!! What the hell is that post supposed to mean.

 

I think he misspelled "were" as "where". He had to pay the grading service twice to get 7 coins properly graded.

 

Or to get the grading service to place the grade he wants on the label.

[PerryHall]

Point about upgrades. I sent in 7 PCGS coins and got 5 upgrades

 

Also sent in 4 and got 2 upgrades.. Upgrades where a cost to me.

 

For the love of God, can you please find a coherent sentence!!! What the hell is that post supposed to mean.

 

I think he misspelled "were" as "where". He had to pay the grading service twice to get 7 coins properly graded.

 

Or to get the grading service to place the grade he wants on the label.

 

Agree. He was obviously looking for a higher grade and the graders obliged him.