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How indepent grading "saved" the coin market. An opinion.

16 posts in this topic


Before slabs, in 1980 coins were SOARING in price. Not like they did in the early 70's but still they reached such a level that I sold my type set and can STILL replace the quality at less than I got.


But...in explanation, before grading we had BU, Choice BU, and Gem BU. Some started using the numerical grades and we all lived happily. We traded coins and all KNEW what a 65 was. Then the silver market crashed and a lot of dealers, collectors, and "investors" wanted to sell their coins.


Then came the grading service. But the grading service was run by a dealer and the dealers didn't want to pay the enormous prices that coins had been bringing, so they changed what everyone HAD BEEN paying 65 prices for to appx. MS63. This coincided with a published Wall St. coin investment "index" that was making people get the foolish notion that they owned a stock or a commodity instead of a coin.


Thus, by changing the grade standard, the coin peddlers were able to say that there had been no decrease in coin values. But what really happened was that the coins that had been bought at 65 prices could now only find homes in 63 holders.


But.......the mainstream press had no idea. The index was intact because it could be DEMONSTRATED that a 65 still sold for 65 money. But what was NOW a 65 was what used to be "Superb Uncirculated" which was far higher priced than what real people were trading at 65 money.


So, by just upping the standards, the market LOOKED intact and rosy. It was NOT!


Many dealers went down to lawsuits and worse. Even though they committed no crime. Other than falling victim to the then current practice of letting clients think that coins were suddenly an "investment."


But the judges sided with the ignorant people and only saw that what had been sold to them as a 65 was something that they could not sell for 65 money anymore. And some dealers didn't have another huge revenue source to pay off their "mistakes" which were not mistakes at all but simply the state of the market at the time.


So...........any tightening of grade should be considered to be a CHANGE of the market.


Just as happens with raw coins, people pay more for nicer specimens. So if anyone says your specimen is not as "nice" as it used to be, you have suffered a decline in value.


No matter WHAT CDN or Coin World says in headlines.

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Interesting summation.


I lived through three coin cycle highs. 1978-1980, 1988-1990, 2001-current. All of them were different, yet all are connected in one way, money and perception. Usually, when an upward cycle is in place, most dealers do not perceive the market is a bull until the money flow is continuous, not market driven, but driven by outside sources, such as collectors and main stream cash. A bear market is not perceived by the public until the dealer has too much inventory and not enough cash, usually a six to eight month lag time. In a bear market, dealers will liquidate inventory with the notion the market is still hot, then not buy with higher prices, but with lower offers, hoping that the public will not notice until the dealers are in a better cash position. Again, when main stream collectors stop buying and begin selling because of need for cash, the market has already turned.


Unfortunately for the slabbed marketplace, the point of resistance with loosening grades is MS69. The 'barrier' cannot be moved. Once a coin is upgraded to the 'max', the 'wall' of the Sheldon scale has determined the coin may not rise in grade value, but only in market value. For example, a coin graded in 1987 will probably grade a point of two higher now. An MS66, might jump to MS68, thereby reaching it's 'barrier' limit on grade. Only market conditions can move the coin higher in value. Elsewise, the coin has been maximized. This is the paradox to this cycle of a bull coin market and looser grading than in years past. Once this bull market is saturated, another bull market can only be driven with cash, not grading. Once all major coins have been 'maximized', that is it, no more upgrading, spelling eventual doom for the grading services for classic coins. In years to come, the saving grace will be modern coins and the constant need to have them graded. As long as the mint produces coinage, the services will be grading.




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Hey! Maybe the backlogs could be filled if the grading companies just paid the mint to pop bullion coins in pre-printed MS69 holders. Should be easy and the eagles I get in new tubes already ARE what passes for 69.

More money for the mint, too.


Oh boy!



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There is also the possibility, Truth, that the grading scale may be "fine-tuned" to allow a 100-point range. Therefore, the translation between the scales would call for re-grading and further grade maximization. For instance, what is now an MS65 might be in the 100-point scale known as an MS87 to MS90. Of course, if you were to sell your MS65 slabbed coin, you would be offered MS87 money because it is "low-end". So, a re-grade of the coin might put it anywhere from MS87 to MS90 in its new holder and, over time, allow for the resubmission of these new coins in order to maximize their new grades.


In example, you re-grade your MS65 and it comes back MS88. Several years later, in another bull market, you re-grade it again and it is MS89. It is then re-graded again to be MS90. All of these new grades correspond to the present day MS65 grade, however, the coin is perceived to have gained value even though it hasn't changed.


Of course, once all coins are maxed out on the MS100 scale, things will be shaken up. 893scratchchin-thumb.gif

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TomB: The excuse of "fine tuning" will just be another way of changing the standards. I think that is what you are trying to say, right? I can see Erfit's senerio happening all over again....



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I hated the way it was before grading companies.

EVER time the dealer would rip you (If you were buying, it would be 65, if you were selling it would be 63) always a loss of value. Kinda like buying a new car.


As for me the grading services have saved this hodge podge of independent business owners (for lack of a fouler word) and gave this hobby some Legitimacy.


I knew back then how to spot great coins,but it was a wasted talent.

Now I can excel without a dealer and their expertise.



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You know, I get kind of tired at the adoration we sometimes bestow on TPGs unnecessarily. Don't get me wrong, grading companies have added a lot to the coin market and the hobby in general, but they aren't the almighty saviors of the market we sometimes make them out to be. Personally, I think eBay has done more to improve pricing and overal liquidity than the TPGs could ever take credit for. They add ligitimacy, authentication, and some sense of the overall grade of a coin. But without other outlets for selling, dealers would still be paying 63 money for 65 coins, and selling them for full 65 retail (today we call this the blue sheet). Ebay allows collectors to sell through a different channel to other collectors in other markets that may not have access to the same material we are selling. The result is that collectors can sell somewhere closer to retail, while buyers have greater selection than their local shop (which in some small towns can be a 2 hour drive!). But eBay wouldn't be as big without the TPGs, so there is a synergy there that cannot be overlooked. Overall, the market today is much more liquid, and more geographically diverse than it ever was before and than it ever could be without the advent of technology that exploded on the scene in the late 90s. It takes a lot of different factors to make up a strong market, and we shouldn't give too much credit to any one factor in particular.

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Just as the practice of applying the Sheldon scale to ALL coins was just BEGINNING to become common.....and BEFORE slabs, I.....refused.....to assign numerical grades to coins. I used the BU, Ch BU, Gem BU on my flips and 2x2's and told customers that the PRICE was the grade, i.e. "this coin grades $700.00."


I had mostly customers who were coin collectors and knew what a nice coin looked like. Just down the SAME STREET from me was another coin co. who was on TV, had their own European accented "investment advisor", and also a GUARANTEE of 20% APR .....or......Grey Sheet.....whichever was HIGHER!


Wow! What a guarantee! Can't lose. I lost some people to them and even one bank trust dept.


BUT.....when TSHTF, guess who began calling me when "company x" didn't open the doors one fine morning? Golly. The guy who was ticked because I would NOT store his 77 Krugerrands.....the lady who had TOLD me what a creep I was because I didn't offer the "guarantee" when she came in the week before to buy SOVEREIGNS (oh yeh...."rare" sovs were covered by the guarantee), and various others who previously had considered ME in league with Satan.


Actually, that was quite funny as my quoted price to "sovereign lady" was $14 less per coin for those gold hunks and she could not see that paying less was to her ADVANTAGE.


I digress.....Anyhow, ONE of the calls was from their "European investment advisor." Hmmmmm.......seems he was not quite aware of their sudden departure either. Anyhow, he offered me........TWO HUNDRED DOLLARS PER COIN......to "simply" put his customers' coins in MY flips.


Sorry, buster, I don't need the lawsuit.


Oh quite a time it was. The TV ads stopped.

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Simply put, I have lived thru all the info you have dispensed and don't really have a point of view for or against your statements. But your last paragraph says...

So if anyone says your specimen is not as "nice" as it used to be...
, I am assuming you are referring to a TPGC or a dealer telling you that the grade of said coin has dropped 1-2 points (tightening of grade), thus the decline in value. But if a coin is already slabbed at XX grade, and the perceived "tightening" @ the TPGCs is in effect, your coin is STILL that XX grade and would only drop if re-submitted. In fact, wouldn't it be more likely that your XX coin would be worth MORE as a result of tightening of grading? Subsequent submitted coins of an equal XX grade prior to this would get hit with a lower grade making your XX now a XY. Or am I relying too heavily on the insert here? If so (and I probably am), wouldn't it be smart to just let the sine curve trough downward to the point were it was before the tightening? Is there/has there been this up-down-up-down cycle in the grading of all coins since the TPGCs arose?


And TRUTH says...

...a coin graded in 1987 will probably grade a point of two higher now. An MS66, might jump to MS68...
This is the paradox to this cycle of a bull coin market and looser grading than in years past.
thereby validating my questions and why I am a little confused.


With Tom bringing up a 100 pt. scale, I for one (IMO) think this would just make for further differences of grade "opinions" worse then they already are. I can already hear a member posting a "Grade This Coin!" and getting responses with anything within a +/- 5-8 point (or more) difference from the insert! Same might be said if the Sheldon Scale were to adopt a decimal system within each grade. Instead of a 65, you now might have a 64.6 or .7! More confusion and variables either way then there is now. Not to make light of your post Tom! (I have always thought that the Olympics Gymnastics should go to a 100 pt. system of grading. No such thing (again, IMO) as a 10, or perfection. Same for coins. There should be a MS71 that is unattainable. Period. It sits there after 70 on value lists with no listings. Don't all things collected have various aspects that will differ from person to person in desirability? If one looks close enough @ ANY MS/PR70, wouldn't there be minor imperfections visible (albeit EXTREMELY minor) to different people with different likes/dislikes? Don't we all have our own point of view based on who we are, where we've been, what we've done, etc. etc. as to whether a coin is accurately graded now, within the 11 MS ranks? I for one, can't tell the difference between a PR70 and a PR69 or visa versa, even within my own little world of Jeffs. Cameo, yes, I think, but is still subjective.


Until SOMEONE speaks up with a well thought-out grade standard by which we can all agree to, or at least accept as better then we now go by, there will always be the disparity we all clap about or grump about! Once this is done, specific values can be assigned specific grades.


But this will not likely ever happen as our hobby is still growing and will never stop. Growth demands changes, but in increments, not leaps and bounds.





P.S. Jeff, I agree with you on all your points concerning eBay! Without it, I would never have gotten back into the hobby.

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Years ago, Bill Hall in SF and I had a pretty good grading system. He started using it. I could pretty well "see" the coin (even over the phone) from his system.


He used scale of 1 to 5.


Actually it would work in just about all grades as it has enough delineation to be accurate but stays within the grade.


Don't know if it would work, but know it ..... did. At least between him and me.


David Lawrence sorta uses it for color.


Right now we have 20, 25, 30, 35 for VERY FINE.


How did VF get so many divisions? Maybe XF should go on strike. Get G and VG to help him.


The old bugaboo is......"knowledgeable" parties. Hard to get in a book.

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Pardon my intrusion, but can someone explain the difference between a 63 & a 65 ?


A lot of money. 893whatthe.gif


Actually, I find that even some professional graders can't tell the difference so I'm hard pressed to do so here. laugh.gif



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  • Member: Seasoned Veteran

Bill Hall . . . now there's a name from my past. He's the first person who took the time to show me truly outstanding coins, all the while knowing that I wasn't yet a buyer. He died too soon.

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