What is the current state of grade-flation?

[Hard Times]

Are we in a period of tightening or loosening? State your evidence. I think my recent grades from the TPG's have been fairly conservative - Conders here at NGC, a few old silver ATS.

 

Best, HT

[RWB]

Inflated....generates revenue.

[BillJones]

From what I've seen, worse than ever.

 

I recently purchased Lesher Refermation Dollar, which is Colorado silver piece. I had been looking for about two years. A number of the pieces that I saw had serious rim issues. One of them even had a filed rim, which used to be a big no-no. That almost always got you a body bag in the old days.

 

Now such coins are getting straight grades.

[brg5658]

In my experience, the world (non-USA) coins I have been buying in the newer "left aligned" label NGC holders are quite conservatively graded.

 

Which is fine with me -- the dealers don't ask for stupid money as much.

 

Two really nice pieces I have purchased in MS64 holders recently (below) are MS65 every day of the week in my opinion. But, I don't really care all that much what the labels say between MS64/MS65 -- close enough.

 

 

 

 

 

 

[mark]

That CWT is sweet! So, too, is the franc but to my eyes the CWT is much sweeter!!

 

Mark

[orifdoc]

The current states of gradeflation are California and Florida.

 

[Conder101]

What is the current state of grade-flation?

Alive and well...........unfortunately.

[BKW]

In my experience, the world (non-USA) coins I have been buying in the newer "left aligned" label NGC holders are quite conservatively graded.

 

Which is fine with me -- the dealers don't ask for stupid money as much.

 

Two really nice pieces I have purchased in MS64 holders recently (below) are MS65 every day of the week in my opinion. But, I don't really care all that much what the labels say between MS64/MS65 -- close enough.

 

 

 

 

 

 

I agree. NGC is very conservative with exonumia

[Hard Times]

One area where I believe ATS has been very liberal is with colorfully toned coins? Anyone observe this?

 

Best, HT

[SkyMan]

One area where I believe ATS has been very liberal is with colorfully toned coins? Anyone observe this?

 

Best, HT

 

ABSOLUTELY!!!

 

I have seen a LOT of coins that IMO are AT in both the major TPG slabs in the last year or two.

[david3142]

I would agree that I have seen many PCGS toners with larger-than usual color bumps lately.

[coinman_23885]

One area where I believe ATS has been very liberal is with colorfully toned coins? Anyone observe this?

 

Best, HT

 

Yes. I have been burned by it twice this year (i.e. not submitting NGC coins that subsequently were given what I believed were egregious color bumps and leaving money on the table).

[numisport]

Some of these colored ASEs are so obviously artificial IMO that many in this forum just stay silent on the subject - maybe that's the best thing to do. I am truly stunned that they are not only certified but accepted by some as legitimate. That's more than gradeflation...... call it ...... I just don't know what.

[Walkerfan]

Some of these colored ASEs are so obviously artificial IMO that many in this forum just stay silent on the subject - maybe that's the best thing to do. I am truly stunned that they are not only certified but accepted by some as legitimate. That's more than gradeflation...... call it ...... I just don't know what.

 

Yes, it is difficult for me to imagine that these coins could tone, so wildly, in a relatively short period of time.

[BillJones]

Yes, it is difficult for me to imagine that these coins could tone, so wildly, in a relatively short period of time.

 

I have received a few of these coins in custom holders from giving speeches at clubs or as quiz or dollar prizes. Some of them have toned on one side fairly nicely, but it didn't happen over a couple of months. It took a couple of years. Also when I flipped them over to try to tone the other side, it didn't work as well or it didn't work at all.

 

Yes, I'd say that these new coins with "monster toning" have gotten some help.

[Hard Times]

As an example of 'natural toning', and granted this Morgan below has a different metal alloy than ASE's, here is my grandparents best of show Morgan that sat in a manilla envelope in a cardboard box for 50 years with a bunch of other coins. This is the kind of toning one would expect over that period of time. CAC gave it a bean (I am batting 100% on Morgans 7 for 7 ) so those folks don't believe this is un-natural toning. I just looked yesterday at my 2007 silver quarter proof set sitting in a cardboard mint holder. The coins have a grey-bluish tone beginning to develop along some of the rims, and at the right angle, it looks like a grey/brown haze. So 9 years of cardboard for the same kind of alloy as an ASE shows no hint of wild neon colors. So yes, the vibrant colored ASEs must be human assisted....

 

The toning of this Morgan reminds me of the Newman coins and their toning. They also sat in manilla envelopes for a long time.

 

Best, HT

 

[MarkFeld]

I believe it's a mistake to assume that ASE's or other coins which obtain wild color in a short period of time, are necessarily AT. Differences in coin types, their holders, methods of storage, and environmental conditions can lead to vastly different results.

 

In answer to the question posed at the beginning of this thread, the current state(s( of grade-flation are California and Florida. And based on many thousands of certified coins I've examined the past few years, as well as population report data and price histories, I believe that grade-flation is rampant. And that it's had a severe negative impact on values.

[coinman_23885]

I believe it's a mistake to assume that ASE's or other coins which obtain wild color in a short period of time, are necessarily AT. Differences in coin types, their holders, methods of storage, and environmental conditions can lead to vastly different results.

 

In answer to the question posed at the beginning of this thread, the current state(s( of grade-flation are California and Florida. And based on many thousands of certified coins I've examined the past few years, as well as population report data and price histories, I believe that grade-flation is rampant. And that it's had a severe negative impact on values.

 

How do we fix it? CAC seems to have acquiesced in it in my opinion. I have been bothered by several CACed pieces I have seen lately, including several with prominent scratches or other defects that I found to be distracting.

[MarkFeld]

I believe it's a mistake to assume that ASE's or other coins which obtain wild color in a short period of time, are necessarily AT. Differences in coin types, their holders, methods of storage, and environmental conditions can lead to vastly different results.

 

In answer to the question posed at the beginning of this thread, the current state(s( of grade-flation are California and Florida. And based on many thousands of certified coins I've examined the past few years, as well as population report data and price histories, I believe that grade-flation is rampant. And that it's had a severe negative impact on values.

 

How do we fix it? CAC seems to have acquiesced in it in my opinion. I have been bothered by several CACed pieces I have seen lately, including several with prominent scratches or other defects that I found to be distracting.

 

Sadly, I don't see a fix. I believe that continued grade-flation is inevitable. That's largely because (on a practical basis) re-grades are far more likely to have their grades raised than lowered. The process is strongly biased against lower grades on re-grades, even if deserved.

[RWB]

In effect, what all this means is that there is no "standard" either for coin grading in general or within any of the authentication companies. This will continue until the structure collapses under the weight of confusion, and this will result in substantial financial loss to those "left holding the bag."

[BKW]

I believe it's a mistake to assume that ASE's or other coins which obtain wild color in a short period of time, are necessarily AT. Differences in coin types, their holders, methods of storage, and environmental conditions can lead to vastly different results.

 

In answer to the question posed at the beginning of this thread, the current state(s( of grade-flation are California and Florida. And based on many thousands of certified coins I've examined the past few years, as well as population report data and price histories, I believe that grade-flation is rampant. And that it's had a severe negative impact on values.

 

How do we fix it? CAC seems to have acquiesced in it in my opinion. I have been bothered by several CACed pieces I have seen lately, including several with prominent scratches or other defects that I found to be distracting.

 

Sadly, I don't see a fix. I believe that continued grade-flation is inevitable. That's largely because (on a practical basis) re-grades are far more likely to have their grades raised than lowered. The process is strongly biased against lower grades on re-grades, even if deserved.

 

I guess the only real fix for gradeflation (or perhaps defense is a better word) is collector education and knowledge. I think this can take many forms.

 

First, collectors should learn to grade. This should be a given. If you collect only one or two series, you can most likely become an expert with some time and effort. If you’re mostly a type collector like I am, learn to grade “as best you can.” I’m pretty good at grading certain series, but other are more difficult for me. This leads to point two…

 

Buy from reputable dealers who won’t gouge you on overgraded coins. Build relationships with good dealers and take advantage of their knowledge when yours may be lacking. I’ve had several dealers tell me over the years that they won’t sell me a particular coin because they didn’t think it was “worthy” of my collection.

 

Third, try to buy coins at the break point. For example, if there is a big price jump between a 63 and a 64 – buy the 63 (even if you can afford the 64). This isn’t appropriate in all situations, but this approach can certainly help you hedge against getting burned by gradeflation in the long run.

 

[RWB]

"I guess the only real fix for gradeflation (or perhaps defense is a better word) is collector education and knowledge."

 

An intuitive suggestion, but I will disagree. The authentication/grading companies now control the "grades" assigned to coins. They alone are the ones persistently revising numbers upward for coins that have not changed in the past 50 years.

 

The difficulty is both one of training to and maintaining standards for new grading employees, and a willingness to place consistency and accuracy above short-term financial gain. (The companies gain from resubmissions either for crack-out or regrade in-holders.) The problem is further increased by addition of pluses, minuses, stars, widgets and other attempts to imply absolute accuracy when that does not, and cannot, exist in an structure based entirely on opinion.

 

It does not matter how "educated" collectors and good coin dealers might be, the number on a slab is a primary driver.

 

It all is a slow motion semi-Ponzi.

[BillJones]

The problem is we are at the very mature stage of the product life cycle for grading and authentication services for the so-called "classic coins." A great many of the existing, worthwhile "old" U.S. coins have been graded, sometimes multiple times.

 

The only things the grading services can do are:

 

• Expand the hype for new modern coins,

• Offer fancy labels and better slabs

• Technology changes, like the PCGS "snifter"

• Make it easier to get higher grades for the coins that already in holders.

 

This last one is troubling, and it does not have that much to do with training the graders. I think that it is a change in grading policy from the top down.

 

The only way to fix this would for a grading company to offer a properly graded product that brings significantly higher prices in the marketplace. There would force the competition to either tighten up their standards or become "third world" grading services that produce slabs for the "poorly informed buyer."

 

As we have seen new grading companies have repeatedly fail to crack "the big two" grading market. ICG tried, but had to give up and take "second world status."

 

My answer is logical. Achieving it would be the coin marketing breakthrough of the century. That's why CAC has never become a full service grading company. They have simply piggybacked on to the existing market with a "yes or no" service. If they had tried to be a full service grading service, they would have failed, like the others.

 

 

[BKW]

"I guess the only real fix for gradeflation (or perhaps defense is a better word) is collector education and knowledge."

 

An intuitive suggestion, but I will disagree. The authentication/grading companies now control the "grades" assigned to coins. They alone are the ones persistently revising numbers upward for coins that have not changed in the past 50 years.

 

The difficulty is both one of training to and maintaining standards for new grading employees, and a willingness to place consistency and accuracy above short-term financial gain. (The companies gain from resubmissions either for crack-out or regrade in-holders.) The problem is further increased by addition of pluses, minuses, stars, widgets and other attempts to imply absolute accuracy when that does not, and cannot, exist in an structure based entirely on opinion.

 

It does not matter how "educated" collectors and good coin dealers might be, the number on a slab is a primary driver.

 

It all is a slow motion semi-Ponzi.

 

I agree with all of this Roger, especially that the number on the slab is the primary driver. But I don’t think it’s necessarily in opposition to my post. If collectors as a whole were more educated and less reliant on the holder, there would be less of a market for overgraded coins and less of an incentive for the TPGs to “revis[e] numbers upward for coins that have not changed in the past 50 years.” Perhaps it is naïve of me to think that the average collector would put in the time and effort to educate himself. I sometimes find myself using the holder grade as a crutch.

 

Perhaps the situation could be addressed somewhat if the TPGs instituted a system for US coins similar to the system they use for ancients. That way different aspects of a coin such as strike, luster and eye appeal could be graded individually. This would be more transparent and more accurate than stars and pluses. A system such as Rick Snow’s PDS grading system could also be helpful.

 

[BKW]

The problem is we are at the very mature stage of the product life cycle for grading and authentication services for the so-called "classic coins." A great many of the existing, worthwhile "old" U.S. coins have been graded, sometimes multiple times.

 

The only things the grading services can do are:

 

• Expand the hype for new modern coins,

• Offer fancy labels and better slabs

• Technology changes, like the PCGS "snifter"

• Make it easier to get higher grades for the coins that already in holders.

 

This last one is troubling, and it does not have that much to do with training the graders. I think that it is a change in grading policy from the top down.

 

 

 

Yup, Bill, that’s the long and short of it. One way to help address bullet 4 of your post would be to have an industry organization perform the job of CAC. I support CAC, but they are a for-profit business and one of their goals is “making markets in most actively traded coins.” A non-profit, truly independent organization free of “conflicts of interest” could sticker coins without bias according to a publicly available grading standard published on their website.

[Hard Times]

The problem is we are at the very mature stage of the product life cycle for grading and authentication services for the so-called "classic coins." A great many of the existing, worthwhile "old" U.S. coins have been graded, sometimes multiple times.

 

The only things the grading services can do are:

 

• Expand the hype for new modern coins,

• Offer fancy labels and better slabs

• Technology changes, like the PCGS "snifter"

• Make it easier to get higher grades for the coins that already in holders.

 

This last one is troubling, and it does not have that much to do with training the graders. I think that it is a change in grading policy from the top down.

 

 

 

Yup, Bill, that’s the long and short of it. One way to help address bullet 4 of your post would be to have an industry organization perform the job of CAC. I support CAC, but they are a for-profit business and one of their goals is “making markets in most actively traded coins.” A non-profit, truly independent organization free of “conflicts of interest” could sticker coins without bias according to a publicly available grading standard published on their website.

 

Well I think that has been done - a company that is not making a market on the coins they grade - NGC does not. They make a profit for grading the coin, not on the coin itself. But then, it costs money to stay in buisness, would for any company or organization, so how do you make one free of a conflict of interest and keep them afloat? Great idea, but hard to implement?

 

Best, HT

[coinman_23885]

I believe it's a mistake to assume that ASE's or other coins which obtain wild color in a short period of time, are necessarily AT. Differences in coin types, their holders, methods of storage, and environmental conditions can lead to vastly different results.

 

In answer to the question posed at the beginning of this thread, the current state(s( of grade-flation are California and Florida. And based on many thousands of certified coins I've examined the past few years, as well as population report data and price histories, I believe that grade-flation is rampant. And that it's had a severe negative impact on values.

 

How do we fix it? CAC seems to have acquiesced in it in my opinion. I have been bothered by several CACed pieces I have seen lately, including several with prominent scratches or other defects that I found to be distracting.

 

Sadly, I don't see a fix. I believe that continued grade-flation is inevitable. That's largely because (on a practical basis) re-grades are far more likely to have their grades raised than lowered. The process is strongly biased against lower grades on re-grades, even if deserved.

 

Does this suggest that collapse is imminent? Is this market doomed long term?

[BKW]

 

Well I think that has been done - a company that is not making a market on the coins they grade - NGC does not. They make a profit for grading the coin, not on the coin itself. But then, it costs money to stay in buisness, would for any company or organization, so how do you make one free of a conflict of interest and keep them afloat? Great idea, but hard to implement?

 

Best, HT

 

Yes, the details would certainly have to be thought about and worked out. It would have to be supported financially (at least partially) and otherwise by collectors and industry organizations like PNG and ANA so it could maintain as much independence as possible. It would be a non-profit. There could be a cost for submission but only to cover overhead.

[Hard Times]

I believe it's a mistake to assume that ASE's or other coins which obtain wild color in a short period of time, are necessarily AT. Differences in coin types, their holders, methods of storage, and environmental conditions can lead to vastly different results.

 

In answer to the question posed at the beginning of this thread, the current state(s( of grade-flation are California and Florida. And based on many thousands of certified coins I've examined the past few years, as well as population report data and price histories, I believe that grade-flation is rampant. And that it's had a severe negative impact on values.

 

How do we fix it? CAC seems to have acquiesced in it in my opinion. I have been bothered by several CACed pieces I have seen lately, including several with prominent scratches or other defects that I found to be distracting.

 

I think CACs only goal it to build a market on coins they would buy and sell. That is pretty clear after all the threads we have had on this. Especially for non-MS coins, they are mostly looking at whether there has been human assistance on the coin and how severe, so yes they do let coins with scratches pass because they would buy and sell them. So I don't know whether they contribute to grade-flation, they just decide if they like the coin at the grade it has on the slab.

 

Recent example, I had a 1829 dime that got a cracked NGC slab during shipping, it was a VF25 and green beaned. Because vendor nicely gave me $30 back for the broken slab I decided to cross it to PCGS. It got VF20. Went back to CAC for consideration, went green bean again, not gold. So all that says is yes they would buy it and sell it for grade on its slab and this is an example of deflation. If they were consistent and focused solely on the grade, one would have expected a gold bean I think(?). So I don't think they directly contributing to grade-flation, that is all on NGC and PCGS.

 

Best, HT

[BillJones]

So far as pricing goes, I don't think that there is much difference between VF-20 and VF-25 for an 1829 dime. A gold bean would indicate that it might qualify as an EF-40, at least that's my take on gold beans.