WHAT IS GRADING?
Grading is measuring the present condition of a coin to a theoretically perfect
example of the same piece. I used theoretical in the above statement because no
perfect examples of many coins exist that could be used for comparison
purposes. I could be a nitpicker and suggest that no perfect coins exist at
all. Show me any coin, regardless of the grade, and I can find something wrong
with it. Not only are we interested in knowing how a coin of a certain type may
rank in comparison to perfection, but also how the coin measures up to all
others of it's kind, and all other coins. Coin grading has established levels
of imperfection. It is not enough to say a coin is less than perfect.
Since the condition of a coin can range from being so worn as to be hardly
identifiable to as well preserved as the day it dropped from the dies, the coin
grader is obliged to categorize very different looking objects. The currently
popular grading standard gives perfection the number 70 and the lowest grade of
1 to a coin in poor condition. If you are new to the hobby you might ask why we
don't grade coins based on a scale of one to ten or use 100 as the top grade
and 1 as the lowest. The answer is because the system we now use was borrowed
from a method of ranking the condition of United States Large cents. The
original inventor did not intend for their system to be used for all coins.
The current numerical system we use to grade coins might suggest that there are
seventy different grades since there are seventy numbers involved. Actually,
the current system doesn't use all the numbers available because there is
apparently no use for some of them, at least when money matters. For example, a
coin grader, unless they wish to be unorthodox, can give an Extremely Fine
graded coin a numerical grade of EF-40 or EF-45. Someone who decided to use the
numbers in between might be asked why they are doing unnecessary hair
splitting. Money-wise what does it matter if a coin is graded EF-40 or EF-41?
Why is it then that we use every number allocated to the mint state grades,
those being MS-60 through MS-70? The answer is because with mint state coins,
each slight difference in grade can be measured in monetary terms. Another
consideration is that factors not directly linked to grading can have a
profound influence on value, especially in the circulated grades. A Large cent
which grades but VF may well be considered more desirable and valuable than an
EF grade coin that has porous surfaces. A beautifully toned EF coin may be
worth more to many collectors than a dull AU example. This is not to say that
subjective factors don't influence the value of uncirculated coins; however, as
of this writing an ugly MS-64 grade coin is still most often worth more than a
pretty MS-63.
A VISIT TO THE HENHOUSE
If I asked you to go into the henhouse and bring out the fox I wouldn't expect
you to return and hand me a rooster. There is no mistaking a fox for a chicken.
That's attribution and authentication. A coin is properly identified and
genuine or it's not. If I asked you to go back into the building and fetch me
the oldest hen so we could make some soup, it might take several trips to find
the right bird. Guessing the age of chicken isn't all that easy. Once they
reach a certain age most of them look quite alike. Ninety-nine percent of coin
grading is based on one's ability to detect subtle differences between very
similar looking coins.
BEAUTY IS IN THE EYE OF THE BEHOLDER, COIN GRADING ISN'T
Even experienced coin collectors often tend to confuse the attractiveness of a
coin with the grade. When judging something as nebulous as beauty each of us is
entitled to our opinion, and even if we may not happen to be part of the
majority our opinion remains valid. This cannot be the case when grading coins.
If there is no such thing as a right or wrong grade then we have no standards.
It is the fact that slight differences in grade can have a profound effect on
values that adds validity to the grading system we use. An undergraded coin is
easily sold to any of a number of anxious buyers. An overgraded coin finds no
takers amongst experienced coin graders.
WHAT DOES HOW WELL SOMETHING WAS MADE HAVE TO DO WITH THE GRADE?
If we are going to have a grading system that has any meaning at all then it
must measure just one thing, preservation. I was once told by a collector that
he didn't think any coin should be graded MS-65 or better unless the piece was
fully struck. "What if no fully struck examples were ever minted?" I asked. How
well a coin was struck can have a profound effect of the desirability and
value, but it has nothing to do with how well a coin has been preserved since
leaving the mint.
CONFUSING SUBJECTIVE FACTORS WITH GRADING MEASURES
If the customer had stated that instead of being fully struck a MS-65 grade
coin must not have any heavy bagmarks, I would have completely agreed with him.
The vast majority of collectors I have met want to own the best coins they can
afford; and it is universally accepted that the best coins are those which have
survived in a condition that is as close to when they left the mint as
possible. Most collectors of anything consider well-preserved examples to be
the most desirable. Many popular hobbies have developed formal grading systems.
Others have grading standards that are not as well documented but as important.
An old pine table in its original finish with no replacements or repairs is
considered more desirable, and often much more valuable, than one which has the
legs lengthened and was spray-painted black.
THE GOOD-BAD-AND UGLY
The person who is new to coin grading will often make the mistake of confusing
the appearance of a coin with its grade. It is important to remember that
grading deals only with preservation. It is entirely possible to have a coin
that deserves a high grade but would be considered by most collectors to be
ugly. The opposite is also possible. It is this second possibility that creates
the greatest problems for the novice grader. Coins may be cleaned or otherwise
altered to make them "attractive" to the beginner who wrongly presumes that
anything so bright and shiny must be uncirculated. The terminology we use when
describing coins can be misleading. Most of the time when we say something is
very good it is considered to be better than average. A coin graded Very Good
is less than an average specimen when measured against perfection. Based on the
numerical scale we use with 70 as perfection and 1 as the lowest grade, then a
Very Good coin is either an 8or a 10. It is not until we reach the grade Very
Fine-35 that a coin numerically becomes the "average" grade.
HORSESHOES AND COIN GRADING
I have never encountered anyone with perfect grading skills, nor is such
perfection expected. On the one hand we are dealing with a grading system
offering very precise ways to measure preservation, and yet we are willing to
admit there can be some room for opinion as well as error. How can this be?
Experienced numismatists realize that since human beings are doing the grading
there are bound to be some differences of opinion and outright mistakes. Those
who are critical of the grading services correctly point out that the same coin
submitted to a grading service at different times can be given different
grades. What they fail to mention is such cases are the exception rather than
the rule, and often the difference in grade is no more than one point on the
grading scale.
MY FIRST GRADING TEST
When I applied for my first job as a numismatist I was given a grading test. A
dozen very different types of coins were placed on a velvet pad in front of me.
At the time numerical grading was not in use so I had fewer possible grades to
choose from and less chance for error. After the test I was given my score. I
had graded 8 of the coins exactly as my future employers had. In two cases I
called an AU coin EF. Honestly, I figured they were AU but thought it wise to
be conservative. In one case I called a weakly struck 1808 Bust half-dollar VG
when it was really a VF. I had confused the weakness of the strike with wear.
My greatest mistake occurred when I graded a silver dollar as uncirculated when
it was really a Choice AU with light friction on the high points. Despite these
rather glaring errors I was given the job. My new employers could see I had
acquired basic grading skills. I just needed some fine-tuning.
GRADING IS OFTEN DECIDING WHAT IT'S NOT
Perhaps the easiest grading determination is to decide if a coin in
uncirculated. A coin having any wear, even the slightest friction, cannot be
uncirculated, period. I have always been puzzled because slight wear counts for
so much and heavy marks, even cuts, called bagmarks, are found to be acceptable
on uncirculated coins. If grading is to measure how well a coin has survived
since the moment it was minted, why is damage caused while coins were being
transported or stored any different than marks occurring after a coin
"officially" entered circulation? I could place the reeded edge of one silver
dollar on the flat surface of another and by tapping the top coin with a hammer
create a "bagmark". Such a defect would not keep the coin from still being
uncirculated. If I rubbed the coin vigorously with a dry paper towel chances
are while the damage is very slight, the coin would now be considered
circulated.
ARE THE SUBJECTIVE FACTORS REALLY ALL THAT SUBJECTIVE?
During my years in the coin business I have found that coin collectors have
remarkably similar and very predictable tastes. While I believe that grading is
only a measure of preservation, there is no denying that subjective factors can
influence how we grade coins. A heavy bagmark on the cheek of the monarch is
more offensive to most collectors. A coin with this type of defect is more
likely to be given a lower grade than apiece having an even larger mark well
hidden in the devices. Most of us tend to give lower grades to weakly struck
coins or to one having overly deep or unattractive toning. If we do technically
miss the mark and undergrade the coin, most collectors would forgive us because
the piece is considered by many to be undesirable.
FLEX-O-GRADE
The grading standards we use for coins today are not the same standards in
place fifteen years ago. We now have more grades. When I first became a
professional numismatist numerical grading was not used. Not long ago I
purchased a small, but nice collection that had been assembled in the mid
1970's. The coins were graded as Choice Extremely Fine, Choice BU and Gem BU.
The owner of these coins was an experienced collector and a skilled grader. In
my opinion, all the coins were correctly graded using the terms and measures of
the time. When I received the coins back from a grading service the Choice EF
pieces were graded EF-45. The Choice BU coins were mostly MS-63. Many of the
coins called Gems were given the MS-64 grade, with an occasional MS-65.
In the past it was common practice to reduce the grade of a coin with minor
defects. Rather than calling a coin EF-45, with rim nick, the piece might be
offered as a VF with no mention of the flaw. A piece that had been lightly
cleaned might be reduced a full grade or more. Now the trend is to grade the
coin correctly and mention flaws or cleaning. This is the way it should be
done.
What I find somewhat disturbing is the move in the direction of increasingly
precise standards for the grading of uncirculated coins. Logic would suggest
that for each difference in grade there should be a corresponding difference in
value. A coin gradedMS-63.5 should be worth more than one given a MS-63 grade.
As grading becomes more
precise the tendency is to make more than just the state of preservation part
of the grade. What results is a bewildering number of possibilities and
options. Would you prefer to buy a coin that has an average strike and average
luster or a well-struck example with less than average luster? Every
experienced numismatist has a checklist of likes and dislikes. I
think it is far better, for everyone involved, to leave these questions up to
the individual rather than trying to answer them as part of the grade.
For it to work, a grading system must apply to all coins. It would be wrong to
have one set of standards to measure inexpensive mint state coins and a more
precise scale for mint state coins valued at $1000 or more. We should give as
much time and attention to grading a coin worth $10 as one worth $10,000. This
seldom happens.
As one becomes more skilled at grading coins the less important grading
becomes. Decisions once agonized over are now made at a glance. Suggestions
about the grade of a coin that were once whispered are now emphatically stated.
Once grading skills are acquired it becomes obvious that the grade of a coin is
merely the starting point from which we determine if we will purchase it or
not. The beginning grader might rely heavily on the opinion of a grading
service or fellow numismatists. The beginner might wrongly assume that once the
question of the grade has been resolved nothing else matters. The skilled
grader knows better.
IT'S EASIER TO REVIEW ANOTHER GRADER'S WORK THEN TO DO IT YOURSELF
What if I handed you a box of 100 coins that I had just graded and asked you
pick out those you thought were over or undergraded. I think you could complete
this task much faster than if I asked you to grade, from scratch, 100 "raw"
coins. Those who criticize the various grading services correctly note it is
not unusual for any of these services to grade the same coin differently when
examined at different times. Coin grading has always been this way. I think the
most skilled and experienced coin graders would readily admit that they have
changed their mind concerning the grade of coins on many occasions. When expert
graders revise their opinion concerning a coin the change is often slight.
A SLIGHT DIFFERENCE IN GRADE CAN BE WORTH THOUSANDS OF DOLLARS
It is rather difficult to grade coins without considering the monetary
implications of what you are doing. Grading and money go together. If I were to
sell you a coin as a F-15 and it was called a F-12 by several grading services
you might not be pleased with me, but I think you would be far more upset if
the three point discrepancy had involved a coin graded MS-65 which was later
found to be a MS-62. Certainly anyone who is trying to acquire grading skills
should, after becoming basically familiar with the system, concentrate their
first efforts on those areas of grading most applicable to their interests. For
example, if you collect early token issues you would be far more interested in
learning how to grade circulated coins than someone who was building a set of
George VI quarters. The majority of collectors and investors I have encountered
are most interested in grading uncirculated coins. In this report, that is
where we will focus our attention.
ARE ALL COINS GRADED BY THE SAME STANDARDS?
In theory we have one grading standard that is used to grade all coins,
therefore, any coin graded MS-60 is just like any other coin deserving the same
grade, regardless of what type of coin it may be. If this was true then having
learned how to grade one series of coins we could grade them all. Such is not
the case. Based on my personal experience, I have reached the unpopular
conclusion that grading is done based on comparisons of like kind pieces.
Modern coins are graded more conservatively than earlier issues because many of
them are quite common in uncirculated condition and as collectors we have the
luxury of being more discriminating. I have reached these conclusions after
examining, grading, and selling many thousands of coins.
When grading disputes occur they are often resolved by referring to other coins
of the same type. If you were trying to prove that the silver dollar you had
just graded as MS-65really did deserve this grade would it help your argument
any by showing me a MS-65nickel? Rather, what you would do is to make
side-by-side comparisons with other dollars or compare the coin to pictures of
MS-65 graded coins in a grading guide.
Let's suppose we developed a new grading system where it was a rule that any
coins having a total of five or more bagmarks 1/8 inch or longer in size would
automatically be given a MS-60 or lower grade. A coin with four or less marks
of this size would be graded MS-61 or better. By comparison to the system we
now use to grade coins such as silver dollars and larger denominations the new
grading system would be seen as quite conservative. If these same standards
were applied when grading a Five Cent silver piece the coin could be virtually
defaced with marks and still be graded MS-61 or better!
Gold coins because of their weight and the softness of the metal they contain,
can quickly accumulate marks. A nickel is a rather average weight coin made
with no edge reeding. The metal used to make these coins, is rather hard. If
you were to carry a mixture of newly minted gold coins and nickels in you
pocket for a couple of days which coins do you think would look the worse for
wear? I think all skilled graders consider what they are grading when they
measure the piece against perfection and rank it according to other coins of
the same type.
WHAT DOES UNCIRCULATED REALLY MEAN?
Let's suppose I was walking down the street and noticed a cent lying on the
sidewalk. I carefully pick the bright and shiny coin up by the edges and wrap
it in a tissue. When I get home I send it off to a grading service. In a few
weeks it is returned to me gradedMS-63. How can this be? Obviously the coin
didn't magically drop from the mint's dies onto the street. Someone, perhaps
several people, must have handled the coin before I found it and thus, in the
strict sense of the word, the piece had circulated.
I once reviewed a group of silver dollars that was the property of a bank. The
coins had been shipped to the institution in the original mint bags. Believe it
or not, each year a bank employee had unsealed the bags and, one by one,
counted the coins! These pieces had been handled dozens of times by perhaps
dozens of different people, but in the strict sense of the word they were
uncirculated.
Almost all coins struck by a mint for circulation, this is, business strikes as
opposed to proof issues, that have survived in close to perfect condition have
done so totally by accident, not by design. Making coins involves mass
production. Coins bang against one another. They are dumped into metal hoppers
and run through counting machines into bags. The bags are heavy. Transporting
the coins naturally rubs them together. At banks the coins are again run
through machines and mechanically stuffed into rolls. Many times, when I look
at a nearly flawless old coin I wonder, how could this have happened, what with
all the odds being against it?
I once submitted to a grading service a group of 1953 U.S. proof sets. Each set
was still sealed in the original mint box. I made a special arrangement with
the grading service. They were to open the boxes, remove the half dollar, and
grade it. A grading service employee would be the first person to handle the
coin since it left the mint. When the coins were returned to me in the grading
service holders of the fifty pieces six were graded as PR-67. Eleven coins were
graded PR-66. The rest were given the PR-65 grade. How could this happen? The
coins, according to the Mint, were especially struck for collectors. I seem to
remember photos of Mint employees wearing cotton gloves as they carefully
packaged these sets. How could a coin that was carefully produced to please
collectors and had been carefully packaged with the collector in mind be less
then perfect? Why were some of these coins just three points on the grading
scale less than perfect and others had dropped by a full five points? When I
asked this question of the grading service they responded by saying it was not
unusual, back then, for coins to have been improperly handled by Mint
employees. What the blazes could they have done to them! Have we who grade
coins set impossible standards? When grading proof or business strike coins in
grades above MS-65, has the grading of these pieces become just a game? On both
counts I think the answer is yes.
The quickest and easiest way to increase the value of a coin is to raise its
grade. Let's suppose collector demand for coins and market conditions were such
that there were only two coin grades. A coin is considered new or used. Since
there were just two grades there would be only two prices. Anyone who attempted
to get a collector or investor to pay a premium for an especially nice new or
used coin would find no takers. I think many of us who are involved in the
commercial side of numismatics have benefited greatly because of the complexity
of the grading system we use. We have done nothing to simplify the procedure
because doing so would not be in our best interest. As we allow the grading
system to become increasingly complex new opportunities to profit are created.
For example, suppose there was no MS-64 grade. At one time, when numerical
grading was in place and was a working system, this was the case. A coin could
be properly graded asMS-63 or MS-65. When it became a common practice to start
grading coins MS-64 and the pricing guides began listing values for this grade
which coins do you think became included in this grade? Did some MS-65 get
regraded downward? Perhaps, but I think it is much more likely some once MS-63
coins were now called MS-64 and thus immediately increased in value. For as
long as I have been involved in the coin business differences in grade resulted
in differences in value. I have never seen an advertisement offering coins in
several different grades at the same price. I'm certain if there were suddenly
fifty different grades of mint state coins the business side of the hobby would
find a way to use all of them!
Creating different grades and placing great monetary value on a slight
difference in condition will only work in an expanding market where values are
generally rising or at least the trend is toward higher prices. As the values
of the very highest grade pieces rise room is created for the others to move as
well, like opening the bellows of an accordion to their full length. When the
coin market, like the accordion, becomes compressed the differences in values
between the grades are forced closer. The supply of coins in each grade can
also have a major influence on values. Grading service population reports have
had a major influence on coin values. This data has often confirmed the
suspected scarcity of certain coins. In other cases we have learned the supply
of some coins in certain grades is larger than previously thought.
TWO LEFT FEET AND NO RHYTHM
I have seen enough variation in grading skills among experienced coin dealers
to have reached the conclusion that some people are better coin graders than
others. Some numismatists seem to have a knack for grading coins and for others
it is a struggle. For the most part, a good grader has the ability to detect
small, sometimes minute, differences in coins with great consistency.
Consistency is the key. Perhaps the greatest fault anyone can have, who grades
coins, is inconsistency. One minute they are calling a coin a MS-65and the next
a MS-63.
A GOOD GRADER KNOWS WHY
A skilled grader is much like a person who is adept as detecting counterfeits.
They are both able to clearly explain how they reached their conclusion. Just
saying, "Because I said so." Is not good enough. As a youngster, I was able to
rapidly improve my grading skills because other collectors and dealers would
take the time to explain why one coin was given a certain grade and another did
not qualify for that same grade. Certainly part of learning how to grade coins
will involve some trial and error. Having someone take the time to explain your
errors will greatly reduce the trial period.
WHEN GRADING THERE CAN BE THREE RIGHT ANSWERS TO THE SAME QUESTION
A coin can be correctly graded and be one that just makes the grade. The piece
can be typical for the grade or it can be a coin that just misses qualifying
for a higher grade. A person who is considered to have correct, but
conservative standards would often drop the first piece down a grade and keep
the one that just missed being better in the grade. The person with liberal,
but still correct, standards would do just the opposite.
THE ULTIMATE TEST OF YOUR GRADING SKILLS
Coin collecting can be a very individual and creative endeavor. You can collect
as you please and, if you're prepared to not complain about the consequences,
you are free to follow any grading standards you wish. If you choose to be
hyper-conservative then you will find few coins of a particular grade that
please you. If your grading standards are too liberal then you will seldom see
any coins, because of the grade, you don't like.
When grading coins the goal is to get the grade right. To be conservative or
liberal when grading coins indicates to me a lack of experience or an ulterior
motive. In the majority of cases I have encountered the purpose for grading a
coin had to do with justifying the asking price. As an active participant in
many hobbies I have found that people with things to sell offer evidence to the
buyer in hopes of substantiating the price. Grading coins is no different.
HOW THE MARGIN OF ERROR AND CHANGING STANDARDS IMPACT YOU
In the first pages of this report I quickly reviewed a variety of topics that
might suggest grading coins is not as precise as the system seems and that
grading standards are subject to change. Most importantly, the value and
salability of a coin is not only influenced by the grade of a coin. What I have
not addressed is a simple question that concerns the great majority of
collectors and investors. How can I make sure the coins I am buying will be
given the same grades when I want to sell? There is no absolute way this can be
done. Not being able to locate a buyer who will grade your coins the same as
when they were sold to you is one of the major risks associated with the
purchase of rare coins. Furthermore, it must be remembered that how a potential
buyer grades your coins doesn't matter if the price offered is not acceptable.
Suppose you were to offer me a 1946 dollar that was graded by PCGS as MS-63.
After examining the coin, I agree that it is a lovely specimen and indeed a
solid MS-63. I then proceed to offer you $100 for the coin, which is supposed
to be currently worth more than $300. That I agreed with the grade means
nothing.
You then offer me an 1870 No LCW half dollar that has quite clean surfaces and
very attractive toning. You purchased the coin as an EF-40 but my eyes detect
enough wear to call the coin no better than a VF-35. Your asking price is
$2500. I wouldn't normally pay this much for a coin grading VF-35 but it is
such an outstanding specimen I go ahead and make the purchase. Did our
disagreement concerning the grade make it impossible to do business?
In the past when the coin market was booming and demand was strong, grading
standards tended to become more liberal. Chances were good that if the first
person trying to do business didn't agree with the grade someone in the long
line behind them would. When business was slow and demand for coins was off
grading standards tended to become more conservative. I think we can expect
this to happen in the future. It would also be prudent to assume that grading
standards will be different ten years from now. During the five decades I have
been involved in the coin business we have gone from adjectival grading to
numerical and then new numerical grades were established. It is probably
reasonable to assume decimal grading, that being MS-63.5 etc., will be the next
innovation. If you predict the system used to grade coins will become
simplified, you had better be very young and hope to live a long life if you
expect to see it happen.
BUY UNDER THE OLD STANDARDS AND SELL BY THE NEW
Recently I reviewed a small collection of coins that was assembled prior to
1960. The coins were stored in the small brown paper envelopes that were a
popular way to house coins at the time. The only grading information written on
the holders indicated the coins were uncirculated. As I examined each coin I
assigned a "new" grade to the pieces based on current grading standards. Among
the coins I found items I felt were MS-63 quality, a few MS-64 grade coins, and
one piece I was sure would get a MS-65 grade from any grading service. If I had
graded and evaluated the coins as simply uncirculated, or MS-60 by current
standards, the lot would have been worth about $10,000. Thanks to today's more
precise standards the coins were easily worth three times that amount!
WOULD YOU VOTE FOR MY NEW GRADING STANDARDS?
The grading standards we currently use for coins are in place because they
work. I doubt anyone would suggest that we have a perfect grading system, but
since many thousands of numismatists use the current standards they must be
considered acceptable. For the standards to be changed a credible and powerful
force, or the majority of people who buy and sell graded coins, would need to
believe a change was actually in their best interest. As our example hopefully
illustrated, many collectors have benefited from increasingly precise grading
standards. I doubt reverting to a standard having far fewer grades would be a
popular choice, as it would mean many coins of previously different values
would be
lumped together.
THE STANDARDS MAY STAY THE SAME BUT TASTES MIGHT CHANGE
For a good number of years condition has tended to overshadow rarity.
Collectors have shown a willingness to pay huge premiums for rather common
coins in uncommonly nice condition. This trend developed as large numbers of
new participants became active in the marketplace. Condition seems to be a much
easier concept to grasp than rarity. There is no denying that those investors
who bought high-grade coins made some impressive profits. Condition has, up
until quite recently, outperformed rarity. Will this trend continue? I see a
trend in the direction of giving coins more recognition based on their rarity
or scarcity while allowing condition to remain an important consideration. How
is that for a hedge? A track record of proven rarity within a grade is what we
are looking for. Value is a secondary condition, while keeping in mind that, at
least for now, the majority of coin buyers are still chasing coins in the
highest grades.
WHAT ABOUT THE AVERAGE COLLECTOR?
Suggesting you might have done well had you spent $35,000 or more for a coin is
advise that would interest only a tiny percentage of the people who collect or
invest in coins. It has been my experience that the majority of people who
participate in the coin market have far less money to spend or are unwilling to
make such a substantial investment in a single coin. What can the average
collector do to use the grading system to their advantage or to protect
themselves from becoming a victim of the system?
1. Learn to grade coins. I have found that the quickest way to develop grading
skills is to deal with one series of coins at a time and to make side-by-side
comparisons. I have found that large size coins are easier to grade than small
ones. If you are very new to the hobby, and coin grading, you may want to begin
your grading lesson by studying uncirculated silver dollars, if for no other
reason than there are lots of them available to look at. If you intend to
purchase coins that are not housed in grading service holders I would suggest
before doing so you should make comparisons of these "raw" coins to pieces in
grading service holders.
Aside from making comparisons of coins it is important to understand what you
are comparing. For instance, in the Morgan dollar series there are certain
issues, such as the1892-O and 1893-CC, which often come weakly, struck. This
striking weakness show sup above Liberty's ear and has often been confused by
the novice as being wear. Each different type of coin has a place, or places on
the surface that shows the first signs of wear. It is important to know where
to look to determine if a coin which otherwise appears to be uncirculated
really is so.
Don't try to accomplish too much at once. You will find it much easier to
distinguish the difference between a MS-65 silver dollar and one graded MS-66
if you first learn to tell the difference between a MS-60, a MS-63, and a
MS-65.
Developing good grading skills requires lots of time and effort. Furthermore,
unless you regularly examine coins your grading ability can become "rusty". I
wish I could say that learning to grade coins is simple, but this is a
publication intended to deal with the truth.
2. Avoid buying grade sensitive coins. By giving this advise I'm suggesting you
can somewhat reduce the need to have good grading skills if you avoid
situations where you must use them. Some might criticize this advice by saying
it's the chicken's way out. I think if more chickens did this fewer of them
would end up being plucked! All of us can understand the risks associated with
buying an expensive coin and many of us avoid such situations by not spending a
great deal of money on any single coin. Isn't buying a coin in the MS-65 grade
for twice what a MS-64 would cost incurring the same kind of risk? As an
investor, won't buying coins that are not of the highest grades eliminate any
chance of making big profits? In most any endeavor it is expected that some of
what we learn is gained through experience. Betting on your grading skills can
be a very high stakes game. If it was your first trip to Las Vegas would you
take every cent you brought with you and bet in on one spin of the Roulette
wheel?
PROVING THE INSIGNIFICANCE OF GRADING
Are all coins of the same grade equally desirable? If I offered to let you
choose from a dozen MS-65 examples of the same date silver dollar would you
rather let me pick one for you or do you think you could find a coin in the
group you would like to have more than any of the others? The shortcoming of
coin grading is it's purpose is to place groups of coins in rather precise
categories while being obliged to ignore that among experienced numismatists
each coin is judged on it's own merit and each judge may have different tastes
and preferences.
Prior to the popularity of third party grading I think most of us talked about
a coin's grade but when it came to buying and selling grading was only another
thing on our checklist that influenced our decision to buy or pass by certain
coin.
As part of a collection I once purchased a 1935 dollar with extremely clean
surfaces and just about the ugliest toning you can imagine. I'm certain if sent
to a grading service today the coin would be given a MS-65 or MS-66 grade.
There is no way a competent grading service could ignore that under the
disgusting toning the surfaces were immaculate. Long ago, when I bought it the
coin should have been worth $50. I paid $20and offered it for sale at $30.
After having displayed the coin at a dozen shows I dropped the price to $25.
Still nobody would buy it. Finally I tossed the coin in a wholesale lot and
sold it as part of a group. Now somebody else was stuck with the Old Maid! Last
January I saw the coin again. It was not a piece that could be easily
forgotten, even after more than twenty years had gone by. Sure enough, there
she sat in a MS-65 grading service holder.
BABY TALK AND COIN GRADING
An infant learns to talk by mimicking the sounds of others or by accidentally
making a sound someone recognizes as a word. After countless repetitions of
sounds the baby learns to talk. A child that never came into contact with other
people would never learn a language. Coin grading is much the same.
Several excellent books, and numerous articles, have been written on the
subject of coin grading and all are worth reading. Becoming familiar with
grading terminology and other aspects of the art will give you a basic
foundation on which to build your skills. The next step is to carefully examine
coins that have been graded by others. Two excellent places to do this are at
coin shows and coin club meetings. Most coin collectors tend to believe one set
of grading standards applies to all coins. A silver dollar, George VI nickel,
and early Large cent are all graded in the same way. I have found that because
of the difference in the way they are made, the metallic content, and the size
of the coin this is actually not the case. A mark that might be considered
small on a dollar would be a much more noticeable flaw were it found on the
surface of a Five Cent Silver piece. Coins with complex raised devices covering
most of the surface area will often show fewer marks than pieces with generally
flat surfaces on which marks are much more noticeable. Many early Canadian
issues have striking deficiencies that can be confused with wear. All coins
have certain areas of the surface that are studied to detect the first signs of
wear. If I were to show you fifty different types of coins, all correctly
graded as MS-60, I'm fairly sure you would find the coins to look quite
different. For me, the best way to learn to grade coins is to concentrate on
one group of like kind pieces. Once comfortable with that group it's time to
move on to another challenge.
YOU HAVE TO HAVE SEEN ONE TO KNOW ONE
Many expert graders can correctly determine the condition of a coin at a
glance. It takes only an instant to check their mental grading set and compare
the coin they are examining to all others they have seen in the past. If you
are new to coin grading then your grading set may have some missing pieces.
When I was a young collector an older friend suggested it would be time well
spent if I carefully studied the choice and gem quality coins displayed for
sale or in exhibits at coin shows. Knowing what the best coins looked like
would help me compare their image to what I might be thinking of adding to my
collection.
THE GRADER'S RESPONSIBILITY TO BE RIGHT
Several times in this report I have mentioned it is not unusual for a skilled
graders change their opinion about the grade of a coin or for experienced
graders to express different opinions. What if, as a dealer I sell you a coin
graded as MS-65 and then when you wish to sell it back to me I change my mind
and grade the same piece MS-64? This change of opinion can be easily expressed
in money--money that came from your pocket. How would you react if this
happened to you? Coin grading works because the majority of people who view a
coin give it the same grade. If I ask ten experienced coin graders to examine a
coin and eight of them call it MS-65 it matters little that one person called
the coin MS-64 and the other thought the piece was a MS-66. By George, the coin
is a MS-65 and that's that! If you show the coin that I sold you as MS-65 to a
number of skilled graders and they think it is a MS-64 then I was wrong pure
and simple. Some discussion of my competence is in order.
As a collector or investor you are allowed to adopt any grading standards you
wish. As a dealer, I don't have this right. I could intentionally undergrade
everything I sell but I would soon be out of business unless I adjusted my
prices upward and charged according to the true grade. Does it really matter if
I'm Mr. Conservative and charge $65 for a coin I call MS-62 or Mr. Bargain Barn
asks only $65 for a MS-64 when both of us are really selling a coin that
properly graded is a MS-63?
It has been my experience that most collectors who proclaim to be conservative
graders change their standards and get with the program when it's time to sell.
I don't blame anyone for trying to buy low and sell high. I wish I could do
more of it myself. Adopting conservative grading standards is a valuable aid in
reaching this goal when you are buying.
I once stood across a bourse table from a collector of copper coins who had
nothing good to say about the grading services. He was attracted to a Large
cent I had on display but took exception to the PCGS grade of MS-63. He felt
the coin was only a nice AU. If I was prepared to sell the piece, based on its
"real" grade he would take it off my hands for$120. His offer was a very fair
one were the coin really AU. Since I had paid about $200for the coin I wasn't
quite ready to toss the grading service's ability to grade like pieces, and
$80, into the dumpster. I had agreed with the grading service's opinion when I
bought the coin.
The collector, after making a facial expression that indicated that he was
tired of dealing with incompetents like me, suggested that if I wanted a quick
lesson in learning how to properly grade Canadian Large cents I might stop by
the table he was sharing with three other collector/dealers.
"Let's go," I said.
I pulled the coin that he wanted to buy from my display case and followed him
down the aisle. When I got to his booth the other people he was sharing with
were all in attendance.
"Your friend offered me $120 for this overgraded coin," I said. "Can any of you
sell me one that looks the same for $150?"
I didn't buy a coin.
COIN GRADING -- DIFFERENCE BETWEEN DEALERS AND COLLECTORS
As a dealer I must conform to the grading standards of my customers, otherwise
I would soon be out of business. The collector is under no such obligation.
What does it matter if, as a collector, the silver dollar I bought is a MS-63
instead of a MS-64? I think the coin is a beauty and it fits perfectly in my
set. I want to keep it forever. Truthfully, this seldom happens. I have found
that most collectors are just as concerned about how the next person will react
to what they are buying as I am. It has been my experience that the modern
collector holds coins for less time than their predecessors. Today's collector
often acknowledges that they will be selling coins before they even buy them!
ARE WE ALL SLAVES TO THE GRADING SYSTEM?
Earlier, I mentioned that I have never fully understood why a coin that has
slight friction on the high points is automatically valued at considerably less
than a technically uncirculated piece which has heavy bag marks and other
detracting features. It seems tome that this element of the grading system
creates a wonderful opportunity for the true collector.
Heaven forbid it should happen, but could we someday have grades like MS-63R,
the R standing for rub? I seriously doubt this will happen. I'm very sure that
the grading system we will be using in the future will continue to classify
coins, which have the slightest friction as lesser quality.
I once purchased a collection that had been bought as uncirculated but ended up
being sold as circulated because the coins were improperly stored. The person
who owned the collection had kept the pieces loose in paper envelopes. He
constantly examined the coins, showed them to others, and displayed them at
shows. This careless handling had made some coins "shopworn". The toning was
still beautiful, the surfaces were free of marks, save for just enough friction
on the high points to deserve AU grades from the grading services.
Putting aside the technical grade for a moment, these coins had far better eye
appeal than most of the uncirculated pieces I have encountered; yet they were
worth far less. It must be said that AU grade coins probably don't offer the
investment potential that has been historically available when buying mint
state pieces. The value associated with collecting and owning aesthetically
appealing coins cannot only be expressed in money and thus the grading system
we use has created a magnificent loophole for numismatists.
IF I WERE STARTING OVER AGAIN
I strongly recommend that everyone become a skilled grader of coins. After more
than thirty years of experience I know this won't happen. To be more practical,
I would suggest you only buy coins that you feel competent to grade and avoid
buying coins for which you are paying a large premium for a slight difference
in condition. If I were beginning a collection these days I think I would tip
the balance in the direction of rarity while at the same time realizing the
importance condition plays. I would pay close attention to what was available
in the AU grades. When purchasing mint state coins I always ask the question,
"If I buy the next highest grade will I be getting a coin that is substantially
better?" There is little doubt that a MS-65 example of a Morgan dollar is
noticeably better looking than one grading MS-60. Can the same be said every
time we compare a MS-64 to a MS-65? As a collector, if you can't see the
difference in quality then why should you be paying for it?
JUST MORE PAGES OF PAPER
I have found this a rather difficult report to write. The topic of coin grading
is very complex and one that seems to be filled with more exceptions than
rules. The subject must deal with the very human part of numismatics. The
seller tends to see what they are trying to sell in the best possible light.
The buyer looks carefully for every defect. A slight difference in grade can
sometimes be expressed in thousands of dollars. When money is involved are we
all capable of resisting the temptation to overgrade a coin, just a little? The
popularly accepted and used grading standards are not carved in stone. They
have changed in the past and may change again. Market conditions affect the way
we grade coins. In theory we use one set of grading standards to grade all
coins. I have found that some coins are actually graded by more liberal or
conservative standards. If all of this sounds confusing then join the crowd.
There are many challenges available in numismatics and grading coins is
certainly one of them.
This article used by permission.
© 2001 Tom Becker Online
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