Market Grading vs. Technical Grading - Round 35!!! Ding!

I know we have been over this bridge a million times, but recent comments by someone here have made me think about this whole market grading vs. technical grading thing and although I have tried to explain my point of view in the past, I don't think that I have done so well enough to make the point clearly as it is in my mind.


My point of view is that there are 2 schools of thought developing in numismatics lately. I am going to focus on the technical graders, because that is the side I think I fall to.

To a collector, there is less of a difference in opinions when a coin is technically graded (either detail is there or not) than any other way. There are STILL going to be differing opinions!!! It is a matter of opinion whether or not a coin is attractive (part of the technical grade) for example, but for the most part whether detail is on the coin or not is more of (but not completely!) a black-and-white issue, and one that I personally feel some comfort with. It was how I was originally taught to grade coins.

When a technical grader looks at a coin that for market reasons receives a higher grade than it's technical grade or receives lenience in grading due to market factors it doesn't make sense to us. I can understand it's value being high, but it's grade is more of a black-and-white thing to me. I personally don't think that the value of a coin should indeed influence it's grade. I think that is the cart leading the horse.

In the case of coins like the 1926-S Buffalo nickel, a coin with a full-horn is almost non-existant, and therefore if the coin is not uncirculated, it becomes a debate as to grade above VF because of the horn. I am NOT getting into the horn or no horn debate, except to say that technically graded, many would not receive the grade that they have because of the horn. If you were to say, for example, "Well, if you grade by the detail in (insert your favorite other buffalo detail here) you can see that the coin is only worn to (insert wear point here), but that is not how it is explained to us, we have been told that because there are none with full horn, that ones with 3/4 horn are now acceptable for XF grades. I think it is THIS issue that divides us.

So before all of the market graders tell me I just don't understand the world of numismatics, let me say that I work in the coin business in a VERY successful shop and I assess the value of coins every day. I understand market grading and that it IS a definate part of the way the coins are graded today. I can use the system, even if I disagree with it. I just tend to fall to the side of technical grading in this debate and think that what I espouse makes sense.

I think as we go into the future and as things always do, standards will change and grading will evolve again and many may look at the market graders much the same way that they look at technical graders now.

just my 2¢, I don't want to start a fight, (SERIOUSLY!) I just want to make a point for a group of individuals here that may have not clearly enough made their point...

 

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Mike,

Sorry for joining the discussion very late in the game but I'm not sure what you mean by the comment above?

Not to start some argument/discussion over but I think both groups will be around as long as the hobby is. I think it's a level of commitment to the hobby the buyers have that will drive it. The more committed the more you will understand the difference. Some will take advantage of the market grading for the buyers that do not have the time or commitment to understand the difference. The buyers if nothing changes won't care and the sellers will make a little extra cash. IMO. I am still learning and have little experience compared to many on this forum so please I am not trying to offend anyone. Mark posted a comment once about some collectors having unimpressive collections as a result of the way they buy. Market grading probably helps this along a little. What happens when a coin is put into plastic, market graded, sold and then the market has another down turn? The hobby will look back on this behaviour and say what a mess we have. That's the dilemma as I see it, if there is never another down-turn then life goes on and most are happy - I think...

 

Technical Grading is pretty Black and White and simple to understand. A coin which is sent to a TPG should only need to be graded and encapsulated once using the 'Technical Aspects' of the coin. Last time I cracked out a coin from a slab it appeared just the same outside as it did inside, the coins condition didn't change. The only reason coins are resubmitted is to get a HIGHER GRADE, definitely not a lower one.

My advice to the small-time novice (US Coinage) collectors would simply be this. Get a RedBook, a pencil or pen, several 2x2s, your collection and have a wonderful afternoon with your friends, spouse, children, or grandchildren learning how to grade by these basic standards. You can move into more advanced areas as time goes by, but you must understand the basic technical aspects of worn coins and how they correlate to the grades listed for each variety. Thiis basic knowledge will serve you well.

Case in Point-
There was nothing funnier (we have a young 'clueless' professional in our local coin club) than seeing a certain new collector (with LOTS of money) submit large lots of bullion coinage to a Top Three TPG in the hopes of receiving high MS grades because he thought the coins looked so beautiful. When they came back some were in body-bags and the others were low-end MS grades. "But, but, but... How could they... They looked so nice..." The guy just won't listen

This fellow isn't even familar with basic numismatic terminology and wanted to start at square 6 or 7 instead of 1 when he began collecting a few months ago.

Take Care
Ben

 

The market shouldn't determine grades. Grading should be in a world of its own, and the market should simply assign values to the grades. But I read in these threads (as I'm sure you did, too), such things as how an XF Buffalo nickel is now only a 3/4-horn, and how a coin's "pedigree" now somehow has grading significance. You ask me, that's all baloney. Yet, take a start-up TPG like DGS (ostensibly, at least, grading by traditional criteria...which, don't mistake it, does have a subjective component to it, in addition to the more objective "checkpoints"). What chance do they have against the "market graders" who in general are assigning higher grades to the same kinds of coins? I understand and applaud the "niche" DGS is taking cognizance of, and attempting to fill. But I think it's going to be an uphill battle to wrestle away any significant market share like that (at least, in the reasonably-foreseeable future). If they can stick it out and see it through, though, there may come a time when their slabs are selling at one even two "market grades" higher than their assigned grade because everybody is going to know their grades are equivalent to one even two "market grades" higher. DGS does this right and sees it through and they're not going to need any "CAC" stickers on their slabs, because their grades are already going to be given the highest respect in the industry. But, again, that's likely going to take time, not to mention a lot of determination...

 

I think this discussion is very useful/helpful to anyone interested no matter what determinants each individual cares to use. The bottom line is grading is subjective just as discussion about it tends to be.

If at the end of the thread some members have learned or adjusted (tightened) their thinking concerning Technical Grading or Market Grading then there are benefits.

Take Care
Ben

 

Well, there are a lot of things discussed on this forum I don't agree with or believe... I just go to another thread.

Just let the thread develop and see what happens. It's interesting to see what everyone's views and thoughts are. Who knows we all may learn something.

Take Care
Ben

 

Haven't been avoiding stepping in it further - just been busy with photos ..

As I was first to stick my neck out here is some more to chew on.

Technical grade is based on Wear, Marks, Strike, Luster.

Technical grade combined with Eye Appeal, Coin History, Age and Demand/Market conditions influence Market grade. Market Grading tends to be a little more subjective (I Think).

Brief but I think this answers your questions.

 

Then there is the "dealer grade" which is one grade higher than market grade when they are selling to you, and one grade lower than technical grade when they are buying from you.

 

Am I missing something. (Overall Strike) is the MOST important factor when determining the Technical Grade of a coin. Without a good strike you cannot have gradable areas; Buffalo's Horn, Libertie's Bust, Readable Date, etc. It's very much a part of Technical grading IMHO.

Market grading is when luster, pedigree, and eye appeal (tone) come into play.

Ben

 

That is what I believed. Wear and strike largely determine technical grade. Luster and eye appeal largely determine market grade.

 

Chuckle, obviously I'm missing something... OTOH, I look at the Big Picture.

 

If it's determined it's not due to wear, sure it could...no? Just going off the hair above Morgan's ear...it's not the same detail in every year of issue.

I'll put my neck on the chopping block. This is what I do. I simply put a plus sign after the grade if I think the coin should command higher money. Based on what I see in the market, auctions, that sort of thing. Each plus sign bumps up the coin's grade one "market grade" (for lack of a more descriptive term). Vice-versa for minus signs. But I don't mess with the integrity of "the book" by engaging in "pretty boy" grading. OK...chop away!

 

Just one source: http://www.steveestes.com/cgi-bin/newsite/eyet.html

but have read it in others so I'm also missing something. I usually am so nothing new there!

I have seen it in many threads where many different someones who I think are knowledgeable will talk about things like the years when a coin was struck weak so you have to give allowances for the technical grade.

 

Another:

In theory, technical grade is based on quantifiable factors of a coin's level and quality of​

preservation. These factors are: wear, luster and strike and color.

http://www.earlyus.com/art003-marketgrading.pdf

 

Doug - In answer to your question, yes it can be uncirculated and therefore Mint State even without the horn.

I think I understand where your going with this is that if you work from the diagnostics of the "non-full horn" MS coin, and see no wear on a coin except where normal wear would be to qualify as XF, would THAT coin qualify as XF? I think that whether you do or don't is a subjective answer in and of itself.

As far as technical grading, I am talking about grading by diagnostic points of wear as most coins tend to wear in largely the same ways due to height of relief, etc. The LESS subjective part of grading.

As far as the comment on whether or not someone knows what they are talking about and how that affects their right to post in a thread here is ludicrous. We should hear all people's opinions on a given subject, and let the reader make the judgement as to whether or not the poster is knowledgeable. Most idiots reveal themselves through their words and no one needs point it out.