Technical v. Market Grading

Discussion in 'Coin Chat' started by Kirkuleez, May 15, 2012.

  1. rzage

    rzage What Goes Around Comes Around .

    I must say this is a must read thread to understand how and why coins that were once 64's are now 65's . Also to understand the difference of Technical versus market grading , and to why they allow slight rub on MS coins . Though I've read the PCGS book I never really understood the why to market and technical grading , though this may not be an eye opener to me on grade inflation , I now know the reasons . Thanks .
     
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  3. GDJMSP

    GDJMSP Numismatist Moderator

    Oh I firmly believe you're largely correct Mike. I think they did it because people accepted it. But think about it for a second - it had to start someplace. In order for people to accept it, they first had to try it and see if people accepted it - now didn't they ?

    What caused them to try it ? Danged if I know. But it sure as heck happened. I watched it happen. I started complaining and posting about it shortly after it happened. And have been ever since. Based on my personal observations, it started happening in 2004. You, me, everybody else, we've discussed that a hundred times. Mark Feld even agreed with me once, but in his opinion the change occured before 2004.

    What I know, not what I think, what I know, is this. By my personal observation the change happened in 2004, you can call that opinion if you want but that's when I started seeing it and I know what I saw. By 2005 there were articles being published by well respected numismatists in the coin mags like Numismatic News and Coin World, hinting at the same thing that I was seeing. And if you look at population tables, for specific grades, from the end of 2003 and then compare them to pop tables from the end of 2004, you see a huge increase in the pops of those grades. And I mean increases of 300-500%, or more - in 1 year !

    Now couple all of that together, and I dunno what it tells you, but it tells me that grading standards changed significantly - loosened - in 2004. I was seeing the change, others were seeing the change, and the pop numbers confirmed the change.

    Walks like duck, sounds like a duck, looks like a duck - it must be a duck !
     
  4. Kirkuleez

    Kirkuleez 80 proof

    Yes Doug, I am happy now. I just wish you guys waited till I got off of work to light the fireworks.
     
  5. GDJMSP

    GDJMSP Numismatist Moderator

    Well don't ya know - we did that on purpose :D
     
  6. Kirkuleez

    Kirkuleez 80 proof

    [​IMG] Originally Posted by NGC Interview
    MR: I agree, there’s been a learning curve at work. I believe that the early years of NGC and PCGS saw conservative grading because they were young companies out to prove themselves, get market share, introducing a new concept. You yielded a lot of power and had to be careful, earn your “oats,” so to speak. Does this make sense?

    MS: Initially we were very conservative, but again you have to consider the pricing level at the time. For example, the Greysheet price for a so-called MS 65 Barber Quarter was about $3,000, way over what a realistic MS 65 was trading at in the marketplace, about $1,500. So the coin that we graded MS 65 was probably a 66 or 67 to equate to the coin that was necessary to fulfill the $3,000 price. We were grading based on value as well.

    Don't you really think that said it all?

    Personally, I could care less what grade is on the slab, I very seldom sell a coin. Usually, when I buy a coin in a slab, I chose it because I thought it was a nice coin for the grade. Then I crack it out and put it in a Dansco or Intercept Shield album or in Capital plastics holders (A throwback to my grandfathers collection). The reason I care at all is that if I want to upgrade a coin, I have to resubmit it to get fair value for the coin. In my experience, the average grade upon resubmission goes up by a point.

    Lehigh, I am not surprised at all that I couldn't tell which generation slab held those Morgans. As I said previously, you can make an argument that coins in every generation TPG slabs have over and undergraded coins. If anyone would argue with that, I would be shocked. I do stand by the assessment that I put on the coins based on what I saw in the photos.

    It is impossible for TPGs, myself, Doug or anybody else to always agree on grades. The subjectivity of grading is what it is. I just don't need a TPG to decide that a coin has nice luster and add a point. Or a coin has nice colors so add a point. I have my own eyes for that. Just determine if it is an original, unaltered coin, and I can do the rest.

    And I'm home from work now so....Bring it! :)
     
  7. Lehigh96

    Lehigh96 Toning Enthusiast

    Perhaps in your advanced age you forget some of the things that you write on this forum. This is a quote taken directly from one of your posts in one of our many discussions of the topic of gradeflation.

    Read more: http://www.cointalk.com/t149207-3/#ixzz1vJK9h1kE

    Are you really going to claim that profit motive is not the same as increase submissions?

    In another thread you were asked a direct question by a fellow CT member. Here is his question and your answer.

    Read more: http://www.cointalk.com/t119947-4/#ixzz1vJMMEp9N

    Woulg you care to revise your statement in this thread after taking a trip down memory lane.
     
  8. Lehigh96

    Lehigh96 Toning Enthusiast

    Here are some of the threads that include Doug & I arguing about gradeflation in the past.


    Read more: http://www.cointalk.com/t149207/#ixzz1vJLfmXGx

    Read more: http://www.cointalk.com/t119947/#ixzz1vJLzEM4v
     
  9. Lehigh96

    Lehigh96 Toning Enthusiast

    Can you please provide us with what coins in what grades experienced increases in populations of 300-500% in one year!
     
  10. Lehigh96

    Lehigh96 Toning Enthusiast

    Yes, I do think that the section highlighted in bold says it all. It basically states that the TPG's ignored their own standards in the early years because they were value grading coins. In one fell swoop, they explained the inconsistency of early graded coins and proved that grading standards have not been deliberately loosened over the years.

    And it doesn't surprise me that your resubmissions would go up a point if you were initially buying PQ coins to start with. That is gradeflation in a nut shell!
     
  11. Catbert

    Catbert Evil Cat

    Lehigh - have you considered becoming a lawyer? ;)
     
  12. mikenoodle

    mikenoodle The Village Idiot Supporter

    It wasn't about showing your arguments with Doug, Paul, it was a thread that addressed the very subject of this thread not the tangential issue of gradeflation. Your current argument with Doug has basically hijacked this thread and I think has derailed the discussion.
     
  13. Lehigh96

    Lehigh96 Toning Enthusiast

    What are you talking about? This entire thread is about gradeflation despite the OP's inaccurate thread title. In the OP he asked "why have grading standards changed?" Doug and I did our best to avoid having our 4th or 5th debate on the subject, but in the end, neither of us could resist. And if we hijacked the thread, why is the OP so happy about it?
     
  14. Kirkuleez

    Kirkuleez 80 proof

    This thread has not been hijacked. The discussion going on here is exactly what was intended. I didn't realize that Paul and Doug have had this discussion in the past, or I would have avoided bringing it up again.

    It is clear, however, that I think we can all agree that the grades given to coins in the early days of TPGs were for whatever reason somewhat lower than what the same coin could get graded as today. Perhaps I inaccurately viewed this as a loosening of standards rather than gradeflation due to market prices or any other factor. But there is the problem, we can't price or value these coins the same way based on the grade on a slab. It would have been easier on collectors if they would have continued to grade coins the in the same way. I'm sure the market prices would have followed, there was no reason for NGC or PCGS to change the way that they operated. PQ coins from every generation of slabs have and will always command a premium.
     
  15. GDJMSP

    GDJMSP Numismatist Moderator

    Uhhh, yeah, I am. But you are right, I did propose a reason, and yes I definitely forgot doing so.

    edit - you see Paul, I have no problem admitting when I make a mistake or when I am wrong about something. Do you ?
     
  16. GDJMSP

    GDJMSP Numismatist Moderator

    I have before, do I need to do it again ? You seem to remember everything else I say, do you conveniently forget things like that ?
     
  17. mikenoodle

    mikenoodle The Village Idiot Supporter

    when explained that way, you are right. I apologize Paul.
     
  18. GDJMSP

    GDJMSP Numismatist Moderator


    I've never compiled, or posted, this many before, but just for you Paul.







    Lincoln Memorial -


    NGC


    MS69 Red pop at the end of 2003 - 16
    MS69 Red pop at the end of 2004 - 45 - increase of roughly 300%
    MS70 Red pop at the end of 2003 - 0
    MS70 Re dpop at the end of 2004 - 0
    PF69 DCAM pop at the end of 2003 - 7,875
    PF69 DCAM pop at the end of 2004 - 20,501 - increase of 260%
    PF70 DCAM pop at the end of 2003 - 607
    PF70 DCAM pop at the end of 2004 - 1,581 - increase of 260%


    PCGS


    MS69 Red pop at the end of 2003 - 99
    MS69 Red pop at the end of 2004 - 671 - increase of almost 700%
    MS70 Red pop at the end of 2003 - 0
    MS70 Red pop at the end of 2004 - 0
    PF69 DCAM pop at the end of 2003 - 10,092
    PF69 DCAM pop at the end of 2004 - 45,242 - increase of approx 400%
    PF70 DCAM pop at the end of 2003 - 455
    PF79 DCAM pop at the end of 2004 - 873 - increase of approx 200%




    Jefferson nickels (post war)


    NGC


    MS69 pop at the end of 2003 - 0
    MS69 pop at the end of 2004 - 0
    MS70 pop at the end of 2003 - 0
    MS70 pop at the end of 2004 - 0
    PF69 pop at the end of 2003 - 8,740
    PF69 pop at the end of 2004 - 26,213 - increase of 300%
    PF70 pop at the end of 2003 - 502
    PF70 pop at the end of 2004 - 2,187 - increase of 400%


    PCGS


    MS69 pop at the end of 2003 - 700
    MS69 pop at the end of 2004 - 1,077 - increase of 50%
    MS70 pop at the end of 2003 - 72
    MS70 pop at the end of 2004 - 79 - neglible increase
    PF69 pop at the end of 2003 - 8,899
    PF69 pop at the end pf 2004 - 67,070 - increase of 750%
    PF70 pop at the end of 2003 - 223
    PF70 pop at the end of 2004 - 928 - increase of 400%




    Roosevelt dimes


    NGC


    MS69 pop at the end of 2003 - 2
    MS69 pop at the end of 2004 - 2
    MS70 pop at the end of 2003 - 0
    MS70 pop at the end of 2004 - 0
    PF69 DCAM pop at the end of 2003 - 8,611
    PF69 DCAM pop at the end of 2004 - 21,110 - increase of 245%
    PF70 DCAM pop at the end of 2003 - 1,161
    PF70 DCAM pop at the end of 2004 - 3,426 - increase of 295%


    PCGS


    MS69 pop at the end of 2003 - 13
    MS69 pop at the end of 2004 - 18 - increase of 30%
    MS70 pop at the end of 2003 - 0
    MS70 pop at the end of 2004 - 0
    PF69 DCAM pop at the end of 2003 - 13,709
    PF69 DCAM pop at the end of 2004 - 70,114 - increase of 500%
    PF70 DCAM pop at the end of 2003 - 489
    PF70 DCAM pop at the end of 2004 - 1,639 - increase of 335%




    Washington quarters


    NGC


    MS69 pop at the end of 2003 - 0
    MS69 pop at the end of 2004 - 0
    MS70 pop at the end of 2003 - 0
    MS70 pop at the end of 2004 - 0
    PF69 DCAM pop at the end of 2003 - 7,460
    PF69 DCAM pop at the end of 2004 - 68,647 - increase of 920%
    PF70 DCAM pop at the end of 2003 - 137
    PF70 DCAM pop at the end of 2004 - 22,228 - increase of 1600%


    PCGS


    MS69 pop at the end of 2003 - 18
    MS69 pop at the end of 2004 - 309 - increase of 1700%
    MS70 pop at the end of 2003 - 0
    MS70 pop at the end of 2004 - 0
    PF69 DCAM pop at the end of 2003 - 85,340
    PF69 DCAM pop at the end of 2004 - 238,422 - increase of 280%
    PF70 DCAM pop at the end of 2003 - 824
    PF70 DCAM pop at the end of 2004 - 3,759 - increase of 450%




    Kennedy half


    NGC


    MS69 pop at the end of 2003 - 0
    MS69 pop at the end of 2004 - 1
    MS70 pop at the end of 2003 - 0
    MS70 pop at the end of 2004 - 0
    PF69 DCAM pop at the end of 2003 - 14,431
    PF69 DCAM pop at the end of 2004 - 29,375 - increase of 200%
    PF70 DCAM pop at the end of 2003 - 568
    PF70 DCAM pop at the end of 2004 - 1,555 - increase of 270%


    PCGS


    MS69 pop at the end of 2003 - 759
    MS69 pop at the end of 2004 - 1,074 - increase of 40%
    MS70 pop at the end of 2003 - 134
    MS70 pop at the end of 2004 - 141 - neglible increase
    PF69 DCAM pop at the end of 2003 - 29,181
    PF69 DCAM pop at the end of 2004 - 96,323 - increase of 330%
    PF70 DCAM pop at the end of 2003 - 1,460
    PF70 DCAM pop at the end of 2004 - 2,214 - increase of 65%

    It kind of shows what I would call a definitive change, don't ya think ? Pure coincidence that it happened in 2004 though huh ?
     
  19. rzage

    rzage What Goes Around Comes Around .

    Paul but you do agree that the grading standards have loosened over the years , for a number of reasons , right ? Anyways I realize why they have changed , something I knew was happening but couldn't put my finger on the why it was happening , so thanks for the discussion , this was an excellent thread .
     
  20. Lehigh96

    Lehigh96 Toning Enthusiast

    It is a red letter day in the history of Cointalk. And yes, I have admitted when I was wrong but I am not about to go find my admissions in my 6,000+ posts.

    All of the coins you just quoted are ultra high grade moderns. I don't know very much about the modern market but it seems to me that much of those increases is related to the fact that it was an emerging market back in 2003. Wasn't that the height of the state quarter craze? In addition, the mint puts out a new crop of coins every year that drastically affect the population reports. I don't think that these changes you have quoted are the result of a change in grading standards. They are more likely the result of increased submissions in an emerging market and growing popularity of modern registry sets. However, I will admit that I believe that PCGS did deliberately change their grading standard with respect to MS70 & PF70 coins sometime during that time period.

    I really thought you were talking about classic coinage Doug. Based on our past conversations, I don't believe that your opinion about changed grading standards is limited only to moderns. Do you have any evidence within the population reports of any classic coin series or even individual date/mm that would support your theory?
     
  21. Kirkuleez

    Kirkuleez 80 proof

    I agree that the state quarters did play a part in the numbers simply due to increased submissions, but how could you argue with those numbers. Especially since the statehood quarter program started in 1999. Surely the hundreds of thousands of coins submitted by groups like HSN and Coinvault beginning in 1999 would have made the population numbers grow. But they didn't, the change occurred a few years later.

    Not to mention that it was not only quarters that had such a significant rise, the increase goes across the board. Why this happened is anyones guess, but it is a fact that it happened.
     
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