Grade inflation over time

I've been reading a great "Coin Book" titled Rare Coin Investing, An Affordable Way to Build Your Portfolio" by David Ganz. In this book he asserts that coin grading standards have changed quite a bit over the last 30 years or so.

He cites an example of an 1842 O Quarter Eagle, which was catalogued as part of the Eliasberg collection in 1982 as a VF-30. The same coin was slabbed in an NGC holder and sold in 2008 as an AU-55!

I know there was some loosening of standards over time, but had no idea it was so severe.

I'd be interested to hear opinions on the subject from any collectors who've been around the hobby for that period of time.

 

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I for one do not like how laxed the grading scale has become. I do have a local dealer that still uses the older standards, and many of the coins I buy there would easily grade considerably higher if I pawned them off on ebay. First the green stickers, and then the "+" grades are supposed to fixed the errosion of the sheldon grading standards that has taken place over the past couple of decades. I feel it has just needlessly complicated things a little further.
Many people talk of cracking old slabs, and resubmitting them to get a higher grade. I personally feel the older slabs carry a premium themselves because of grade-flation, and therefore advise against it without a true professional's opinion.

 

I've noticed that many of the Old Green Holders from PCGS have coins that are ripe for an upgrade if cracked out.

I also just purchased a bunch of Morgans graded MS63/63 by a back-yard 1980s slabber by the name of WMP grading service. Many of these coins look like 64s or better to me.

 

Doug,

Since you joined this forum in Nov 2002, I will assume that this alleged change in TPG grading standards happened sometime during the last 8 years. Can you tell us exactly when you noticed that the TPG's changed their grading standards?

 

It's all business. I remember reading somewhere that most coins worth grading have already been graded. So, a TPG has to either adjust grading standards to keep business, or fold because the business has ceased to exist. By laxing standards they have ensured a steady flow of coin re-submissions will occur for years to come. Eventually, they change directions again, as now we see + grading. They're always looking for a new niche to entice suckers into giving away their money. Some will disagree, but those are the collectors who weren't collecting before TPC's existed.
Guy

 

He cites an example of an 1842 O Quarter Eagle, which was catalogued as part of the Eliasberg collection in 1982 as a VF-30. The same coin was slabbed in an NGC holder and sold in 2008 as an AU-55!

I know there was some loosening of standards over time, but had no idea it was so severe.

As was stated in another thread, " so loose, it's a joke " .

 

Do any of you old pros remember a book called Guiton's Coin Grading Guide, by Harold H. Guiton? The copy I have was published in 1966. I picked it up when I collected coins as a kid in the 70's. After a long hiatus I began collecting again a few years ago. I bought Making the Grade and couldn't believe how soft its grading standards were compared to Guiton's.

 

I'll say, in fact they typically deny that they have EVER changed their standards. Something which any one who has been collecting for an extended knows is not true because they have seen the changing standards.

 

If I understand your post correctly, you are saying that the changing of standards for key dates and other high value coins started in the 90's but the change in standards for more common material happened in 2007.

If that is the case, then we should be able to see a difference by comparing coins of the same grade in different generation holders. Feel free to post some examples to prove your theory.

Furthermore, how would you say that inception of the CAC has impacted the grading standards of the TPG's? I don't submit coins so I have no direct experience, but I can tell you that across all of the coin forums, the members complained that the TPG's became instantly more strict in their grading standards.

 

I'm an old-school currency collector, used to grading by the non-numerical standards (i. e., ChCu(VF) = an almost flawless uncirculated note with very good centering). I thought the migration of TPGs to currency was a good thing for non-expert collectors, so they could be confident they were purchasing genuine, correctly graded notes. Then I saw a clearly circulated note sold on eBay, and then resold in a TPG holder as uncirculated in a sale by a major auction house (notes have serial numbers, so they're easier to track than coins). That opened my eyes some.

I returned to coin collecting, my first love, a couple years ago. I realized I lacked the expertise to detect recoloring, retooling, etc., so I began buying TPG coins. Then I came here, and was schooled on the degradation of grading standards, to the point that obviously circulated coins routinely get MS-60+ grades. That opened my eyes fully, stopped me cold, and I haven't bought a coin in months.

I'm frankly discouraged and thinking about exiting my hobby life entirely.

 

Coin grading is a very limited market. Pressure is always going to be on a company to generate sales. Since the majority of sales are generated through coin dealers, and dealers need the highest grade possible to maximize profits of their inventory, it becomes a natural progression. You always build a business from satisfied and repeat customers, TPG's are certainly no exception, and I don't think any TPG is going to succeed by advertising themselves as "the most stringent and demanding grading company in the world". lol That might not get you enough business to stay afloat. IMHO

 

Don't let that ruin the hobby for you, John. I'm sure you've heard it a million times, like we all have, but buy the coin, not the plastic. Regard the holder for what it is, a simple opinion, and nothing more. If you let paid for opinions dictate your hobby experience, you'll go crazy.
Guy

 

Good advice. Please John, don't fret too much about the whole issue, buy coins that you enjoy for your pleasure. I do not usually sell, so all of this will be a concern, (probably not, she will just enjoy the money), of my wife when I am gone. In the meantime, I will have enjoyed the full value of my coins as my pleasure.

 

That is a very cowardly way out IMO. If there are examples of gradeflation posted on this forum every day, then link some. If there is a marked difference in the standards prior to 2007 and post 2007 then it should be easy to prove by posting just a few photographs. I have never claimed that gradeflation doesn't exist. However, I have always disputed that it is caused by an intentional change in grading standards by the TPG's. My theory is that gradeflation is a function of the inconsistency inherent in the grading process itself. We have discussed this before and you are well aware of my opinion on the subject. To claim that I will make excuses while blindly defending the TPG's is a low brow tactic.

I have been collecting rare coins for about a decade. What I see is that the grading process has inherent inconsistencies that can't be eliminated. What I don't see are drastic shifts in grading standards by NGC or PCGS. I see coins in old slabs and new slabs all the time on Heritage and very rarely do I see a coin that my immediate reaction is that the coin is improperly graded.

Well you certainly can't prove anything to me if you don't even try. It seems that you would much rather everybody just blindly accept your opinion because you are Doug, because you are old and have been in the coin game longer, because you have 20K posts. And for most of the newbies on this site, that is good enough, but it isn't for me.

If you don't think that both NGC & PCGS wanted to ensure that their coins had a higher percentage of CAC stickers than the other service, then you are the one being naive.

I completely agree that the members of both PCGS and NGC forums complain about the changing standards of the TPG's. And almost always the complaints are born out of frustration that their coins did not grade they way they expected them to grade. However, I have never seen any member of either forum prove that the TPG's intentionally changed their general grading standards. All I have ever seen is the examples of typical gradeflation caused by the resubmission process.

I will admit however that there have been some notable changes to grading standards adopted by the TPG's. I firmly believe that the TPG's instruct their graders to be more lenient with key date coins. I aslo believe that they instruct their graders to make allowances for what they consider roll or cabinet friction. And yes, they have changed how they grade rainbow toned coins, much to my dismay. But if you want me to believe that in 2007, they told their graders to bump every coin up a half grade across the board, NO I AM NOT GOING TO BELIEVE THAT!

 

I will concede that they sold out completely with regards to moderns. But then again, see how easy it is to notice a blantant change in standards, you can see it by looking at the population reports.

 

This is why, when buying coins in encapsulated form, put a pair of blinkers on and just examine the coin. Forget what the labels say, examine the coin . The buyer's grade is the only one that matters even if it happens to coincide with the TPG assigned grade.