Market Grading vs. Technical Grading - Round 36!!! Ding!

Oh come on, what's one more round among friends? Hey, I'm buyin...

Anyway, look, I still have one question. The coin is 64, say. No question. Solid. But, nonetheless, it's market-graded/slabbed 65, because it's just that "pretty." Then, people's tastes change, the market goes "south;" now, there are different tastes, and a different market. Do you still have a 65? That's all I want to know.

 

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eddie get banned round 1 ding

 

I beg your pardon?

 

did i make the mistake with the number?

 

Unless the technical standards you use change, the coin will continue to technically grade 64. Some will argue that the market grade will continue to sit 65, because the market "should" affect all uncirculated grades. However, the coin will most definitely go south along with market acceptance and expectations.

As an example, the market generally accepts and even places a premium on toned coins with exceptional eye appeal (whatever that may be). Thus, a technically graded 64 coin may very well slab at 65 because of the exceptional eye appeal for the grade as well as the fact that any detractions may then be harder to first or even second glance, which may be deemed as acceptable to the market.

Now, if the market drastically changes and views toning on silver for what it is - damage - then that exceptional eye appeal (whatever that may be) may no longer have market acceptance, but be viewed in the market as damage, and thus grade to 63 therefore, especially since the coin will sell for much less than market acceptable 64.

Of course, like I said, there will be those who do not agree, but this is one way market acceptance can affect a grade. Remember also, that the so-called "professional" graders are not the only graders out there and they are far from the authority on grading. As I have said before, and will continue to say, you are the only authority on grading when it comes to your purchases.

If the coin does not meet your own personal expectations or biases for the grade, then you change your prospective coin purchase, not your grading habits. When and if it comes time to sell, that is when you may have to compromise on your grading habits. But, until then, this is your hobby for your enjoyment.

 

Is it that the question is too challenging for you? I don't understand.

 

I guess that's as good an answer as any there is, NP. But now I still have this slab that says I have a 65 coin when the new market is market-fixing the same coins at 64 now. It just seems to me our coins should be graded without regard to where the market may be at any particular moment in time. Maybe that's too simplistic, though, when one is grading to sell, as you suggest.

 

This is one reason why I believe that grading should be done on a technical level, with the market aware aspects of grading sub-noted, for instance: MS-70, red, weakly struck with exceptional luster.

Now, that in and of itself is a debate!

But, it proves a point. With a grade like that, you know the actual condition of the coin. It tells you right away that the coin is Uncirculated, the fields are perfectly devoid of detractions, no contact marks, no hairlines or scuff marks. But, the devices are weak, and thus not vividly detailed. That tells me much more than MS-67RD does.

Prices and grades should not be correlated with each other, in my opinion. Not all MS-65s were minted alike! Even if we are talking pure technical grading, not all MS-65s were minted alike! there will be differences, and such differences may hold either positives or negatives with us, depending on our own personal biases.

This is also one of the reasons I do not believe that the sight-unseen market will be the market dominator some believe it will be. In any business transaction, there needs to be a "meeting of the minds". Each party must come to agreement with the other. The only reason the sight-unseen market exists today is because of the TPGs. And this only works if both parties agree that they can trust the determination of the TPG. When that trust fails or is violated, then the minds must look past the plastic and conduct the transaction in the more conventional manner...by coming to agreement.

And this seems to be the predicament that you face right now with grades. MS-64 technically is really MS-65 today, but could be MS-64 tomorrow, and even MS-63 in the far future. If the we are expected to put our trust in the one who graded the coin, then why would this happen? To put it simply, because grading is subjective, and that subjectiveness has its roots in the market, which varies from time to time. Therefore, your grades may vary from time to time dependent on market rejected and accepted practice and expectation.

 

NP, let me just add (as long as I'm the one who re-started this fiasco), I still don't understand why some of us are taking such things as %-age of luster, %-age and location of bag marks, detail, strike, etc., as if that criteria is some new phenomenon called "market grading." Before that term even came into existence, we've been grade-distinguishing uncirculated coins that exact way, according to that exact criteria. What other criteria is there when in mint state? So, quite frankly, I don't care what any books may be calling that. I continue to understand these criteria as "technical grading." They're just the technical criteria one looks at when one is grading mint state as opposed to circulated coins.

Be that as it may, concededly, it's not all that black and white. It's a balancing test. Here, this strike is gem, yet the contact marks hold the coin back at 64. Where is the technical guidance on how we're to weigh those conflicting criteria? It's a (not to use a pun) coin toss. If you're grading the coins to sell them, you put prominence on the strike. That's why I say, we shouldn't grade them with regard to that (selling them).

Personally, I think the strike should have superiority over the marks. Today, and in tomorrow's market, too. But, I don't see any "book" telling me that. I see an ANA, but no book on that. If we do this right, though (IMHO), every coin will be the same grade tomorrow as it is today. The money will just be different, according, understandably, to prevailing consumer preferences (i.e., "market"). Technical grading, the way most of us appear to be construing it, is strictly for circulated coins. You hit mint state, all bets are off, and you're grading for the market. I'm saying, no, that kind of grading is still technical grading. When you're market grading, you're looking at a value and working backwards to a grade. Continue working forward, understand these "market criteria" (%-age of luster, %-age and location of contact marks, detail, strike) as the technical criteria used to distinguish the mint state grades. And, if the "book" says different--well, simple--throw it away.

I look at my 2007 Red Book, and I see the chapter entitled, "Conditions of Coins," subtitled, "Essential Elements of the ANA Grading System." I don't see anything there in reference to any "market." Grading is condition, without regard to market. Period. That's how I continue to have it, anyway...

 

Hmmm. If you read The Official American Numismatic Association Grading Standards for United States Coins (6th Edition) you would find this under 21-ST CENTURY REALITY CHECK (pg. 14):

Sounds like ANA Frading Standards report Market Grading.

 

ok, at risk of sounding like I am jumping to the other side, let me share what I have learned through all of the twists of this last thread, as well as a few things that I already knew.

The technical standards for grading coins aren't really standards that give you MS-64 grades. What you have from a technical grade is either MS-63 (choice uncirculated) or MS-65 (gem uncirculated), there really isn't a grade in between. This is where market grading comes in and gives us MS-64. It's a coin that technically grades MS-63, but has strong eye appeal, thus grading better than 63. Also, you could have a coin that technically grades MS-65 and negative eye appeal brings it down to MS-64. Most people think that there is all of these Mint State grades in technical grading, but there really isn't. When you see a grade on a PCGS slab, that is the market grade, NOT the technical grade.

As far as the future and what the slab says the grade is, what I think many of us have said on ALL sides of this discussion is that the knowledgeable collector grades his own coins and pays attention very little to what slab houses say other than how much money it brings in the market by virtue of the slab, and how easy it makes it to liquidate the coins.

 

So they're already putting the cart before the horse. If that's what it says (and, I'm not doubting you, Hobo), they're standing everything I learned right on its head. And, ironically, I learned it from them...

 

That much, Mike (and, I'm not being facetious), I figured out. Took me long enough, but I did...

 

Eddie,

It seems that you want to change the definition of technical grading because you have been practicing market grading since before the term market grading was created. The simple fact is that what you are calling technical grading is actually market grading. Technical grading assigns a grade based upon the surface preservation, ignoring luster, strike, and eye appeal.

Mike,

I disagree with the fact that technical grading can't include all of the mint state grades. Simply grade the surface preservation of the coin on a scale from 0-10 (worst to best). If you give the coin a 3 it is an MS63.

NPCoin

Although I understand your position, I don't think it is very realistic. What would happen to the coin market if coin prices were not related to the grade of the coin. I see people posting "you overpaid" all the time on coin forums. Collectors seem obsessed with knowing that they either got a good deal or a bad deal and equate getting a good deal with being an astute collector. If the price does not relate to the grade, price guides would either not exist or would be meaningless, and it would kill the hobby in my opinion. Shady dealers would gouge people unmercifully and in the end we would all suffer.

It appears that your problem with market grading is that the assigned grade is cumbersome because you don't know which elements of grading were used to determine the assigned grade. This is a very valid concern that can only be determined by examining and grading the coin for yourself. However, I really don't think that using technical grading with remarks to describe the luster, strike, and eye appeal is the answer. The reason most collectors like market grading is because most collectors are actually interested in luster, strike, and eye appeal when purchasing coins. Additionally, they want to know how much a coin should cost. If we used technical grading, the collector would have no idea how much to pay for a coin that is graded MS65 but would market grade at MS63 or MS67.

It appears to me that most collectors problem with market grading is the inconsistency that accompanies it. I think just assigning an numerical grade to the coin is a bit ambiguous as well and often times would like to know how the TPG arrived at the assigned grade. If the TPG's actually used an actual formula like this one:http://www.coingrading.com/grade1.html

they could post the number on the slab of the coin and you would know both the technical grade and how the TPG arrived at the market grade. Simply post on the slab the P, S, L, & E numbers for both sides on the insert. FWIW, I don't agree with the grading scale proposed in this example, but I do believe that a system similar to this could work to make both the technical graders and market graders happy.

 

this is your scale right? cuz I know that's not how the ANA standards read. There are technical standards for MS-63 and for MS-65 for most coins, not a numerical scale based on some percentage of surface preservation. The depth of strike comes in to play as well as other factors.

now if you're suggesting a new system, I am all for it, but this is the system we have currently.

 

And you thought grading is complicated now. You ain't seen nothin' yet!

What would a grading system like what you propose do to the price guides? I don't want to even try to calculate how many more grades we would have to contend with - for EACH existing grade of today.

Price guides would become a Tower of Babel. There would be so many different grades that the Grey Sheet would be as thick as a phone book.

I can see it now:

1883-CC Morgan Dollar

O - SP= 8
O - S = 5
O - L = 4
O - EA = 4
R - SP = 8
R - S = 4
R - L = 4
R - EA = 4

Bid $200 / Ask $220

 

Hobo,

I meant they would still keep the market grading system as is in place for advertising and sale purposes but would provide the other numbers as backup for how they arrived at the assigned grade. Doesn't seem very complicated at all to me. The insert might not look as pretty but I'm ok with that.

 

We see it every week. Just pick up a CoinWorld and look for the Tiso ads:

W+++L++S+++E++++++++

it's dizzying

 

well, I disagree that value is what created grading, but I certainly think it drives grading, and I don't like it. (<---------- opinion)

I think that where this whole numismatic train started to take the wrong path is where value started driving grading. While I agree that grading will always be a stone on the path to value, I think that they are slowly changing positions.

Where most object in this discussion IMHO has been the fact that pedigrees, true rarity, etc. drives grades up. I believe that those things should be a determinant of value, but that value should remain as far a part from grading as possible. Determine what something is (technical), and then what it is worth (subjective), NOT determine how much something is worth and then what it is. Sounds like semantics, but it's not.

If nothing else, it should prove to you Doug that I have been paying attention to what has been said, and that I have an open mind about the ideas expressed previously. I have learned things in this thread, and I love the banter.