Define Market Grading

Now that we seem to have it defined pretty well.

What is everyone's opinion about it? Should your rare date coin be graded differently them my common date coin?

I'd love to hear everyone's thoughts!

 

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At a show once I looked at a coin (and a dealer) who were the victim of market grading. I got to examine an 1893 S Morgan Dollar in a NGC MS66 Holder that was pedigreed to Eliasberg. If this was any other coin I would have been surprised to see it in an MS64 holder. The toning was spotty and unattractive and it almost reminded me of a dalmatian.

Market grading at it's finest.

 

I couldn't disagree more. Market grading is NOT a good thing and here's exactly why.

Things that are subjective: eye appeal, luster, and market acceptability have no place in judging the state of preservation of an object.

What the major TPGs have done (and the public has applauded) is to place a grade on the slab that is reflective of the value that a coin has in the marketplace. This is not, never has been, nor will it ever be grading. That is appraising, valuing, or judging a market for a particular coin.

The problem is exactly as you mention, Doug. Over time, value changes, markets change and so as you have rightly noticed, the market grades change.

I have said it so many times now that my fingers hurt from typing this same thing, but the process of valuing coins is not grading!!!! It is appraisal.

This is exactly what many want from a TPG. They don't want a grade, they want an approximate market value, which is reflective of the grade the TPG gives it, but only temporarily!

I have seen others call it gradeflation. I have noticed grades that have indeed slid upward over time, but the coin doesn't change!!!

Many collectors of items use experts in the field to appraise their items and place a "market value" on their item. The Antiques Road Show is an excellent example of this, but once and for all, I implore you to stop expecting market grading to be accurate as far as condition of a coin. Use it for what it is, an appraisal that is reflective of the fair market for the coin at the time it was submitted.

Let's call a spade a spade, call a grade a grade, and let's call a market grade what it truly is, an appraisal. Then we won't expect it to hold over time, or even be consistent from one coin to the next.

When people understand what something actually is, then they can understand how it works.

 

You mean Governor Moonbeam?

 

Put into an analogy:

You can't make a cat bark whether or not you call it a dog, and even if everyone agrees to call your cat a dog, at the end of the day, it's still not a dog. Everyone refers to it as a dog, everyone thinks it's a dog, but it's not. It's a cat and anyone who can tell the difference is smarter than the "expert" who told you that you have a very nice dog.

 

I agree Mike, and am reminded of this.....

"How many legs does a dog have if you call the tail a leg? Four; calling a tail a leg doesn't make it a leg." - Abraham Lincon

 

Well for me I like every aspect of market grading except for the value/rarity aspect. I don't believe standards should be weakened because the coin is more valuable, or rarer than some of the other coins. To me that just doesn't make any sense.

The funny thing is it would probably bring a premium at auction because it has the Eliasberg pedigree.

 

even tho there is quite more posted then what im quoting i most believe in the 1st part.

on the other hand i completely disagree with the 2nd part. that is all subject to opinion. im having a hard time putting what i think into words. when people look at lincolns and mercury dimes ECT. we know what the "key dates" are. now compare these key dates to the mintages of coins from 1794. almost everything in 1794 would be a key date. on top of that with all the different types you have in 1794 is a S-65 going to be graded differently from an S-66 because ones a R1 and ones R5? i wouldnt know anything about how well they were struck to tell the difference in grade but i would expect a better explanation then "its a tough sheldon in that date". its just that what is usually called key date doesnt seem key at all to me if i could goto ebay right now and pick one up like a 1877 IHC. if i wanted that i already know its going to be the most expensive piece in a IHC set so the last thing i want is it being overgraded because its "key date". i know this isnt how the system works but this is the opinion ive formed based on what i collect. i hope some of this made sense to anyone.

 

Not much to add, except WOW, still an emotional topic! Nostalgia, wish I could remember who said "the good old days weren't!" IMHO third party grading, and the adoption of the, love it or hate it, 70 point system has prevented more rip offs, than it has caused.

I really though that ANA had defined market grading, at least they included in the end of course exam on grading....maybe just there definition ;-)

 

I agree completely. We certainly don't want to retreat to the use of technical grading. The fundamentals of market grading work very well. Sometimes you have to take the good with the bad. Gradeflation is a problem, but one that I am willing to live with.

In the end, each of us bears the responsibility to evaluate the grade of each coin we buy. If we disagree with the grade of a coin because it is a victim of gradeflation, our offer/bid to buy that coin must be adjusted accordingly. If a collector really knows how to grade coins, it will much more difficult for that collector to become a victim of gradeflation than a less proficient collector.

 

I couldn't agree more about who bears the responsibility, but doesn't this just mean that it behooves us to learn to grade so that we don't have to rely on TPGs to tell us what to value a coin at? That we are best served when we are able to evaluate and value based on our own knowledge?

Is the "proficient collector" one that is able to grade on his/her own and therefore make determinations of value independent of TPG grades?

Leave the TPG grades for the neophytes and people who would rather not learn to grade. They need the help. I don't think that the knowledgeable collector has as much need for them as the TPGs would lead you to believe.

 

The TPG grade is still important and useful even to dealers and the most advanced collector. Your other points are well taken and 100% true. Knowledge of how to grade coins will allow you do avoid the dreck and build a collection of quality coins for the assigned grade. Without the TPG's assigning a grade, you would inevitably return to the days when the seller always thought the coin was undergraded and the buyer always thought the coin was overgraded.

I like that idea very much Doug. Can I nominate your post for the clinker award. That is a good name for what they do (value grading) and I think it is very bad for the hobby.

 

hmmm... where have I heard that idea before... hmmm?

I guess that means that I agree with the term value grading, but I prefer one that already exists; Appraisal.

 

I never said that they were unimportant, I said that they aren't as useful (to the knowledgeable collector) as the TPGs want us to believe.

 

IMO, you are confusing/combining market grading and gradeflation -- two quite different concepts.

 

Market grading

On this topic, the idea that occurs to me is how have the grading standards changed over the last 25 years and why, in coin category to coin category? I have only been collecting since '97, those who have been at this for 50 years have a different set of standards and have seen a change in standards during those years. Back in 1987, 1993, and 1999 there were changing standards for each of the third party graders.

One category I know fairly well--$20 liberties. In 1987, the prices for better dates and significantly rare coins were not as pronounced as they are in 2010. The "O" mint $20s, the key dates, the CCs, and so forth. Prices in the 1980's were cheap with comparison to today. So graders were more conservative--it had to be a really nice, collectable coin to fetch the good grade and the high price. Defects, hairlines, and so forth kept the grades down--for the reason that a lot less people were making a living off of the coins as possible investments or for being six figures in the highest graded coin, an 1870CC, for example. I doubt the resubmissions were that significant back then. Experts whose memory goes back that far could speak to changing standards, and the reasons for the changing standards.