Market grading: the true story...

I'm just curious who came up with this. The way most of us have it, I suppose, that was the ANA, then, the market graders came along, and, now there's a coincidence! Or, is it? Is the ANA just plausible deniability, in other words? In other words, let's name names, if you know anything. What individuals, specifically, dreamed up these market grading standards? Then, you may go home.

 

Log in or Sign up to hide this ad.

I think it was started by Mr. Alan Hager., slabbing coin start on 1984 by ACCUGRADE. follow by PCGS 1986 then NGC 1987.
Hope this one help.

 

Well for my part I a torn on "market grading". On one hand I believe its a travesty to change grades for any reason, there should be some absolutes. On the other hand, I strongly disagree with US grading methodology like weak mushy strike being called BU, and "higher" quality than a nice sharp old fashioned AU. "Cabinet friction" is another heartache. "Market grading" does help some of these problems I guess.

Overall, to me a grade is a grade, market price be damned. That is not reality, though, which is a good reason if I buy a US coin at all I buy nice AU's. US grading in the BU section is completely dysfunctional to me, being not a grade but influenced by age, desirability, strike, planchet, etc.

Chris

 

ANACS was the first third party to grade coins starting in 1972 out of concern for the amount of counterfeit coins that were being sold. Go to the ANACS web page and click on the about us section and it will tell you the story.

 

NO COMMENTS..ALL I Know Slabbing coins with a grade start on year 1984 by ACCUGRADE follow by PCGS 1986 & 1987 NGC..

 

Back in the '70s, you didn't get a slab with ANACS (which was ANA Certification Service back then)-- you got a picture of the coin on a certificate of authenticity. I don't think they even assigned a grade in those days.

 

Market grading is as old as the lay numismatic hobbyist. James Halprin (in his N.C.I. Grading Guide) defines market grading as "the grade at which most reputable dealers would retail a coin. Often the retail market grade is less conservative than the technical grade. Factors other than the state of preservation are taken into account..." What I find interesting is the allusion that the practice of market grading originates with those selling the coins...the dealers. That would mean that "market grading" is as old as the practice of coin dealing itself.

To very partially answer your question as to who is involved in this market grading push, here are some of the people from some of the most prominent entities involved:

If we go as far back as the late 1940s, we come across Dr. Sheldon form whom the current 70-point system of grading used in the ANA standards was derived. Although Sheldon's scale varies from the form of "market grading" we have today, it is still similar in that there is a direct grade-price correlation. It is said that the ANA, as early as 1908, had a grading committee with attempts to set standards for particular series. Whether these attempts were attempts to indoctrinate a form of "market grading" on the numismatic community would only be revealed by the copies of "The Numismatist" from 1908-1911 (which I do not have in my library) with the Gettys-Catich articles referred to in Halprin's N.C.I. Grading Guide.

Even if these earlier attempts at standardization do not meet up with the definition of the term "market grade", the attempts were most certainly accelerated in the early 1970s when the "invasion of the investors" was foreseen by many in the numismatic industry. The modern practice of "market grading" could well be attributed to this "invasion" as dollar signs danced in the heads of those with inventory. Just something to really think about.

Regardless, I would contend that "market grading" has existed since the beginnings of numismatic transactions. When applied to formal standards, we call it "market grading". When applied to informal dealings, we have historically called it "over-grading" or "trying to rip-off the unlearned".

 

I think NPCoins perspective is a good one. For instance, the EAC has been market grading coins for longer than the ANA, IMO. They didn't call it market grading, but they are essentially the same thing.

 

Wow, did I get more than I bargained for, here! I suppose my question was a little on the narrow side, NP. Thanks so much for taking the bother to open up my eyes to the broader picture. I have a much better understanding, now.

Thanks, everybody, too!

 

Dr Sheldon in 1949 He would take a technical grade and then make reductions in the grade for problems to arrive at a net or market grade. EAC followed that lead as did ANACS when they began grading in 1979. In the late 80's things began to change as the market got hot. Now market grading became start with a technical grade and then RAISE the grade because in a hot market you can get away with it or because the coin has exceptional eye appeal. The market is demanding more MS-65's so the coins that would formerly 64's get the "boost" and become 65's etc.

 

I think that's a bit of gradeflation added to market grading, Conder.

 

....or how a TPG comes up with a grade, or why it is graded a certain grade, or who is asking certain types of coins get certain grades. Grading is a cool business when you set your own standards, huh?

Dang, I wish I could get a job where I was responsible for my own performance criteria.

 

I refer to what one of those TPG's does as, "marketing grading." Maybe you can guess which one. At any rate, it works like this. First comes the marketing, then comes the grading.

 

That MS65 or what used to be called Gem BU was the downfall of the whole grading system as it was thought to be the perfect investor coin back then.
Paying dollars for cents is still the main stay of the hobby.

 

True, back in the late 80's MS-65 WAS the investor coin. Why? Because there were no coins, or almost no coins, graded higher than 65. For quite some time when PCGS or NGC graded a coin higher than MS-65 it was considered a news story suitable for Coin World. Today a 65 rates as "oh yes another one" while the pops are full of 67's, 68's and every now and then something higher. Now where did all of these 67's and 68's come from? They weren't around in the 80's. Are we to believe that everyone held onto their best coins and only sent the lower grade pieces in for grading? I don't think so. Todays 67's and 68's are the 65's from back then. Of course that is gradeflation, but it is also market grading. "We can take this MS-65 and get MS-67 money for it, so we will grade it MS-67."

 

I fully agree, I remember quite a few Coin World articles on the rarity of a 65, and how anything higher than 65 was an astronomical rarity just like Conder says. I even remember really big deals about a 67 mercury dime of a common date and how utterly rare it was, being the only one graded that high out of tens of thousands of submissions.

Slabbing has always been more for higher end coins, so as Conder says, why would it have taken 20 years for the better coins to get slabbed? Answer is that it didn't, they have been slabbed many times, each time at higher grades.

 

Why does everyone seem to assume that all higher end coins have already been slabbed? I can imagine several scenarios in which higher-end coins would not have been graded up to now. For example:

1) Long-time collector prefers to have his coins in albums, rather than slabs.
2) Long-time collector had original rolls of uncirculated coins saved from the '50s and '60s (when uncirculated rolls were all the rage), then he died recently and his estate just sold the rolls to a dealer, who cherrypicked the best coins and sent them off for grading.
3) Long-time collector thinks "Why should I pay $35-40 to have someone grade my coins when I can do it myself?
4) Long-time collector thinks "Why should I pay $35-40 to have someone grade a coin that probably isn't worth that much?
5) Collector finds high-end US coin in the stock of a foreign coin dealer who isn't concerned with fine differences in uncirculated grades.

 

Well, but therein lies the rub. We can’t do it ourselves. Not when it comes to this market grading business.