It's a rhetorical question, really. Of course market grading is more volatile than technical grading as market grading is susceptible to market fluctuations. It's like asking whether stock prices are volatile. Market grades are really just that, market prices couched in the terminology of grades. OK, so I answered my own question, so now you're all off the hook. Well, not so fast. What does that mean to collectors? That's the question. In other words, just as a hypothetical, let's take that "raw" coin on eBay you think you like, the one the seller is representing as a MS-64. Go with me, here. It's a 1931-S BN Lincoln Cent, gently toned with blues and reds. You've been around the block, you've seen the auctions, you can see it at that grade. Then, again, it could grade AU-58, in-hand, even lower. Are you asking yourself, "Will it grade?" Let me translate that: "Will it get into plastic?" What about that lovely toning it has, what do you make of that? Are you asking yourself whether that will pass the PCGS "coin sniffer?" That would be just terrible if it didn't, wouldn't it? It would come back "QT," without a grade. Uh oh. Then you don't have any permission to like it anymore! Neither, for that matter, does anybody else! I guess I'm just really trying to make a statement, here, folks. Learn how to technical grade. When you get into MS, all that really involves is an assessment of the coin's condition based on contacts and luster. That's the grade that doesn't fluctuate, provided you keep the coin right. Believe me when I tell you, you'll be a happier collector for it. Oh, and one more thing. If I ever hear anybody ask, again, another question of the form, "Hey, gang, I just love the toning on this coin--I hope it's not AT," I think I'm going to choke!
No, they aren't. There is much more to market grading than that. Having the value of a coin affect its grade is only 1 aspect, 1 tiny part, of the market grading used by the TPGs. And those last few words are underlined for a reason, that being that with true market grading value has nothing to do with, and has no impact at all on the grade of a coin.
Its a subject that should be brought up more often. Part of the problem is the US grading system, where an old AU58 was technically a superior coin to a MS60-62 coin in most instances. In my perfect little world, all grades would be technical, giving no thought as to why the detail was missing, just the fact that it is. Slight wear would be treated the same as a soft strike, and the same as bag marks, etc. Technically grade a coin based on degree of detail possible that is still there. This is how ancients are graded, accepting the fact many coins leave the mint as VF or lower sometimes. Market grading is dependent on TODAYS market, something I guarantee will change. Technical grades would be forever, but that particular coin's value could change daily based on the market. I think its just wishful thinking though.
Doug, I'm sorry, but I think I'm going to have to give you an "eddiespin dislikes this" on this one. You're not seeing the forest for the trees. All market grading does is seeks to assign market prices to coins, couched in the terminology of grades, based on market criteria extrinsic to or apart from the actual technical condition of the coins. That's it. That's all there is to it. Whether that market criteria be color (tarnish), detail (strike), status (pedigree), or, what have you, market grading allows those market criteria to actually influence the grade based on how desirable or undesirable the grader may personally happen to feel about those market criteria. Market grading, thus, is a pretentious style of grading, but that was necessary to pave the way for the business of the TPGs (and, for that matter, CAC). Of course, don't expect David Hall or John Albanese to tell you that anytime soon. But, that's the bottom-line. Or, at least, that's how I see it.
eddie all I can tell you is this. The ANA invented the market grading system and no where in the entire book will you find any reference to the value of a coin influencing the grade. You can choose to see it any way you want, but that's the way it is.
But, then, no problem, read between the text. ANA market grading gives permission to raise or lower the grade based on how the market values that extrinsic criteria. All I'm saying, really, is, that's one volatile system of grading. I'm not saying it's bad, necessarily. I have my ideas on that, too.
Sure, market grading is more fluid than technical grading. However, "volatile" suggests it changes from day to day, when in reality the changes take years to occur. That said, the different between the two is subtle yet important. Technical grading attempts to grade a coin on its less subjective and more technical merits. Market grading attempts to assign a relative value to a coin. To me, at least, the relative value (e.g. price) is the much more important characteristic -- as it dictates how much it's going to cost to add a coin to my collection -- and pretension has nothing to do with it. IMO of course.
But with any grading system, even the early ones like Sheldon's, or Brown and Dunn, or the original ANA standards - all of which were 100% technical grading - the grade always equates to a value. It's always been that way. The difference, and the problem as I see it, is that with the grading system that the TPGs use today (and they didn't use to do this) is that as the value of a coin goes up, so does the grade. And THAT should not happen. As I have said many times, the are several differences between market grading and techinical grading. But in the beginning and for many years after the market grading system was adopted, value played no part whatsoever in determining the grade of a coin. It has only been in recent years that the TPGs started playing this game where value affects the grade. And that's the problem, and it's why most people don't understand what market grading really is. All they see is what happens now, and they forget, or never knew, how it used to be. So today they think that market grading is based largely on value alone because they equate "market" with money or value. But even that isn't true. The only reason anyone ever chose the term market grading to begin with was to differentiate it from technical grading. They didn't have any other name to use, so they chose that one.
It isn't that way today. Today, technical grading does a poor job of predicting value on coins that are more (or less) valuable than their technical (i.e. detail) grades. Of course it should happen if your goal is to assign a relative value. I'll take your word for it that value only recently came into the equation. That said, I'm not sure that "they think" any such thing -- I certainly don't. Market grading only comes into play on coins that have attributes that make the value of the coin diverge from its technical grade, and in the grand scheme of things this is a relatively low number of coins (I'd guess 10% or less). How we got to this point is an interesting discussion, but not particularly germane to understanding today's market grading, IMO.
OK, just as an example, let's just take one of those extrinsic criteria I mentioned, tarnish. Are you saying ANA market grading standards don't allow for an increase in the grade based on how much the market values that tarnish? I'll remind you, if a market finds tarnish eye-appealing, it values it. Oh, that's the problem. Well, then, of course there are market values for technical grades, and of course those market values also fluctuate as the market fluctuates. They don't influence the grade, though. That's the difference. In market grading, any extrinsic criteria adjudged to have market value can influence the grade.
No argument, nor do I advocate using technical grading. But that is not the goal, nor should it be. The goal of grading a coin is to establish the condition of the coin, not the price. Of course making such a statement, or believing that that is what the TPGs are doing, does make for a handy cop-out/excuse/assumption (chose your word) to explain the actions of the TPGs. Well Mike, if it was only the coins with exceptional eye appeal, or those with exceptional luster, or those with exceptional strike, that got the higher grades - I might even agree with you. For those are the things that make up the primary differences between technical grading and market grading. And make no mistake, I am and have been an advocate of market grading since its inception. At least if it used the way it was intended to be used. But now tell me Mike, do things like a having a certain pedigree, being particularly rare, or being particularly valuable - are you trying to get me to believe that these attributes make a coin worthy of having a higher grade than a comparable coin that does no thave these attributes ? I certainly don't believe they do. But yet that's how the TPGs grade them. And what about all the coins that were graded by these same TPGs 10, 15, 20 years ago as AU55 or AU58 and are today graded as MS62 or MS63. or the ones that were graded as 63 and are today being graded as 64 or 65. Or the 65's that are today 66's ? The list goes on. It is with these coins where the market grading system is being abused and used as an excuse to get the buying public to buy into the actions of the TPGs. It is with these coins that I have a problem. For with these coins the TPGs are no longer using the market grading system, they are using the value grading system. And that is what the world needs to recognize. They need to recognize that there is a new, a third grading system, not technical grading, and not market grading. But value grading.
Well eddie if you are talking about things like eye appeal, quality of luster, and quality of strike, having an impact on the grade of a coin - yes I do agree that those things should influence the grade. If you believe they should not, OK, that's your right. And it is in that way that we shall have to agree to disagree. edit - But I think if you were forced to actually use technical grading that you would strongly disagree with just about all of the assigned grades. And that's usually a huge surprise for most people who advocate technical grading.
