In another recent thread I made the comment that I didn't think that somebody understood what market grading is, perhaps what it means would be a better way to express it. To start it off I will point out some basic things that a lot of people don't seen to understand. All TPGs use market grading. And - the ANA Grading Standards are based on market grading and have been since 1987. So, let's hear it, let's hear what your definitions of market grading are. Define it, explain all the aspects of it and list what the criteria are for market grading.
I fully understand that all the TPGs use market grading (one can argue to what degree each does, but they all do it to some extent) but disagree with those that don't seem to think there's anything wrong with it. As I understand it the term "market grading" as it's commonly used refers to grading that is done not based on some set of fixed technical standards (or at least not completely on them) but based on how market-acceptable they are; in other words, grading them according to how good the market would value a given coin in its condition. Case in point, read the other thread about how weak strikes on Peace dollars are often forgiven (given a higher grade than such a weak strike would warrant on other coins) because the market doesn't seem to mind that they're not penalized for such. The ANA standards (the rare instance of a set of standards actually publicly published, and since NGC is "the official TPG of the ANA," in theory the standards NGC should be going by) claim to be in essence a set of technical standards, but it's clear NGC uses market grading just like the rest of them. I understand of course that there's a certain amount of subjectivity involved in grading coins, and opinions will differ from TPG to TPG, person to person, and sometimes you can resubmit a coin to exactly the same person and get a different grade. However I think the TPGs do a disservice to their customers, investors, and those in the hobby, by not setting a set of standards for a given coin series and strictly adhering to them to the greatest degree reasonable (in other words, "technical grading."). I don't think it's the TPGs' place to determine what a coin is worth; they purport to be third-party graders after all, and are not supposed to be appraisers. The plural of anecdote is not data of course, but one example comes to mind of blatant market grading, such as an NGC PF-70 given a star (which should be impossible, since 70 is perfect, and by definition nothing can possibly be better than perfect). Determining "eye appeal" or "market acceptability" are things that should be left to the free market (buyers and sellers) to decide, and the TPGs should stick just to grading. It's what they claim they're in business to do after all.
I think it's sad if market grading (if I understand it correctly) is used to justify TPGs giving mass 70 grades to modern issues which are obviously, to the naked eye, far less than perfect. Case in point: 2012 ASE RP with all the speckled frost breaks. All that does is aid investors and harm collectors.
"70" is not perfect. NGC defines a Mint State or Proof 70 coin as having no post-production imperfections at 5x magnification. PCGS defines 70 "As struck, with full strike."
Er, 6 of one, half a dozen of another. Fine, 70 isn't perfect, but it is still the highest possible grade, meaning a 70 should never get an indication that it's better than other 70's. (Because if coin A grades 70, and coin B is also 70, and coin B is better than coin A, logically coin A should have been graded less than 70.) If 70 isn't perfect, at the very least it's as close as a coin can possibly get. Eye appeal is highly subjective anyway and if the TPGs were doing what they claim to do they shouldn't be making any decision as to how much eye appeal has (read my opinion on market grading again for my explanation as to why I think this). That should be for the buyers and sellers to decide. The TPGs should be grading according to a fixed, consistent, and objective as is reasonably possible, set of standards; nothing less, nothing more. The fact that this doesn't always seem to be the case doesn't change my belief that it should be.
I like Troodon's post above and agree. In my opinion, the term "market grading" seems to be a term most commonly used by those trying to defend pieces that are overgraded... and anyone with a contrary view is dismissed as out of touch, old school, etc.
To be fair, some "market graded" coins I've seen have been undergraded too, to create the illusion of supposedly high standards. I just think grading should concentrate purely on the quality and condition of the coin, not how "market acceptable" they think it is, which is why I'm strongly opposed to the concept of market grading. I'm resigned to the reality that it exists and pretty much everyone uses it, but will never accept it as OK.
To be fair, some "market graded" coins I've seen have been undergraded too, to create the illusion of supposedly high standards. I just think grading should concentrate purely on the quality and condition of the coin, not how "market acceptable" they think it is, which is why I'm strongly opposed to the concept of market grading. I'm resigned to the reality that it exists and pretty much everyone uses it, but will never accept it as OK.
Well then you could have a "coin having no post produciton imperfections at 5x" and have superior eye appeal to give it a star. Could you not?
I agree. I thing TPG's should only use the technical standards for grading, even though eye appeal does play some part in the grading standards.
Duke will remember HIPS....Human Impairment Post Strike. Most all coins will have HIPS in some degree or another as described to us by Jerry Bobby at Summer Seminars. Hairlines, rim dings, scratches and putty, etc, whether intentional or not. I've had a gold piece that had a small area of fine hairlines and caried a grade from PCGS MS 62 and if the same coin was slathered in hairlines it would have gone details for sure, so the coin was market acceptable to the degree of 62. Again, as we see in copper, the colors are all over the spectrum and some are acceptable to the market and some are not regardles as to whether the color is unintentional/ natural or dunked in a spicy secret sauce. To me the line of "market grading" begins at the grade/no grade line. I guess its simply put that if you can see work on a coin then it just needs more work, but thats all part of the game right, being able to see the problems and deciding value in spite of them. TPGs have to make the call if the coin in hand is gradeable or far to gone to merit a clean grade. And they have their own skin to consider and nests to feather, so they consider their position first of coarse. Once a coin is deemed gradeable, then EF, AU, MS whatever can be awarded without too much trouble, but thats another game to play...CAC I do believe that the TPGs are totally aware of what a coin would fetch at each grade level and that comes into play when it comes to their buy back guarantees and if its a ton of money they surly want the coin to merit any assigned grade. I'm not to much into conspiracys about who sends in coins making a difference or if favors get made, but then again if they can fix things like Boxing and elections, then the coin market would be easy in comparison. I guess I'm saying that to me market grading and market acceptable are the same thing....they both indicate a level of value. Great question and discussion Doug! Matt
