All in all a good article on the subject. I don't agree with everything the author has to say but I agree with most of it. Click Here
Doug, what do you mean you agree with most of what he said? He didn't say anything of his own, he just quoted other people and gave their definitions of market grading and technical grading along with a few pictures of coins with very different market and technical grades. I have no idea what the author thinks about market grading in comparison to technical grading! When I got to the end of the article I was pretty interested and was thinking to myself that the author had laid the groundwork to make a good point one way or the other, but when I looked for the link to page two I realized that there was no page 2! I was sadly disappointed. hmmm...oh well, maybe he'll finish the article next week...here's to hoping! I just want him to say SOMETHING! So far I don't think he has.
I should have worded that differently to say that I agree with most of the comments or statements made in the author's article. But he does make a few comments on his own that I don't agree with. For example this one - " On the other hand, ANA and business standards in such a case would dictate split grading, indicated by a slash mark: EF-45/AU-50, for instance. " The ANA standards do not use split grades.
"PCGS today defines "market grade" as: "A numerical grade that matches the grade at which a particular coin generally is traded in the marketplace. The grading standard used by PCGS." " Does that mean that PCGS grading will change as the market does? In other words, if the coin market suffers a slump, PCGS grading will go down on a coin that they had previously graded higher? Seems kind of confusing to me.
That's exactly what it means! You are not alone...I don't find it so much confusing as just plain silly. If the grade is a fixed value, then the market can determine a coin's value, but if the grading companies are always trying to adjust their standards to fit th market that can cause their grades to be less and less useful.
I don't know... I think it's more saying that if the general opinion in trade changes - for example if people up and start to agree that what WAS a MS 65 coin is NOW considered an MS 64 or 66 - then PCGS will reflect its shift. So if by 'slump' you mean a slump in their grading standards, then yes - this seems to indicate that PCGS will reflect that slump. But if coins in MS 66 tend to sell fo $500.00 today, and the market shifts down the road, such that they only sell for $250.00 next year - this does not indicate that that fact will effect their grading standards. At least not as I understood it.
Market grading can be confusing as there are really two criteria that have a bearing on the grade assigned - value and condition. As for condition - what PCGS's statement means is that they will assign the grade that is found acceptable by the market. The market can be defined as dealers and collectors. So - say PCGS assigns a given coin the grade of MS65. At any given point in time a given coin in that grade has a particular value - and if that coin is readily bought & sold at the value given to MS65 - then the grade is accurate. But if it is not accepted, and it is readily bought and sold at the value assigned to MS64 - then PCGS overgraded the coin. So they will then adjust their standards to reflect this and for a period of time all coins of that type and in similar condition will be graded as MS64 - not MS65. It also works the same way in reverse. For if that same MS65 coin is commonly traded at MS66 values - then they undergraded it and they will adjust their standards to meet that acceptability. Now this all works fine - as long as the prices for coins in a given grade remain steady or are moving up. But what happens when the prices go down ? To the best of my knowledge this has only ever happened once - at least since PCGS, NGC and ANACS have been around - since 1986. In 1989 the coin market collapsed - almost overnight. Coins that were being sold for $1500 one day - were being sold for less than $100 less than a month later. And the market stayed down until 1999 with minimal value changes. Then it began slowly moving upwards until we got what we have today. Now the change for the market back in the late '80s, both going up and back down - took place so fast, that I don't think grading standards for any of the companies really had time to change very much. They did a little - but nothing that reflected the magnitude of the market changes. So the system has never really been tested in a gradual down market. Kinda makes it interesting though all the stories and reports we are hearing about how the grading companies are tightening up their standards recently now doesn't it ? Of course it's pure coincidence that the coin market has been slowing down - even dropping these past few months
