Is there a third party grading company rarity quota?

Discussion in 'US Coins Forum' started by shaney777, Jul 2, 2020.

  1. shaney777

    shaney777 Member

    Is there a third party grading company rarity quota? I read a forum post about one bulk submission - the poster said most of the grades seemed off, and the entire box seem to suspiciously follow a bell curve.

    This leads me to wonder if for every modern coin, there is ALWAYS going to be a very small population of the highest grade. Why can't there be a large population of the highest grade, at least for a few years? Is it realistic that there'd only be a few coins of the highest grade for every single coin year and mintmark known, or could that be from some TPG quota to keep customers interested in gambling with the grading lottery?

    Let's stick to business strike coins that come in Mint sets. How could the Mint naturally create only a select few coins of the utmost quality? Are working dies different enough that for some, every coin created is inferior? Why would packaging and handling be so different for some coins but not the others? I can't imagine a variation in creation at the Mint so large that an extremely tiny amount of coins come out elite.

    We can't forget that graders are likely looking at so many coins per day that they see coins in their dreams. Are they given incentive to avoid assigning upper echelon grades?
    Last edited: Jul 2, 2020
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  3. Pickin and Grinin

    Pickin and Grinin Well-Known Member

    I think that you are missing the fact that dies begin to deteriorate at the first strike, add in striking pressure, mechanical failures, and differences in each planchet and you will find that business strikes were never meant to be fancy/perfect, and without flaws. This is much different than Proof sets which are struck twice from specially prepared dies and handled carefully before being packaged. Mint sets are taken from bulk bags. Every coin that falls into the ballistic bags has the potential to drop the grade of a coin. This is what create conditional rarity's.
    shaney777 and Inspector43 like this.

    GDJMSP Numismatist Moderator

    Not that I ever heard of.

    No, not always. But it is usually the case with business strikes.

    In many cases there is a large population of the highest grades. But it usually only occurs with modern commems and Proofs. And with them, at least in today's world, it's not unusual at all for over 80% of them to be graded as 70s - both MS and PF.

    Yes, for business strikes anyway. Not so much for the ones I mentioned above.

    It's all pretty simple really, to understand it, all you have to do is have a good knowledge of the minting process for all the various coins being produced - business strikes, Proofs, both types of modern commems, and collector only issues.

    Ya see, with business strikes, (coins struck for use in circulation), the mint doesn't even care if the coins are of the highest quality. They have a minimum standard, but only a minimum standard. And they will use the dies for business strikes, pumping them out just as fast as they can until they literally wear out. And they are only struck with pressures just high enough to do the job. And there's more to it than that, the quality of the planchets also make a difference. And planchets also have a minimum quality standard. And when business strikes come off the press they are dropped into a big hopper holding many thousands of coins, with each coin dropping on all the others and them being dropped on itself. And then there's packaging, in today's world business strikes go into giant bags weighing about 1 ton. All of this leads to coins of low grade, and understandably so.

    With Proofs, modern commems, collector only coins - everything is different. The dies are special, made and treated with special care to be of the highest quality. And they are only used for a very short time before being replaced. The planchets too, they are treated special, only the best are selected and then they too are polished so as to remove any blemishes. Then they are struck on special presses, at higher pressures, and running a much slower pace, and the Proofs are all struck more than once. Then is special handling, none of them come off the press and drop into big hoppers, they are all removed with care one at a time. Then they are all individually packaged in protective holders and handled with the utmost care, most of them never being touched by human hands.

    That's about it.
  5. messydesk

    messydesk Well-Known Member

    If you look at high population older coins (Morgan, Peace dollars, classic commems, war date halves, ...) you'll see a similar bell curve. I don't know if the distribution of abuse a coin receives after being struck and before being considered worn is a normal distribution, but wouldn't be surprised if it were.

    If you look at the trend of Proof and bullion ASEs, there is a large population in the highest grade and it is a growing percentage of the total population over the past several years. This is due to additional defect mitigation steps taken by the mint, which is fully aware that customers want perfection.
    The coins are struck on normal presses and not hand fed, so there is plenty of opportunity for contact with other coins after striking. The mint set coins are no longer just scooped out of a regular production line, though. They are handled with some extra care to make sure they're above average.

    As for you question about quotas, you'll never get an official answer to that other than that if the coin fits the grade, it gets the grade. Going back to ASEs, if you look at the pops, the number of 70s is going up. The market needs these to be more special than something, so it's in almost everyone's interest for there to be a significant number of lower grades so that the premium on the 70s more than makes up for the grading cost. One could argue here that this is where quotas come into play at TPGs, and it's reasonable to think that bulk modern graders looking at monster box after monster box of these things are going to become numb to the differences between coins and just start assigning grades arbitrarily to fit a pre-defined ratio. There's no evidence of this other than anecdotal mis-graded coins that are more easily explained by fatigue and human error.
  6. Robert Ransom

    Robert Ransom Well-Known Member

    Plaudits @GDJMSP ! Many books worth of knowledge summed up into a few well written paragraphs.
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  7. baseball21

    baseball21 Well-Known Member

    I wish for things like ASEs (where they are increasingly getting submitted to only holder the 70s) they would add a number submitted to the population so we could see how many didn't make the grade
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  8. messydesk

    messydesk Well-Known Member

    It used to be 70 wasn't allowed as a minimum grade for bulk orders. I don't see that restriction anymore, so I wonder if they allow it now. That might explain part of the 70 population boom, but the TPGs and dealers still need there to be a significant population not graded 70 to make the 70s worth more and therefore worth grading.
  9. johnmilton

    johnmilton Well-Known Member

    I have been out of the bulk grading game as a witness for a long time. But from my experience 20+ years ago, the "bell curve grading policy" applied. A dealer I know had several rolls of Sacajawea Dollars graded when they were first issued. Somehow, he thought that collectors were going to buy them.

    Coins in MS-66 holders were not as nice as coins in MS-64 holders. It was like the grader threw them all down a staircase and the ones that landed on the top steps were graded MS-66 and 67, and the ones on the bottom were 62s and 63s. The main interest seemed to be to get them into slabs and put a random grading number on them.

    Of course, there was a nice mix of grades as one might expect. It’s just the preservation of the coin inside was secondary.
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  10. Robert Ransom

    Robert Ransom Well-Known Member

    The reality is, we will never know unless someone breaks the code of silence.
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  11. baseball21

    baseball21 Well-Known Member

    At least for the big boys they were for a while, not sure if they changed back or not. I don't think we'll see a day where they don't have at least some premium though and it only has to be very minimal for it to be worth it for the big guys financially to submit
  12. TypeCoin971793

    TypeCoin971793 Just a random guy on the internet

    Because, in the business strike world, that’s basically how it is. Proofs and NIFC coins will be highly biased towards 68-70.

    Imagine you have a bag of silver dollars. All of the coins are struck by the same dies, go through the same machinery, get thrown into the same bag, and are all jostled by the movements of the bag.

    Of the jostling of the bag is normal and not excessive in any way, then we can reasonably assume few of the coins would get royally chewed up, so few would grade 60/61. Those at the bottom of the bag which were victim of higher potential-turned-kinetic energy from the chute would see more damage, so your 60-62 coins would be found there. The rest of the bag would be filled with nicer pieces with some receiving the occasional nasty hit. Based on the nature of heavy coins colliding with each other, the majority will be 63-64, with more and more entering this grade level each time the bag is thrown around. A good many would be spared harsh abuse based on how the coins fell in the bag and stacked themselves, and these would be your 65s. Statistically, the chances of having fewer hits decreases staggeringly each grade point higher. The max grade you find might be a 67 or 68, and there will only be a couple in the thousand coins.

    If you plotted the numbers in each grade level, it would be a roughly bell-like distribution, with a leftward bias centering around 63/64. The results you quote do not surprise me in the least.
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  13. Morgandude11

    Morgandude11 As long as it's Silver, I'm listening

    Nope, there isn’t.
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  14. shaney777

    shaney777 Member

    You all are awesome! I love these responses! I am going to study them and internalize it all later when I get more time. I am grateful for the good information!
  15. Cheech9712

    Cheech9712 Every thing is a guess

    Comment to your second paragraph!!! Just thinking of those crappy W minted cents. Those were a bust. Seems like they messed up on a bunch of those. Then sent them out anyways
  16. Cheech9712

    Cheech9712 Every thing is a guess

    I did like the idea of the W minted cents, but a proofs a proof.
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