The Official Grading Standards

(I’m asking a lot of questions today, I know, but) I consider the Official ANA Grading Standards for US Coins to be the authority on grading coins. It seems to me, however, coin dealers I deal with sometime aren’t even close to abiding by these standards. Is there another set of official grading standards?

 

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I know this sounds simplistic, but here is my view. Dealers don't grade, graders grade. Dealers buy and sell. I'm not inferring dishonesty, but all a dealer-assigned grade does is facilitate his buying or selling of a coin. I believe as collectors we should do our best to grade any raw coin for ourselves before buying, and then don't overpay.

 

That makes all the sense in the world. More often than not, the coins I buy, using Red Book prices, are worth less than I pay for them, it seems to me.

 

There is no real accepted grading guide today. The ANA book tends to give a technical method of grading. But with the number of examples, it often just gives a new reader the idea that grading is fairly easy. PCGS has a grading book also, and it tends to be a little more rewarding since it does consider "market standards" which most are buying and selling at, but the advantage with PCGS and NGC is that there are tremendous number of examples at shows or club meetings, or even in giant high resolution photos on Heritage auction's archive ( free to sign up). I have other grading books, and most seem close in theory, but once past MS-60, it becomes very difficult. That is why PCGS, NGC, and other grading services have a comparison set of coins they can use to grade the questionable grade. Learning to grade will continue the whole life of the collector, as it will vary along the way.

Many collectors have made comparison sets with certain series such as Lincoln's or Jeffersons to have for reference. If you learn the basics, then start observing, and with each coin ask yourself "why does this coin have this grade"

The Redbook is published way before the year on the front, and is known for being high for most values and also tending to reflect a buyer's price. Ignore for for the present for prices. There are several free online pricing guides that are more accurate, but each coin is an individual, and price may vary significantly on 2 coins graded similarly. Happy Holidays,

Jim

 

Thanks.

 

In general, if you are paying Red Book prices you are overpaying. (Noteable exceptions are gold and silver coins where the current spot price of gold or silver is significantly higher than the spot price on which the coin values in the Red Book were based.)

 

There are a number of numismatists that utilize the ANA Standards as "the" standard. However, as a numismatist learns more and more about the coin market, and grading in general, I believe that a number of different standards become incorporated into the individual's own "standard" for grading.

There are a number of different predominant standards in the market. Some are published, and some are not. Some standards, including those that are used by some of the TPGs, are only learned by actually scrutinizing their products and insider information regarding their procedures and policies.

Do not be mistaken, the TPGs, including PCGS and NGC, do not strictly adhere to "the" ANA Standards.

I personally incorporate standards published by the ANA as well as Ruddy's Photograde and the published Brown & Dunn standards into my own grading standards. The AccuGrade published standards for each series is also a good source I utilize, as well as the N.C.I. Grading Guidelines for uncirculated coins.

Grading is subjective, regardless of any group of organizations that may try to espouse differently. The very notion of grading commands subjectivity. At any point where a bias is involved in the decision, this is subjectivity. And because everybody has a different bias, everybody has a different opinion. There is no right or wrong, or "fact", involved with opinion, only gross negligence and disregard for objective "technical" issues.

ANA, AccuGrade, Ruddy's Photograde, Brown & Dunn, the N.C.I. Grading Guidelines, and, although by far not a complete publication of their standard, the PCGS Guide to Coin Grading and Counterfeit Detection.

Of course, when buying and selling, no grading is "complete" without an analysis of the current market and its rejection or acceptability of the particular coin in question to withstand a certain range of grades (for you market graders out there). Not all MS-65s are graded equal.

 

Agree to disagree?

I personally see designating a circulated coin as uncirculated (even if it is an AU-58 "becoming" an MS-60) to be just as much gross negligence as SGS grading a seemingly MS-63 coin as MS-70. But, that is only personal opinion. And being a subjective matter, there are questionable times as to the difference of even an AU-58 and MS-60.

However, that is just a nitpick. The real issue is when the market changes. Even if the standard utilized by the TPG does not itself change, by relying heavily on market grading, a coin that five years ago graded MS-65 because the market accepted the coin on subjective matters to obtain the same value as other coins graded MS-65, today may well fall to an MS-63 grade because the market itself has changed.

In no way do I find this form of grading to be "rewarding". In order to "properly" ascertain a coin's grade based on this from of grading, an individual must understand the particular market for the coin in question. The TPGs are supposed to be there to make things "easier" for the novice collector and investor. A market adviser of sorts. However, it is the novice who is not going to quite understand the market at this point in their learning, and may thus become discouraged or disgruntled when the market does change and what they thought they had is no longer what they have.

After years of studying the TPG slabbed coins and their grades, once the market shifts its bias in a different direction, that knowledge really comes to nothing unless one is also on top of the particular market to keep up with market acceptability.

I personally believe in a more technical grade with the subjective aspects being detailed in the grade. The price one pays for any coin should never be any more than they are willing to pay for the specific coin. Using a "grade" to determine how much one is willing to pay is simply being market manipulated. When a person becomes market manipulated, they tend to pay for their coins like one pays for retail goods...based on some imaginary "Manufacturer's Suggested Retail Price".

Learning to grade is a very important aspect of buying (and selling) coins. Second in importance is knowing the market. Relying on a third party to make the first determination leaves you vulnerable to being manipulated by the market itself (including those same third parties). Grading is a subjective opinion...nothing more. Not all MS-65s are graded equal.

 

Dealers grade because they buy and sell. The problem is that grading is subjective. I would personally term many dealers' grading practices as "anti-market grading", with a propensity to consider their coins at "market grade".

In some cases, however, I would. Thus, caveat emptor.

Extremely sound advice! A "market grade" is a grade assignment that demonstrates the value the market may be willing to accept for a particular coin. I term an "anti-market grade" as the grade assigned by either a buyer or seller of a coin to facilitate the most advantageous gain knowing, yet disregarding, the value the market is actually willing to accept for the coin. It is what many may term as "gradeflation".

Knowing that the item is only valued at the money a typical MS-64 would bring, they "grade" the coin as MS-65 (or even MS-66). An uneducated buyer may come in, talk with the dealer, and be convinced that the coin grades as an MS-65 and pay accordingly. However, a more knowledgeable buyer may come in and notice that the coin would only bring MS-64 money and make verbal note of detractions and other technical items that would make the coin MS-64 (or even MS-63).

This is part of the haggling process. Some sellers do this, and are prone to accept the proper grade for the coin. This in no means shows that a dealer or seller is not a grader. In fact, I would pose that a dealer would necessarily have to be able to grade in order to stay in business for long.

Imagine if the dealer is on the other side of the table as a buyer. A raw coin is brought in and the seller states his belief that the coin is MS-66. What is a dealer to do if they are not able to grade?? Simply accept the coin as an MS-66 based on the seller's own statement of his opinion? No, the dealer would have to have at least some knowledge of grading and the particular coin in question in order to make a proper purchase and possibly profit from it.

I would say that dealers in fact are graders, but are prone to grade manipulation ("anti-market grading", "gradeflation" or whatever other term) in order to profit from their sales. Not all MS-65s are graded equal.

 

I have collected coins only sporadically through the years, since it is an expensive hobby, but I inherited a collection this year, which has set me on a coin-buying spree. It is somewhat appalling, I think, what passes as a good, very good, and fine coin.

When I was young I discovered the ANA grading standards and can see no reason to part from them. The only problem with them is they assume you know what an uncirculated coin looks like, and they will say such things as “if half the details in the hair are worn away,” or “if half the details in the wings remain,” which are impossible to understand if you’ve never seen an uncirculated coin of that design.

However, with the PCGS website you can see the uncirculated version of the coin.

And I would conclude that the ANA standards, coupled with pictures of uncirculated coins on the PCGS website, give us standards that allow some consistency in grading coins. (Would you agree?)

I appreciate all these comments—it’s very helpful in my understanding what goes on in the coin world.

 

My copy of the ANA Grading Standards (6th Edition) has photos of uncirculated coins as well as circulated coins in each grade.

 

I have 57 year-old eyes and have just learned I have cataracts that probably need to be removed. The PCGS photos are awfully good.