A risky topic, but I’ll bring it up anyway, market grading.
BillJones
Posts: 34,317 ✭✭✭✭✭
Last week I purchased an 1834 Classic Head $5 gold piece for my own collection. It is in an NGC MS-61. I would grade this coin AU-55. It has virtually full mint sharpness, but the fields have lost about 50% of their mint luster. Having looked a fair number of Mint State graded Classic $5 gold coins, I’ve come to the conclusion that most all of the pieces that are graded MS-60 through MS-63 are really AU coins.
Why is this? I think the short answer is that the grading services seem to feel obligated to get a supply of Mint State graded coins of this type on the market, even though this type coin is very, very scarce in true Mint State. The prices have to come to reflect this loosening of the grading standards. It’s my view that if these coins were grading strictly that the price of most any MS-60 or higher coin would be very high. There would than be quite a gap between AU-50 and MS-60 and grades like AU-53, 55 and 58 would have market prices that would reflect their rarity.
There are other coins that are graded more conservatively where we see this. The one that comes immediately to mind is the 1922 Plain cent with the strong reverse. There is a wide spread in price for that coin which on the Gray Sheet ranges from $2,225 in AU-50 to $3,700 in MS-60. With a spread like this the intermediate AU grades do matter when it comes to pricing. The same is even more true for the 1895-O Morgan Dollar which has an AU – MS-60 gap of $670 to $9,000.
Why has market grading become so obvious for the Classic Head $5 gold? Would anyone like to discuss this?
Here’s a picture of my coin.
Why is this? I think the short answer is that the grading services seem to feel obligated to get a supply of Mint State graded coins of this type on the market, even though this type coin is very, very scarce in true Mint State. The prices have to come to reflect this loosening of the grading standards. It’s my view that if these coins were grading strictly that the price of most any MS-60 or higher coin would be very high. There would than be quite a gap between AU-50 and MS-60 and grades like AU-53, 55 and 58 would have market prices that would reflect their rarity.
There are other coins that are graded more conservatively where we see this. The one that comes immediately to mind is the 1922 Plain cent with the strong reverse. There is a wide spread in price for that coin which on the Gray Sheet ranges from $2,225 in AU-50 to $3,700 in MS-60. With a spread like this the intermediate AU grades do matter when it comes to pricing. The same is even more true for the 1895-O Morgan Dollar which has an AU – MS-60 gap of $670 to $9,000.
Why has market grading become so obvious for the Classic Head $5 gold? Would anyone like to discuss this?
Here’s a picture of my coin.
Retired dealer and avid collector of U.S. type coins, 19th century presidential campaign medalets and selected medals. In recent years I have been working on a set of British coins - at least one coin from each king or queen who issued pieces that are collectible. I am also collecting at least one coin for each Roman emperor from Julius Caesar to ... ?
0
Comments
It looks 50/55 to me.
To me a market graded gold coin is one that looks like a 58 but the discoloration & rub in the high points of the design are really from a weak strike, stacking wear or roll rub rather than circulation.
I don't care much for market grading and you probably remember the post I made on the NGC board with my overgraded NGC holdered Peace Dollar.
Edit: Pics too big in res to show here, sorry.
<< <i>Last week I purchased an 1834 Classic Head $5 gold piece for my own collection. It is in an NGC MS-61. I would grade this coin AU-55. >>
1st of all, i LOVE classic-head gold
you are assigning a technical grade, ngc assigned a market grade. grade follows price, & most all price guides contain, by def'n, "market prices". ie. the redbook, blackbook, trends, etc. therefore it would make no sense for ngc to assign a technical grade since there essentially are not technical pricing guides widely available.
K S
I think the price guides of which you speak are merely reflective of what people are paying for coins of the assigned grade regardless of how the grade is assigned, not vice versa.
I also think it's deplorable that the grading services concern themselves with the value of coins -- does anyone really submit coins to have a value assigned?
Hey Karl, do you assign grades to your raw coins based on what you feel they are worth, or is it a grade commensurate with the details and state of preservation?
Back in 1966 Breen wrote in his “Early United States Half Eagles 1795-1838” die variety guide that, “Strictly Uncirculated half eagles of the 1834-38 period are very seldom encountered.” During my years of collecting and dealing, I have seen no evidence to dispute that statement. Back then five dollars was a lot of money, and there were very few collectors and even a smaller number who could afford to set $5 aside in their coin cabinets.
I think that the grading services concern themselves with the value of coins all the time. Have you ever noticed that in series where the services do grade the coins more accurately that sometimes the grading for a better date is more conservative that it is for a common date? The graders are well aware of the huge increases in value that the assignment of one additional grading can do for some coins. It is for that reason that they can be so tight with them. This also might explain the sudden tight standards that PCGS as seemed to initiate at the Long Beach show. Perhaps they are trying to control the supply of some high grade coins to maintain the market.
<< <i>Hey Karl, do you assign grades to your raw coins based on what you feel they are worth, or is it a grade commensurate with the details and state of preservation? >>
hey gilbert, that is an extraordinarily insightful question, an absolutely tremendous question!!! please read my answer(s) & followup!!!
there are 2 answers, because there are 2 scenarios.
there are 2 reasons i would assign a grade to a coin:
#1: i want to sell it. in that case, i attempt to grade it according to what appears to me to be prevalent at that point in time in the market. take for example bust dollars. a few months ago, they were so absurdly hot that you could add 5 points to what you think it should really be graded - & still get your $ for it. short answer: graded according to what value i think i'll get for it, based on 30 years experience.
but far, far, far more important to me, & what i think your really asking about is:
#2: coins i want to keep in my collection.
such coins for me, the ones i collect & intend to keep, the grade just does not matter, makes no difference at all really, because after all, either i like the coin or i don't, regardless of grade. if i like it, i'm going to keep it.
grade IS NOT inherent to a coin, so it ultimately doesn't matter to whether i'm keeping it or not. what matters is: do i like the coin, do i really, really like it
i don't bother to grade coins destined to be kept except in those circumstances where i've decided i've outgrown the coin, & it's time to move it. then, as a crutch for myself, i add it to my wantlist along w/ grade & comments, so that when i go out on the bourse floor, i can tell whether a potential candidate is an upgrade or not. this is how i think grading is truly meant to be used - as a crutch, because otherwise, i would have to carry my upgrade candidates around w/ me for head-to-head comparison.
the truth is, going right along w/ what i've always said: do not buy coins sight-unseen. what follows is that, if you truly are a collector, you will want to compare your coins to upgrade candidates, then decide on a sight-seen basis whether you want to pull the trigger. i just honestly feel that THAT'S how a true collector/coin lover works.
as a matter of fact, i do often carry around the coins i'm most anxious to upgrade. you will see me in those cases, i'm the guy w/ the little black coin-wallet & the detail scribbled notes as to what i'm looking to replace that coin with. no need for nametags - just look for the guy i've just described, & that's probably me.
gilbert, i think your question is so tremendous because it shoots right at the heart of what makes someone a true coin-collector. collecting by the numbers, whether slabed or raw, just doesn't do it for me. but collecting coins that you truly fall in love with, regardlesss of what some "3d party" might say about them, THAT is a true coin-collector. & i believe it is how eliasberg, norweb, garrett, beistle, overton, logan, all the great collectors, really felt as well. somehow, those guys managed to assemble collections that are the envy of all, yet the pulled it off w/out the blessing of 3d party grading.
think of it this way: mrs. norweb had 2 grades for all her coins: circulated, or uncirculated. yet how many folks who "collect by the numbers" have even come close to her accomplishments?
K S
Now with gold. The way I see it, gold is VERY soft. Any metal alloyed with another metal with make it stronger. Gold is so soft that is is the most malleable material on earth. Alloying it with copper makes it much stronger and harder. As I understand it, folks used to put lots of gold coins in a bag and shake it violently to get a little gold off to make a "profit". I think Dog97 is correct in that the wear did not come from being circulated, but handle roughly from the time it was minted. When NGC/PCGS assigns a grade to a coin, they look for tell-tale signs of circulation and not just cabinet friction. True, the coin has some wear on its high points and the luster is subdued and if you call uncirculated "without wear", then yes, is is an AU coin. If you call uncirculated "not having been in circulation", then the coin is uncirculated.
Tom
K S