Market Grading/Technical Grading
coinkat
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Perhaps this question has been addressed before but lets give it some additional consideration:
Is market grading the dominant and most accepted grading standard used today?
Has technical grading lost its appeal due to the rise and acceptance of Third Part Grading?
Is market grading the dominant and most accepted grading standard used today?
Has technical grading lost its appeal due to the rise and acceptance of Third Part Grading?
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Despite several board members attempt to explain "market grading", I still don't understand what it is, much less if it's a "grading standard".
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There really is a market grading standard, that was a poor choice of words on my part.
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I guess that means if people buy and sell coins that look like this as MS65, then it must be MS65
In their Coin Grading book (2nd edt)..
As the name suggests, "technical" grading is a process of evaluation that considers only the degree to which a coin does or does not meet objective, hard-and-fast guidelines for a given grading.
"Market" grading, by contrast, broadens the equation to include commercial factors, as well, giving important weight to the way in which a coin is viewed by buyers and sellers in the marketplace.
I guess this means Market Grading will bump it up a point if it's pretty.
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"Market" grading, by contrast, broadens the equation to include commercial factors, as well, giving important weight to the way in which a coin is viewed by buyers and sellers in the marketplace.
Some of you must think I'm "playing dumb". Believe me, that's not the case. That said, can anybody tell me what are the "commercial factors" that might influence a grade?
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I think "eye apeal" is a commercial factor.
<< <i>what are the "commercial factors" that might influence a grade? >>
To quote the Mad Hatter, "What I say means what I want it to mean. Nothing more and nothing less."
I think, for example, some possibilites are
a) positive/negative eye appeal
b) forgiving cleaning on some series
c) attractive toning
d) extreme luster
If coins are trading in the marketplace as MS65 that has one of those positives but is a technical MS64, PCGS can grade it as a MS65
- or body bag it if they want.
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Technical grading is really no better than market grading because factors such as eye-appeal, strike, etc. tend to be ignored.
The real grading standard in use has no name but it is more conservative than market grading or technical grading. Take some of your major brand slabs to a major show and attempt to sell them. You will quickly find that only the top end of grade coins sell easily for anything that could be described as decent money. The middle-of-grade coins will sell, but only if discounted. The low-end-of-grade coins may not sell at all unless heavily discounted. What you are seeing is the real, nameless grading standard in action.
Let's address those four things one at a time:
a) positive/negative eye appeal - Before the services started designation DCAM, your version of "market grading" might have allowed extra points to DCAM coins. Do you think that the same number of extra points are being allowed now that the DCAM designation is provided? After all, the market assigns a value to the designation, so why give any extra points for that aspect of eye appeal? Do you see a lot of old 66 and 67 no-CAM coins getting cracked and turning into 65DCAM's?
b) forgiving cleaning on some series - That would make sense. For example, more cleaning should be allowed on a Slug than on a Washington quarter.
c) attractive toning - How many points could you add for toning? Should wild rainbow Morgans get multiple points because the market values the color so highly? Would the same colors on another coin get fewer extra points because the market for those coins isn't quite as wacky?
d) extreme luster - Wouldn't that be part of the technical grade? If not, then we should add strike to this list.
291fifth - You said: Market grading essentially is a floating grading standard. If the market is soft then what is market acceptable tends to narrow. If the market is strong then what is acceptable tends to expand. It is actually a terrible grading standard because it is really no standard at all.
It sounds like you're saying that grading tightens when the market is soft and loosens when the market is strong. It I got that right, I have to think that it would make no sense for grading services. After all, the market constantly changes. What would happen to the loosely graded coins when the market gets weaker?
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
<< <i>Relayer -
Let's address those four things one at a time:
a) positive/negative eye appeal - Before the services started designation DCAM, your version of "market grading" might have allowed extra points to DCAM coins. Do you think that the same number of extra points are being allowed now that the DCAM designation is provided? After all, the market assigns a value to the designation, so why give any extra points for that aspect of eye appeal? Do you see a lot of old 66 and 67 no-CAM coins getting cracked and turning into 65DCAM's?
b) forgiving cleaning on some series - That would make sense. For example, more cleaning should be allowed on a Slug than on a Washington quarter.
c) attractive toning - How many points could you add for toning? Should wild rainbow Morgans get multiple points because the market values the color so highly? Would the same colors on another coin get fewer extra points because the market for those coins isn't quite as wacky?
d) extreme luster - Wouldn't that be part of the technical grade? If not, then we should add strike to this list.
291fifth - You said: Market grading essentially is a floating grading standard. If the market is soft then what is market acceptable tends to narrow. If the market is strong then what is acceptable tends to expand. It is actually a terrible grading standard because it is really no standard at all.
It sounds like you're saying that grading tightens when the market is soft and loosens when the market is strong. It I got that right, I have to think that it would make no sense for grading services. After all, the market constantly changes. What would happen to the loosely graded coins when the market gets weaker? >>
Actually, all you have to do to see what happens when the market gets weaker is to look at on-line auctions and dealer store and bourse offerings. They are filled with this type of second rate material. Eventually, this type of "stuff" gravitates to Sunday bourse dealer types where it remains for years and years. This is why the typical Sunday bourse dealer has such stale stock. These guys don't buy unless they can steal so all they end up buying are the dregs that no one else wants.
Technical grading is grading the coin for its physical condition.ie; strike, luster, surface condition et al.
Market grading is to add points to a coin for its unseen attributes such as rariety of the coin
or it survivorship in comparison to others of its kind. Key date coins are the prime example
of why a coin would get a higher than normal grade.
`16 D dimes.......how often do you really agree with what a slabbed one is graded at.
They always get `extra` points for it being so sought-after by collectors.
Toning also plays a big part in market grading when the coin has universal eye-appeal.
Thats what it all means to me.
What do yall think.
Did I say anything that wasnt already known?
Simple answer to a simple question.
Market grading is the coin salesmans best friend.
Sometimes I think market grading can be justified but
only if its not taken to extremes....like more than 5 points over technical grade.
JM2c
Solution: everyone must adhere to one standard that is clearly defined. That standard should be the ANA grading standard. Problem solved.
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Lets say a Morgan dollar is a 64.5 so IMO NGC would ordinarily round it up to a 65 whereas PCGS might round it down to a 64. When the market is bullish or "hotter than a snake's a$$ in a wagon rut hot; no offense Adrian "
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"That said, we believe an "ugly" but otherwise problem free coin should get what it deserves in the form of a lower grade. Coins with spectacular original toning are highly preserved, miniature works of art that in some cases should be rewarded with a higher grade. Likewise, a blazing white gem with "pop" could be rewarded. "
and
"Next, and equally important, remember to always ask yourself the question: "How is it made?" (Or, "How do they come?"). I think most professionals would agree that one of the things to come out of the evolution of grading is acceptance that you simply cannot grade coins from different time periods and of different mints the same way, even though they may be the same coin type. If you submitted an 1896 "O" Morgan dollar that looked like an MS65 1903 "O", I'll bet you would be very disappointed if it came back in an MS65 holder! You would probably also expect an "O" mint $2.50 Liberty to be graded taking the typical weak striking into consideration. Most choice AU Charlotte and Dahlonega gold might only be XF40 if compared to most choice AU "P" or "S" mint gold. So you can see that one simply cannot apply the same grading standard uniformly to all coins without taking these and other factors into consideration. "
I guess that's how I understand market grading.
and it sets us apart from practitioners and consultants. Gregor
CAM also mentioned the 16-d dime, It is a prime example. Many 16-d dimes are graded an increment or two higher than what they should be IMO. If you look at a typical graded PCGS 16-d dime and compared it two a regular date from the same time frame, many times you can see a difference in the techinical merits as well as the overall eye-appeal/quality for the grade. In some cases, had the coin been a different date, then it may have not even been holdered or if so a few grade points lower.
Another coin that comes to mind lately is the 1877 Indian head cent especially in grades of Vf thru Au. Compare the quality and merits of a typical 1877 graded PCGS-40 to a another date in the 70's and tell me if you can see the difference in what you get for the grade.
I have sold three coins out of my collection in the past year that have all been "market graded" or pushed a little higher than the techinical grade due to some factor or another.(IMO) And all for different reasons:
1) 1932-d washington quarter PCGS-63. Coin was nice with lots of luster and white, but should have only been in a 62 holder. Just too many contact marks in prime areas on the obverse. Had it been any other date, would have been holdered as a 62. I beleive that PCGS gave it a 63, becuase it had nice eye-appeal, was white and market acceptable to many folks as a 63? I would have never broken out ?
2) The 1901-s quarter I had before I upgraded to the monster. It was a Vg-10. Nice coin, original but only a solid 8 on the obverse IMO. The reverse was darn nice, but obverse should have merited the coin an 8. Several of the other barber quarters in Vg-10 will have a little more detail in the headband and a majority of the time will have parts of several of the letters visible , not just the bear minimum. The reason that I had to go with a VG-10 originaly, was becuase many of the Vg-8' 1901-s look like they should be in good -6 holders. And for those of you who dont belive it, look back at some of the VG-8's that have been offered in the last two years, including one or two that were posted on this board for Opinions. Everyone said, sure looks like a good 6 to me, no way that should be a VG? Due to it being a rare date above full rim good, PCGS pushed it a little to the vg-10 mark?
3) 1877 Indian, a date that I already mentioned about, this coin came from Rick Snow raw who said it looked Xf-45, which I agreed. Sent it to PCGS, came back Au-53. Sure didnt see AU in this coin compared to your typical 70's indians in AU, thought it may be an error, but after seeing several more 77's graded a little higher than typical indians of the 70's I just assumed that the standards for 77's are a little different. Again the coin was nice and chocalate brown with good strike, but not techinically thier. However, each and every time I had my coins out for display, several folks always commented that they felt it was overgraded and that it really was an Xf-45. Like many, I like having strong for the grade coins in my collection, so I parted with it. It actually sold for lower end AU money at the time!
jim d
we believe an "ugly" but otherwise problem free coin should get what it deserves in the form of a lower grade
And I say that beauty is in the eye of the beholder.
"Next, and equally important, remember to always ask yourself the question: "How is it made?" (Or, "How do they come?"). I think most professionals would agree that one of the things to come out of the evolution of grading is acceptance that you simply cannot grade coins from different time periods and of different mints the same way, even though they may be the same coin type. If you submitted an 1896 "O" Morgan dollar that looked like an MS65 1903 "O", I'll bet you would be very disappointed if it came back in an MS65 holder! You would probably also expect an "O" mint $2.50 Liberty to be graded taking the typical weak striking into consideration. Most choice AU Charlotte and Dahlonega gold might only be XF40 if compared to most choice AU "P" or "S" mint gold. So you can see that one simply cannot apply the same grading standard uniformly to all coins without taking these and other factors into consideration. "
Hogwash! One thing that all U.S. Coins have in common is that they start as blank planchets of various metals that are sqeezed between two hardened dies under pressure in order to push the metal into the recesses of the dies. What Mr. Maben should have stated is that some coins are not struck with the same pressure as other coins, and some early series coins are struck on poorly prepared planchets. That is true. But why......WHY.......why must the grading standards vary from coin to coin depending on the mint, the metal and the era in which it was struck? I have often said that there is no shame in having a 1794 Dollar (i.e. Carter specimen) that "only" grades MS-61....or even AU-58. Looking at the pop reports, one would believe that there are hundreds of bust dimes and half dimes that are truly uncirculated. Not true. Many of the certified draped bust dimes that I have seen are NOT uncirculated, even the ones slabbed as MS-64 or higher. They are, unfortunately, market graded.
One can review auction records of 10-20-30 years ago and see the SAME coins that once were described as EF-45 now being called Unc. I would be happy to provide you with examples. Wasn't there an 1804 dollar that was once graded as EF that is now PF-58 or something stupid like that? Here's the important thing: if a dealer has an AU-58 1807 dime in his case that is slabbed as MS-64, is it worth AU money or Unc. money? It depends on the the buyer's taste. If the AU-58 coin has great luster, clean surfaces and nice toning, but a bit of rub, then it is worth the price of an MS-64.....if the collector thinks that it will fit into his/her collection. So, you see, I grade more by value than technical grade (e.g. that bust dime grades $4,000). But....the technical grade is established by a fixed set of standards that MUST NOT slide with the times. jmho. Dennis
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but thats just `MO`.... maybe Don`s too. I dont know.
yes , i know....sad but true.
For those who don't know, John Maben is a finalizer at NGC, and was once a PCGS grader. The entire article can be seen here.
The ANA says this,
"Fine line differences in grading become important when there is a difference of hundreds or even thousands of dollars of value between coins of superior quality. Of all the astetic qualities, none is more important than the quality and originality of luster. To evaluate the luster of a coin one must be able to judge it's appearance against a perfect coin of the same date and mint. "
Not defending either approach to grading, I just thought these opinions might explain market grading.
and it sets us apart from practitioners and consultants. Gregor
no great panacea for most because pricing will become more complicated and
standards will still be gauged to how the coins were actually made rather than
to absolute standards on some parameters. At least grading itself will be much
more easily understood.
simplified,as it should be.
Its just the nature of progress.
Way way back when, coins where graded as either new or used. By todays standards that
leaves a huge casum (sp) of discrepency between `now` grading standards.
Know what i mean Vern?
Whatever happen to Jim Varney. He made a bunch of goofy comedies a few years ago.
Never see the ol rascal anymore.......
Sadly, Jim left this world back in 2000. Great guy.
______
Guys, I hear what you are saying and I know that my comments are controversial and against the grain. I am getting extreme to make a point.
One thing that we can probably all agree on: If no money changed hands (i.e. coin collecting was for fun only) then the grading standards would never change and "market grading" would not have been invented by the coin marketing geniuses.
One last thing: Maben states that coins should be graded with consideration to the mint and the era in which they were struck. If that's the case, then why is an 1877 Indian graded more liberally than an 1879 Indian cent?? Both struck in Philadelphia just 2 years apart in the same equipment by the same group of people. Please explain that one Mr. Maben.
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in the world who are good at it. I have no reason to doubt this though there are some
who don't seem to agree.
Certainly while grading multiple parameters is more "complicated", even a novice could
get a pretty good approximation on most. If he did it improperly one could still have a
much better idea of the coin's condition from his grade.
And Jim....R.I P. .Sorry, Didnt read that obituary.
More demand means more area to soak the buyer. Market grading in a nutshell.
Experience the World through Numismatics...it's more than you can imagine.
Cam40 - Are we to infer that the grading services are in cahoots with the dealers to soak the collectors? If so, I feel left out. After all, I am a dealer, yet I am not privy to (or benefiting from) this alleged conspiracy. It just ain't right!
BTW, if 77's seem more loosely graded, it's probably simply because it pays to resubmit them multiple times until the next grade is achieved.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
<< <i> Right now those who are expert in grading claim there are only a few dozen people in the world who are good at it. >>
Yep, that's the 'smoke' they're puffing!! Can you see through the fog?
<< <i>Are we to infer that the grading services are in cahoots with the dealers to soak the collectors? >>
Andy, Andy. Someone's always in cahoots! Ever here of Chicago? Nice gig if you can get it!
<< <i>
<< <i> Right now those who are expert in grading claim there are only a few dozen people in the world who are good at it. >>
Yep, that's the 'smoke' they're puffing!! Can you see through the fog?
>>
Read HRH's current "World series of Grading" thread. The results would strongly support the contention
that only a few people are good at market grading.
that only a few people are good at market grading.
and that Andy's one of the ones who's good.
and it sets us apart from practitioners and consultants. Gregor
Aw, shucks.
But I still really don't know what "market grading" is, or if the services really practice it.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
and it sets us apart from practitioners and consultants. Gregor
the other factors that are inherent in the coin itself comprise the "technical grade", among these are strike, luster, marks and/or wear, and surface preservation.
In market grading, one first takes the Technical Grade, adds in the eye appeal factor (either plus or minus), tempers the resulting grade with a knowledge of "how this issue 'comes' usually" and "what's out there" to hone the grade, then looks for answers to the question, "what grade will the market accept this coin at?"
For example, on a borderline technical 64/65 rare coin, where the 64 is a $500 coin and the 65 is a $2500 coin, the "market" factor will definitley come into play, based on the eye appeal of the piece and a knowledge of whether or not the "market" will accept the particular coin as a $2500 coin.
this phenomenon is the best argument possible for the implementation of decimal grading, such as MS64.5, when the price jump for a whole point is too much to justify placing a coin in the higher grade holder, yet it is clearly better than the lower grade holder.
without that half point on the insert, it is up to the seller to convince the buyer that it is a PQ coin worth an in-between price.
the services will not to this, because they're thriving on the resubmission income, which would decrease if in -between grade high end coins could get that half point on the label.
Liberty: Parent of Science & Industry
<< <i>Market Grading is when the grader takes "the market" into account in determining his final grade, it's a subjective thing, as is "eye appeal".
the other factors that are inherent in the coin itself comprise the "technical grade", among these are strike, luster, marks and/or wear, and surface preservation.
In market grading, one first takes the Technical Grade, adds in the eye appeal factor (either plus or minus), tempers the resulting grade with a knowledge of "how this issue 'comes' usually" and "what's out there" to hone the grade, then looks for answers to the question, "what grade will the market accept this coin at?"
For example, on a borderline technical 64/65 rare coin, where the 64 is a $500 coin and the 65 is a $2500 coin, the "market" factor will definitley come into play, based on the eye appeal of the piece and a knowledge of whether or not the "market" will accept the particular coin as a $2500 coin.
this phenomenon is the best argument possible for the implementation of decimal grading, such as MS64.5, when the price jump for a whole point is too much to justify placing a coin in the higher grade holder, yet it is clearly better than the lower grade holder.
>>
This would solve the problem of what to do with a $1,000 coin which grades $500 in
MS-64 and $2,500 in MS-65 but it can't explain to the buyer why it grades better than
64 and worse than 65. It also implies far more precision in grading than is actually pos-
sible. It's easy enough (for some people) to know it's the $1000 version but impossible
for him to teach another to price... er... ah, I mean grade the coin properly. At least this
skill is not easily taught to people largely due to its great complexity.
On the other hand if coins were actually rated, ranked, or measured on absolute or re-
lative scales then grading would be a fairly simple matter that evaen novices could make
a good stab at. The greatest benefit would be one's ability to know the condition of a
coin from simply knowing its grade. The grade coupled with a scan or picture would b of
tremendous utility and would even facilitate comparing various coins by lists and other
means. It might be possible to seek die varieties by grade and there would be other un-
foreseable benefits of knowing the condition of coins which aren't in hand. One major bene-
efit would be greater understanding of what exactly constitutes market value. Price guides
would become quite complicated and their study would yield insights into exactly why a
pristine coin might bring more than well struck one or vise versa.
Pricing services might have more difficulty in preparing pop reports but we're supposed to
be collecting instead of investing anyway, right?
<< <i>this phenomenon is the best argument possible for the implementation of decimal grading, such as MS64.5, when the price jump for a whole point is too much to justify placing a coin in the higher grade holder, yet it is clearly better than the lower grade holder. >>
Implementing this sort of senerio will only make the grading situation worse. The fact is either the seller is going to have to "convince" the buyer that the coin is worth more than the standard 64 OR the buyer will have to be knowledgable enough to already know this.
At some point we are going to have to get away from totally depending on the TPG's to do the work ALL collectors MUST do: Learn to grade for yourself, at least in your area of interest. YOU the collector must be the expert not the guys over at PCGS.
jom
and it sets us apart from practitioners and consultants. Gregor
<< <i>and he said he thought the system would remain unchanged >>
He's right, because no matter how "precise" you make there will ALWAYS be a grade where there's a big price jump. You can call it MS64 vs MS65 OR you can call it MS64.9 vs MS65. The prices will always congragate around these barriers. Calling it "64.9" is not going to make a difference, only burdens the TPG's to be more precise and makes collectors more dependant on them. This is something to avoid, IMO.
jom