Is it inevitable for grades to become split finer and finer?
kranky
Posts: 8,709 ✭✭✭
For a very long time, grades were adjectival only, and there were three categories of Uncirculated coins - BU, Choice, and Gem. When numerical grading was instituted, mint state coins were basically 60, 63 and 65. Later 67 was used. Then all the numbers from 60-70 were assigned.
Even using all the numbers from 60 to 70 didn't prevent large price jumps between adjacent grades sometimes. To overcome that, we have a combination of numerical and adjectival grading (i.e. "low-end 65", or "PQ 66"). We are just about at the point where very few people in the hobby can discern a difference between single-point differences in Unc. coins.
But even so, I think it's inevitable that the business will continue to split grades even finer than they are now. Perhaps half-point increments, or single-point grading bleeding down into the AU range. Maybe wear will no longer be the absolute number-one factor in grading a coin; in some cases, that's already happening with beautiful AU pieces getting graded as 62 or 63 because of market grading. Or perhaps additional criteria will be appended to a grade to fine-tune it further.
I don't know how it will occur, but I feel certain that grading will continue to become split even finer than it is now. This is necessary to make it easier for collectors/investors to buy coins which are currently described as PQ or "choice for the grade", as the current system only makes it look as though those coins are overpriced to many people. If a particular coin in 63 is worth $2,000 and a 64 is worth $8,000, you have to have some justification for selling a $5,000 example because otherwise only the truly experienced people will be comfortable buying it.
Whatever occurs, I don't think it will be incompatible with the current 1-70 scale. There is too much money on the line for that to happen. It cannot be a wholesale change, only fine-tuning.
Also, as additional grades and/or grading "factors" come into being, this will push up prices, benefiting sellers. When they started using the grade of 64, what happened? A bunch of 63's suddenly became worth more; it's not like some of the 65's got knocked down a point.
Over the last 50 years, increasingly finer grading has continued to evolve as prices have risen. I see no reason to believe the current system will forever remain unchanged and in effect. So do you agree that more grades are inevitable? If so, how and when do you think it might change?
Even using all the numbers from 60 to 70 didn't prevent large price jumps between adjacent grades sometimes. To overcome that, we have a combination of numerical and adjectival grading (i.e. "low-end 65", or "PQ 66"). We are just about at the point where very few people in the hobby can discern a difference between single-point differences in Unc. coins.
But even so, I think it's inevitable that the business will continue to split grades even finer than they are now. Perhaps half-point increments, or single-point grading bleeding down into the AU range. Maybe wear will no longer be the absolute number-one factor in grading a coin; in some cases, that's already happening with beautiful AU pieces getting graded as 62 or 63 because of market grading. Or perhaps additional criteria will be appended to a grade to fine-tune it further.
I don't know how it will occur, but I feel certain that grading will continue to become split even finer than it is now. This is necessary to make it easier for collectors/investors to buy coins which are currently described as PQ or "choice for the grade", as the current system only makes it look as though those coins are overpriced to many people. If a particular coin in 63 is worth $2,000 and a 64 is worth $8,000, you have to have some justification for selling a $5,000 example because otherwise only the truly experienced people will be comfortable buying it.
Whatever occurs, I don't think it will be incompatible with the current 1-70 scale. There is too much money on the line for that to happen. It cannot be a wholesale change, only fine-tuning.
Also, as additional grades and/or grading "factors" come into being, this will push up prices, benefiting sellers. When they started using the grade of 64, what happened? A bunch of 63's suddenly became worth more; it's not like some of the 65's got knocked down a point.
Over the last 50 years, increasingly finer grading has continued to evolve as prices have risen. I see no reason to believe the current system will forever remain unchanged and in effect. So do you agree that more grades are inevitable? If so, how and when do you think it might change?
New collectors, please educate yourself before spending money on coins; there are people who believe that using numismatic knowledge to rip the naïve is what this hobby is all about.
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A thread on this very subject
someday.. someday!
Liberty: Parent of Science & Industry
Cameron Kiefer
Camelot
Cameron Kiefer
New collectors, please educate yourself before spending money on coins; there are people who believe that using numismatic knowledge to rip the naïve is what this hobby is all about.
Practically speaking I don't think it will ever happen. The lure of the big price jump fuels the market and the grading service's revenue. It won't be in their better interest to be too precise. Plus, so many of those high-end MS64's have already squeezed their way into MS65 slabs, so it's too late to correct them back to "MS64.5". It's an interesting idea that touches on one of my pet peeves about labels and price structure, but I'd be shocked if it ever happened.
No, actually I think that there are too many grades for MS coins and they don't reflect the proper attributes. I suspect that sometime in the future there will be a technical grade and a net grade (based on appearance) for each coin. I would like to see 60/61, 62/63, 64/65, 65/66, 67/68, and 69/70 merged together as a good start to reflecting the reality that technical grades are subjective and thus cannot be exact.
<< <i>No, actually I think that there are too many grades for MS coins and they don't reflect the proper attributes >>
I agree. It doesn't make sense to have more grades when grading is so imprecise in its present state. Look at the results of the PCGS grading contest. The winner achieves a score of 70, which all agree is outstanding. When I was in school, that was a C!
I'm sure one of the mathematicians on the board can explain it better in statistical terms, but suppose a coin is graded X. It is resubmitted and is graded X+1. It is resubmitted again and is graded X-1. It is resubmitted again and is bagged for AT, etc., etc. With the inherent imprecision of grading, further subdividing the grade is a joke.
If you only had 60, 65 and 70, for example, except for coins in the nice 62/weak 63 range and nice 67/weak 68 range, I think just about everything else could be in relative agreement . You wouldn't bicker over whether something is a 64 or a 65 or a 66; with just the three grades, you'd all agree it's a 65. (Of course, just as now, you'd pay premium money for premium quality within the stated grade.)
If we couldn't agree if something is a 64 or 65, would we agree it's a 64.5? Doubt it. Some would think it 63.8, some 65.4, others in between.
I can see the desire to do this where the value rises exponentially with even one point; the 1896-O Morgan is a poster child for this. Here's the current PCGS values (except for AU-58 which is an estimate and is not listed there): AU-58 $300; MS-60 $950; MS-62 $3750; MS-63 $7500; MS-64 $50,000; MS-65 $175,000 (!!!!!) .
Let's pretend I had a nice certified 63 that could go 64 on a good day, I won't want to let go for $7500, and a buyer sure as heck won't want to pay $50,000 for it. Sure, if we had more grades we could have "MS-63.6" for, say, $20-25K. But in reality, if we can't regularly tell the difference between 63 and 64...are we supposed to be able to tell between 63.3 and 63.6?
It's not just the mint state coins, either. Take a grade near and dear to my heart, the AU-58s. We know that these run the gamut from overgraded 55s (too much luster missing and/or too much wear) to essentially MS-64+ coins with the slightest trace of wear or rub. Would we create AU-59? AU-59.9? In terms of value within one technical grade, the AU-58 grade has a HUGE range of "market values" based on the coin itself, much as an MS-63 '96-O Morgan might; some of them might be worth twice what others of the same grade are selling for if one is average at best and the other one a "super slider" in every sense of the word.
it describes a coin. There will be more grades added but it won't be to fine tune the
current system so much as to expand it. An MS-63 might grade 65/ 65/ 64/ 60 to describe
the damage/ strike/ dies/ surfaces. It wouldn't be surprising if the "net" grade or "market"
grade is eventually replaced by more complicated price guides.
Let's leave NGC out of this, but I get your point
Didn't wanna get me no trade
Never want to be like papa
Working for the boss every night and day
--"Happy", by the Rolling Stones (1972)
<< <i> It would be nice if mint state coins were graded with 2 or 3 increments between each grade. Then the focus will be more on eye appeal and overall look of the coin, rather than pure numerics. >>
That makes more sense than adding decimal grades, but the problem is that "eye appeal" is even more subjective than technical grades. (Look at the debate over toners versus "blast white" for an example of that.) If someone who prefers "blast white" coins, even when dipped, grades the coins the toner that isn't spectacular would get dinged -- but would get "bonus points" from someone who believes "original is always best."
1. PQ for high end coins in a numerical classification
2. Color grading- 0 for tone free, A for superb color, B for nicely toned, C for average
one sided tone-1 and two sided tone-2
Camelot
I disagree with shylock's contention that it wouldn't help the grading services; in fact, I think it would be a boon. Anytime additional grades or designations are recognized, a bunch of coins go back in hoping for the bump.
The biggest problem is what cladking alluded to - would additional fine-tuning do a better job of describing the coin? Adding qualifiers beyond the "number" makes it hard to do price guides. But from a selling perspective, a more complicated "grade" that's not simply one number makes it easier to justify any price. Who's to say a 63-fs-lt (full strike for the date/mint, light toning) isn't worth more than a 64-as-nt (average strike for the date/mint, no toning)? There could be so many combinations no one could keep them straight. That works to the advantage of sellers.
Market grading demands that price be commensurate with grade, so beautiful coins with slight rub end up in 63 holders because that's what the coin is worth. We are backed into a corner now because the line has always been drawn between Uncirculated and circulated coins. Everything else is secondary to wear. So we wink at a bit of rub on an otherwise nice coin and call it a 62 or 63, using the "cabinet friction" get-out-of-jail free card to justify it. If we could live with a knockout AU coin being worth more than a dog MS60, that wouldn't be a problem, but that flies in the face of everything that's been established with respect to grading.
ziggy mentions that some AU58's are worth multiples of others, but that's only among the well-educated and knowledgable. In order to
better market those nicer ones to a wider audience, they will need a better way to describe them to distinguish them from their run-of-the-mill counterparts.
New collectors, please educate yourself before spending money on coins; there are people who believe that using numismatic knowledge to rip the naïve is what this hobby is all about.
<< <i>The market already splits grades. Haven't you heard "that's a nice coin, but I don't think it will cross"? >>
Every coin has mutiple grades. In the dealers case its a 65PQ, buy it and you have a 65. Take it to the next dealer and it's a 64 in a 65 holder. The games have always been there.
The biggest problem is that each coin has 2 grades that often conflict. An Alpha grade XF, AU MS and a numeric grade. 45, 58, 64 etc. We really need to eliminate one and the alpha is the choice. The AU in a 62 holder is a common example but it goes a lot further. A lot of coins have details of one grade and bagmarks or luster of another. We need to change the system not just add more grades.
Of course that will never happen as there are too many "collectors" who's coin value's are almost totally dependent on the current system. But that's a thread for the Registry Forum
Better for who is the question.
New collectors, please educate yourself before spending money on coins; there are people who believe that using numismatic knowledge to rip the naïve is what this hobby is all about.
G-4 VG-8 F-12 VF-20 EF-40 MS-63
or
VF-20 EF-40 AU-50 MS-60 MS-63 Proof-63
or, of course, the ever popular
AU-50 MS-60 MS-63 MS-65