What caused gradeflation and do we still have it?

ahopewell55 · January 30, 2013 3:56AM

I often read how coin grading was stricter twenty or so years ago. Did the standards literally change over time? If so, why? Shouldn't a coin that was graded in the past have the same standards applied to it today? Are the TPGs' grading criteria published anywhere? I know there was Photograde in the 1970s, but I don't understand why there isn't a uniform standard adhered to today. See all the posts about Crossovers. Can I expect a coin that I have today to be graded the same or more or less strictly in the future? Thanks for your input.

Coppercolor · January 30, 2013 4:02AM

At least four answers I've gathered from more experienced board members over the years:

1) Grading standards have changed in a few series
2) Market expectations or conditions changed for some series
3) Super high grades were held out in some series with the expectation that better pieces were coming, and when they didn't come, the grading companies were more willing to give those top grades out.
4) The biggest factor might be multiple multiple submissions of the same coin, and the chances that a small percentage of the time a coin will get one point higher grade, and then it stays in that holder forever when it should probably be a grade lower

renomedphys · January 30, 2013 4:03AM

There is pressure to have the best coins in the best holders.

If you start out with one properly graded coin in a 66 holder, and then over the years two more lesser coins somehow make the 66 grade, well then, hey, the best one must be a 67, right?

Sonorandesertrat · January 30, 2013 5:12AM

This thread has very high POOF! potential.

BryceM · January 30, 2013 5:55AM

Nah.

It's a legitimate question and one the TPGs should be willing to entertain.

magikbilly · January 30, 2013 5:57AM

63 was Select
65 was Choice
67 was Gem

for starters.

Eric

Pokermandude · January 30, 2013 6:04AM

<< There is pressure to have the best coins in the best holders.

If you start out with one properly graded coin in a 66 holder, and then over the years two more lesser coins somehow make the 66 grade, well then, hey, the best one must be a 67, right? >>

In a nutshell, it is this. It's somewhat of an application of Gresham's Law. Coins that are strong for the grade get cracked out and resubmitted until they get a bump. As more coins get bumped up a grade, coins that haven't been cracked out in a longer time tend to have a better chance of becoming upgrade candidates, as their previously equal peers start showing up in higher graded plastic. Hence the desirability of OGHs and older PCGS holders.

crypto79 · January 30, 2013 6:05AM

<< 63 was Select
65 was Choice
67 was Gem

for starters.

Eric >>

That's not how I remember it
61-62 was select
63-64 was choice
65. Was gem
66+ was superb gem or choice select gem

And XF was EF which I for some reason miss

s4ny · January 30, 2013 7:49AM

I think the circulated grades have remained more stable, XF45, AU58, etc. Easier for an MS60 to
migrate up to MS62, etc., as coins are resubmitted, crossed over, etc.

Rarely do coins downgrade unless someone really wants it in a PCGS holder.

Maybe all the grading of moderns like American Gold Eagles and Silver Eagles has contributed.
They are all MS69s or MS70s. I can't tell the difference.

joecopper · January 30, 2013 8:42AM

greed

coinsarefun · January 30, 2013 8:47AM

<< 

That's not how I remember it
61-62 was select
63-64 was choice
65. Was gem
66+ was superb gem or choice select gem

And XF was EF which I for some reason miss >>

Yes, this.

magikbilly · January 30, 2013 9:25AM

<< 

<< 

That's not how I remember it
61-62 was select
63-64 was choice
65. Was gem
66+ was superb gem or choice select gem

And XF was EF which I for some reason miss >>

Yes, this. >>

Perhaps my memory is going, but I recall 63 as Select from the original ANA grading guide with gray and blue hardcover. 65 was not Gem to start with - I believe that was 67.

Eric

magikbilly · January 30, 2013 9:56AM

I find the discussion of the evolving terminology very interesting. The fact that we are having it is telling. I remember watching dealers use "Gem" for 65 when it was still called "Choice" (which was indeed MS63 at the time).
Who else remembers 65 as Choice?

Eric

Whit · January 30, 2013 10:37AM

Good evening, everyone:

Thinking back to the 1960s, I don't remember Choice as MS-65. Uncirculated grades were Unc (or BU), Choice, and Gem. In my opinion, these corresponded very roughly to today’s 58/60, 62/3 and 64/5. I don’t recall any other numbers in play, although today's MS-67 or 68 may have traded at their own elevated levels back then. (As a teenager, I certainly didn’t run with that crowd.) There was no one authority to establish and maintain consistent mint-state standards as the first-world TPGs do today, so as you can imagine, ownership added a LOT. Using the 1960s as a base, I think it’s hard to justify that gradeflation has occurred, since the uncirculated grades of the 1960s weren’t that well defined to begin with. Gradeflation since the 80s or 90s... that's a different matter.

On circulated grades, however, standards have weakened since the 1960s. That which passes for Fine in a TPG holder is often the Very Good , and sometimes even the strong Good, of my youth. And that’s all right. I don’t care what it’s called. A Merc dime with 2/3s fasces evident is still a Merc dime with 2/3s fasces evident, whether its called PO-01 or MS-68. (Still, I miss Brown and Dunn.)

Whit.

magikbilly · January 30, 2013 10:41AM

Does anyone have a 1977(?) ANA grading book - with the hard gray, red and blue cover? I think that is where I am recalling 65 as Choice.

Eric

mrpotatoheadd · January 30, 2013 10:54AM

<< In a nutshell, it is this. It's somewhat of an application of Gresham's Law. >>

I think it's more an application of the Peter Principle:

The Peter Principle is a belief that, in an organization where promotion is based on achievement, success, and merit, that organization's members will eventually be promoted beyond their level of ability.

Substitute coins for people and upgrading for promotion and there you have it.

mrpotatoheadd · January 30, 2013 11:02AM

<< Does anyone have a 1977(?) ANA grading book - with the hard gray, red and blue cover? I think that is where I am recalling 65 as Choice. >>

Official ANA Grading Standards for US Coins, Copyright 1977:

MS70: Perfect Uncirculated
MS65: Choice Uncirculated
MS60: Uncirculated

Official ANA Grading Standards for US Coins, 4th Edition, Copyright 1987,1991:

Commercial grades-
MS70: Perfect Uncirculated
MS65: Gem Uncirculated
MS63: Choice Uncirculated

Note that the 1977 ANA grading guide did not describe the adjective grading as commercial while the 1987,1991 edition did.

magikbilly · January 30, 2013 11:04AM

<< 

<< Does anyone have a 1977(?) ANA grading book - with the hard gray, red and blue cover? I think that is where I am recalling 65 as Choice. >>

Official ANA Grading Standards for US Coins, Copyright 1977:

MS70: Perfect Uncirculated
MS65: Choice Uncirculated
MS60: Uncirculated

Official ANA Grading Standards for US Coins, 4th Edition, Copyright 1987,1991:

Commercial grades-
MS70: Perfect Uncirculated
MS65: Gem Uncirculated
MS63: Choice Uncirculated

Note that the 1977 ANA grading guide did not describe the adjective grading as commercial while the 1987,1991 edition did. >>

Thanks

Eric

RedTiger · January 30, 2013 11:08AM

I agree with PokermanDude. Modest grade inflation is a natural outcome from the business model, and would be predicted by game theory. Set up a game with those kind of parameters, have humans play the game, and modest grade inflation is a natural outcome. Also natural would be the occasional backing up to stricter grading or at least rumors or talk of stricter grading. As to whether it continues to exist? Tougher question. CAC, registry, the Sniffer, are relatively new elements to the game.

WinPitcher · January 30, 2013 11:14AM

<< Perhaps my memory is going, but I recall 63 as Select from the original ANA grading guide with gray and blue hardcover. 65 was not Gem to start with - I believe that was 67. Eric >>

This.

65 was Choice.

Before all of this I remember UNC and BU.

And the better the BU the coin was the price reflected it.

Type2 · January 30, 2013 11:18AM

I look at mine like this Nice, Nicer, Nicest..... Hammered.

Look at it this way if you had to pay for down gradeds what way would you go up a point or down a point?

So do we have it still maybe i think.

shorecoll · January 30, 2013 11:35AM

I've been told that there is a de facto standard at least for bust halves and early copper that upper AU coins would trade at 63 prices so that's why there are so many "sliders" in MS-63 holders for these series. Some people still claim it's just "cabinet friction" but I don't believe that old time collectors flipped their coins over so that both sides would have that same wear. I think it's just a market decision. If you look at some early copper and trace it's provenance you will see that it is listed in the EAC condition census as AU, but it's definitely not that way in slabs.

sniocsu · January 30, 2013 1:08PM

I remember 65 and up being choice. Gradeflation is definitely still here.

roadrunner · January 30, 2013 11:16PM

There were multiple instances of gradeflation before the TPG's came around. But in TPG history I look upon the 1995-1997 era as when gradeflation started to take hold
as recessionary forces on the coin market peaked and then started to lift with the Pittman and Eliasberg sales. The reason could have been to get submission rates/revenues back
up after they probably dropped from 1990-1995. Competition between TPG's no doubt influenced this. When I saw the lofty grades the (1997) Eliasberg coins were bringing
I knew something had changed. A few dealers I knew suggested sending all older graded coins back in for another look. One local dealer of mine told me in 1998 that he
had been sending in packages to NGC of 10 "selected" coins for regrades/crackouts and getting 70-80% upgrades. He suggested I do the same. That game worked real well
from around 1998 to 2002. And incentives were being offered to dealers to send more coins back in. Imo the market was generating revenue by regrading the coins from
1986-1993. I've mentioned before that any facial portrait coin like a Barber half with a single visible cheek hairline could not grade higher than 64 during the early days of the TPG's.
That had to be corrected since many of these coins were probably net-valued at 65-66 money. After the initial influx of coins by 2002, I think the gradeflation did a steady but
slow ascent over the next 6 years into summer 2008. Again, competition to get coins in your holder. And giving out higher grades meant more revenues. But I don't think there
was that big a change from 2002-2008 but there was something. Then again, sending in a nice coin 5X or 10X is almost ensuring gradeflation as that coin will eventually achieve
the higher grade. I don't know if that's still as true in the post-2008 world.

These cycles will continue to ebb and flow but maybe not quite as obvious as the 1995-2002 period. Not easy to profit long term by grading coins if the standard is 100% fixed and
100% repeatable as eventually nearly all the worthwhile coins get graded. Then what? It's quite possible that a TPG can't make enough money with a system that's even 90%
or maybe 80% fixed/repeatable. If the mint keeps on churning out specialized collector coins, that's more supply to grade.

MidLifeCrisis · January 30, 2013 11:21PM

<< There is pressure to have the best coins in the best holders.

If you start out with one properly graded coin in a 66 holder, and then over the years two more lesser coins somehow make the 66 grade, well then, hey, the best one must be a 67, right? >>

What caused gradeflation and do we still have it?

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