Is the increasing complexity of the grading game damaging our hobby?
rhedden
Posts: 6,621 ✭✭✭✭✭
After collecting coins since the mid-1980s, I have watched a lot of interesting changes come to the hobby. One feature that seems to be increasing in importance with each passing year is the emphasis on a coin's condition and grading over other factors, such as absolute rarity. The condition/grading game has reached a new level of complexity that has never been seen before in the hobby, and for some people, I suspect that it is siphoning the fun right out of collecting.
Allow me to elaborate a bit. If I were introducing a prospective new collector to the hobby, I would have to explain (at a bare minimum!) the following items as a survival guide:
1) There is an illogical, 70-point grading scale in place, but grading standards shift every few years, so it's a moving target.
2) One company's MS64 is worth less than another company's MS64 because grading is subjective. The reputation of the grading company is quite a big deal these days. And by the way, we need a 4th party to grade the grading companies, and their opinion does make a difference! They give out shiny stickers if your coin is well-behaved. 
3) "Mint State" grades don't actually have to be mint state coins any more. It's been that way for a while. They just have to look nice to get a "grade bump" (whatever that is). Coins grading AU58 are often better looking than those grading MS61 or MS62. C'mon, everybody knows that.
4) Thirty years ago, the grade of MS60 described the vast majority of Uncirculated coins. These days, the grade of MS60 is seldom used by grading companies. Sometimes these coins are truly awful looking.
5) A one-point difference in grade can make a big difference in price. But wait: there are all sorts of sub-grades within that point! Undergraded or "A" coins are sometimes found in old holders. Stickered "A" or "B" coins reside in new holders (or old ones-which affects price). "C" coins without stickers reside in both old and new holders. Overgraded coins abound, and most of them are offered for sale at unrealistic prices right at this very moment! Some coins are graded accurately, but nobody wants them because they're in the "wrong" grade for the series. If you don't understand all of these things intimately, you're probably going to take a beating. Here's a safety helmet, Newbie.
6) A 1914 proof Barber quarter in a PR61 holder is an unloved item, despite its age and meager mintage of 380 pieces. A newer quarter with a mintage in the hundreds of millions, which is graded MS70, could be much easier to sell, and possibly for more money. Often, grade and demand level are both more important than what the coin actually is.
7) Even with all of the above considered, there are numerous pitfalls which might take you years and years.... and years.... of studying to recognize reliably. Because of the rather extreme influence of grade on price, coins get doctored by dipping, puttying, lasering, artificial toning, etc., in order to improve the stated grade. Some people submit and resubmit coins until they get them graded higher than they ought to be. Sometimes counterfeit coins even make it into graded holders! As a Newbie, you will quite possibly be the lucky recipient of all of these items, which are worth next to nothing to anyone who knows how to detect them. The veteran posters on this board will be pleased to berate your new purchases and call them "tuition."
I'll allow the other forum members fill in 8) through 99).
Let me summarize this Sunday afternoon rant by saying that I think the grading game has become such a complex factor in determining price that it could drive new collectors right out of the hobby. The learning curve is just too long, and the financial penalties for ignorance too steep, for many peoples' tastes. Some people would have enjoyed this hobby more in times when grading was simpler, and its influence on price was less severe. For those of you who recently started out as numismatists and decided to stick with it, let me express a great deal of admiration for your perseverance. Major props are due.
Comments
Coins have taken a back seat to the plastic and stickers. If anyone wanted to enter the "hobby" with serious money I would attempt to steer them elsewhere.
I searched and searched for a Barber Half that I would even ....ALLOW...in my box of stuff.
It ain't easy.
Virtually no impact whatsoever for coins technically grading below AU58.
Yet, everyone of us here (myself included) loves to buy coins in say a VF35 holder they feel can get it placed in a 40 holder and make some money.
We are all to blame in some way or another.
EAC 6024
Somewhere, I recall seeing a detailed analysis of 1877 Indian cents by Rick Snow, where XF and AU coins in TPG holders were examined critically. I think the point of the article was that you'd better look carefully at Indian cents in circ. grades, because they have caught the gradeflation bug too. Can anyone provide a link?
thats true enough . Buy them raw and plop them in an album. Sending in a VF or VG coin to get slabbed always seemed like a stupid idea to me.
I've never really had a problem with low to mid grade raw bust quarters. I have yet to have a dealer or other collector try to split hairs on those coins in those grades. All anyone really seems to be concerned with is the correct color, look and surfaces. If you can figure out what everyone thinks is acceptable, you can have a lot of fun buying and selling raw coins. If you really want to get peoples attention, start looking for rare die marriages and dealers really get excited when you want to sell them an "original" coin. If you can find a rare coin every once in a while, it pays for any mistakes made with all the others.
I guess what I am trying to say is I found a way to still have fun without worrying about all the grading issues discussed on the forum all the time. Amazingly, a lot of bust collectors seem to like the low and mid grade coins raw so they can take them out and play with them every once in a while. Most dealers don't seem to want to take the time to attribute the bust quarters so it is actually a lot of fun to go hunting for these coins especially at small coin shows.
My guess is many other collectors feel the same way in the areas they collect. I don't get caught up in having the best. I also don't get caught up in having the right holder or the bean because it really doesn't matter in my world. I am very happy with what I have and the grades I collect. In the last year, I have sold around 40 bust quarters and had a blast doing it. They were all raw and they were easy to sell at prices I and the buyers were very happy with.
I agree if we're talking about lower valued coins. However, I have sent in coins grading as low as AG-3. That particular coin was a 1796 quarter. How many people are willing to buy a raw 1796 quarter for ca. $8,000? It's got to have problems that would prevent it from grading, right? I think there is a real need to get a coin like that graded in today's market.
Those who bought fakes, cleaned, altered, or similar in the past from the scammers or ignorant sellers.....they wish grading would have come sooner. I am a believer in the current system. New collectors who run right out and buy raw coins usually get burned bad and leave because they "did not" buy graded coins.
this post or a portion of it should be printed & handed out to attedees of the upcoming ANA show, with the permission of the author, of course.
That has got to be the prettiest, well struck and mark free Barber Half I have ever seen!
Sorry ColonelJ... I disagree with you. There have been numerous early gold and type that have been enhanced with the specific intent of seeking a higher grade.. The value between 45 and 50 and up the AU spectrum has really done more to encourage the slaughtering what remained of original coins in anticipation of bringing out lustre and a higher grade in process. Most of what I see in the 45-58 range regardless of the holders or which auction company has the listing just does not pass the straight face test.... So others can enjoy that scene. And at some point, those collectors seeking coins with certain look will dwindle further. The process will turn full circle which does not help the integrity or strength of the hobby... It just serves to redefine where it stands and where it's going which is not encouraging.
Experience the World through Numismatics...it's more than you can imagine.
There is more opportunity now, knowledge is power, though getting top dollar seems to be more a function of the cac anti-anxiety sticker. $$ back up the sticker, sight seen equivalent.
There is a great deal of diversity in certified coins, those who can afford to buy more expensive ones may not want white lustrous coins, may actually prefer toned, dirty, coins with character. There are few certified coins that will not find an interested buyer with proper marketing and at the right price. Even dark, heavily toned coins in holders have a company standing behind them, where conservation may improve their eye appeal. There is always another day with a certified coin with a company standing behind them, instead of the problem walking wounded "unwashed masses" coins without interest.
One thing we don't talk about is the increase in tuition, it plays into the grading issue and the willingness for newbies to jump in. What the heck am I talking about? I'm on the 3rd restart of a bust half set and I'm putting $400 XF coins in slots next to equally nice $70 XFs from years back. I'm torn on whether I'd keep collecting some types with a major drop in value, but if XF busties dropped back to $100 there would be wailing and gnashing, but I would take the loss on what I have and keep going.
Wow, I'm at the same point with my XF-AU Bust halves. I have tons of the $70 XF coins you refer to, and most are now $105 XF coins due to the fact that they became worth submitting at some point. I'm not going any further with adding coins at $400 a pop, so do I sell them and avoid the hypothetical wailing and gnashing? Or will I be sorry in a few years when they are $600 XF coins?
"Is the increasing complexity of the grading game damaging our hobby?"
Absolutely - anyone new to numismatics is probably going to say WTF after reading about everything one has to do to validate the quality of their coins. And then after doing so, they learn it is all subjective anyway. Then they are gonna learn that there are alot of fakes, and even fake slabs. Then they are going to see how much it costs to have nice coins. After all of that - they will say 'I'm thinking I am going to go hunt bigfoot instead'. I would honestly say all of this is a strong deterrent to anyone wanting to collect coins and bigfoot beckons. Hence why bigfoot videos get hundreds of thousands of views on Youtube why coin videos get a few hundred. ......
Best, SH
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why would a $70 coin be worth submitting though? I can wrap my head around your 1796 quarter in G6 being submitted but thats not a grading event its authentication , you want to know its real , you don't need help deciding its a G6. Why pay to get a $70 coin graded though? If its fake you are out $70 at most and if its real you are out $35
Why are XF Bust halves worth submitting? The $70 coins of the 2000-2002 era turned into $350-$400 coins in the past few years- but they have to be in PCGS holders to bring the stronger prices. PCGS graded Bust halves get more views and more bids, and thus bring higher prices, in venues like eBay. Getting them graded distinguishes them from the masses of coins that have an old cleaning or a hidden problem- which is a big deal these days. In addition, you can't put a raw coin into a PCGS Registry set.
I agree with what you say. I'll keep it simple. Ken Bressett does not like slabbed coins, and when I thought about it I realize neither do I. I prefer having the coins raw, in hand; it feels more personal. Of course, the caveat is that I collect sample slabs. However, I separate this from the issue as there are none of the problems you describe about grading in samples. I collect them because they are fun and cheap. Stay raw.
CCAC Representative of the General Public
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2021 Young Numismatist of the Year
Well ok , I thought you meant they were worth $70 raw now
I don't follow bust halves I only own one that came as part of a lot I picked up years ago its a VF 1825 I think.
Off topic, but here's an interesting bit of trivia. There are no circulation strike quarters with an MS70 grade. In fact, there are no circulation strike US coins at all with an MS70 grade. There once was one solitary 2003 cent that achieved that grade, http://pcgs.com/cert/08830773, but it turned in its holder (spotting) and has since downgraded to an MS69.
So I can remove the word "possibly" from the quote above?
I've cracked out almost all my coins and stuck them in albums and flips.
The "Hobby" is free to evolve all it wants around these coins for 15 years in the past now, and probably 15 more in the future.
Some of these are very nice coins that will earn whatever bells and whistles the Industry comes up with, but i don't want to chase fads, and pay tax on them in the meantime, in the face of ongoing grade inflation
Liberty: Parent of Science & Industry
I just wanted to be the first to agree with "you" in the thread
carry on all
I qualified my statement carefully from word #1. __ Virtually __ .
I was very tempted to put a dollar limit under 1K on it.
How about
"The great majority of American collectors don't concern themselves whatsoever with gold coins because of expense. They collect silver, copper and nickel coins priced under $1000 in circulated grades. The impact of TPG grading is much more important at higher price levels where technical quality and degree of preservation creates more value.
A progressively smaller percentage of consumers take the most dramatic financial risks. They, along with dealers whose day to day livelihoods are dependent upon grading results, are more prone to anxiety than the rest, and sometimes wake up in the middle of the night screaming. For relief, they post on the obscure PCGS US Coin Forum, which less than 1% of American collectors know exists. Few find it helps much.
Accordingly, unaccustomed to viewing online Photograde at bed-time, the others are more likely to sleep the night through. Instead, reading the Redbook in the bathroom is the high point of their day. Until that second cup of coffee.
And yet, they are happy."
I myself can argue both for and against both "facts" and nuance as expressed above, but there is a replay of an 1973 Knicks playoff game on cable that will make me happier
For these reasons I am in the process of transitioning away from decimal coins and moving toward medals. I pick up circulation coins when it makes sense to do so, but there is so much unfettered enjoyment to be gained from collecting and researching medals. Of course some, like most Betts medals, end up in holders, but there remains so much out there ungraded that opportunities abound. It's just plain fun without the worry.
Dealing in Canadian and American coins and historical medals.
Yes.
Has anyone bought a diamond lately?
Multiple grading companies exist with multiple variables being graded. This creates one big gigantic headache for the consumer. Good luck trying to comparison shop.
I am new collector and yes I am having to rely on slabs until my grading skills get better. But it still baffles me how some collectors or dealers will state the importance of a CAC sticker to validate the grade and then turn around and say the PCGS coin with a sticker is worth more than a NGC coin with a sticker. When CAC stickers a coin for a grade do they not use the same standards for PCGS as they do for NGC?? I know there are a lot of people on this forum with years of experience, can you help me out with this?
@rhedden said:
So as long as it costs less than $280-$330 to slab each coin, is it a win?
Excellent summary, Ron. For those who don't know it, a number of years ago, NGC slabbed many nice MS 64 Capped Bust Halves as MS 65, and these coins sell at a substantial discount to the PCGS MS 65 coins of that series. Even the 5s that NGC got right still trade at a steep discount to their PCGS cousins. If you want to cross one of these coins, or crack it and send it raw to PCGS, good luck to you.
If I was advising a new collector, I'd tell him / her to avoid gold, and stick to nice AU or lower grade type coins, avoiding shot AU 58s that might be considered Unc. at some point in time. If they wanted some Gem coins, buy relatively inexpensive attractive type coins, like a 1940s Merc., a 1945 P Walker, an MS 66 38 D Buff, and an 1883 N/C Nickel in MS 65.
"Seu cabra da peste,
"Sou Mangueira......."
...it's not on CAC or PCGS or NGC or even the dealer..it's on the collector cause they make the market...and the market wants PCGS+CAC more than it wants NGC+CAC...simple really
most of what the OP described only applies to a really small segment of the Hobby which tends to be driven by ego and greed.
While I find the OP analysis well stated and accurate... and the following comments interesting... It really is all about the selling of coins.... not true collecting. I collect coins, I do not sell them. I buy the coin, not the holder or the sticker - that is extra baggage. Always the comments boil down to selling and profit - or loss. For me, it just does not matter. So I will continue to enjoy my coins, collect what I like and have fun doing so. For those in the business (that is different than the hobby), I wish you well in today's market. Cheers, RickO
The hobby doesn't suffer damage. The wallet might. The ego may. The hobby ? It's in full swing. Hey batter ! Like a good sport.
I like the OP's points and have tried to explain them in the past to some friends who were interested in starting a collection. After getting half way through they said "pass". I think they collected some artwork instead.
I would like to add:
8) - the advent of the registry set on collecting habits
9) - access to the latest up to date information; coinfacts, auction results, etc
Yes. I once had a person scoff at a gorgeous AU-58 Turban Head $10 because it "wasn't Mint State!"
Yes, the hobby has already been suffering from this.
The problem has been much worse with MS coins but gradeflation has hit circ coins, too.
Standards changed to allow more and more harshly cleaned coins in no problems holders. Some of the junk in holders today would have never been certified in the early days of PCGS and NGC, no way, no how. Many holdered coins would have been returned in body bags but, at some point, standards changed on these and other circ coins, like key dates, too.
You called a spade a spade! Great article!
Perhaps some TPG's including our host would care to comment?
I believe your whole rant is spot on. And in addition to driving new collectors out of the hobby, I think it is having a negative effect on seasoned collectors, as well.
ColonelJ ... I suppose a thoughtful comment in an effort to reset the mindset of those that make the US coin market what it is has less of a chance at success than a certain franchise capturing an NBA championship...
Enjoy the replays...Until that day comes
Experience the World through Numismatics...it's more than you can imagine.
I agree. I could add more, but I would be booted.
Yep.
I don't think collectors ever wished for TPG grading or CAC. Those were institutions thought up by dealers (for dealers) where the rank and file collectors pretty much had to follow along...or be left behind.
It's a relief to see this post. I'm another raw beginner. I've spent the past 3 months averaging 2-3 hours a day looking at coins and reading up here and elsewhere. Read a lot about grading. I can't for the life of me make any sense of what I'm seeing. I'm a total noob and I can clearly see there are MS62 coins that are much nicer than other MS63 coins from the same TPG firm. It's the same across all grades, although once you get up into 65 and higher, things get a bit better. And there seems to be a premium for PCGS vs NGC. The histories available at PCGS and the auction results at Heritage and elsewhere make it easy to look at high quality pictures of thousands of coins and try to correlate price with condition and grade, and that's what I've been doing.
When I take into account all the variables mentioned here, it's hard to know if spending a 'modest' amount on a coin I like is a good idea. I mean i.e. $200-$500 (most of us are probably blessed that we can call these amounts 'modest'). I hear a lot about 'Just buy what makes you happy and don't worry about the $$'. That's fine, but it turns out I like nice, older coins. Surprise surprise, don't we all. If I bought a coin and paid 'up to grade' only to have an objective pro tell me 'that's not actually MS63' I'd feel bad. I don't want to feel like I bought something that was misrepresented.
The only solution is to wait until I have enough of a handle on grading and build up the experience that I can a) know what I'm really seeing when I see a slab and make an informed decision, and b) know enough to be able to assess a raw coin accurately.
To even get close should take what... 5 years if I work at it?
BTW, thanks to everyone who has been talking to me via PM. There are some helpful folks around here if you're a noob, and that's encouraging.
Tradernik, if you focus on some specific areas, and look at thousands of coins in a concentrated period (say 10,000 coins), you can come up to speed (60-65% accuracy) within 6 months - 2 years on something as basic as Ch/Gem common date Morgan dollars, common Unc. Walkers, circ anything, etc. You still have the slab to fall back on if you aren't buying raw. The easiest thing to do is to find a "look" you can rely on, and then keep refining that "look" to reduce your grading/pricing risk further and further. With massive auction archives to review most anything you want, it is quite possible to do a "coin show every day at home." We didn't have that luxury 40 years ago and learned at a slower (and higher $tuition) pace.
Right, so the idea is to pick a coin you love, then focus in and get to know that coin in the states you're able to buy? Great advice, actually. Not quite as fun, in the sense that there are a number of coins that I'd love to own. And I don't need them MS67, but some of the XF stuff is a little too worn for me. Still, sounds like a good way to accelerate the pace. Thanks.
Boot the coin, not the holder!
Wait. I may have mixed that up
But I will say "you ain't seen nuthin yet" re: carnage to come.
Yes - for that reason many flocking to mods, currency.
Sadly what gets me are people who cross to lose or tie.