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Multiple Grades On A Label: A New Twist to Technical Grading v. Market Grading
cameonut2011
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As we all know most companies use market grading to assign a grade that attempts to represent a coin's value relative to other coins of the same issue. Technical grading focuses only on a coin's objective traits. Both have merit. Would you support a system where the services added both a technical grade as well as a market grade to the label? Coins would no longer be silently net graded and this would be reflected on the label as well like the old ANACS from several decades ago.
Examples:
1808 Capped Bust Half
Technical: AU58
Market Grade: AU62
1942/1 Mercury Dime
Technical: XF 40 with cleaning
Market Grade: VF 20 details - cleaned
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This would create more confusion, not less. Market liquidity increases with simplicity and decreases with friction.
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Fair point but is it better for this to be silently done rather than explicitly/transparently done?
Back in the 1970's when ANACS was still issuing the photo-certificates. they graded each side of the coin separately and showed both grades on the photo-certificates. In most cases the obverse grade and the reverse grade were the same but sometimes they weren't.
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I think the market grading of today creates some confusion of its own. I often see coins that, from a technical standpoint, look like 65–66s but are market graded 67–68, largely because of exceptional toning or off-the-charts eye appeal.
In the past, grading seemed to be much more heavily focused on technical condition, with less emphasis placed on color and overall eye appeal. While I understand the reasoning behind market grading, I think it has made the grading process considerably more subjective.
IMO, NGC actually had a pretty good system for navigating this. You had the technical grade, a “+” to indicate a coin that ranked at the top of its grade, and a “*” to denote exceptional eye appeal. For example, a coin that might previously have been considered a 66+ isn't simply a 68—it tells you that the coin is technically a 66, but ranks exceptionally well within that grade and has extraordinary eye appeal.
I sometimes scratch my head when I see an almost perfect, blast-white coin graded 68, and then see a wildly toned coin with surface chatter that looks more consistent with a 65–66 also receive a 68. Obviously, the market may value the latter more, and I understand why grading services take that into consideration. But when both coins are simply labeled “68,” I feel like we're losing some useful information about what actually makes each coin exceptional.
I personally think the technical grade with + and * designations approach provided a much clearer picture of the coin and left less ambiguity about what you were actually looking at.
No. The coin should have only one grade. Pricing is tough enough.
It would throw a wrench into market liquidity. It is the responsibility of the buyer to examine any purchase as to whether the coin is PQ, average quality, etc.
I honestly really like the idea but I agree with the fact that that could create confusion. While it could certainly make things much more convenient and easy, especially in areas such as details coins, it just wouldn't be worth the confusion it otherwise would cause.
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Not sure I like a TPG assigning an explicit market grade, i.e. value to the coin, although this is what happens today. But different from the technical grade would cause more confusion and buyers will point to the market grade if in their favor. I think an independent TPG 'grade' should be different from an 'appraisal'. The market will dictate the value/price when being sold.
All TPG grades should be technical and luster & strike variances from the 'norm' should only impact a '1' point variance, + or minus. So an 81-S Morgan with great strike and luster shouldn't get a bump unless it was extraordinary. Toning should only impact a '+' grade IMHO, and not a grade bump. Let the market decide if it wants to pay different from the technical grade.
I’m not certain if you are being ironic or not, but what a mess that would be for everyone involved.
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I was being serious. The thought was that it would make everything more transparent for the collector. For those citing confusion, would it help to keep the market grade on the front and the technical stuff on the reverse? You could also put the more detailed stuff online which could be linked by a QR code on the reverse, cleaning up the slab. In additional to technical grade composite grade with separate grades for both sides, there could be subcategories by strike, etc.
I recognize it would be a change, but would it really be more confusing than the silent net grading and market grading that happens today?
How about we strive to focus on consumer education instead of trying to fit more information on a tiny label. Let the buyer determine the market freely based on their own opinions. More education the better.
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That has been attempted. Then CAC was created. It is an excellent educational tool, but too many have used it as a crutch. This distorts the market. I won’t elaborate on that here as I don’t intend to turn this into a CAC thread.
Aren't photos something of a "Market Grade", or eye appeal? The problem with photos is that some people are better at taking photos than others. And of course "eye appeal" is (somewhat) dependant on personal taste.
Not really.
I believe the current collector is more than willing to pay for additional insights and information. Look at the demand for services such as CAC.
In my opinion, collectors, even more so than dealers, would be willing to pay a significant premium to understand why a coin received the grade it did. Currently, that information is largely a mystery. By design, this creates a degree of subjectivity and, in turn, limits accountability.
There is potentially significant value in providing collectors with concrete information or feedback about a coin’s grade. However, doing so could run counter to the existing TPG business model. The crack-out-and-regrade game is an important part of that model. If a TPG were to provide a detailed rationale explaining why a coin received a particular grade, it could reduce the subjectivity surrounding the grade and potentially reduce the incentive for collectors to repeatedly resubmit the same coin in hopes of a different outcome.
I think there is an opportunity here for the grading companies to create an entirely new revenue stream: pay for transparency. A collector who is willing to pay an additional fee to understand the strengths, weaknesses, and specific factors that drove a grade could receive considerably more value from the grading process. It would also give collectors greater confidence in the grade and potentially increase accountability within the grading system. That said, this would be quite profitable in the short to intermediate term, but would undermine the current business model in the long term.
I am not an expert on ancient coins, so take this with a grain of salt. My understanding, however, is that ancients often carry both a market grade and a technical grade (to use the OP's jargon).
In the attached example, I believe XF is the technical grade, and the strike/surface scores are the market grade. [Side note: I'm not sure if ancients follow the Sheldon scale, so XF might mean something different.] Anyway, if modern coins adopt both a market and technical grade, maybe there is something to learn from the practice for ancients.
So instead of one highly subjective grade you now want two highly subjective grades, I do not see the wisdom in this.
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and markets don't change
I’m confused by this. Blast white was once preferred where originality generally reigns supreme now. If market grading is pricing coins, then why the grading shifts from rattler to OGH days to today if there is no market change?
OK, now show the price guide everyone will reach for.
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The price guide would be based on the market grade just as it is today. I’m not talking about an entire paradigm shift. My proposal is to give the consumer more expert opinion and information to decide whether the assumptions made by the market grade are tenable to the buyer. It would also identify low end coins and those that are solid orvery high end for the grade depending on how much info would be provided (I.e. whether to create sub components based on surfaces, strike, etc.). Realistically most collectors and many dealers use the services as a crutch and are very poor graders. The members here, at least the well established ones, make up a very small elite portion of the market.
The services could try to use this as a revenue stream by issuing “TrueGrade” certificates for an additional fee. It could require it for all coins worth more than $5,000 or $10,000 or so.
The idea may sound far fetched to some, but years ago people laughed at CAC for charging to sticker coins it likes. The CAC sticker is far more ambiguous than my proposal as this would delineate (depending on how executed and how detailed the information provided is) between “A” and “B” coins.
Grading companies should grade coins and let the market price them.
I'm not holding my breath waiting on that.
I'm a fan of "market grading," which, even with its flaws, doesn't pretend that, e.g., all "cleaned" coins are equally compromised. Experts look at a coin and make an informed decision about that coin.
But as soon as any negative information is included on a label, the value of that coin crashes, even if it would take an expert with a microscope to see the "problem." Since I buy with an eye to resale, I won't buy a "details" coin, regardless of how attractive I may find it, and I'm sure I'm not alone.
IMO, the entry of CACG into the fray reduced consistency, which does not work to the benefit of the collector. Adding another subjective grade to a slab would further reduce consistency.
The NGC Ancients method is a fairly good implementation of this type of concept:
1. Market grade on top, 1-70 scale, use to look up in price guide for most series.
2. Other non-numeric grade components that are used in some price guides (currently color RD/RB/BN, Full Bands, Full Head, Full Bell Lines, Cameo, Deep Cameo, PL, DMPL, Chopmark (Trade Dollars) are used in the PCGS Price Guide.)
3. Strike (for series other than Mercury Dimes, Roosevelt Dimes, Standing Quarters that already have FB/FH). Do not use the 1-70 scale, because that will be confused with the Market Grade. NGC Ancients use 1-5, maybe that is sufficient.
4. Surface, for situations where the Market Grade is a combination of Surface, Strike and Toning, but some collectors want an independent measure of Surface/Wear. In theory this helps with AU58 vs. MS62. Rick Snow's 2016 PDS system called this Planchet (maybe because PDS is simpler than SDS). He used a 0-5 scale.
5. Die. Rick Snow's PDS used this. It's basically Die State. The basic idea is that a worn die will show less coin detail. And a clashed die is often less pretty/desirable. Of course, some (like myself) love die cracks, so a late die state may be given a low number on the 0-5 scale, but this might not translate monotonically into price! I also realize that missing detail might be caused by a combination of late die state and soft strike, and it may be difficult to distinguish between the two.
Having these separate components would allow collectors who value components differently possibly more easily find coins they want. As with any 3rd party grading, it would depend on consistent standards, and on demand from collectors for separate info on these components. It is already in place to some extent with RD/RB/BN, FB, FH, etc. Probably there is not enough demand to implement it, or it would have already been done, like for RD/RB/BN.
As we all know most companies use market grading to assign a grade that attempts to represent a coin's value relative to other coins of the same issue.
I'm not certain we all know that or agree with it now that you've brought it to our attention.
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Well it reflects the reality of grading. Color bumps, luster bumps, eye appeal deductions for garish toning, and various levels of friction in low grade uncirculated grades, etc., are well explained by the concept. And yes I understand the concept of cabinet friction, but many of those low MS grade Bust halves definitely circulated.