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PCGS Made a Big Mistake

...when it designed its grading scale for gem toned coins. It effectively decided to ignore 3 gem grades: 68, 69, and 70. Moreover, most of the gem coins it does grade are heavily clustered in the MS65 category. So, when you send a gem coin in for grading, you can expect to receive a grade that implies a very wide variance in quality, and hence you're really not getting your money's worth from this entire process.

Let me demonstrate using mint state 1881-s Morgan dollars currently graded MS65 and better as an example. Suppose you had a bag of such coins, randomly put together from other bags. You could expect to find the following distribution of coins by grade:

Grade Number

65 786

66 188

67 24

68 2
----------
1000

Imagine instead that a somewhat different grading scale had been adopted. I suggest that one such better scale could have been created by moving the top 20% of the MS64's into MS65, the top 30% of MS65's become MS66, the top 40% of MS66's become MS67's, and the top 50% of the MS68's become MS69's. Following that adjustment, the distribution of gem common date Morgan dollars in a bag would look something like this:

Grade Number

65 644

66 276

67 71

68 8

69 1
----------
1000


I would argue that this scale, and others like it, provide much more helpful information about the relative technical quality of a coin compared to the current truncated grading scale. But, so what you may ask? It's too late to do anything about it, even in the unlikely event that PCGS would admit that my proposal would have been an improvemnt over the status quo, right?

Well, perhaps not. I can't help wondering whether the NGC* program isn't a way, perhaps inadvertently, to correct the original problem, although it is being described as something a little different than a measure of technical quality. Nevertheless, maybe that approach, which incorpoates eye appeal into the mix, is even a better alternative than the pure technical option offered here. Unfortunately, one can presume that given that NGC introduced this innovation first, PCGS will have a hard time following suite and thereby implicitly admitting that NGC beat it to the punch.


Comments

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    baccarudabaccaruda Posts: 2,588 ✭✭
    You mean like gymnastics where on a 10 point scale all the scores are bunched between 9.7 and 10? Why not use all of the scale?

    That's my opinion too.
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    dorkkarldorkkarl Posts: 12,691 ✭✭✭
    the real problem is that the lower end of the "ms" spectrum is underused. too many sliders make ms-62, too many crappy coins make ms-63, too many choice unc's make ms-65. today's standards are way too liberal.

    ie, a better distribution for your bag of 1000 is

    60 150

    61 500

    62 150

    63 100

    64 60

    65 25

    66 10

    67 4

    68 1

    69 0

    K S
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    baccarudabaccaruda Posts: 2,588 ✭✭
    So there are no 69s, but at least you noted the potential grade. You didn't even note a 70, so in reality it's a 69 point scale, not 70.
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    BigEBigE Posts: 6,949 ✭✭✭
    Nothing is perfectimage---------BigE
    I'm glad I am a Tree
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    topstuftopstuf Posts: 14,803 ✭✭✭✭✭
    It would be AWFUL to change the grading system.

    Think of all the coins that would have to be redone at tremendous expense to the collector and immense profit to the grading companies and.........um..........oh oh........

    image
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    RampageRampage Posts: 9,697 ✭✭✭✭✭
    DorkKarl has the right idea, but I think a better idea is a skewed-left bell curve as described below. Dork's curve has more of a spike than a curve.


    Grade Frequency Probability
    60-----------120------------------0.120

    61-----------195-------------------0.195

    62-----------275-------------------0.275

    63-----------195-------------------0.195

    64-----------120-------------------0.120

    65-----------70-------------------0.070

    66-----------15.90----------------0.01590

    67-----------6--------------------0.006

    68-----------2-------------------0.002

    69-----------1-------------------0.001

    70-----------0.10----------------0.0001
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    RampageRampage Posts: 9,697 ✭✭✭✭✭
    By the way, my scale is for any coin, not just Morgans. We all know they may be be an MS70 Morgan Dollar graded.

    However, assuming 1,000 coins per bag, whether dollars, or something else, I assume there will be at least one MS70 coin per every 10 bags. Even that may be too high.
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    BigD5BigD5 Posts: 3,433 ✭
    Are we trying to adjust the grades to spread out the numbers to meet our own preferences?
    C'mon.
    That's like scaling a test in school. If everyone flunks, they flunk. You shouldn't skew the numbers after the fact.

    Sure, grading is going to be argued from now until eternity. Could it be possible that the 68's, 9's and 70's just don't exist in the real world? That the bulk of the coins fall as they have?

    I do think this is a very good topic.
    BigD5
    LSCC#1864

    Ebay Stuff
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    RampageRampage Posts: 9,697 ✭✭✭✭✭
    BigD-

    In school, the scales are skewed to the right, not left. imageimage

    Speaking of everyone in class flunking, I had a class with three other students. Four of us total from start till end. On the first exam, we all flunked. I got the highest "F". I was very proud. image The teacher taught us one thing and then tested us on something different. Jerk.

    Anyway, he ended up giving our last two exams as take home exams, one week each.

    The final exam had one question. My answer turned out to be 16 pages, give or take a sentence or two.

    My final grade was a "C+". Highest grade in the class was a "B-".

    The class was Petrology.

    Anyway.......back to our regularly scheduled thread. image
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    flaminioflaminio Posts: 5,664 ✭✭✭


    << <i>You mean like gymnastics where on a 10 point scale all the scores are bunched between 9.7 and 10? Why not use all of the scale? >>



    It only looks like all the scores are between 9.7 and 10 because that's what they show on TV. When you're watching a televised event, and especially the Olympics, you're seeing the best of the best. In the entire scope of gymnastics, there's plenty of lower scores out there.
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    baccarudabaccaruda Posts: 2,588 ✭✭
    That may be true and I take into account that I'm watching the finest in the world, but sometimes one of them falls down and still gets a 9.65 or something like that. I remember one gymnast was on those 2 bars where they flip around. She missed the bar she went to grab and landed unceremoniously on the mat - she still scored 9 and change.

    I'm guessing you would have to burn down the gym or fly into the crowd and injure spectators in order to get a 1.
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    The main reason I believe PCGS started [and was successful in the first place] was to avoid grading standard changes, to do something like your suggesting would be to the financial benefit of some at the great expense of the rest of us.

    Remember the full page adds pcgs took out in coin world when they first got started ? It would be great if someone could find and post one of those old adds here. Our grading standards will be the same tommorrow and 20 years from now or something like that. I feel sort of like that promise has already been partially broken with the new designations every once in a while that weren't listed on the holders back in the 80's. I think the full horn buffalo nickle is inevitable and I am suprised it hasn't already happened and I do feel that designation for full strike should be considered as part of the grade, so in that sense things are still changing.

    Les
    The President claims he didn't lie about taxes for those earning less then $250,000 a year with public mandated health insurance yet his own justice department has said they will use the right of the government to tax when the states appeals go to court.
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    MrEurekaMrEureka Posts: 24,791 ✭✭✭✭✭
    Most modern commems grade between 68-70. Should we rig the scale differently for them? Would it make sense if we graded one of the worst known Jackie Robinson $5's MS 61 instead of the currently applicable MS 67 or 68?
    Andy Lustig

    Doggedly collecting coins of the Central American Republic.
    Visit the Society of US Pattern Collectors at USPatterns.com.
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    RampageRampage Posts: 9,697 ✭✭✭✭✭
    Andy-

    You are correct. I forgot about commems? image No, the scale should not be rigged for those.

    Actually, the scale is fine the way it is. I was just "correcting" DorkKarl's original scale. image

    I have no problems with the way PCGS grades, unless I get a really sucky grade. Then of course, I have to go back and look at it when it comes back and then find the problem and then kick myself for sending it in. image
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    some of the other professional (?) grading services have used your plan - even include AUs as MSs - and instead of bumping up a half a point, they give them a nice 1-3 pts




    That one called SGS even has taken it to the extreme of 95%+ of their MS coins grade MS70image




    From what you describe, it sounds like what NGC is doing



    As a disclaimer - all grading services occasionally grade too high or too low - some much more often than others
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    RGLRGL Posts: 3,784 ✭
    But, if we start grading on a "curve" or statistical probabilities, you are opening a huge can of worms that will lack easy answers down the road ... each coin is unique and deserves to be graded as such instead of filling a perceived slot in a mathematical model ...
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    nwcsnwcs Posts: 13,386 ✭✭✭
    I think the issue is far more complex. Grading is not an exact science. A grade isn't necessarily stable. And the relative position from perfection can change as new standard bearers emerge.
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    nwcsnwcs Posts: 13,386 ✭✭✭


    << <i>But, if we start grading on a "curve" or statistical probabilities, you are opening a huge can of worms that will lack easy answers down the road ... each coin is unique and deserves to be graded as such instead of filling a perceived slot in a mathematical model ... >>

    Not only this, but this scale presupposes a fixed population with all pieces known. Not possible. Preservation, hoards, doctors, etc. can ruin any scale. Who is to say what each coin year should bring? The curve for an 1880-S morgan would sure look different from a 1921-S morgan. Or so we suppose. Just not possible to know enough to declare how the distribution should appear.
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    roadrunnerroadrunner Posts: 28,374 ✭✭✭✭✭
    Since PCGS started out rarely giving out 66 grades for pre-1930 coinage, and almost never giving out 67's, they have slowly and inexorably been moving to the right of the scale beefing up the MS 66 to 68 grades. Those grades will continue to get made. At NGC PF67 seated dollars from 1998 to 2003 went from 3 pieces graded to 28 pieces graded. A 9x increase. Note that from 1994 to 1998 the pop stayed at 3 pieces. Massive high end inflation began around 1998. Those high end grades ARE getting filled out. PF 68 and 69 Morgan pops have exploded too. In the same period that PF67 NM seated dollars were increasing by 9x at NGC, draped bust quarters in 64-65 have barely budged. Which is the better value? You decide.

    roadrunner
    Barbarous Relic No More, LSCC -GoldSeek--shadow stats--SafeHaven--321gold
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    SeattleSlammerSeattleSlammer Posts: 10,126 ✭✭✭✭✭
    image
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    BaleyBaley Posts: 22,663 ✭✭✭✭✭
    distribution?

    gents, a coin is what it is, and there are very few MS68 and 69 Morgans not because of quotas, but because these big heavy coins are RARE in those grades, they are from before the days of coins coming from the mint in plastic capsules.

    I think the whole premise of grading being rigged is flawed.

    Liberty: Parent of Science & Industry

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    gemtone65gemtone65 Posts: 963 ✭✭✭
    My suggestion was not to start out with a predetermined statistical distribution, but rather consider changing the way PCGS/NGC think about the range of technical quality that constitutes a given numerical grade. Comments like "there are too few pieces that meet MS68 and MS69 quality" miss my point: That quality is what PCGS/NGC define it to be, hence it is not immutable. As another writer pointed out, PCGS is may be quietly doing this already, as evidenced by the seated dollar example, among others. The problem lies with owners of the 7 million PCGS coins already graded who may be unaware that some of their coins are undergraded based on current evolving standards. As a result, these owners will lose out to the crack-out specialists when they go to sell their coins.
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    dorkkarldorkkarl Posts: 12,691 ✭✭✭


    << <i>Actually, the scale is fine the way it is. I was just "correcting" DorkKarl's original scale >>

    actually rampage, i like your distribution better.



    << <i>gents, a coin is what it is, and there are very few MS68 and 69 Morgans not because of quotas, but because these big heavy coins are RARE in those grades, they are from before the days of coins coming from the mint in plastic capsules. >>

    the point your missing, is that "choice" should mean "above average". if that's true, how can the CHOICE grade also BE the average grade, ie the grade most of a particular issue shows up in? the average grade should be ms-62, w/ ms-61 worse than average, and ms-60 a lot worse than average (but not a crappy slider), and ms-63 really should mean CHOICE as in ABOVE AVERAGE. whatever the average grade is, the choice grade should be more difficult to obtain. it's stupid when the population of a morgan dollar in ms-63 outnumbers the same issue in ms-62 by a ratio of 4-1.

    K S
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    << <i>the point your missing, is that "choice" should mean "above average". if that's true, how can the CHOICE grade also BE the average grade, ie the grade most of a particular issue shows up in? the average grade should be ms-62, w/ ms-61 worse than average, and ms-60 a lot worse than average (but not a crappy slider), and ms-63 really should mean CHOICE as in ABOVE AVERAGE. whatever the average grade is, the choice grade should be more difficult to obtain. it's stupid when the population of a morgan dollar in ms-63 outnumbers the same issue in ms-62 by a ratio of 4-1. >>


    Choice or better coins are submitted more often and therefore there is a dropoff at lower MS grades.
    I aggree with the "A COIN IS THE GRADE IT IS" crowd. All different coins have different POP situations for all kinds of different reasons. It does seem that the services change standards often by tightening and loosening here and there as they see fit. Many here would say it's "Market Driven" whatever that means. image
    Glenn

    Live Long and Prospect.

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