MSNS: GRADING AND CERTIFICATION SERVICES
As you may be aware, grading a coin is not just science but is also subjective.
Perhaps the greatest advance in the grading credibility and consistency started in earnest only about 30 years ago. This is when PCGS and NGC established consensus grading of a coin, sonically sealed into an inert “slab”.
In discussing TPG’s (Third Party Grading services), we need historical background. As old as is coin collecting is evaluation of quality. This may be as basic as “looks good to me” or as sophisticated as the Sheldon 70-point system and the ANA grading standards. Long before the TPGs, grading had already developed levels of sophistication sufficient to buy, sell and trade with mostly satisfactory outcomes.
For generations, a coin would be graded VF (Very Fine) in the eye of the seller, the buyer or – ideally – both. From our viewpoint today, this sounds loosy-goosy, but the great equalizer was the agreed sale price. The market worked perhaps more effectively by the “$” than by the “VF”.
The story of William Sheldon can (and does) fill volumes of commentary. Let’s just consider his 70 point grading scale (first published in 1949). Conceived to assign financial value to early large cents, grade 1 was a cent so badly worn that it was barely recognizable.
Considering quality, grade 70 described perfection.
Considering rarity, a large cent variety deemed rare may have received a basal value of “5”. A very common one was a “1”. Multiply this rarity factor by the quality factor (1 to 70) and that’s how much the coin is worth in $US. Pretty slick! And it actually worked – sort of. He used only 18 markers of the possible 70 – and get this – only 3 grades to cover all uncirculateds!
Unsophisticated compared to our current hair-splitting “MS 64+ CAC”, the 70 point scale expanded, survived and thrives to this day. ANA, then the TPG’s utilize Sheldon’s grading.
An additional mindset – seeking the highest quality and paying premium price – served as a stunning testimony to the collections of Eliasburg, Bass, Ford, Reed, Gardner, Naftzger, Pogue and many other well-heeled and well-connected collectors. As these collections sold at auction and - not only the rare but also the super quality specimens garnered unheard of hammer downs – the collecting community and those with a sharp eye for investing became convinced that great strike, very few imperfections and stunning eye appeal completely transcended Sheldon’s mint state grades of 60 / 65 / 70.
The ANA, Brown & Dunn, Photograde, Halperin publications have all added extraordinary insight in arriving at accurate grading. Obvious to us (but not so to Sheldon and predecessors) is that great line of divide separating circulated from uncirculated. If you leaf through the ANA grading book, you’ll see rather exacting standards to characterize the circulated grades. I, for one, have always been frustrated by the ANA book for uncirculated descriptions. Enter market grading and slabs.
How does a grading book deal with eye appeal? Renowned market grader Jim Halperin took a noteworthy stab in 1990 (“How To Grade U. S. Coins”). Published about four years after the advent of PCGS and NGC, the coin industry was still feeling its way closer to universally accepted standards.
Will grading ever become exact? Probably not. I think that the ever-subjective “eye appeal” factor alone precludes such. What is great eye appeal? It’s in the eye of the beholder; ya know it when ya see it!
Muddying the waters more so is “market grading” or “market valuation” which attempts to mesh technical grade and monetary value. This is maddening to those who see a technical AU58 in a MS62 slab. However, it is the prevailing wind and ironically the thought process is very much akin to what Mr. Sheldon was shooting at.
In 2019, we have highly robust systems in place applicable to both raw and slabbed specimens.
Let’s now concentrate on TPGs.
Over the past three decades, professional numismatists, dealers and collectors have come to trust two services above all others in terms of accurate and consistent grading: PCGS and NGC (on a MOL equivalent level of trust). Coins graded in slabs from these two companies trade “sight unseen” on dealer networks – attesting to their high level of acceptance. Mind you, each of these “first tier” services have experienced inconsistencies in grading standards over time and in comparison to each other. Grading has been, is and likely always will be subjective as well as objective.
Our organization falls in line with industry opinion that NGC and PCGS coins represent the benchmark of market acceptance in terms of value.
In plain English: We generally trust the genuineness and grade of coins in NGC and PCGS slabs. We endorse these two third party grading (TPG’s) services as industry standards.
Many TPG’s abound.
The “second tier” of consistency, trust and perceived grading accuracy are ANACS and ICG. Both of these services have gained a level of acceptance in the coin community as expert in determining that the coin is genuine and accurately graded. However, these two are generally perceived as being a little more lenient in grading standards compared to PCGS and NGC. Likewise, their valuations generally garner a bit less in the marketplace.
All other grading services are considered “third tier”. Coin dealers and collectors have noted greater variation in grading standards and consistency, compared to first tier standards (especially) and also as compared to second tier.
This does not mean that coins in third tier TPG’s are overgraded or counterfeit. Our organization neither endorses nor disapproves these third tier companies. We do reflect our industry’s general opinion: third tier coins can be expected to garner lower price values than first and second tier coins.
There’s a maxim in coin collecting that stands tall: Buy the COIN, not the SLAB.
Raw or slabbed – it’s important to assess the rarity and quality of any coin compared to price paid.
ANA Standards are the benchmark for technical grading, especially of circulated specimens.
PCGS and NGC are considered benchmarks of TPGs in coin grading.
Coins graded by these two services represent solid value.
Coins graded by second tier companies (ANACS and ICG) generally represent good value.
Of course, the asking price of an individual dealer may be perceived by the collector as spot on, too high or a bargain – be that specimen certified (slabbed) or uncertified (raw).
For MSNS: Greg Mencotti - President