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‘Fourth-party grading’ doesn’t add depth

For those who thought they had seen everything with coin grading, we now have fourth-party graders! Before we had grading companies it was pretty simple. It took two parties for coins to change hands ? the buyer and seller plus a price list based on the state of preservation of the coin. Human nature typically had the seller lean on the better state of preservation of the coin (higher value) while the buyer often would estimate a lower grade (less cost).

The coin industry promoted the idea of an independent appraisal of coin (third-party grading) because it would simplify coin transactions and even promote sight-unseen trading of coins. It?s been over 20 years since companies started for a fee to evaluate a coin and assign a grade. The earliest was a non-profit service by the American Numismatic Association that would return the coin in a simple flip with a card with photograph of the two sides of the coin and a grade assigned to each side of the coin. The back of the card had a long disclaimer stating coin grading is subjective and there is no guarantee that the grade assigns a value. The reality was that a coin grade become a starting point to determine the value of the coin when a price listing was used.

In the 1980s this first ANA grading service was quickly followed by for-profit companies that would seal the coin in a plastic holder, or slab, and give on overall grade to the coin. We now have numerous grading companies all using plastic sealed holders. Some of these companies are considered to be reliable while others border on fraudulent with over grading of coins and unwillingness to state what standards they use to grade their coins. In fact, anyone can purchase their own plastic holders and put a name and grade on them. Even among the companies that by consensus are considered reliable, there are coins that seem to be either a little over graded or under graded. The more valuable under graded coins are often broken out of their sealed plastic slabs and resubmitted with the hope that a higher grade is given. This has lead to the first fourth-party grading company (John Albanese?s Certified Acceptance Corporation) that for a fee will appraise an already slabbed coin. If it is average or above average for its grade, they will affix a sticker on the slab. They promise that they will have an Internet list of the coins they ?sticker? but won?t post coins that don?t meet their standards for a higher grade.

I want to start off by stating I am not proposing any change in our 1-70 grading system. It is part of the mystique and charm of modern coin collecting and we have millions of coins in plastic holders. Before suggesting any change, it is important to realize that third-party or now fourth-party coin grading in its basic form is an appraisal done by an expert for a fee. Any coin book that covers grading lists the same areas that are evaluated in determining the grade of coin, including quality of strike, surface marks, color, toning, luster and an overall impression of the coin called eye appeal. However, all we get from the current grading companies is an overall grade! One promised difference is that the newly reincarnated PCI (Photocertified Coin Institute), which changed its name to Dominion Grading Services, will post digital images on the Internet of any coin it grades with a value over $100.

As a collector, some of my pet peeves with the current coin grading companies follow:

1) They are arbitrary when deciding when a coin has been cleaned, which can result in refusal to grade by some companies and a lowered grade by others ? this seems hypocritical when some of them would dip coins for submitters in the 1980s to remove light toning! Even the upper-level grading companies will grade many pre-20th century coins as uncirculated along with earlier 20th century silver coins that have had a light dipping.

2) We get no information when the obverse and reverse are different.

3) It seems that for the coins with special grading criteria (full bell lines with Franklins halves, full split bands with Mercury dimes, full torch with Roosevelt dime, full steps with Jefferson nickels and full horn with Buffalo nickels), the reverse of the coins determines the grade. I collect Mercury dimes and have seen many full split bands ?gems? in a slab with a non-gem obverse, especially in terms of strike and very worn obverse dies.

4) It is difficult to see the rims in many slabs. Being able to see a rim would help a potential buyer determine whether the coin has been dipped since any coin that has been handled will having some toning on the edge of the coin.

If our Public Broadcast System or the British Broadcast Company ran their ?Antiques Roadshow? like our current coin grading companies, nobody would watch them because all we would get is a final value of the item!

What I would love to see is a more transparent grading process that really describes the coin and teaches collectors and dealers what goes into giving a coin a grade by expert appraisers. I am not suggesting a change to the practice of giving an overall grade, but specifically that it would be neat to have grading companies post their appraisals of coins they grade.

Images would be nice although some coins tone even in slabs, but more important is to have the service list for each side of a coin their appraisal of color, toning, surface marks, luster, strike and eye appeal. They can also include honest reports of whether the coin has had any type of cleaning and lower the grade if the cleaning is severe.

I would also like to see all of the grading companies grade ?damaged? coins. I have a 1916-D Mercury dime that would grade very good but has a couple old scratches in the neck. I haven?t bothered to submit the coin to the premier grading companies because it will come back in a ?body bag.? This type of coin is very collectible, but I hate to see it go to the lower echelon of grading companies that will either over grade it or not mention a relatively minor surface damage.

If history teaches us anything, we will see a bunch of fourth-party grading companies start up with the same possible extreme range of quality, reliability and confidence we presently have with third-party grading companies.

Another critique of fourth-party graders is that they really don?t fix the problems with the current practice of assigning a single grade to a coin.
Like the ?Antiques Roadshow,? let the quality of a coin appraisal reflect how the best appraisers do their work and what information they use to determine the final value (grade with coins) of the item.

Meanwhile, the best advice for any coin collector is to buy the coin in the holder, not the grade on the slab.


Bill Waring is a hobbyist from Milwaukee.

Viewpoint is a forum for the expression of opinion on numismatic subjects.  To have your opinion considered for Viewpoint, write to David C. Harper, Editor, Numismatic News, 700 E. State St., Iola, WI 54990. Send e-mail to david.harper@fwpubs.com.

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