By F. Michael Fazzari
Coin grading is a subjective examination made to assess a coin’s condition of preservation. Its grade will help determine its desirability and value in the marketplace. Unfortunately, there are several characteristics on coins that ensure commercial grading will always be very subjective.
Before continuing, let’s make sure you understand what commercial grading actually is. I tell students it is the act of placing a value on a coin. That’s what coin dealers and third-party grading services (TPGS) do on a daily basis. While the four major TPGS are fairly consistent in this regard, taken as a group, coin dealers are not. Now, rather than getting into the weeds discussing the merits of that last sentence, I’ll continue with the subject of this column.
Commercial coin grading is difficult. I believe one of the main reasons the top two TPGS came into existence was the original TPGS were not satisfying the needs of the coin market. The grades they were assigning were considered to be not “realistic” because in most cases they were too strict. The graders at the early services were not coin dealers, and the grading standards they used were based on a set of standards mostly devoid of the subjectivity related to characteristics such as a coin’s color and its strike. Additionally, back then, Mint State was defined as “no trace of wear.”
Thus, in a roundabout way, I have brought you back to one of the subjective “flaws” of commercial grading. How does a coin’s strike, the amount of design detail imparted to the planchet when it is made, contribute to a variance in an assigned commercial grade – its value?
There are several factors that determine how a Mint State coin will look (the amount of design detail on the coin). Any deviance in the die, planchet or coin press can cause a coin to be less suitable to a finicky collector – and that’s most of us. If an eagle on a coin is supposed to have feathers, they need to be present on a Mint State example commensurate with its commercial value as assigned by a major TPGS for a fully struck coin. A coin that is not fully struck will be valued less by collectors and a grade assigned by a TPGS will generally reflect this fact. Back in the day, professional graders would not assign a grade higher than MS-64 to a weakly struck gem. As a weakly struck coin becomes a little circulated, its desirability and “apparent” grade drops by a lot. The Buffalo nickel series is full of actual VF/XF coins that are barely worth VG/F money because their lack of detail gives them the appearance of the lower grade. I hear it all the time in the grading room. “You cannot grade that coin XF, no one will pay even VF money for it.” This is where subjectivity, actual condition and commercial value come together to produce complex problems.
We recently had a coin like this leave ICG with a commercial grade that reflected its value rather than its actual condition. The coin was a flatly struck Capped Bust half dollar. It was a TPGS Photo Grade Fine-15 due to its strike, yet it still had some traces of original mint luster. The “grade-by-a-photo experts” on the internet agreed the coin was under-graded. Some even claimed it was an XF due to some patches of luster. A technical grade that would fully describe the coin would have been VF-25 Flatly Struck, so upon review, the coin was regraded VF-20 Flat Strike to try and keep the grade in line with its value. As a much younger professional at the first TPGS, INSAB in Washington, this situation would have never occurred. Our grading was strict; yet we did not take a coin’s strike into consideration at all. A flatly struck MS coin with no noticeable marks was given the same gem grade as a fully struck example with no regard to the coin’s commercial value. Our grading only reflected the condition of the coin from when it left the dies. Its value on the commercial market was of no concern to us. Let the dealers place the value on the coin.
What is the value of the flatly struck nickel shown here? How far down the grading scale would you net grade this fully original “Gem Uncirculated” coin?
By eliminating variables such as strike and the even more subjective distinctions of color and toning, we kept our grading at the first TPGS precise – less subjective. Nevertheless, our experiment failed. It also cleared a path for the commercial market to welcome the “new” commercial graders and the evolution of the concept of slabs that was already in its infancy in the mid-1980s.
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