Third-party grade not the end of the story

I’d like to talk about the lost art of grading coins.

Way back in the dark ages of 1990, third-party grading was not all that well accepted.

The term slab, used for a coin holder, had a negative connotation. Many collectors still wanted to be able to hold their coins, and they also liked to form their own opinions of a coin’s grade.

It made sense. Dealers formed their opinions and offered coins for sale based on that opinion. In other words, Dealer A could sell a coin as one thing, but when the collector offered the coin to Dealer B, that dealer would insist it was nowhere near that good.

The savvy numismatist learned each dealer’s grading style, and there are legends of people who could make a pocketful of money in a few minutes just by buying from one dealer and selling to another dealer across the bourse room.

I even remember reading well-reasoned commentaries explaining that coin grading is subjective, and so could never be absolute. Every questionable grade from a third-party service was considered as proof that they couldn’t be trusted.

But along the way something happened. People began to realize that once a coin was given a grade by a reputable firm, that grade then provided a sort of base value. People accepted that most everyone else, regardless of their personal opinion, would honour the grade on the holder.

It meant that buyers and sellers could conduct transactions by mail with a fair amount of confidence. With the growth of the Internet, third-party grading allowed people to buy and sell coins at a distance with confidence.

The drawback is that many people stopped looking closely at the coin itself and instead looked at the holder.

Most of these people were looking to build a collection and were happy to let a neutral professional determine the grade.

Smart dealers kept their skills sharp. It allowed them to spot possible candidates for resubmission among already-graded coins and it gave them an advantage in estimating the value of raw coins.

It also gives them an assurance that things are on the up and up.

I think collectors should do the same; it is a worthwhile use of a serious numismatist’s time.

For most of the main grades, it is largely just a matter of measuring erosion. At the top end it gets a little trickier.

In some years, and some denominations, coins were not struck quite as well, and a low-end Mint State (MS) coin may resemble an Almost Uncirculated piece from other years.

Within the 10 MS grades, it gets a lot trickier. All MS coins are, by definition, not showing any sign of wear, so the difference between a top end and a bottom end can depend on such variables as the number and location of bag marks compared with other coins of that year, or the coin is nicer or worse than a typical MS strike for that year and denomination. In other words, it takes detailed and specialized knowledge.

Still it is worth the time to learn. You can buy books and take courses, but you can learn the most by looking at properly graded coins and discussing them with informed collectors and dealers.

Don’t just look at the holder, look at the coin. It could make you money.

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