The purpose of this article is to explain the true meaning of a coin's numerical grade and how to interpret it.
I have struggled with this topic of coin grading for most of my professional career, which is now over 45 years. My use of numerical grading started back in the early 1970’s, as a shorthand for lengthy written descriptions. I knew what the numbers meant to me, and often my customers, having dealt with me previously, understood it as well.
I, as well as any intelligent person, recognize that numbers are exact. For example, twenty-seven always equals twenty-seven. That does not hold true for the current use for numerical grading, which is employed by all of the third party grading services (TPG's). There are at least four competent professional services (in alphabetical order, ANACS, ICG, NGC, and PCGS) that currently encapsulate coins. They often disagree about the numerical grade of an item. I have many colleagues that earn their daily bread, just by taking an already encapsulated item, breaking it out of the holder and submitting it to another, or even the same service.
The new collector just entering numismatics is immediately introduced to a system of evaluation that can be very confusing. They came from a world where numbers were exact and are entering a world where numbers do not reflect that same consistency. Virtually all coins are different in some way, but many of these, as encapsulated by the services, are treated as equals. If we take two different coins that are encapsulated as X, we may be able to agree that one is superior to the other. The new collector does not understand that there is a difference. They see X and that is what it is, as dictated by the TPG.
A long time client and advanced collector recently wrote an article about his experiences with encapsulation, in regard to his experience with his collections. He came to the conclusion that we are in a new time, one where the collector depends on the TPG to determine the condition of the item. Their likes and dislikes often take a back seat to the TPG. He credits the TPG with an excellent business plan and their ability to create new items for collectors to collect.
My experience in numismatics has made it extremely difficult for me to accept a TPG as the final arbiter of my property. The main reason for this is that the same coin will not always be encapsulated by the same TPG as it had been before. There does not exist the degree of perfection in evaluation for the TPG opinion to be accepted as law. There are far too many instances of differing evaluations on the same item for me to be able to accept this as law. I have examined many coins in my career and understand that coins are different. The new collector is not taking the time to learn about their collection and how their hard earned money is spent. They are not taking the time to learn about the dealer. They are just accepting the TPG, because the service may offer a guarantee of grade. It is not that simple. Yes, the guarantee has been used successfully to recover some money, but it is just a tiny percentage, certainly less than 1%, of the overall value of encapsulated items.
I can say, without hesitation, that many, many, of my colleagues stand behind their sales. In all actuality, each dollar of value is a different grade. I can have a coin that is worth $1000., $1100., $1250., or whatever, and they can all be the same numerical grade. There is no substitution for personal experience and the learning that goes with it.
There will be another system that comes into usage, in the not too distant future, that will be different from today’s system. It has already begun. There are stars, designations of strike (FSB, FBL), differing surface characteristics (PL, DMPL), etc. in use by the TPG.
A verbal description of a coin paints a far better picture of a coin, than a two-digit number.
If you can hold the item in your hand, there really is no need for a grade. If you appreciate the item, then you can negotiate the price. Richard Picker, a long-time dealer in early American numismatics never graded his offerings; he just priced them. I used to do that, but the new, less experienced numismatic public now wants both a grade and a price. The great experienced collectors of the past really never needed grades, when they could examine the item. They knew whether it fit into their collection and whether to try to obtain it.
Many of today’s new collectors are too value oriented and want instant capital growth. Slow down. If you want to collect numismatic items, as a hobby, then collect them and enjoy them. Carefully built collections are likely to increase in value. They have in the past, and they should in the future. There are no guarantees. No one has to collect numismatic properties, but if history is a barometer of the future, the number of collectors will grow and so will the value of your collection.
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