GRADE INFLATION

[jody526]

Although fairly specific qualifying standards exist for grading all US coins, it is the INTERPRETATION of these standards by the grading services in a rising market that has led to "gradeflation". The major companies all use "market grading" which is a combination of both technical criteria for a given grade and what the numismatic market considers acceptable for that grade at a certain point in time. The market factor usually decides if a coin receives a higher or lower grade when submitted. If any service grades too conservatively, dealers and collectors won't submit their coins-too loosely and graded coins from that service will trade at discounted prices. What does this all mean to you? Most high end MS64 US coins graded years ago have been cracked out of their slabs, resubmitted, and are now residing in MS66 holders. Many coins recently graded MS65 would have only rated a 63 designation in the past. Of course, all of this reshuffling has led to higher collector prices for basically the same coins! Gradeflation is most present in commoner date slabbed coins retailing for less than $500 within the most popular US series (Morgan dollars and Walking Liberty halves, for example). A huge number of these exist and when the market for them turns downward you will be exposed to grade "deflation". In other words, the holder may STATE that the coin is MS65 but you will be very lucky in a weak market to be offered an MS63 bid for it if you are forced to sell. How can you protect yourself? First, NEVER buy slabbed US coins sight unseen! Dealers don't-why should you? Many pieces offered in print ads and on the Internet are lower end "barely made it" coins. When looking at certified US coins in person, only select coins for your collection that are VERY high end for the stated grade and pass on the rest. Secondly, sharpen your grading skills to the point where you can comfortably buy MS63, MS64 and MS65 coins in their raw state (leave the MS66 and higher "super grades" to the experts). Once you start looking you will find that a number of old time dealers out there grade their material more conservatively than the services (especially in today's market).

[csmalibu]

There is a great amount of talk now about so many people cracking open their previously graded coins and resubmitting them. Many people also know that grading standards in general, have laxed a bit in the last couple of decades. I am an ANA member and have noticed the quality of a specific grade coin vary at shows. I guess my suggestion is to get aquainted with the particular series you are collecting and only buy coins you can examine first. I am not a huge buyer of prefessionally graded coins, but I do have a very respected coin dealer in my town that grades by the "old" ANA standards. His prices are in line with most other dealers, but the quality for the price is exceptional. I guess the bottom line is do your research before buying any high dollar coin. Look at it on the bright side with professionally graded coins: your chances of buying a counterfiet are slim to none!

[dargonbill]

Grade inflation has led to grading even in the Sacagawea coins I've been noticing. Can anyone tell me why they would grade a circulated "Very Fine" as a "Brilliant Uncirculated" coin? I've been bidding on these coins and then find that I have to down grade to "very Fine" if I want to ethically re-sell them on Ebay.

[szul2005]

dargonb, Do youself a favor and stick to reputable slabbers. They are: PCGS,NGC,ANACS AND PCI(top 4 grading companies). Most of the other TPG (Third party graders) will overgrade 2 or 3 grades to get more submissions from some dealers. Also, be more careful when viewing the pics. If they are "fuzzy",ask for clearer ones. Happy Hunting, Brian

[norcalcounsel]

Among the three top TPGS (i.e., ANACS, NGC, and PCGS), I've noticed a distrubing trend in GRADE DEFLATION and in kicking out fine coins as "non-gradable" for very, very tenative, arguable reasons. I attribute this to CAC, and the fear of not receiving that coveted green sticker. The GRADE DEFLATION trend infuriates me, as I've been saving a number of choice raw coins, which have come back with grades I KNOW are below what is fair.