Top grades differ with age of series

The old advice to buy the best you can afford is still the best advice but it is potentially getting more difficult to follow. It is natural as prices rise that buying the best coin possible will be more expensive, but what is happening now is that it may well be getting increasingly more difficult to identify what the best coin is for any specific date. The problem might actually be considered a good one as our information is improving all the time, but more and more collectors need to examine what information we have before considering what their next purchase might be just to be sure they are truly getting the best and not a coin that in the years ahead will be seen as only average.

There has always been a desire in the rare coin market to own the best. That is natural and we can see in many cases where offerings and auction catalogs stretching back well over a century claim that a certain coin is the best or at least one of the best of the date ever seen. At the time many of these catalogs were compiled, there was very little information and almost no way to compare one coin against another of the same date.

In a sense, at least to some older collectors the old ways of doing things when it came to grading probably seem better, or at least easier and collectors from other countries tend to agree.

There was something very simple and certainly far less pressure to walk into a coin shop in the 1950s and purchase a circulated or uncirculated coin and even in the 1950s there were many who saw grading as nearly that simple as either a coin had seen used or it had not. The difference was easy to spot and disputes were few and far between. There were some differences in circulated grades but they were generally widely recognized and also easily understood.

High resolution images of the Top 100 Morgan varieties.

For many in the 1950s, although there were designations like “choice” or “gem,” the idea of “uncirculated” was basically a term that applied equally to any coin that had never reached circulation. It seems so simple and it was. I can remember one day at the local coin shop where the owner was showing me three different 1950-D Jefferson nickels, all of which were graded as uncirculated and consequently all had the same price. Even today there is a relatively small difference in Mint State prices for the 1950-D, but at the time I and a number of others spent a good deal of time trying to figure out which of the three we thought was the best. There were basically no standards to apply except for our personal feeling as to which of the three coins was the nicest. Sure enough, there was a split opinion although everyone agreed that one of the three was not quite as nice as the other two.

Even while we were trying to pick and choose among 1950-D nickels, things were changing as grading had already begun an evolution that continues to the present day and which is likely to continue well into the future. There were already grading standards, but it must be remembered it was a time when the bulk of the nation’s collectors were collecting from circulation and the intense interest that would come later in the highest grades was still for many hobbyists something that seemed remote from their regular collecting as a more important concern was whether the next roll of Lincoln cents that they searched might include a 1910-S in it.

Realistically, there had been general guides to grading coins dating back at least to 1897 when The Numismatist had issued seven classes for condition from basically damaged to best. In 1958 a book called A Guide to the Grading of United States Coins by Martin R. Brown and John W. Dunn was a major breakthrough as it actually had specific guidelines to grading. That was new as prior to that time it was basically a learning process from other collectors or dealers and if you happened to learn from someone who was not that skilled you could end up making many mistakes before realizing the problem.

That said, the Brown and Dunn guide had limitations as it did not even have sketches to illustrate specific coins until 1964.
Things improved even further in the 1970s when James F. Ruddy produced Photograde, which was clearly another step forward as by using photographs collectors were finally able to see just how a coin in a certain grade would appear. There were still shortcomings as coins sometimes did not fit perfectly into a certain grade, but by the 1970s most involved in coin collecting were fairly adept at grading circulated coins.

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While progress was being made in giving everyone standards by which to grade coins there was still a great deal left to be done. The biggest problems were illustrated by our problem with the uncirculated 1950-D Jefferson nickels as all uncirculated coins are not equal, and while the differences from one circulated grade to another can be fairly clear, the situation in Mint State especially to the newcomer is not as clear.

In 1977 the American Numismatic Association took a dramatic step by releasing the Official A.N.A. Grading Standards for United States Coins." It was a dramatic because the standards the ANA was using were based on a system designed by Dr. William H. Sheldon in his book Early American Cents, which was first published back in 1949.

The Sheldon scale used numbers from 1 to 70 to designate the grades of large cents. The scale had a practical side as it helped to illustrate values as well as condition. A coin receiving a 4 would be approximately twice as valuable as one receiving a 2.
The first edition of the ANA work showed grades of MS-60 and MS-65 as well as a theoretically perfect grade of MS-70, but that proved to not be enough. Grades of MS-63 and MS-67 arrived in 1981. Also, the numbers no longer were intended to be an specific indicator of value. A VG-8 might be a better grade than G-4, but the price could be more than double the G-4 price.

The changes were in many ways reflecting a changing nature in the coin market. In the 1950s many had simply collected from circulation with purchases from local coin shops or mail order dealers and auctions being relatively unusual events that often were prompted by not being able to stand looking at the empty hole in the Whitman album for the 1909-S VDB.

The elimination of mintmarks for three years starting in 1965 and the elimination of silver in 1965 for the dime and quarter while the half dollar was reduced to 40 percent before it too had all silver eliminated after 1970 had basically ended the days of serious collecting from circulation. Silver coins of the 90 percent alloy disappeared by the end of 1968 making completing collections virtually impossible at least from circulation. Increasingly, many turned to dealers as their source of coins and to the upper grades as the coins they wanted to buy.

Although the idea of numerical grading had great appeal it still had some problems, which were exposed in the market in the early 1980s. Morgan dollars were a particular focus as at the time. MS-65 was basically seen as the standard for an excellent Morgan dollar. The problem was that one dealer or collector’s MS-65 was not nice enough for another. In fact there were big price differences with some being willing to pay more for an MS-65 than others were asking for their MS-65. In fact, many openly admitted that they did not know what made for a $500 MS-65 as opposed to a $165 MS-65 and in part this was because there are many variables in a coin like a Morgan dollar such as bag marks and where they are located, sharpness, luster and other factors. At the time, one frustrated dealer simply shrugged his shoulders and suggested to me that he had no idea what his coin would grade. He just knew it was $300 and the buyer could call it any grade he wanted.

A number of groups were being hurt by the lack of clarity. Buyers wanted to be sure the coin they were getting was the grade it was sold as, fearing paying for an MS-65 only to have it later be an MS-63. Dealers were also confused and sales were probably suffering as a new generation of buyers was not content to simply hear from a dealer that the coin they were buying was, “as nice as I've ever seen.” It was at this time that the third-party grading service business burst onto the scene.

It was 1986 when David Hall introduced a concept that has been with us ever since with the debut of the Professional Coin Grading Service. It was followed by others, the most important of which was the Numismatic Guaranty Corporation of America. What put their mark on the industry was the use of the plastic slab. Along with its grading guide, the ANA had also offered a grading service called ANACS that photographed coins and issued grading certificates. The coins, though, were not sealed in the holder. That little factor made all the difference and PCGS and NGC took large market shares.

Since their introduction, PCGS and NGC have served as the dominant grading services offering the thing many wanted at the time, which was independent grading that most dealers would accept. Other firms followed their example.

It would, however, be wrong to suggest that everyone welcomed the grading service as the solution to problems seen in the market at the time. In fact, some swore they would never have their coins “entombed” in the plastic holders being used by the grading services. For many, at least initially there was enormous curiosity. I can remember spending a night in a hotel room in Kansas City with a dealer going through a box of the first grading service coins comparing one grade to another especially in Morgan dollars trying to determine with certainty what made a coin MS-65 or another grade. It was the public, however, who ultimately made the decision that the grading services were a success as without demand for coins graded by PCGS or NGC, the services would not have lasted long.

Even today with the services offering Mint State and Proof grades with the focus on coins from -60 to -70 there are still complaints and fair observations not the least of which is that grading is still not perfectly uniform in that a coin sent to different grading services can sometimes come back with different grades. That said, if a coin such as an MS-65 is honored by the majority of dealers and auction houses, that supplies the security many wanted so badly.

Moreover, coins graded by third parties does prevent some of the worst abuses of the past as very few cleaned or problem coins are going to get grades that would make them valuable, so those buying certified coins are unlikely to learn years later that the coins they purchased as MS-63 were actually cleaned AU-55 coins worth far less than they paid at the time.

While the contribution of the grading services to secure grading has been significant, a much less often mentioned fact is the information these services have provided through regular listing of all the coins graded and in what grades they are found. Such listings have become invaluable in the rise of so-called “ultra grade coins,” which are the finest known example of a specific date. In the past, a buyer would basically have to take the word of a seller that the coin being purchased was the “best I've ever seen.” Of course, if the seller had never seen many of the specific date his observation while honest did not mean much, but the grading services with records on millions of coins are a different matter.

The impact of better information on prices can be seen in any number of transactions. One instance I remember clearly happened in early 2003 when an MS-68 with full head 1920-D Standing Liberty quarter brought a price in excess of $130,000. At the time, an MS-65 with a full head was listed at $6,250, but to have the finest known as no others had been graded in MS-68 with a full head, the price simply soared and that has happened repeatedly since then especially when a coin is the only one known in the highest grade.

What the grading service reports have also done is to give us a far better idea than at any time in the past regarding how available certain dates are in certain grades. For example, it has always been known that the key 1799 large cent was extremely tough even in upper circulated grades. They were made on dark, rough planchets and simply do not usually come very nice, but now we have much better proof as the 1799 is almost never even seen in AU much less Mint State, confirming what most had believed but never had been able to prove.

For the early years, the grading services did not see many recent coin issues as financially it made little sense to pay money to grade a coin that was worth only a few dollars. Modern commemoratives, modern bullion coins and even ultra grades have changed that and we are now looking at a great deal of information about recent issues and some of that information may point to trouble ahead for the old Sheldon numerical system.

The simple fact is that MS-65 has basically become the standard for excellence in coins. In coins prior to the Civil War you do not find many MS-65 examples and even through 1900 they are the exception to the rule even if you just consider Mint State examples. Since the early part of the 20th century, however, MS-65 does not rank as highly in terms of designating the best or even close to the best. Price guides might still stop at MS-65 but the more recent the coin the less impressive MS-65 is as a grade.

The grading services show the trend. There are a surprising number of MS-65 with full split band Mercury dimes or MS-65 with full head Standing Liberty quarters when compared to the MS-65 totals for the same dates in many cases. In fact, we may well be seeing the impact as MS-65 prices for some coins are not rising as we might expect simply because demanding buyers want better coins.

Just as important, we are now able to see very clearly that with more recent issues a grade like MS-65 is simply not going to be good enough for many. At NGC for instance, they have graded 81 Barber half dollars in MS-67 or better while the MS-65 total is 856.

In the case of Walking Liberty half dollars the MS-65 total of all dates is 68,453 but the MS-66 total is 27,913 and that is just MS-66, but it is a much higher percentage than was seen in Barber half dollars.

In the case of Franklin half dollars the number in grades above MS-65 is again higher than was seen in Barber half dollars, but not as high in terms of percentage as was seen with Walking Liberty half dollars.

If, however, we turn to clad Kennedy half dollars we discover 3,177 have been graded MS-65 but 9,449 were MS-66 and 7,311 were MS-67 with over 1,700 in higher grades. The simple fact is MS-65 for a clad Kennedy half dollar is not that good and in fact higher grades are far more available.

If we take commemorative half dollars from 1892-1954, we find there were roughly two coins in MS-65 for each coin in MS-66 and a relatively small number in higher grades. If, however, we take modern commemorative business strikes we find there are virtually none that grade below MS-68 and many even reach MS-70. It can vary from one to another but the fact remains even MS-67 for a modern commemorative is not a high grade, but rather a very low one. The same patterns exists for American Eagle bullion coins of all metals. If anyone tries to sell you an MS-65, while that might sound good, it is actually not and even an MS-68, which might seem like potentially a great coin, might well prove to be very average depending on the date.

There are notable exceptions, such as Eisenhower dollars, which in some cases seem to have been poorly made, but the fact remains that if we seek an average grade for the coins of the United States we will find that recent issues are as a group not just higher than issues of the early 1900s but much, much higher and nearly off the charts at least in terms of the old Sheldon numerical system.

This is not to suggest that the current system is not adequate as perhaps it will continue to be used for a long time, but it does suggest that back in 1977 two Mint State grades not counting MS-70 were seen as adequate. Just a few years later two more grades became widely accepted and later there were others as greater precision was desired.

Today with so many new coins hitting at least MS or Proof-68 and with many others reaching a perfect -70, which was thought to be basically impossible only a few decades ago, it is fair to question whether we have reached the end of evolution in terms of grading standards. After all, the current system dates to 1949 and was made for early coppers. We build better planes than we did in 1949, have computers and so much else and based on the records kept by the grading services we apparently make much better coins now than in 1949 and our grading standards might well have to evolve to reflect that fact.