Dr. Sol Taylor

Coin Population Data, Part 2

By Dr. Sol Taylor
"Making Cents"
Saturday, January 24, 2009

he American Numismatic Association formed a grading committee in 1975 to formalize a grading scale and for every series of United States coins, and to establish guidelines for ascribing grades to each coin.\
    Headed by numismatic leader Abe Kosoff and Ken Bressett, the committee established guidelines in the form of the Official ANA Grading Guide. Peviously, the ANA had been certifying coins as genuine, but not ascribing a grade.
    The Early American Coppers (EAC) had a system in place, designed by Dr. William Sheldon in the 1940s, giving each coin in the series grading pointers from 1-70. This was based in part on the dollar value a coin had in relation to its grade.
    For example, a 1798 large cent graded Very Good-8 was worth $X. A similar date coin graded  Fine-15 was worth $2x.  A similarly dated coin that graded Extra Fine-40 would be worth $5X.  The highest-valued coins in the series would grade in the MS-60 to MS-70 range based on their 1940s market value.
    Since so many coins already had a numerical value assigned well before the official ANA Grading Guide was published, the ANA adapted the 1-70 Sheldon Scale to all United States coinage.
    In the early days of grading, the ANA service known as ANACS (ANA Certification Service) would grade coins for a fee and provide a photo certificate with a high-resolution black and white photo of the coin showing the grade for each side (not very coin grades the same on each side). Thus a common ANACS certificate might read "1905 Barber quarter VF/F." That meant it graded very fine on the obverse and only fine on the reverse; this was common as in this series the reverse details eroded faster than the obverse features.
    This system, was in place from the mid-1970s to about 1980. The certificate changed to color images of the two sides of each coin. 
    By 1985, with the innovative encapsulation (known as a "slab") by PCGS, the ANACS certificate became obsolete and few remain today.
    Further, PCGS ascribed a single grade for each coin, usually leaning toward the lower grade in cases where one side was better than the other. In their first few years, PCGS slabs were the universally accepted grading standard for all United States coins. Within the same decade, Numismatic Guaranty Corporation introduced its version of the slab and began to certify coins.  By 1990 it was evident that a majority of submissions were more modern (less than 50 year old) – coins of mint state with aspirations of achieving grades higher than MS-65. Thus began the race for "top grades collections."
    PCGS acknowledges the holders of top-graded series in their Set Registry publication giving credit for collectors who assembled the highest graded coins for a given series.  In the Lincoln Cent series, collector Stuart Blay has for the past several years achieved ratings (average of all coins in the series) of MS-67-plus. The highest possible grade is less than fraction of a point higher. And for many of the super-graded coins, super prices are achieved at public auction.
    A very common 1963 cent was graded MS-70 last year – the first and only one – and it sold for more than $15,000. An MS-65RD 1963 cent is worth perhaps ten cents.
    The drive for ultra-high grades gives some coins the title of "Set Registry" coins — those grading MS-70 or Proof-70. There is no higher numerical gade than 70.  For coins over 100 years old, the super grades usually tail off rapidly above MS-66. And for many coins in that age bracket, often NO coins list above MS-65.  In auction catalogs a coin often includes its population status, such as 1877-S quarter MS-64 47/12 which means there are 47 coins of the same date grading MS-64 and 12 coins higher grades.  For coins that show figures such as 15/0--that means that coin is among the highest graded since there are none higher.
    The process of grade inflation seemed to have caught on midway through the era of slabs. According to Q. David Bowers (and many others) many investors, dealers and collectors have been buying coins grading MS64 and resubmitting them to the same or different grading services in the fond hope of achieving another point (or more). In some coins such a single point can mean thousands of dollars or more at auction. Though there are no hard figures for this crossover process, no doubt hundreds (if not a few thousand such coins) have been broken out of their slabs.  I know of cases where a coin has been resumitted more than twice in hopes of gaing an extra point or two.  In a few cases, the result has been a loss of a point or two.  Since grading is not scientific, the eye of the grader is often as much as factor in assigning a grade as the coin itself. Toned (also known as tarnished) coins were in disfavor for many collectors early on but in recent years have caught the eye of many graders and have rebounded with many super grades.  A major silver dollar collection recently came up for auction where almost every coin was MS66 or better and almost every coin was toned (or tranished) to some extent. Even some of the rare 1804 silver dollars acquired as much as 15 grading points when resumitted.
    Finally, the idea of slabbing a coin seemed such a great idea that dozens of companies sprung up just for that purpose. They used similar sized capsules as PCGS and NGC, used nicely printed inserts with bar codes and to make some quick sales, gave out grades often well above the standards. Many have come and gone. Some still exist and basically are outlets for the dealers' own inventory since most dealers would not handle such offbeat slabs and many collectors soon learn their painful lessons  that the MS66 silve rolalr they paid $200 for from XYZ grading is not uncirculated and has a fair market value of $15. In a COIN WORLD analysis of  ten grading services a few years ago, only three services achieved a satisfactoiry rating while the others ranged from "poor" to "very poor". The full report is on at CW.com. When buying certified coins from a dealer or at auction, ask which grading service is the most respected and reliable--any dealer can tell you. Auction firms typically avoid the unsatisfactry services and do not usually offer their "certified" coins for sale.  E-bay recently modified its policy to only accept the word "certified" from the top four grading services. Other slabbed coins are not referred to as "ceritified".
    As with college grades in the past two decades, too many As (in many colleges more than 50%) are awarded and too few Cs (usually under 10%.) On a grading curve which was in use when I was an undergraduate (1949-1953) 50% got Cs, about 15% got Bs and the top students got As (about 5%). As a top high school student (A- overall) I was somewhat taken aback with my bunches of Cs and few Bs my first year.  But my classmates from high   school weren't doing much better except for the real "brains".  Grade inflation has hit numismatics now too.

    There is a single 1959D cent with the wheat back reverse. I first examined the coin in 1992 and believed its grade was AU. It was sibmitted for grading and was assigned the grade of AU55. Later it was resubmitted to another service and came back as MS63 Brown. In this case, the grade hardly mattered as the coin is so far one of a kind.