Ask any retiree or coin collector and they’ll tell you: 70 ain’t what it used to be
By Charles Morgan and Hubert Walker …..
Charles and Hubert’s column Market Whimsy, which originally appeared in the American Numismatic Association (ANA) magazine The Numismatist, won the 2016 Numismatic Literary Guild’s award for Best Column, Non-Profit Large Publications.
This article consists of two columns that were first published April-May, 2015: “Reimagining Perfection” and “Meaningful Change”, respectively. It has been updated where necessary.
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There’s no denying how important third-party-certified grades are to the coin market. With the 70th anniversary of the Sheldon grading scale fast approaching in 2019, we wondered: What does the future hold for coin grading and that all-too-desirable mark of perfection, MS70?
In the decades since the publication of the landmark books Photograde (1970) and [The] Official A.N.A. Grading Standards for United States Coins (1977), the topic of coin grading has remained controversial and, to a certain extent, unsettled. The American Numismatic Association (ANA) tried to establish hobby-wide standards for grading but ultimately conceded the field when critics charged that its fledgling grading service, ANACS, was inconsistent.
Since then, third-party coin grading has utterly transformed the hobby, making hundreds of millions of dollars for today’s two dominant grading services: Professional Coin Grading Service (PCGS) and Numismatic Guaranty Corporation (NGC). Yet after all these years, charges of grading inconsistency have not gone away. For their part, PCGS and NGC shrug it off; coin grading’s an “art”, not a “science”.
But there are some hard limits built into the art, nonetheless. The Sheldon Scale, the 70-point scale adopted by the ANA and others as the basis of modern coin grading, impacts how human graders are expected to ply their craft. One such limit is the line between Mint State and About Uncirculated. Another limit is the scale’s ultimate grade, MS70.
MS70 (or PROOF 70) is described by the ANA guide as “Perfect Mint State”. As originally devised, the grade was a theoretical construct, not something most collectors expected to see in the real world.
Obviously, things have changed.
Terminal Point
Today, the perceived frequency of MS70s appearing in the marketplace has relegated this once abstract notion of numismatic perfection to a level of real world banality that the architects of the modern grading system probably didn’t anticipate.
If anything, the services have become victims of their own success. As we discussed in our column on Terminal Point, the proliferation of certified, high-grade modern coinage has brought thousands of new collectors into the hobby. But the apparent ease with which coins grade MS70 has eroded any premium that coins graded MS69 or below might otherwise have had.
There are exceptions, of course: the 1995-W American Silver Eagle may (for now) fall into this camp, but for most modern day “70s”, a few exceptions do not make the rule.
If MS/PROOF 70 becomes the only profitable grade for this sector of the industry, the grading services face an existential dilemma: either develop a strategy to create more value for 70-grade coins, or further delineate perfect coins using methodologies not currently employed.
In other words, create a grade for “Ultra-Perfect” Mint State coins.
For the sake of argument, we’ll call it “MS70+”.
MS70+ and Beyond
To understand how it’s possible to go beyond 70 points without breaking the current system, we must first understand the methodology employed to grade coins in the first place.
This method employs a human being, a 5x loupe and a finite amount of time. Lather, rinse, repeat.
Human eyes are perfectly acceptable tools for observation, but as scientific instruments they are imprecise. Worse yet, human eyesight tends to deteriorate with age. We don’t have a census of the ages of today’s professional graders, but odds are that at least some of them are aged 40 and up, the age when the American Optometric Association states adult eyesight begins to change dramatically[1].
Naturally, when 70 means “perfect”, going beyond 70 seems… “counterintuitive”. Attempts to do so within the current grading system would meet with a highly skeptical response–the same skepticism that greeted the introduction of the plus (+) grade for grades EF-45 through MS68. And while we’re not precisely sure what differentiates an MS60 from an MS60+, the empirical evidence is quite clear that plus grading in these imperfect grades has paid off for both submitters and the grading services.
So if the grading services one day find themselves pushed into a corner, and overcoming the credibility gap inherent in going beyond 70 is less terrifying than stagnation, then they’ll have to adopt a publicly acceptable methodology. One that says 70 is still “perfect”, but that 70+ coins are verifiably better using more rigorous techniques of observation.
Almost immediately, a flood of MS70 resubmissions would pour in, staving off Terminal Point (at least for a time).
But once the current system is transgressed, what next? Why stop at 70+? Why keep using the Sheldon Scale at all?
Cue Walter Lippmann.[2]
Managing the Message
If the idea of moving past 70 points on the current coin grading scale is hard for you to swallow, the first thing you should understand is that the grading services don’t equate MS70 or Proof 70 with absolute perfection.
As it turns out, the scope of “perfection” that a grade of 70 implies is much narrower than a plain English interpretation might lead one to believe. According to NGC, the official grading service of the American Numismatic Association, a Mint State or Proof 70 coin has “no post-production imperfections at 5x magnification”.[3] For a coin to earn that same 70 grade at PCGS, it has to appear “as struck, with full strike”.[4]
Therefore, NGC could give a coin a perfect grade regardless of the fullness of its strike, so long as the coin’s imperfections were imparted before it was struck or any post-production imperfections aren’t visible to a human grader using 5x magnification. PCGS, on the other hand, can assign a 70 without the aid of a loupe, if they so choose. And, by definition, pre-production imperfections are not grade limiting.
Once you realize this, it’s obvious that all the grading services need to do in order to go beyond 70 is make the appropriate additions to their grading techniques and publish the definitions.
Another way to consider the classification of coins graded 70 and up can be seen in this table. From 1 to 70, we see bands of adjectival grades organized into roughly 10-point increments:
The idea that a “Good” coin can be either About Good (AG-3) or Very Good (VG-10) is readily accepted by numismatists. Same goes for “Fine” coins. About Uncirculated and Mint State grades have also been expanded over the years, with the Mint State grades expanding in half point increments from 60 to 69. When third-party grading first arrived on the scene, there was no 66 grade, no plus grades, and no star designations. Yet collectors active in the marketplace no longer bat an eye when they see a coin graded MS66+*.
To shatter the 70 glass ceiling without diminishing pre-existing 70s, the services would first have to convince market participants that there was a meaningful way to differentiate the traditional 70 from the new higher grade(s). Again, it gets back to techniques and definitions; these augmentations could be “full strike” (NGC) or “no imperfections under 5x loupe” (PCGS). They could be “no imperfections whatsoever (pre-strike or otherwise) under 5x” for NGC, or they could simply be described as “Absolutely Perfect”.
An opportunity to go well beyond 70 exists as well. To do this, the services could evaluate the quality of 70-grade coins and give them additional points for being exceptional in one way or another. Perhaps a fully-struck coin with a magnificent cameo effect would score higher than that same coin with a touch of softness and so-so eye appeal.
We imagine such a development would actually end the use of the 70 grade as we know it, much like the introduction of the 11-point Mint State and Proof grading system brought a practical end to the once-common 60 grade.
And the new highest grade or grades beyond 70, whatever it or they might end up being, would be the modern coin submitter’s ticket to wealth and riches…
So long as it lasts.
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Notes
[2] https://en.wikipedia.org/wiki/Public_Opinion_(book)
[3] https://www.ngccoin.com/coin-grading/grading-scale/
[4] http://www.pcgs.com/grades#modal
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I think there needs to be new players on the coin grading scene. The cost to grade coins is way too high.
I think maybe a plus to the proof or MS 70 grade could or should be as far as it should go. If you start deciding to go beyond 70 pretty much the entire Sheldon scale would have to be adjusted. Of course the grading services would love to have resubmissions to make more money but now that CAC is making an enormous impact why not just leave it at that? If you get a CAC sticker that shows it undergraded that doesn’t reflect very well on the grading service. If you get one that shows it properly graded why start trying to find minute details by changing the standards to enhance a coin’s value? It can only be worth X amount.
Being an old numismatist I feel that have a good eye for grading, and feel it is neither an art nor a science but merely an educated opinion much like most everything else in life.
I have seen (in my opinion) both over-graded and under-graded coins in every holder, though some due to imperfections prior to leaving the mint which after all is definition of Mint State. I have also always preferred toned coins over clean coins, which used to be considered an imperfection that decreased the overall grade and I benefited from it. I will also never purchase a “Preserved” coin, cleaned is cleaned even though I have seen some PCGS conservation coins that are visually beautiful. I would still prefer a copper spot and though the grade on the slab does make a difference when selling, I still rely on my own opinion when buying. Because the bottom line is that I am happy :-)