Third Party Grading Companies - Part 1

January 5, 2009

PCGS MS63 1879S Morgan Dollar

Coin Grading, a difficult problem

Grading coins is a very subjective topic. The grade of a coin depends not only the amount of wear of a coin, but also the quality of the strike, bag marks, luster, eye appeal, rim condition, and many other factors. Very few of these factors can be easily quantified on any measurable scale, and even when trying to do so each factor is subjective and can vary depending on who is grading a coin. Thus, any single coin can be assigned a different grade when given to different coin graders. It can vary depending on experience of the grader, the type of coin being graded, how 'tough' a person happens to be grading a coin, or even the day of the week.

Of course, the actual grade of a coin is critical, with the same graded almost uncirculated versus uncirculated potentially having values 100's or 1000's of dollars different. The potential conflicts in grading a coin become even worse when buying and selling coins. It is natural for sellers to tend to over grade a coin to get more money, and buyers to under grade coins to get them cheaper. Particularly unscrupulous sellers will go out of their way to over-grade coins to dupe novice coin collectors who are unable to grade coins. Even worse is when counterfeit or cleaned or altered coins are passed off as genuine or non problem coins. Clearly this is a problem that needed a solution.

In part 2 of this series I'll cover the origins of the third party grading companies.

Posted by mnemtsas at January 5, 2009 5:17 PM
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