Thoughts on Grading

by F. Michael Fazzari

I have heard that a teacher or writer needs to explain a concept at least three times before it can be comprehended so please bear with me while I start this New Year by reviewing some well hashed-out thoughts on grading as expressed by me and others. The title of my November grading column was “How do you account for non-wear?” I’ll confess that I don’t pick these headings – the Editor of this paper does; and it’s a task I could never do as well. The subjects of that column were “detail” grading of problem coins and more importantly the evolution of the interpretation of “Uncirculated” for coins that definitely circulated. That message inspired one reader, Joseph Reakes, to write a follow-up letter to the Editor. I’m going to reply to his letter here rather than send him a personal note.

Just because the ANA’s stated standard for the Uncirculated grade is “no trace of wear,” that does not say that professional numismatists cannot interpret the “line” between no wear and a slight trace of wear by using any terms they please. For example, the term “cabinet friction” was incorporated into the lexicon long ago to describe coins with a slight amount of wear on their high points. Most of you have probably heard of a “slider-Uncirculated” coin that often shows even more wear. There is one thing for certain. I don’t believe the ANA should change their definition of Uncirculated to indicate a coin that shows a slight amount of wear. In class, I teach students how to detect wear on a coin no matter what its cause. Then, I explain how they must determine their own standard for the amount of rub allowed on any coin they purchase as Uncirculated.

Mr. Reakes brings up an age old problem caused by the word “Uncirculated.” It was a bad choice in the first place. “Mint State” or even “new” would have been a better choice. On one hand, “Uncirculated” describes a coin’s grade (no wear). On the other hand, uncirculated means that the coin never circulated; therefore, you might think that it should be as nice as the day it left the coining press. We all know that’s not the case. Coins are stored and transported in bags and bins. They get knocked about. They are rolled, sent to banks, spent and circulate. I believe this has been true throughout our history. When is a coin considered to be circulated? Is it circulated when it leaves the press, is it circulated when it leaves the bank wrapper? It can be easily demonstrated that some circulated coins still meet the criteria for a Mint State grade the moment they leave a cash register and enter our hand. Therefore, as coin collectors, we must not concern ourselves with the actual history of circulation that a coin goes through before we examine it for traces of wear! Mr. Reakes affirms that circulated Mint State coins exist and he has given me an idea for future columns. Since the word Uncirculated can be ambiguous on occasion – at one time meaning a lack of actual circulation and another time meaning the best condition of preservation; from now on, I’m going to try to use the term Mint State in my columns to describe coins with no trace of wear. Then, all that is required to determine if a coin is Mint State is to examine it closely for signs of friction and loss of luster.

The heading chosen for my November column in Numismatic News also caused me to reflect on a different aspect of the AU/BU grades that I have mentioned before in other columns. Coins are no longer graded professionally using a strict interpretation of Mint State (Technical Grading). If many coins that were “technically” graded About Uncirculated in the past are now being bought, sold, and graded as Uncirculated specimens by professionals; “How do we account for non-wear” on coins? How do the major grading services factor in the value of low grade, Mint State coins that have no actual wear? It appears to me that no one cares for now. That’s why most high-end AU coins with high eye appeal are “commercially” graded Mint State and priced accordingly.

Professionals will tell you that the major grading services place a value on a coin as indicated by the grade on the label. It’s actually a value range. That’s because there is a high and low price for a certain date common coin. Once it is encapsulated, that value will change up or down depending on many factors but chiefly on economic conditions within the commercial marketplace. A little research should let most of us determine this range of value for a coin at the time it is purchased. However, some coins will break through the top of their usual price range and be valued more due mainly to exceptional toning or eye appeal. In some cases, these coins may even be removed from their holder and graded higher in a new slab to reflect that value. One caveat: Truly rare, key-date, or famous coins often do not fit into any system of valuation and their “assigned grade” will reflect this practice.

Here is another rub. In the lower Mint State grades, MS-60 to 63, you can find true Unc’s with no trace of friction wear slabbed right alongside the market acceptable “sliders.” It seems there really is no accountability for “non-wear” reflected in the prices of slabs! This is especially true for our gold issues. Since gold is a soft metal, more leeway is allowed by the grading services when determining their condition of preservation. I don’t have a solution for this practice. It has become accepted and is too ingrained to be changed at this time. It does give astute collectors and technical graders an opportunity for profit. Perhaps one day in the future, a symbol will be added to the grading service’s label to indicate that the coin inside represents a “non-wear” example for its grade regardless of its eye appeal or commercial value. In that case, true Mint State examples will get the attention they deserve again.