Following some recent high-profile sales in the coin trade I thought it a perfect time to write a few words on the third-party grading of coins and in particular British coins, as therein lies our expertise.
The encapsulation of coins by third party graders started in the USA in the mid-1980’s when the two now large grading companies were formed. They were initially formed with good intentions to combat the practices of unscrupulous dealers who were cleaning coins, selling forgeries and generally passing coins off as something they weren’t. Initially they graded US coins, and the numerical Sheldon scale, which was originally devised by Dr William H Sheldon in 1949 to grade early American cents, was adopted as the scale of choice. Over a period of time the third-party graders grew in size and began to grade foreign coins and then hammered coins, all against the Sheldon scale, a scale which was never intended to cover such issues. Today we are seeing the use of slabbing proliferating further and further into the UK market and with an almost universal following in the USA.
In a global coin market and with such support overseas is it any wonder that coins with a high third-party grade have a good chance of attaining higher prices? Maybe though the question should be, are the individuals paying these prices getting their money’s worth, is the coin worth what they are paying for it? Or perhaps even, are they purchasing a coin or a commodity? I will tackle these issues in more detail below but first let’s take a look at the grading itself because if this is of a high quality then there should be no issue - if a buyer can rely on the grade then he/she can legitimately claim that they have got what they paid for.
The numeric grading scale works rather well for the purpose for which it was designed and can be applied with reasonable success to other US and world later milled coinage as long as the graders have sufficient experience of the issues, and there are well defined benchmarks for all types being graded. A numeric grade cannot, in my opinion, be successfully used for hammered coins, or perhaps even early milled for that matter as there are so many more factors that need to be taken into account. Slab grading seems to place a greater emphasis on surface preservation, but no two hammered coins were produced the same, they were a hand-made product, and a single numeric grade cannot take into account wear, strike, tone, roundness, die-wear, double striking and clipping for example.
In the UK we have traditionally used the terms Fine, Very Fine, Extremely Fine and Uncirculated to describe the condition of coins. Admittedly, this is woolly at best as these terms are ‘stakes in the ground’ in a grey scale of grades, but coupled with words to describe other attributes of the coin, along with additional prefixes, e.g. nearly, almost, better than, etc, a coin can be given a pretty comprehensive description of grade. The U.S. grades of Fine, Very Fine, Extremely Fine (XF instead of EF) and Mint State tend to be one grade out of step from the UK grading scale, in other words a U.S. XF is typically on par with a UK VF. This of course pre-dates slabbing and neither scale should be determined as more ‘correct’ than the other, but when we see an XF40 on a slab we cannot assume that this will relate to an EF guide price in the British Standard Catalogue, it most certainly won’t!
Not only is there a difference in standards to be aware of, another problem in applying US third party grading to UK coins is one of expertise. In a market that is relying so heavily on a third-party grade, the third-party graders better be the best! Numismatics is a vast field, we are experts in the British series and yet some of our collectors have superior knowledge in particular areas of detail focus. In turn we have 11 years experience dealing solely with British coins and know the issues intimately, but the third-party grading companies have to cover all issues from all countries as well as covering milled and hammered - grading a US cent is not the same as grading a penny struck in Stephen’s anarchy period! We have no idea who the graders are, what experience they have, how much training they have had, and importantly how much exposure they have had to a particular coinage.
The term ‘finest known’ or ‘top pop’ is always a problematic one for it is only convenient sales jargon, it only relates to the coins that have already been slabbed. If there are 100 examples of a certain type of coin and only 20 have been slabbed the term is meaningless. Furthermore, for very rare or infrequently seen coins, how can there be a benchmark? How can a meaningful consistency be followed in this case? This is of course true for anyone grading such coins but for those who have a knowledge of the rarity of the piece and the history and method of its production, grading standards are likely to be higher. It would seem to follow then that specialists in UK coinage are likely to be able to grade UK coinage to the highest standards.
Perhaps there is no better example of this than with the grading of the coins presented in the recent Hird sale at Spink. The coins were catalogued and graded by Spink, using traditional British descriptive grades, and I have to say that in the main I very much concurred with the grades presented, yet the decision was taken to have the coins graded. The grades that came back were, at best, shambolic, there is no more subtle way to say it. Coins that were cleaned or scraped or damaged were given a grade, and others which were fairly reasonably worn were graded way too highly, and in several cases given mint state grades.
Some look to third-party graders as an independent body who authenticate coins, and indeed they do fulfil this role, for the inexperienced collector a graded coin is likely to allow him/her to collect with a degree of comfort. However, it should not be forgotten that coins purchased from a BNTA or IPAN dealer or auction house come with guarantees of authenticity too, backed up by a body representing the trade. The grading companies are large profit marking organisations, it is in their interests for graded coins to achieve high prices as this encourages further business and slabbing charges are often charged on a percentage value of the coin. It is not difficult to see then how it might be possible that ‘grade-inflation’ could happen over a period of time. After all, the business of third-party grading is unregulated and no one is grading the graders!
I feel compelled to offer a few examples to back up my claims, there are many more. The James Spur ryal in the Hird sale (lot 35) was graded good very fine by Spink and yet made an MS62, an image of this coin is included here and by way of comparison an example we sold a few years ago which really was a choice coin. This coin was not slabbed and it is fair to say it may well have got a higher slab grade, the point here being to demonstrate how far off ‘MS’ the Hird spur ryal was.
Another coin which caught my attention was the Elizabeth I pound which was graded as almost extremely fine by spink but MS65 by the third-party grading company (lot36); it was not a particularly fantastic example, being struck from rusty dies and slightly double struck, neither of which I appreciate is fundamentally detrimental to the technical condition of state of preservation, but both are most definitely detrimental to the ‘eye- appeal’ of the coin. It was struck with mint mark anchor over key, which means that the dies used to strike the coin were old, and hence rusty and with the die breaks seen around the queen’s face and chin. Technically therefore the grade is no doubt good but it is not the most attractive example of the type you would find by any means. By comparison I attach images of another coin we sold a couple of years ago which I saw as a superior piece.
The list really is endless, the James I double crown (lot 18) was filed and described as such by Spink but given an AU55 grade, some coins were cleaned yet graded, and there was another James I double crown that recently went through another auction house with a hole in it that graded MS61.
A few years ago, we sold a Hiberno-Norse penny in the style of an Aethelred II long cross penny, and I make no exaggeration when I say it was perhaps one of the finest coins of the period I had handled. I include an image below with a comparison with two slabbed Aethelred II pennies. The Hiberno-Norse was eventually slabbed by a client and never achieved more than an MS64+, the Aethelred II pennies by comparison both achieved an MS65 grade! It is to be noted that they also have peck-marks, which though generally an acceptable part of the coins history are historic damage after all.
It is also not difficult to find examples of mis-identification. I have now seen two examples of standard pre-Treaty Edward III nobles slabbed as the very rare third period noble which is quite different in appearance. Steve Hill at Sovereign Rarities has kindly allowed me to take this image of a George V half sovereign which is graded as a full sovereign.
I have seen a ‘cartwheel’ twopence slabbed as a penny and coins slabbed as the wrong date. Some of these are obvious and amusing, we all make mistakes but those such as the third period nobles can be costly for the buyer.
And so we must return to the question of coin or commodity. Personally speaking, I have a passion for history, and in holding a historic coin in the hand (or by the edge at least) I am in touch with that history and I can appreciate the true beauty or naivety of manufacture. Lock it up in a piece of plastic and I may as well collect Lego bricks. But this is only an opinion and we are all entitled to forge our own, I do appreciate that slabbing provides protection. Whether or not one likes a coin to be in a slab is not the question here, the quality of third-party grading and subsequent realised prices are under scrutiny. If one chooses to buy chiefly by the grade on the slab in the hope that the label will again define the retail price then so be it, but he or she is then buying a commodity, a little like a crypto-currency if you will. Buyer beware that the item of historic interest included may be ‘worth’ a fraction of the cost. There will always be those of us who will buy a coin for its beauty and artistry whether it is entombed or not and will look past the label to make up our own minds.