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The Grading Game

The Grading Game

The grading of coins and banknotes is perhaps one of the most subjective and controversial of all numismatic debates.

A simple comparison of the definition of the grade "uncirculated" (with regards to coins) by two experts in Australian numismatics reveals how perceptions have evolved over time:

The first is from from Hanley and James (1966):

UNCIRCULATED: This would be a proof coin if the field showed more finish... Magnification discovers no trace of wear or nicks. Only the cream of coins obtained from the banks in the original mint rolls are in this condition.*

And the other, from McDonald (2003):

GEM UNCIRCULATED: Far more often than not, this will be the highest grade a collector can realistically expect to encounter... (The) coin will be almost faultless with a strong, but not necessarily absolutely perfect strike. The design may show just a hint of die-wear but such wear should be minimal...**

CHOICE UNCIRCULATED: Describes a fairly well struck coin but some weakness in this area is acceptable...**

UNCIRCULATED - TYPICAL: ...a coin which has not been in circulation in the commercial sense and therefore shows no wear. It may however have been struck from a die nearing the end of its useful life, and not all the intricate details of the design may be fully formed on the coin. Moderate but not excessive Detracting Marks from the production process may be evident in the fields and on the rim... major imperfections must either be mentioned in addition to the grade, or if reasonable, the grade itself should be lowered...**

Note that in the 1966 definition, the term "uncirculated" is the highest possible grade for a non-proof coin. In the 2003 definition, it is not. In fact, there are higher grades: CHU, GEM (and in McDonald's case, also FDC (which he mentions can be used for both proof and normal circulation coins).

If one goes on the examine and compare the definitions of Extremely Fine (EF) in 1966 vs 2003, it seems as if EF in 1966 equals UNC or aUNC in 2003, and so on...

However, I do not think that standards have actually dropped since 1966 (as the above may imply); it is simply that perceptions of the meaning of the terms have shifted, and this is most likely because attitudes and functions of grading have evolved.

What do I mean by this?

One of the key changes that have taken place in recent years is the exponential rise in price of certain numismatic items, such as the 1930 Penny, 1923 Half Penny, and other key dates in the Australian pre-decimal series.

A major implication of this is that people have become increasingly conscious about grade and how it directly affects the item's value. Lower grades seem to be less of an issue, but at the higher end, minor improvements in grade may involve a significant increase in value.

So, it is not so much that standards have dropped since 1966; rather, grading terminology has shifted so as to take into account minor differences in quality and grade at the higher end. It is no longer adequate to just have a single grade called "UNC" as it is now recognised that coins can be uncirculated and yet display some imperfection. Hence, it has been necessary to introduce terms to describe uncirculated coins in various levels of quality, eg. CHU and GEM.

To me, there has also been a shift in definition of the term UNC. Currently, we normally think of UNC as meaning that the coin has not been in general circulation. In contrast, the term UNC as used by Hanley and James in 1966 generally implies a state of perfection. I would guess that the 1966 definition would have UNC coins with bag marks or edge nicks downgraded to EF or even VF (if very severe) even if they have not actually been in circulation.

Nowadays, it seems that qualifiers are preferred to describe UNC coins with detracting marks. For example, it is possible to have an UNC 1910 Shilling with a slightly flat or rounded star or emu with a lack of detail on the feathers either because the strike was weak or the die was worn.

What seems to be a growing worry to me is that price increases from one level of "UNCness" to another may be so great (perhaps more than double or triple the preceding grade) that it almost becomes unrealistic; it becomes just a matter of what someone is willing to pay. The ramifications are staggering: for example, if the dollar drops in relation to other currencies, such as the US dollar or Euro, we may find the highest bidder coming from abroad, resulting in key Australian numismatic items leaving the country, sans GST!

Another concern is also that it may reach the level of pure speculation with its concomitant volatility and unstability.

Still, that is the nature of the "game"; perhaps this adds excitement for some, but for others, it may mean that, like the housing market of today, many key numismatic items of higher grades will eventually become unaffordable to the ordinary collector...

Footnotes:

* Hanley, Tom and James, Bill Collecting Australian Coins, Murray, Sydney/Melbourne, 1966, Insert between pages 128 and 129.

** McDonald, Greg The Pocket Guide to Australian Coins and Banknotes (Tenth Edition), Greg McDonald Publishing and Numismatics, Lavington, page 19.


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