Baldwin's Managing Director Criticizes 'Details' Grades in Third-Party Coin Grading (2023)

This article is based on a post published on the Baldwin's blog on June 12, 2023. The author is Neil Paisley, Managing Director of the British coin dealer, and the views are his own.

On June 12, 2023, Paisley published "Condition, Rarity and Third Party Grading." Third-party grading is a system in which a company that is not a party to the sale assesses a coin's condition; the author describes it as an unbiased or "disinterested" observation.

The author's view of 20 years of prices

Paisley writes that coin collectors and dealers have seen large increases in coin prices over the last 20 years. In his view, the coins with the biggest gains are rare ones in superb condition, and third-party grading has been a major factor in that trend.

He says he first noticed a clear price increase at part 1 of the Slaney sale in 2003. He also writes that during the pandemic, when buyers could not view coins in person, third-party grading set a new norm for grading.

Paisley states that he personally thinks third-party grading "does more harm than good," while adding that no one can argue it has not radically changed the coin market.

Three coins

The author discusses three different coins.

The first is a George II proof guinea, headed in the post as a 1729 coin. The author notes that, as a proof, its fields are mirrored and the portrait and reverse shield show no wear. NGC graded it Proof 65 (PF65), which the author says is the finest certified by a third-party grader. He writes that he could find only one other example sold at auction in the last 20 years: an inferior NGC Proof 64 that sold for a total of £45,600 in 2017.

The second is a Charles I silver three shillings struck in 1645 during the Siege of Carlisle in the English Civil War. According to the author, these coins were struck in emergency conditions from plate and other silver in the castle to pay the defenders. He writes that fewer than 10 examples are believed to exist. Because no high-grade examples exist, he says there would be little reason to have this coin graded.

The third is a Henry VII sovereign, which the author describes as the first sovereign ever produced. The example is unusually well struck, with the full likeness of the king's portrait, but it has some very minor scratches visible only under close inspection. The author says it is unlikely to receive a numerical grade because of them.

He writes that the 2023 catalogue value for this coin in VF is £165,000, and that in 2010 a similar example without the light scratches realized £186,000 including premium.

Criticism of "Details" grades

The author writes that any coin the grading companies deem to have a problem, one that comes back as "details," becomes far less valuable and harder to sell, even when it is extremely rare and the defect is very minor.

He illustrates the point with a five guinea piece. Twenty years ago, he writes, a choice example might have been priced at £10,000, and one in similar condition with a light scratch on the reverse at perhaps £9,000. Today, he says, the same two coins might be graded "MS63" and "Unc Details," with the first at £150,000 to £200,000 and the second at perhaps £30,000 to £40,000. He calls this gap unjustified.

As alternatives, he suggests assigning such coins a lower numerical grade based on the severity of the issue, or giving the grade the coin would have achieved with a note of the issue, such as "AU58 light scratches," an idea he says was also suggested by a friend in the coin trade.

Source: Baldwin's, "Condition, Rarity and Third Party Grading" (June 12, 2023).