Nov. 12-14, 1982
Dollar Grading – An Evolution or Revolution?
By Leroy Van Allen
Dollar grading – a hot topic!
Over the past year there has been much in the coin newspapers and journals on silver dollar grading. ANACS has been roasted and toasted, 67’s are all that people want claim some, grading is stricter or more lax depending on the writer, abolish numerical grading demand others while ads and flips show MS62, 64, 66, etc. and + + +.
Are we in the midst of a grading revolution or is this state of the market just a plateau (or niche) in grading evolution? To find out let’s look at the Morgan and Peace dollar grading changes (and things unchanged) over the years, what makes a coin eye appealing, the condition availability, effects of grading evolution, and how the buyer can get the most for their buck.
Good Ole Days?
Before the late 1960’s the major grading concern was whether the coin was circulated or uncirculated. Rolls and bags of dollars were readily available from banks, Federal Reserve and the U.S. Treasury. Relatively few people collected or invested in these common coins. Then came the great silver dollar rush on the Treasury in 1965 when most of the remaining Morgan and Peace dollars were finally permanently released to the public. That meant the prices for these series would start the march upward.
Interest in these series increased with this sudden influx into the market of an attractive, large-sized, silver coin. The standard grading reference used in the 1960s was Brown and Dunn. Coverage in the circ grades was fairly detailed. But unc was not described although several grades were mentioned in the Introduction.
Still, knowledge dealers and collectors could tell some coins looked and sold better than others. So, gradually in the late 60’s and early 70’s, various terms evolved to describe unc dollars. Most used terms such as BU, Choice, and Gem to describe increasingly desirable unc coin grades and these were priced accordingly. The premiums of a Gem usually were not that much over a BU or Choice. This was due to the large supply of rolls and bags for many dates.
But as the dollars were dispersed and the numbers of collectors and investors increased, supply and demand forced prices upward. Unc grading terms became more and more complex. By the mid 70’s well over 30 terms were routinely used to describe unc dollars in the various publications. How was a collector/dealer/investor to know if BU Gem was any better than Choice Superb? Grading terminology was chaotic for unc dollars.
Out of this confusion grew the ANA Grading Guide. When released in 1977, it recognized three levels of unc or BU dollars with numerical grades based on the Sheldon numbering system. In practice this was reduced to MS60 and MS65 since MS70 was, in reality, nonexistent for dollars. Red book and other price guides plus many ads used these two MS grades in the late 1970’s.
As the market prices for dollars continued to rise, the price difference between MS60 and MS65 became larger and larger in many instances. Actual pricing by many dealers and collectors developed to fall between and above these grades depending on how nice the coin condition.
In October 1980, the so-called Grey Sheet pricing guide added MS63 prices for dollars to reflect the widening gap of price between MS60 and MS65. The ANA Grading Guide added the intermediate grades of MS63 and MS67 in the Second Edition released late in 1981.
But grading complaints and controversy still rage about the use of these four MS numerical grades.
Mine’s Better than Yours
Coin Value – that’s what it is all about! A coin grade is translated into value by the collector/dealer/investor using various price grades. The grade in the coin examiner’s mind may be a numerical one, descriptive term or just how nice the condition appears. The question is, what factors determine how nice a coin is (meaning value or price)?
What makes a dollar eye appealing? It will of course depend on the beholder (like beauty). But over the years five factors have become generally used:
- Abrasions or wear
Abrasions are scratches, scuff marks, rubbing and contact marks in general on the coin’s surface. Morgan and Peace dollars struck for circulation were all put in canvas bags of 1,000 coins by each mint. This was to facilitate the accounting and shipping of them. Transporting a bag of 1,000 dollars weighing 60 pounds caused abrasions on virtually every one of the coins. Of course fewer abrasions on a coin makes it more desirable. But the complication is what size, how many and where can these abrasions be to affect the coin’s value. These are subjective judgment in many instances.
Over the years, some accepted guidelines have evolved on these abrasions or bag marks. For the Morgan dollar the cheek area is the first, second, and third most important area to look for these bag marks. It is a large raised area on the Liberty Head that was open and most vulnerable to abrasions. A relatively clean cheek is required for an eye appealing Morgan dollar but abrasions in other areas that are noticeable can also downgrade a coin. For the Peace dollar the cheek area is smaller but the Liberty Head neck and eagle’s wing are more vulnerable to bag marks and thus an important area in grading.
Strike refers to the fullness of the design detail. Weak areas make the coin less attractive or valuable. For the Morgan dollar a weakness in strike typically shows up first in the hair above the Liberty Head ear and the eagle’s breast feathers. For the Peace dollar it shows first in the hair over the Liberty Head ear and the eagle’s wing feathers over the legs.
Luster refers to the frostiness of the design devices and the brilliance of the field. This is determined by die wear. New dies used to strike coins will strike coins with frosty devices and brilliant fields. As the dies wear from striking thousands of coins, the frostiness is gradually polished away to give a more brilliant look and the fields become rough, producing a dull appearance. The coins are more attractive and valuable when there is frosting on the devices and brilliant fields producing a nice contrast.
Color is anything other than natural silver brilliance. It can be natural or artificial toning or dirt/grease coating. Natural toning occurs when silver oxidizes from being in contact or near canvas bags or paper with high sulfur content. It can be multicolored or a solid color and its attractiveness in very much a personal thing. Very dark tones or spotty toning is generally considered to be undesirable. Light dirt or grease coating picked up from many years storage in a bag doesn’t affect the value but a heavy coating can decrease the value.
Prooflike is a term “coined” by Dean Tavenner in the early 1960’s and refers to the degree of reflection in the coin’s field. Basining of the Morgan dies to obtain a slight curvature of the field of better striking of the coins resulted in polished and smooth mirror-like fields of the coins when they were struck. As the dies were used and wore, the field surface would become rough, gradually losing their reflective quality. Only the first 5 to 10 thousand coins struck from a new Morgan die would result in PL coins unless it was again polished during its life to remove clash marks, for example. The greater the degree of reflectance, the more valuable the coin. A clear reflectance of at least three inches is required for full PL and a deep mirror is one beyond about four or five inches. Both sides of a coin must be PL for a coin to be valued as a full PL. There are no PL Peace dollars because Peace dollar dies were not basined or polished except for some rare instances to repair a dies that was badly clashed.
The most desirable and eye-appealing coins with the highest value will therefore have minimum of distracting bag marks, a full strike with sharp detail, a cameo-type luster on the devices, with or without attractive toning, and very deep mirrors. The state of these factors will determine the relative value of a coin.
Not All are Equal
One of the most fascinating and frustrating things about Morgan and Peace dollars is the fact that the dates and mints are not equally available with the same eye appealing factors of abrasions, strike, luster, color, and prooflike. There can be no such thing as a matching set of Morgan or Peace dollars. Differences in the basining of the dies, planchet preparation, striking of the coins, coin storage and transportation, and the survival percentage preclude identical-looking coins for all dates and mints.
For mint state coins there can be approximated curves of the relative number of surviving coins within the various ranges of the five grading factors.
For example, under abrasions years like 81 S or 03 P tend to have a higher percentage of coins available with a minimum of bag marks as compared to a 78 CC or 95 S which tend to be “baggy” as they say. This can be illustrated in a chart in Figure 1 which shows the degree of abrasions on a horizontal axis versus the relative surviving number in mint state on a vertical axis.
The distribution of abrasions for other dates and mints would have curves somewhere between these two extremes. When translated into a grade number this same chart as shown in Figure 2 would show a higher proportion of coins falling into the MS65 range for the 81 S and 03 P than that for the 78 CC and 95 S.
Note that within say, the MS65 grade, there is a definite range of surviving number of coins from slightly better than average number of abrasions to a number approaching the minimum number of abrasions. This shows that even within a grade number “some are better than others.” There will be some MS65 coins approaching the minimum number of abrasions for MS67 and others that have a number approaching that for MS63. In other words, the continuous distribution curve for abrasions when divided into discrete MS segments of MS60, 63, 65 and 67 results in range for each grade and not just a single point on the distribution curve.
Similar curves of the relative number of surviving mint state can also be shown for strike as illustrated in Figure 3. Again, certain dates will show distribution curves skewed at one extreme or the other such as the 81 S which normally are fully struck and 02 O which are normally slightly weakly struck. These differences were caused by the different die basining and strike pressure used by the various mints.
A chart illustrating the variances in luster is shown in Figure 4. In this case, the later P mints of 1901 to 1904 tend to mostly have brilliant surfaces on the devices while some years like the 80 S have a fairly high percentage of coins with significant frosting. These differences were caused by the state of frostiness of the master hub and dies in use at the time, the number of coins truck while the die was in service, and the manufacturing process used at each mint for the planchets.
Prooflikes can also be charted to show the relative surviving number in mint state as shown in Figure 5.
Certain Morgan dollar dates like the 95 S have a high percentage of PL and DMPL coins while others like the 01 P are extremely scarce in PL. This was due to the length of service of the dies which tended to be longer in later years of the Morgan series and the coin melts in 1917 and 1918 which destroyed about half of the Morgan dollars minted.
Grading Changes – Are They Real?
Back in the late 1970’s when there were but two MS grades of MS60 and MS65, they each covered a wide spectrum of the MS coin condition. This is illustrated in Figure 6. Some dates like the 81 S had a fairly high proportion of MS65 coins in comparison to others such as the 80 O which had a relatively small proportion in that grade. But many MS65’s were better or lower than the average because of the wide grade spectrum.
Then in October 1980 the addition of MS63 to the Grey Sheet pricing guide changed the coverage of MS60 and MS65. MS67 was also added but not listed in the Grey Sheet because of the limited availability and market for that grade. The addition of these two grades narrowed the surviving spectrum average for MS60 and MS65 as shown in Figure 7. That is, the better MS65’s prior to October 1980 because MS67’s and the lower MS65’s became part of the MS63 spectrum. Also, the better MS60’s became part of the new MS63 grade. This is illustrated in Figure 8.
The shaded area shows the grading spectrums absorbed from the old MS60 and MS65 into the new MS63 and MS67 grades. This had the effect of tightening up the MS65 grading spectrum with the more baggy or weakly struck old MS65 becoming MS63. So the MS65 grade encompassed fewer coins of the MS spectrum and they tended to be of better than average condition. That is because coins that became MS67 were much fewer than those that became MS63.
Those people who bought coins with a condition at the lower end of the old MS65 spectrum but at full MS65 price suddenly found that their MS65 coins had changed to MS63 grade and price with a loss in value. But, if they had paid a price below the standard MS65 price, then the true value of the coin probably hadn’t change much even though the grade fell from the low end of the old MS65 to the upper part of the new MS63 spectrum.
Another effect on the coin grading and value is the condition of the coin market. In a rising or hot market, demand is ahead of supply and the full spectrum of coins in say, the MS65 grade can be bought and sold. In a slow or receding market, the supply outstrips the demand. This has the effect of the buyer demanding the upper part of the spectrum of a grade and general tightening of grading for coins traded.
So, in the past two years there have been two effects of the tightening of the MS65 grading – the narrowing of the MS65 condition spectrum range with the addition of MS63 and MS67, and the slow market where buyers can demand the better coins within a grade range. This is the result of the grading evolution process and not just a current grading revolution.
As we have seen above, some people suffered an apparent drop in coin values when the MS63 and MS67 grades added. How could this have been avoided? Simply by realizing that coin grades and values shouldn’t be pegged to just two or three points of the condition availability spectrum when there is a wide price gap between MS60 and MS65.
Some of you may say at this point that the good old days of just one unc price is best. I would say we can never go back to that point. There are just too many collectors/investors of silver dollars these days. The bags and rolls of dollars have been, for the most part, widely disseminated so individual coin grading and pricing are a very important part of the market. Their price structure reflects the complex condition availability of silver dollars.
But why do we need all of the MS grades and their complexity? Can an MS65 coin be accurately graded and differentiated from an MS63? Or can even an MS65+, MS65-, MS66 or MS64 be accurately graded with consistency. I say yes – but only with experience. It is the areas of the condition spectrum where MS60 merges into MS63 and MS63 into MS65 that are hardest to grade. Value-wise, it is probably easier to get some agreement. But to assign a specific grading number is still, after all, an opinion with much subjective input. The idealized grading areas with a fine line dividing as shown in charts in reality become grading areas with overlaps and wide dividing bars because of differing opinions.
You should practice grading and valuing dollars not just by the four basic MS grades and five Grey sheet prices (which includes MS63 and MS65 PL). For coins with a wide gap of MS values, you need to divide up the condition availability spectrum finer than MS60, 63, 65 and 67 grades and equivalent values. Experienced and competent dealers/investors/collectors routinely do this. The Grey Sheet prices are to be sued as only a rough guide. Coins should be priced in finer increments along the grading spectrum to reach a fairer and more realistic value. Let the coin speak for itself and don’t try to artificially force the grade and value to one of the four fixed MS grading points. The coin values and grades will then better withstand any future changes in grading. After all, the silver dollar grading should continue to evolve.