By Louis Golino, special to CoinWeek …..
Third-party numismatic grading is currently experiencing its most significant period of change since the launch of PCGS and NGC about 35 years ago.
Certified Acceptance Corp. (CAC), a company that has become famous for its green and gold stickers that identify higher-quality certified coins and create greater value for such desirable pieces, is getting ready to launch its own grading service — CAC Grading — that will compete with industry leaders PCGS and NGC.
Other changes include the wider use of technology in grading and the purchase of both industry giants in recent years by large private equity firms.
And on November 16, NGC announced the launch of NGCX – a new, 10-point grading scale for modern coins (those issued since 1982) that intentionally resembles the current system for grading other collectibles like comic books and sports cards.
NGC says the point of the new scale is not to replace the 70-point Sheldon scale that was introduced in the 1940s by Dr. William Sheldon, which will continue to be used. Instead, NGCX aims to bring in new collectors to numismatics who currently collect other items that are graded on a 10-point scale.
It is currently only available to a select group of dealers who can submit coins under the new scale starting in January and is not available to regular submitters. So those who have argued in online coin forums that it is a “money grab” whose purpose is to make everyone who owns modern coins graded on the Sheldon scale resubmit their coins, are not correct.
But the new system also raises some important questions: Will it be widely accepted by collectors and by the market? Will it create confusion to have different grading scales? What are the benefits of the new scale for the grading of coins? And does it address, or impact, issues often raised by collectors about modern graded coins such as substantial variations in the appearance of coins that grade MS/PF70?
As some collectors have said in response to initial information about NGCX, isn’t it really a 100-point answer? Hint: No, but it is more than a 10-point scale.
To better understand what the new scale does and doesn’t do, it is useful to understand that while the basic system is a 10-point scale, there will actually be a total of 29 different potential grades within the system. They include: 1, 1.5, 2, 2.5, 3, 3.5, 4, 4.5, 5, 5.5, 6, 6.5, 7, 7.5, 8, 8.25, 8.5, 8.75, 9, 9.1, 9.2, 9.3, 9.4, 9.5, 9.6, 9.7, 9.8, 9.9 and 10.
First, Mint State coins would fall from 9 to 10, the range that is the equivalent of MS/PF60 to MS/PF70. If one studies the more detailed scale on NGC’s site, it explains, for example, that a 9.1 is a coin that has no trace of wear but that has a weak or average strike and abrasions. A 9.3, which would be an MS63 under the Sheldon scale, is a coin with a decent strike but one that has marks, hairlines, or other imperfections.
Coins that graded 9.9 are fully struck whose imperfections are barely perceptible and those that grade 10 have no visible flaws at 5X magnification – the same standard as current MS70 coins.
It’s worth emphasizing the fact that the new scale would, according to NGC, only be used for modern coins struck since 1982. Those coins — whether bullion or collectible–especially if produced in the past decade or so–tend to mostly grade under the Sheldon scale between MS/PF68 and MS/PF70, or 9.8 to 10 in NGCX.
When it comes to coins much further down the new scale such as a 3, it is hard to understand why someone would go through the expense of having it graded unless it was perhaps a rare error that is valuable even in circulated grades. Or perhaps the scale included circulated coins because it will eventually be adopted for older issues? If so, the scale does indeed simplify most of the grades for circulated coins compared to Sheldon.
As for whether the new scale will be widely accepted, of course, only time will tell. Early reactions in the numismatic blogosphere are mixed with some questioning the need for another coin grading scale and others seeing merits to it.
There have been many proposals over the decades for new grading systems to replace Sheldon such as various plans for a 100-point system. None of them was ever adopted by the grading companies until now.
A Universal Language
The reason NGC thinks this particular new system will work where others have not is that, as NGC Chairman Mark Salzberg told Charles Morgan in a recent interview, the 10-point scale is “a universal language” for all those collectors of sports cards and other collectibles.
The main motivation for the new system appears to be expanding the market for graded coins by bringing in those who currently focus on other collectibles like trading cards, which have in many cases received a considerable boost in prices and activity since the debut of the pandemic in 2020 when collectors had more time and often more money for hobby pursuits.
Expanding the market is certainly a worthy goal for NGC as a company, but for the Coin Analyst, the more important question is: Even if the scale is eventually widely accepted, will it be of benefit to collectors and the hobby? And could it replace the Sheldon system? And if it is widely adopted and then later replaces the Sheldon scale, what are the implications of that?
At this point, one can only begin to answer such questions. But they may remain moot points since Salzberg in the CoinWeek interview specifically rules out the new system replacing the old one and says it will “exist side by side in a parallel path.”
As for whether it will cause confusion, it shouldn’t once collectors understand NGCX better and can translate grades in Sheldon to the new system.
The goal of bringing in new collectors to numismatics is something most numismatists have long favored because more collectors mean a bigger and stronger marketplace when it is time to sell and a larger hobby with a diverse range of generations represented is also better for the long-term health of the hobby.
But the question remains, is slightly simplifying the grading scale the best way to do that? And how much evidence exists that newer and younger collectors are confused about the Sheldon system? Some say that is the case, yet so many others of us who began collecting coins many decades ago managed to start using Sheldon as children.
As for whether the new scale has advantages over the old one, it does reduce the number of grades from 70 to 29. But the number of grades for Mint State coins would remain the same at 11, and that, as mentioned above, is where the majority of post-1982 coins would likely fall.
If the new scale were later adopted for older coins, while continuing to exist alongside the old system, it remains unclear how that might impact the market for graded coins made before 1982. Much would depend on whether the market valued older coins graded with NGCX more highly than coins graded with Sheldon at a comparable level.
Vintage coins in circulated grades come in a wide range of states of preservation and it remains unclear how owners of such coins would feel about having fewer grades at levels like XF40 to AU58, which are among the most widely collected grades for vintage American coins.
On the other hand, consolidation of circulated grades may be welcomed by collectors since some of the lower-end grades are not seen very often.
To clarify some of the points raised by this discussion, I reached out to Max Spiegel, President of Certified Collectibles Group (CCG), NGC’s parent company, who provided some useful clarifications and other information on December 1 about NGCX:
Louis Golino: First, was the year 1982 selected as the starting point for modern coins because that is when the modern U.S. commemorative coin program began?
Max Spiegel: 1982 seemed like the ideal starting date because it was the first year of both the Modern US commemorative coin program and the Chinese Panda program. [1982 is also when the Mexican silver Libertad program began, though the gold version debuted in 1981. –LG]
LG: Second, while I understand NGCX is not intended to replace the Sheldon scale, do you anticipate extending it at some point to older coins?
MS: The 10-point grading scale is a universal scale and could conceivably apply to any collectible, including vintage coins. At this time, we are focused on more recently minted modern coins because these are often the first coins that catch the interest of new collectors. Based on extensive research and analysis, we believe that NGCX’s 10-point grading scale will drive new collectors into the hobby because it is a universally understood grading scale.
LG: Are world coins eligible to be graded under NGCX? And would that involve some adjustment in the starting point (year)?
MS: Both US and World modern coins will be graded under NGCX.
LG: Fourth, do you have plans to make the new scale available for regular submissions down the road or do you plan to continue to limit it to select dealer submissions?
MS: By starting with a select group of bulk submitters, we are able to ensure that NGCX-certified coins quickly reach a large and diverse group of current and prospective collectors. We may eventually expand the group of eligible submitters, but for now, we believe the distributor model is the most efficient and orderly way to grow this new program.
As it is currently construed, NGCX is one of NGC’s specialty services that should help expand the market for modern coins through a simplification of the grading scale rather than a revolutionary grading system that will upend the current state of affairs in numismatics.
But as it evolves over time and possibly gets extended to earlier issues, it will undoubtedly have an increasing impact on the market for graded coins and on the numismatic hobby more broadly. It will also be interesting to see if it has an impact on the market for graded world coins, especially in foreign markets.
However, as things look from today’s perspective, it seems unlikely that NGCX will ever completely replace the Sheldon system, nor that a large number of owners of major coins and collections graded under the old system will think it is necessary to have their coins regraded with NGCX, though some likely will do so.
Having two different scales for modern coins that are in essence comparable with the same number of grades for Mint State coins does seem like it would be feasible, but compacting all those circulated grades to a fraction of those under Sheldon seems like it might create some confusion and market disruption at least initially.
Finally, as for those issues about graded coins that have long been of concern to some collectors, such as disparities in the quality of modern coins at the highest level, changing the grade from 70 to 10 does not seem designed to address that.
But there are some encouraging signs regarding consistency in grading as technology continues to play a larger role in the grading process such as with imaging technology and the greater use of databases and archives, as Salzberg mentioned. Eventually, perhaps artificial intelligence and some form of computerized grading will be involved too, though it is unlikely that subjectivity will ever be eliminated.
* * *
Louis Golino is an award-winning numismatic journalist and writer, specializing primarily in modern U.S. and world coins. His work has appeared in CoinWeek since 2011. He also currently writes regular features for Coin World, The Numismatist, and CoinUpdate.com, and has been published in Numismatic News, COINage, and FUNTopics, among other coin publications. He has also been widely published on international political, military, and economic issues.
In 2015, his CoinWeek.com column “The Coin Analyst” received an award from the Numismatic Literary Guild (NLG) for Best Website Column. In 2017, he received an NLG award for Best Article in a Non-Numismatic Publication with his piece, “Liberty Centennial Designs”.
In October 2018, he received a literary award from the Pennsylvania Association of Numismatists (PAN) for his 2017 article, “Lady Liberty: America’s Enduring Numismatic Motif” which appeared in The Clarion.