Wednesday, January 16, 2019

A Tribute to the EAC grading system

EAC grading is not perfect; it is just the best system we have today.

Attempts to systematize coin grading for U.S. coins began in the early 20th century. The American Numismatic Association (ANA) was a leading proponent of this effort. Coin grading was deemed important because of the correlation between the amount of wear on the coin and its market value. Dozens of books have been published to describe various grading systems. Adjectives were assigned to describe progressive levels of wear (eg. ABOUT UNCIRCULATED, EXTREMELY FINE, VERY FINE, FINE, VERY GOOD, GOOD). Following the publication of a book called Early American Cents by William Sheldon in 1949, the adjectives used for grading coins were supplemented with numerical grades ranging from 1-70. The ANA published the first edition of ANA Grading Standards for U.S. Coins in 1977. Shortly thereafter (1979) ANACS (the ANA Certification Service) issued its first coin grading certificates. These certificates were intended to facilitate coin trading, and featured photos of both sides of the coin and a grade estimate, based on ANA grading standards. A useful history of the ANACS grading service has been published, and can be read here:

Problems associated with grading continued to plague the coin market. In 1986, The Professional Coin Grading Service (PCGS) introduced the concept of grading & encapsulation, wherein the coin was graded, and encapsulated in a hard plastic holder, along with an insert upon which a certified grade was printed. The origin story for PCGS makes interesting reading, and can be found here:

Other companies followed the PCGS example, and today the coin market is heavily reliant on coins graded & encapsulated in holders from 3rd party grading services. If 3rd party grading had “solved” the problem with grading, no other system would be necessary. However, as we will discuss, that is not what happened.

Adjectival definitions for grades (eg. GOOD, FINE, VERY FINE, ABOUT UNCIRCULATED) have remained relatively constant over time. Likewise, the numerical grading scale (ranging from 1, for a coin just recognizable as to date & type, to 70 for a flawless coin) remains in place. However, the standards by which various grades are defined have not remained constant. This lack of permanence was the original justification for the 3rd party grading services. Unfortunately, these services have not been able to maintain adequate consistency of their standards. This has resulted in much confusion in the market for 3rd party graded coins. In addition, the increasing price spread between coins near the upper end of the grading spectrum gave rise to demand for increased precision in commercial grades. In response to this market phenomenon, PCGS introduced 11 discrete mint-state grades (MS60-MS70), and later added intermediate “+” grades, in an attempt to refine the definition of grade. In many cases, the difference between these 1-point grade spreads is too small to maintain with consistency (at least with human graders).

Coin grading has been described as part art & part science. For circulated coins, it is straightforward to define points along the continuum of wear – this is the “science” part of grading for circulated” coins. The “art” part involves accounting for differing striking pressure, which will also affect the amount of detail in the resulting coin. Another important aspect of the “art” of coin grading is deciding how particular defects (eg. rim bumps, scratches, abrasive cleaning, etc.) will impact the value (or grade) of a coin. The location and the severity of the problem will impact the coin’s value, and is unique to each and every coin graded. For coins that are strictly uncirculated (ie. No wear visible) it is theoretically possible to define points on the scale of beauty that involve the quality of the luster and the number of marks acquired by the coin during handling at the mint (or elsewhere) – this is the “science” part for uncirculated coins. The “art” part involves assessing the “eye appeal” that each uncirculated coin possesses within the context of its particular coin series.

The EAC grading system evolved within the Early American Copper community as a unique answer to the grading conundrum for problems experienced with circulated coins. The vast majority of early copper coins are circulated. The EAC system uses two numbers to define the grade of any coin. For a circulated coin, the first number defines the “sharpness” of the coin (on a 1-60 scale). For EAC grading the second number is called the “net” grade of the coin, after accounting for the impact of any problems. The net grade is either equal to, or lower than the sharpness grade. For uncirculated coins, the same two-number system is used. The 1st number (from 60-70) is related to the color, luster, and eye appeal of the coin. The second number is the “net” grade, which will be equal to or lower than the first number, and accounts for any problems the coin has.

The EAC system grading scale looks the same (on the surface) as the other grading systems. The same grading adjectives are also utilized. The most important differences are as follows:
  • The EAC standards for sharpness on circulated coins are a little stricter than commercial grading standards. A coin that grades “40” at a commercial grading service is likely to have too much wear to qualify for the sharpness grade of “40” by EAC standards. It will more likely have an EAC sharpness grade of “30”.
  • Problems are handled completely differently within the EAC system than by the commercial grading systems. For a coin graded using EAC standards, there is a 2nd number, derived from the sharpness grade, which accounts for any issues on the coin (eg. cleaning, scratches, damage, rim bumps, etc.). For a coin graded commercially, there will be no 2nd number. If a coin has issues, but they are deemed to be “minor” by the grading service (ie. Below the threshold that will prevent assignment of a numerical grade), the “net” grade (sharpness minus some allowance for the issue(s)) will be put on the holder. If the issues are above the “threshold” level, then the grading service will encapsulate the coin in a holder marked “Genuine”, usually with an adjectival description of sharpness, and an indication of the problem(s). For example “AU Details / CLEANED”.

  • The EAC grading system is not simple. There are just too many variables involved in grading for a simple system to work. However, the EAC system is consistent and capable of delivering trustworthy guidance about the market value of copper coins. Coin market participants who utilize EAC grading have made a concerted effort to sustain the grading standards that have been in use since the 1960’s. The consistency and time invariance of the EAC grading system renders it more useful today than any other grading system. The book devoted to describing (and illustrating) the EAC grading system is called “Grading Guide for Early American Copper Coins”. The first edition of this book has sold out, and must now be purchased on the secondary market.

    Thursday, June 28, 2018

    Jim Neiswinter and Dan Trollan

    Just a few weeks ago, the Early Copper community was jolted by the news that two of our superstar collectors plan to team up and offer coins from their collections for sale in early 2019.

    Jim Neiswinter, a native of New York and a member of EAC since 1981 has pursued the CENTS OF 1793 since purchasing his first one in 1983. That first coin was a 1793 Wreath cent (a variety called Sheldon-11a). It was not until Feb. of 1986 that Jim acquired the 1793 cent that ultimately led to our meeting. On Feb. 1, 1986 Kagins Numismatic Auctions sold the Phillip Van Cleave collection. It was, at the time, the first complete Large Cent collection (by Sheldon numbers) sold at public auction. LOT 5017 was the famous (and rare) 1793 Sheldon-15 Liberty Cap large cent, and Jim was the winning bidder. Sheldon called the S-15 the "The aristocrat among the Liberty Cap cents, and therefore an aristocrat of aristocrats among the Large Cents". He called it thus due to the astonishing rarity of this coin. At the time Sheldon wrote Penny Whimsy (1958) there were just 5 examples of S-15 known. Today the census has expanded to 13 known. Jim's coin is the 7th finest (with the #1 coin permanently impounded in the ANS museum). This acquisition motivated Jim to do extensive research on S-15, and publish a wonderful book called "The Aristocrat" in 2013. Inexplicably, I waited until 2017 to visit Jim at his table at the EAC convention in Philadelphia to introduce myself, and obtain a copy of The Aristocrat (along with the author's autograph). This book has become one of the "keys" to my numismatic library. I now count Jim as one of my EAC friends. Jim ultimately obtained all of the Sheldon varieties for 1793 (16 specific die parings, and 3 distinct edge variations of Sheldon-11, called S-11a, 11b, and 11c).

    Dan Trollan is a business man from Durango, Colorado, who happens to love Large Cents. He joined EAC in 1989 (just a few years before I joined in 1992). By the time I met Dan, which I think was at the 2001 EAC convention in Fredericksburg, VA, he was deeply involved with the CENTS of 1794. The two things that struck me most vividly about our first encounter was how doggone approachable Dan was, and how bushy his mustache was! Dan is a prominent member of an EAC sub-group known as "The BOYZ of 94". Dan went on to assemble a complete Sheldon set of 1794 cents, comprising not just the 58 collectible Sheldon-number varieties, but also the 11 Non-collectible (NC) varieties. Dan is just the third person to achieve this level of completeness for 94's!

    The sale of the coins from these two esteemed members of EAC is scheduled for late Jan. 2019 in Los Angeles. Goldbergs, in collaboration with M&G Auctions are expected to conduct the copper auction on Jan. 27,2019. The occasion leaves me with some strong and conflicting feelings. On the one hand, it is going to be a very important auction, attracting bidders from all across the country, and promising many bidding highlights. On the other hand, it feels as if two of my "contemporaries" in the world of copper are preparing to "pass the torch" to a new generation of copper enthusiasts. This is certainly appropriate and timely. The economy seems strong, and the coin market has never been better poised to absorb coins of such quality and significance. And yet, it is hard to avoid the sense, that in some way an era is passing. However, I can look back to the Walter Husak sale in 2008. That auction produced at least as much "electricity" as any other copper sale I have attended. And, Walter remains very active in EAC. Likewise, Chuck Heck sold his wonderful collection of 1794 Cents in Feb. 2017, and he remains prominent in EAC affairs. I hope that the same can be said for these two fine gentlemen.

    Monday, March 12, 2018

    Apple Cheek Love

    I rarely devote a post to just one coin. I want to make an exception this time, for the sake of one exceptional copper coin. Next week, Stacks Bowers will be offering this beautiful 1794 large cent (Sheldon-24, called the "Apple Cheek" variety by Dr. William Sheldon in his book on the subject of early cents).

    The coin is graded MS-65 BN by PCGS. The provenance (as might be expected) includes numerous early copper luminaries, including T. Harrison Garrett, Walter J. Husak, and D. Brent Pogue.
    Here is a link to the Stacks Bowers description (LOT 2176 in their Baltimore March sale).
    This coin ranks CC#3 in the Early American Copper census for the variety. It is certainly a visual treat. I was lucky enough to see the actual coin at lot preview earlier this month. I will not be bidding for this beauty, but whoever ends up being the winning bidder can be proud to own a historic piece of Early American Copper.

    Wednesday, February 21, 2018

    Goldbergs Pre-Long Beach sale of the GREEN TREE half cents

    The Green Tree half cents comprised the first 236 lots of the Goldberg's pre-Long Beach auction, held Sunday Feb. 18 in Los Angeles. These are my post-auction impressions from the sale.
    The majority of the coins stayed relatively close to pre-sale estimates, and met expectations. However, as usual there were both upside surprises and also some coins that fell far short of their estimates. The general theme that emerged was that scarce & rare varieties that were in mid-to-low grades did not do very well (price-wise). Here are a few of the most notable examples:
  • LOT 15 was a 1794 C-7 (R5+) graded EAC F12 (PCGS F15). It was hammered for $2650 vs. an estimate of $5000.

  • LOT 21 was a 1795 C-3 (R5+) graded EAC F15 (PCGS VF25). It was hammered for $4250 vs. an estimate of $8000.

  • LOT 90 was a 1805 C-2 (R5) graded EAC VG10 (PCGS F12). It was hammered for $3750 vs. an estimate of $8000.

  • LOT 100 was a 1806 C-3 (R6) graded EAC G4+ (PCGS G4). It was hammered for $3000 vs. an estimate of $6000.

  • It was apparently a good day to be bargain hunting among rare half cent varieties!
    As I mentioned above, there were also some surprises on the upside of prices. A few of these include:
  • LOT 125 was a 1809 C-2 (R3) graded EAC VF35 (PCGS AU53). It was hammered for $2100 vs. an estimate of only $600!

  • LOT 172 was a 1825 C-3 (R1) graded EAC MS64 (PCGS MS65RB). It was hammered for $4000 vs. an estimate of only $2000.

  • LOT 201 was a 1849 C-1 (R2-) graded EAC MS63 (PCGS MS64RB). It was hammered for $3000 vs. an estimate of only $1000!

  • LOT 205 was a 1851 C-1 (R1) graded EAC MS65 (PCGS MS66BN). It was hammered for $4000 vs. an estimate of only $2000.

  • Note that all these coins rank very high in the condition census. The trend that emerges from these high-side surprises is that Quality is still King!
    I will try to share some impressions from the large cent portion of the sale a little later.

    Sunday, February 11, 2018

    The Goldbergs FEB 2018 Pre-Long Beach auction preview

    It is that time of year again. Time to shake off the snow from winter, and head to sunny Southern California for a week of coin activity. The Long Beach coin convention begins Thur. Feb. 22. In addition to the huge bourse floor (over 400 dealers attending), Heritage will hold a big coin auction. But, the Sunday before Long Beach, copper collectors will have a chance to participate in the Goldberg's pre-Long Beach sale.
    Goldbergs have a great lineup of more than 600 lots of U.S. copper coins (and hundreds of coins in other U.S. series as well) up for sale. The headline collection for the sale is a large high-quality collection of half cents, called the Green Tree Collection.
    The Green Tree Collection comprises 236 lots of half cents (1793-1857), and an additional 16 lots of U.S. cents. Many of the Green Tree coins are in stellar condition, but there are also a number of mid-grade and collector level coins that should entice a lot of online bidding action.

  • LOT-1 is a choice 1793 C-1 (PCGS AU50 / EAC 40+). A real beauty.

  • LOT-18 is a choice AU 1795 C-1 (Lettered Edge / PCGS AU58 / EAC 55)

  • LOT-144 is a nice looking 1811 C-1 with the famous 4-star break (PCGS F12 / EAC 10)

  • While the Green Tree Collection lacks a 1796 half cent, there are two opportunities to obtain a 1796 C-2 (with-pole) in the session that follows.
  • LOT-267 is a 1796 C-2 (PCGS F15 / EAC 12).

  • This would make a welcome addition to any half cent collection.
  • LOT-287 is an example of the ultra-rare 1811 C-1 half cent with a 2-star die-break

  • Moving to large cents:
  • LOT-303 is a high-grade 1794 Head-of-93 S-11b (NGC MS61 / EAC 50+)

  • LOT-404 is a beautiful 1817 N-16 (The famous 15-star variety) that is an obverse brockage. This is a real conversation-starter!

  • LOT-470 is a high-grade 1839/6 N-1 (PCGS XF45 / EAC 35)

  • LOT-488 is a well-preserved PROOF 1843 N-12 (PCGS PF65 BN)

  • LOT-490 is a nice PROOF 1844 N-1 (PCGS PF63 BN)

  • There are three 1799 cents (S-189) to choose from in the sale, and a single 1804 (S-266a). Opportunities abound for half cent and large cent collectors in this sale. Unfortunately, the selection of colonial coins is very limited (only 11 lots).

    I plan to attend the Goldberg sale. I will be very interested in seeing how well the coins do with regard to price realized. The market for copper has been fairly quiet for the last 6 months. The last large copper auction was the Heritage Padula sale (SEP 2017). That sale featured a full Sheldon set of large cents. However, many of the coins were in low grade, and they sold at modest prices. This Goldberg sale should have a different character, since there are a number of high-grade coins that have appeal to both copper addicts and type collectors. Check out the sale on-line at the Goldberg web site, and have fun bidding in the sale!

    Tuesday, September 26, 2017

    Directions in Copper & Coins

    I have been absent from the blog scene for personal reasons. But, I continue to participate in the coin market, and have been observing the shifts underway in the market for early copper coins. A few of my observations are summarized as follows:
    > The coin market (in general) continues to mark time. Coin collectors have learned to be patient. The opportunity to acquire a truly rare coin always trumps the circumstances of the current market ups & downs. Generic material remains very weak. However, marquee coins continue to sell at reasonable prices (bargains, one might possibly argue). There are a number of forces exerting influence on the coin market today. Uncertainty is high, due to both economic and political factors. The overall economy, while appearing strong on the surface, faces a number of headwinds. Interest rates, energy prices, currency values are all at historically high levels of volatility. A long bull market in equities faces an uncertain future. Gold remains stable (?) at 2-year old levels. A break-out feels imminent.
    > Coin collecting is faced with an additional worry - the demographic challenge. The old guard is beginning to liquidate, and newcomers to copper are less inclined to follow the old ways. Full sets, by Sheldon or Newcomb # are no longer in vogue. There are so many other collecting themes to consider - die-state collecting, date-specific, RED BOOK sets, error collections. This is challenging the traditional models for value. R5 once represented a desirable coin (population less than 75). but, what if only 50 people find themselves wanting one? Well.... there will be fewer bidders. That is the new reality. But, what if a new terminal die-state is found for an R1 variety:  now, THAT is interesting! This is how it has always been with collecting. The shift is neither new nor should it be surprising.
    > GRADING! This is a subject that could fill a book. Since 1986, we have witnessed the era of the third-party-grading service (TPG). There is no denying the success of the TPG, as a business. What about the success from the perspective of the coin hobby? Well, in fairness, there have been some positive developments: Authentication, as part of the TPG service, has gone a long way to remove counterfeit & altered coins from the market place. Certification has also created value in the form of "perceived good" coins (ie. coins that the services deem fit for numerical grades). The "bad" coins (those deemed unfit by the grading services, and given "details" grades) have suffered a great deal of persecution in the marketplace. Is this fair? That depends upon your perspective of the role of the TPG. They have become the "arbiters" of good & bad in the coin marker. Those willing to accept the  judgement of the TPG hold the products of that judgement. Those willing to think on their own may hold some questionable (?) coins. One day, when the third-party grading paradigm is discarded, these questionable items may find increased market acceptance. When might this occur? Probably not soon enough to save today's owners. But, the coin market is ultimately rational, and the time will come when rarity & condition (in the absolute sense) will prevail over "condition rarity" (as defined by population reports). This is (admittedly) an optimistic scenario for the triumph of logic over propaganda. Time will tell whether it is an accurate forecast.
    > What about coin collecting? Will it survive the transition to a "cashless" society? We have witnessed the steep decline in stamp collecting. That should send a collective chill up the spines of today's coin collectors. Most of the stamps collected over the past 50 years are best licked and used to send out letters today! Could this also happen to coins? Well, in some cases, YES! Those double albums of statehood quarters, culled from circulation, are doomed to the tip jars of the world. The fate should be different for the classic coins from the 18th & 19th century. The abandonment of coinage in the U.S. might actually lead to a resurgence of interest in classic old coins. Rarity and history might combine to create a virtuous cycle for collectors of classic U.S. coinage. Again, I admit to a touch of romanticism and optimism combined. But, I hope I am right!

    Sunday, April 16, 2017

    A little note about Numismatic Literature

    I recently made the acquaintance of a young man who works at a local business, and he expressed an interest in coins after learning that I am an avid collector. Lately, each time I see this fellow, he either asks me what I have that is "new", or he entertains me with a story of some numismatic item that he found.
    I remember being surprised by his interest, since I thought that everyone his age was infatuated with high-tech "toys", and had no interest in "old school" hobbies like collecting. I decided to try to inspire this kid, by gifting a few numismatic books to him.
    The first gift was the modern classic "100 Greatest U.S. Coins" by Jeff Garrett and Ron Guth. I just happened to obtain a duplicate copy of the 2nd edition, and the intent of the gift was "shock & awe", at both the beauty and the value of some of our finest coins.

    Next, after we had a discussion about mint-marks on Mercury dimes, I gave the young man two different books. First, an early edition of "A.N.A. Grading Standards" (I purchased a newer edition for my own use). Second was an earlier edition of "The Cherrypicker's Guide To Rare Die Varieties" by Bill Fivaz and J.T. Stanton. These two books have a lot of practical value for a new numismatist.

    I began to reminisce about my own beginnings with numismatic literature.
    My interest in U.S. coins began to stir in the late 1980's. I occasionally visited the retail coin shop of Steve Estes PN. Steve kept a stock of coin books for sale, and the first one I spent real money for was another classic: "The History of United States Coinage as Illustrated by the Garrett Collection" written by Q. David Bowers, who is one of the preeminent numismatists of our time (and a prolific author) . Dave wrote this book as a tribute to the famous Garrett family collection at the time of the collection's sale (by his firm, Bowers & Ruddy). The collection had been donated by the Garrett family to the Johns Hopkins University in Baltimore, MD, and board of Johns Hopkins made the decision to sell.

    This volume remains one of the keystones to my numismatic library, and I can still recommend it as a good way to learn about U.S. coinage and one of America's earliest and most devoted collectors, T. Harrison Garrett. I remember being enthralled by the image of the Garrett family home (known as Evergreen House) in north Baltimore, and the thrill of actually visiting Evergreen House and taking the tour over 15 years later.
    My next big numismatic literature purchase was "Walter Breen's Complete Encyclopedia of U.S. and Colonial Coins". As the title implies, this was an ambitious effort to cover (in great detail) the colonial coinage of the early U.S. (ie. prior to the establishment of the U.S. Mint and commencement of coin production in 1793), all the regular-issue U.S. coinage (plus proof and commemorative issues), and even much of the private & territorial coins of the U.S. Breen supplemented his encyclopedic understanding of each series with amusing (and occasionally factual) anecdotes concerning the production and/or the collecting of particular coinage issues. Breen's work covered the important types for each series, while leaving the exhaustive variety-by-variety analysis to other authors. By that time, I had become involved in collecting large cents, and it was Breen who informed me about some of the important cent hoards and accumulations (eg. The Nichols Find and the Randall Hoard) and the fact that some coins are important enough to have names of their own (eg. "THE COIN", which refers to a particular 1793 Chain Cent).