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Differences between PCGS and Australian Grades

23-Jul-2013

Even some of the more experienced collectors can sometimes be confused by the gradings given by third-party grading services such as PCGS. Collectors not familiar with PCGS may attribute this to an error on PCGS' part, but in most cases the confusion is caused by a lack of familiarity with the grading standard employed.

While it would take a thick book (which PCGS actually sell) to objectify all the methodology involved in professional grading, we've compiled this brief list of common points of confusion associated with where the method used by PCGS differs from techniques used by Australian dealers.

PCGS Considers the Whole Coin

Australian dealers, particularly those with less experience grade circulated coins by looking at key points, such as the band on George V's crown. While this can be reasonably accurate, where this method fails is often a point of contention between PCGS grades and Australian grades. Even more experienced dealers use this method, drawing from their experience and understanding of the various strike characteristics of each respective coin to adjust for any inaccuracies but no matter how experienced the grader is, this method can never be as accurate as analysing the coin as a whole.

The Australian standard too considers all points of the coin so the method of grading by key points can at best be seen as a means of estimating a coin's grading which gained popularity because it's easier to express grades from key points rather than more abstract expected characteristics of each respective grade.

Even beyond the inaccuracies, this method can only work for a coin series with a well defined set of key points to look out for. As far as I'm aware, such a list has only ever been published for George V pre-decimal coins (the ANDA grading guide) so it comes as no surprise that almost every disagreement over a PCGS grading I have come across has been over a George V pre-decimal coin.

PCGS do not give concessions for Weakly Struck Coins

In Australian grading, most graders look at a coin's detail, then assign a grading, then adjust for the typical strike characteristics for the year. By definition of what is 'typical', this can be assumed to be accurate most of the time but where it is wrong is often another point of disagreement.

PCGS however grade a coin by wear, not by missing detail, for this reason there is no need to give concessions for weakly struck coins because when you look at wear directly (as the movement of metal rather than missing detail), there is no possibility of mistaking a soft strike for wear.

This means that a worn, well struck up coin with the same detail as a softly struck up coin, will grade much lower while to most Australian graders, if they're the same coin type, they will probably receive the same grading.

PCGS use the same standards for all coins

While the Australian grading system evolved initially from a single system, the leading dealers of different fields adapted the system to their area of expertise and since then each adaptation of the system has evolved on its own path. For this reason, each system has become distinct from one another and while the adaptations can be seen as a improvements for each respective system, as a whole it makes it difficult for collectors to understand the grades of other series when expanding their collecting interests.

Compared with pre-decimal coins, gold sovereigns are graded to a much weaker standard. E.g. a Gem 1963 threepence would need to have surfaces practically perfect to the naked eye while a Jubilee sovereign could have numerous fine marks as long as lustre was in tact and full, and no significant detracting marks were present. The logic for this is that gold coins wear easier due to gold being a softer metal and thus are more likely to contract such damage. An EF sovereign is intended to have experienced the same level of circulation as an EF threepence and has acquired more wear due to being a softer metal. While this may seem logical, it creates the unnecessary obstacle of making collectors learn a new grading standard to expand to another area of collecting.

Beyond this, even within an individual series coins are graded to different standards. For example, bags of 1943-D sixpence have surfaced but not a single hoard of mint state 1943-S sixpences have surfaced. For that reason, to be considered uncirculated, a 1943-D sixpence would need to have full intense lustre, be unworn and have generally clear surfaces (i.e. MS62 minimum). Without any sizable hoards however, the 1943-S sixpence is incredibly difficult to find in such a state. As a result, dealers tend to call examples of this date with slight wear, numerous surface marks, and impaired lustre as uncirculated. This process is known as market grading, in which the coin is awarded an uncirculated grading because such as coin is worth an uncirculated price.

PCGS on the other hand grade all coins to the same standards. For this reason, the 1943-S sixpence is much more valuable in an MS slab than it is graded locally as uncirculated while decimal coins will often be awarded MS gradings when they'd only be considered EF to an Australian dealer.

Strike has little bearing on the numerical gradings

To ensure the same standards are applied for each coin, definitions need to be strictly defined and one problem is that collectors of different coin series have different expectations in the quality of the strike. E.g. collectors of hammered coins don't expect as strong a strike as collectors of Australian pre-decimals. The standard however, must cater for all coins (See Understanding Strike for more information on rating strike).

For this reason, Australian coins are rarely affected by strike by PCGS as their surface condition is usually lower than their strike grade as the lower strike grades tend to be reserved for hammered coins. Despite this, some Perth mint copper finds itself limited by strike though usually these require exceptional surfaces (which are rare among Perth mint issues anyway).

This is at contrast to the Australian system which rates strike against other examples of the year. For example striking faults can still be found on GEM Perth mint copper, while a minute presence of die wear around the steps of a Parliament House florin can preclude a GEM grading.

PCGS rates surface quality on its physical characteristics rather than appearance

A major part (often quoted as 40%) of the professional grading of a mint state coin involves its surface condition. Severe marks detract much more from an Australian grading than they do from a PCGS grading, while smaller marks (particularly fine surface marks which disturb the lustre), detract far more from PCGS gradings while having barely any effect at all on Australian gradings.

This is commonly a point of contention between PCGS grades and Australian grades in which an uncirculated coin with a severe mark can grade MS64, while a GEM coin with numerous fine marks only grades MS62.

Gem/FDC does not equate to MS70

Another problem with equating mint state grades is the belief that FDC or GEM are granted only to perfect coins. This belief is never more apparent than reading the protests of when MS65RD Elizabeth pennies sell at auction for 10 times the price of a GEM coin. The reason for this is that the GEM coin would probably slab MS64RB.

In reality, GEM is awarded to coins that are among the best that could reasonably be acquired of the type. For this reason, GEM Victorian sovereigns tend to grade MS63-64 while GEM decimal coins should grade around the MS67 level.

FDC on the other hand seems to be graded to any untoned post-55 proofs (even those which have been dipped). Because of this, most FDC post-55 proofs grade around PR64-65 and as such, PR67 proofs tend to sell for over 10x the price of FDC uncertified coins.

MS60 means no wear

On the other end of the spectrum, the MS gradings are guaranteed to coins without wear (except when they no-grade). This contrasts with the Australian system which often grades coins with no wear as low a EF depending on the series and any indications of circulation which the coin may have.

PCGS rates copper colour differently

Another distinct difference between PCGS grades and Australian grades is the rating of copper. The RED designation is given locally to copper coins irrespective of whether the colour is original and given to coins which only have around 50% original brilliance.

PCGS only awards the RED designation to coins which have 95% or more original brilliance and as such, coins with an RD designation are extremely rare and are generally only available to issues which have had mint rolls surface.

In addition to this, PCGS rates the level of original brilliance remaining, not the area of the coin which has original brilliance as Australian dealers do. An example of where this causes disagreement is on a copper coin which has a light but even tone through, still remaining a darker red colour. This red colour would only be worth about 90% and although it covers the whole coin, such a coin would only receive an RB designation.

To be awarded an RD designation, the coin would either need to have full golden brilliance covering at least 95% of the coin, a level of brilliance with less than 5% toning covering 100% of the coin, or some combination of the two.

PCGS uses different standards

In addition to all this, what is probably the most important difference for collectors of circulated coins is that PCGS use different standards to Australian dealers. What is a VF30 by PCGS is probably only a gFine by Australian standards. The equivalents are discussed on this page: Coin Grading Guide


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