N.M. from Texas recently asked an excellent question which I’d like to try my best and answer. His question, in part, is as follows: “It seems as though the grading services are holding coins like Indian $10 and Saints to a higher standard than say CC $20's or Territorials, etc. I see MS61 or MS62 CC $20 and Assay pieces with terrible surface preservation relative to what 20th Century coins show for the same grade. I don't believe this is just a case of a few over graded coins. We all know that Territiorials and CC's had a hard life but I always thought coins of the same grade were to be held to the same standard. Care to comment?”
This question is very astute and is unquestionably worthy of some analysis. My initial reaction is that N.M.’s observation is absolutely correct. Territorial gold coins and, to a lesser extent Carson City double eagles, are definitely accorded a different grading standard than 20th century issues such as Indian Head gold or Saint Gaudens double eagles. And I think they should be.
There are at least two legitimate reasons why Territorial gold is graded the way it is (which tends to be, for the most part, very loosely). The first is that these coins were typically created in difficult circumstances by amateur coiners using primitive equipment. We expect them to look bad and, usually, the coins do not let us down. The second reason why the grading services have trouble with these coins is that they are genuinely hard to grade. There are about five people in the world who really, truly know how to grade Territorials (I am not one of them...). And none of them work for the grading services.
There is another factor that comes into play here: what I call the “veneration effect.” The graders at PCGS and NGC are savvy numismatic professionals and they get a lot more excited when they see a Bechtler quarter eagle than when they see a 1926 Indian head quarter eagle. Cool, truly rare coins will always get more of a break from an experienced grader than common coins. The graders at PCGS and NGC can deny this until they turn blue in the face but this statement is absolutely, unequivocally true.
Ironically, this is true even within the same series. I contend that a well-known rarity like an 1854-S quarter eagle is graded on a different standard than a common issue from the same series, like an 1854 Philadelphia quarter eagle. Is this “fair?” Probably not. But human beings are subjective creatures and we are influenced by factors like rarity when we determine a coin’s grade; which, like it or not, is subjective in the first place.
When the grading services first began slabbing coins, they were brutal when it came to Carson City gold. I can remember sending them coins which, even back in the late 1980’s, I thought were nice AU’s but which would routinely be graded VF35 or EF40. This began to change a few years ago and now I think the services often overcompensate when it comes to these coins. I’d like to think it has to do with the fact that the graders read my CC book and became more in touch with strike patterns on early CC half eagles or surface characteristics on 1890’s era CC double eagles. But I’m enough of a pragmatist to know this isn’t true. The market demanded different standards and the services acted accordingly.
This blog isn’t meant to be a condemnation of how PCGS and NGC grade Territorials and Carson City gold. As I said before, I believe that virtually no one has a clue how to grade the former and the market standards for the latter have changed considerably. If the market eventually determines that CC gold is all way overgraded, then you’ll see the price spreads between grades become more compact. This has already happened in some 19th century gold series.
In considering the grading of Carson City gold versus 20th century issues, there are other factors to analyze. CC gold is, as rule, rarer and as I stated above, rarer coins are graded more liberally than common coins. In addition, CC coins saw intense circulation, unlike 20th century coins which seldom entered commercial channels. Furthermore, Mint technology in 1920’s San Francisco was a heck of a lot better than it was in 1870’s Carson City and we can (and should) expect a better looking product which should be held to a more rigorous standard.
The bottom line is, if you judge CC double eagles by the same standards as 1920’s Saints, you are going to hate the CC coins and not buy any. But if you learn what the standards are for CC double eagles and try to find coins that are aesthetically pleasing for the grade, you’ll be able to be a happy collector.