Market Grading vs Technical Grading: The Hidden Truth
Your coin grades AU58. The holder says so. But wait—three dealers have called it “solid MS62” and the auction house describes it as “virtually Mint State.” Welcome to the complex world where market grading and technical grading diverge, and understanding the difference can save—or make—you thousands of dollars.
What Is Technical Grading?
Technical grading applies strict standards to measure a coin’s preservation. Did metal move? Where did it move? How much luster remains? PCGS and NGC attempt technical grading—their numbers should mean the same thing regardless of a coin’s rarity or market value.
Under technical grading:
- Any evidence of wear on the highest points means the coin cannot be Mint State
- Surface marks are counted and evaluated against published standards
- A common date and a rare date in identical preservation receive identical grades
What Is Market Grading?
Market grading adjusts expectations based on what’s typical for a particular issue. If 1916-D Mercury Dimes almost never come fully struck, should we penalize them against 1945-P coins that are routinely sharp? Market grading says no—judge each coin against others of its kind.
This creates situations where:
- A “weak” strike on a typically weak-struck coin doesn’t hurt the grade
- Coins of rare dates may receive slightly generous grades
- Type coins are graded more strictly than key dates
The AU58/MS62 Debate
No grade creates more controversy than AU58. Technically, AU58 means the slightest trace of wear on the coin’s highest points—visible perhaps only under magnification with specific lighting. In reality:
Some AU58 coins show:
- Absolutely no visible wear to most eyes
- Full, unbroken mint luster
- Simply a slight “flatness” on the absolute highest points
Some MS62 coins show:
- Heavy bag marks that create “wear-like” appearance
- Subdued luster from surface marks
- Surfaces that look more circulated than high-end AU coins
The market often prices premium AU58 coins higher than low-end MS62 examples of the same date. A “CAC’d” AU58 frequently outsells a generic MS62.
The Rare Date Premium
Grading services face pressure when evaluating rare coins. A 1893-S Morgan Dollar worth $5,000 in VF-30 jumps to $15,000 in EF-40. The temptation to call a coin EF-40 when it’s truly VF-35 is ever-present. Studies have shown that rare dates tend to receive slightly more generous grades than common dates in identical preservation.
Protect yourself by:
- Comparing your target coin’s photo to PCGS TrueView images of confirmed grades
- Seeking CAC approval for rare coins (CAC tends to grade strictly)
- Getting multiple opinions before major purchases
Grade Inflation Over Time
Grading standards have evolved—some say loosened—since the 1980s. An MS65 coin graded in 1990 might receive MS66 today. An AU55 from old holders sometimes upgrades to AU58 in modern holders. This “grade inflation” creates opportunity for collectors with old, original holders.
The “crackout game” involves:
- Identifying undergraded coins in old holders
- Submitting for regrading hoping for a bump
- Profiting from the grade increase
It’s profitable but risky—coins can also receive the same or even lower grades.
Which Approach Serves Collectors Better?
Arguments for technical grading:
- Consistency and objectivity
- Easier comparison across different issues
- Removes subjectivity from the process
Arguments for market grading:
- Accounts for what’s realistically available
- Prevents penalizing coins for characteristics inherent to their issue
- Reflects how the market actually values coins
Practical Strategies
- Know your series: Some series are graded more loosely than others. Walking Liberties and Standing Liberty Quarters are notoriously generous; Morgan Dollars tend toward stricter grading.
- Compare populations: If a rare date shows 500 coins in MS65 but only 50 in MS64, something’s wrong. The grades may be inflated.
- Buy the coin, not the holder: An attractive AU58 often represents better value than a baggy MS62.
- Seek CAC when possible: Their additional opinion helps validate the holder grade.
The Bottom Line
Technical grading provides the framework; market grading reflects reality. Understanding both allows you to spot coins where the grade may not tell the whole story—for better or worse. That “MS62” might be a disguised AU58. That “AU58” might be the most attractive coin in a tray full of MS63s. Knowledge is profit.
