Coin Grading System for Bank Notes???

News: Welcome to the Canadian Paper Money Forum.

This is my opinion and only my opinion. It does not reflect the opinions of others however I encourage you to let your voice be heard on the subject.

There has been talk of implementing the tiered system of coin grading to banknotes. In other words having sub levels of UNC.

I cannot express to the collecting community enough how concerning this is to me. The grading system for banknotes has purity in its simplicity. It is set out in such a manner that anyone can grade any banknote for themselves without outside assistance and this system has worked beautifully for many years. If it isn’t broke don’t fix it. If your car is running perfectly do you take it to your mechanic to have a full diagnostic tune done? Not!

You might be asking your self why anyone would want this type of grading for banknotes. Well to me the answer has purity in it’s simplicity as well…………it’s called GREED. The type of person who would benefit from this tiered system is not your average collector. Instead to them it is a business and the bottom line there is PROFIT.

What does this mean? What it means is that notes that you and I would call AU now come with a rating of UNC 63 and would cost you a premium over the AU price. A note that we would consider UNC is now UNC 65 or Gem UNC and would cost you more than the current UNC price in the catalogue to purchase. Remember the phrase “a Rose by any other name is still a Rose” Basically it’s going to cost you more for lesser quality banknotes and a premium for notes that we now refer to as UNC. It’s all about getting more cash for sub UNC notes and a premium for the ones that are truly only UNC.

The other problem that arises is what happens to the lower grades. If AU is now UNC 63, what is AU??? And EF where does this fit in?? This pattern would suggest that every lower than UNC grade would now drop a notch and allow for more problems than the current system allows. What I’m guessing is the sub grades for UNC would initially be 3 tiers; UNC 65, UNC 63 and UNC 60. Over time this could expand to possibly 8 sub level tiers of UNC!!!

You as the collector must ask your self, do I want this change and is it even necessary. Take a look at the coin grading system and pose this question to your self. How as a coin collector (except for the professional grader and even then I can imagine a lot of head butting) can I ever feel confident in purchasing a coin using this 8 tiered UNC system? The problem is that if you buy a graded coin you could take that coin to 5 different people for their opinion of its grade and get 5 different opinions. It would not surprise me if you sent a coin to one of the certified grading facilities, had it graded, removed it from its holder and sent the same coin to the same place that it would return with a different grade. Even if graded by the same person. How can I make my purchase decision based on such uncertainty?

At least with the current paper grading system I have all the tools to decide the grade myself and pay what I feel the note is worth and not what some biased opinioned seller wants based on pushing the item up a sub grade.

Many coin collectors have given up on coins for this high level of uncertainty and have switched to collecting banknotes. In my opinion the coin grading system is lunacy and I am not surprised at all that coin collectors would switch to banknotes, I did.

It’s all about simplicity and its all about quality. Do you want to be at the mercy of some grading agency? Who do these people think they are to claim to be the authority on grading? Why aren’t you the authority?

Do not get me wrong, I sell banknotes too and would stand to profit from the tiered grading but first and foremost I am a collector and I do not want this. I feel implementing the tiered system would lead to the demise of collecting banknotes as we now know it. Don’t forget; its not about what you have for a collection today… it’s about what you will have for a collection in the future (over graded over priced banknotes). Personally I would have to seriously consider getting out of Canadian currency collecting.. period.

The most important thing you must remember as a collector is that the Charlton catalogue is printed as a guide for YOU the COLLECTOR and NOT the DEALERS.

You have a voice, use it. I welcome replies for or against the tiered system being considered but speak up now before it just happens and there is nothing you can do then.

If you are against the now being considered tiered system, send me your full name and I will forward this as a petition to the Charlton Press.

To whom it may concern:

I am a Canadian Banknote collector and I am against the now being considered tiered system of grading banknotes. There is nothing wrong with the current system of grading and I feel this new system will only benefit the dealers of banknotes by purely increasing their profits while supplying the collector with inferior banknotes. I am not in favor of a tiered system that will only confuse me the collector and cost me more to obtain notes of the quality that I have become accustom to. The current grading system allows SIMPLE classification of ANY banknote and I see no reason to confuse, discourage or dissuade collectors with a change in the method of grading. Why try and change something that works so well?

The coin grading system is confusing, chaotic and disillusioning and I the below named paper money collector want nothing to do with it, that’s the primary reason I collect banknotes and not coins!

I think it is important to remind you that the catalogue you provide is for COLLECTORS and NOT  DEALERS whose bottom line is profit. After all Charlton did not sell over 6500 copies to dealers they sold them to collectors.

Thank you,
Concerned Banknote Collectors


Scott Melville
Kevin Fraser

There already is a current system of grading banknotes with numbering systems similar to coin slabbing. It is done by Mr. McKaig from Alberta.

As of right now, the CPMS does not recognize this system, nor does Charlton books or trends.

Until it is recognized, the old system remains in place.

Rick

So do you agree or disagree with this proposed system? It is being considered for inclusion in Charlton for the 20th edition.

I am neither in favour or against a new system for grading banknotes.
Only the Canadian Coin Dealer Newsletter is using parts of it for prices. No major dealer is using it right now.

Charlton's has not indicated that they will introduce this system.

No sense of starting a petition on a hypothetical situation.

There is always resistance to change.

Rick

This is not a hypothetical situation and before you know it it becomes a reality. Better to have a say and express an opinion to Charlton now so they can make an informed decision based on the opinions of the very people that make their publication possible. I'ts fine that you are on the fence... that's cool but I think the collecting community has a right to know what is being considered.

I won't mention any names but you and I both know there are dealers already using this system of their own accord.

Mr. Glassman: I appreciate your comments and will follow the postings carefully. However, with all due respect and not trying to be a jerk, could could please cease adding your flashing logo to yours posts. I find it very distracting and annoying... thanks... al

The last couple of major auctions that featured a lot of banknotes, including C&P at the TICF, Moores at Torex did not use numbering systems for grading. I attend most major shows, and have yet to see anyone using grading terminology as you suggest.

Most dealers use desciptive terms, such as good centering, crisp, original and stuff like that.

As I don't know who you are, but you likely know who I am. I am wondering why would Mr. Cross be telling you inside information on grading methods in future catalogues?

Rick

Mr. Glassman: I appreciate your comments and will follow the postings carefully. However, with all due respect and not trying to be a jerk, could could please cease adding your flashing logo to yours posts. I find it very distracting and annoying... thanks... al

No problem, done

The last couple of major auctions that featured a lot of banknotes, including C&P at the TICF, Moores at Torex did not use numbering systems for grading. I attend most major shows, and have yet to see anyone using grading terminology as you suggest.

Most dealers use desciptive terms, such as good centering, crisp, original and stuff like that.

As I don't know who you are, but you likely know who I am. I am wondering why would Mr. Cross be telling you inside information on grading methods in future catalogues?

Rick

What do you think origional UNC stands for?? An AU note that under the proposed grading would be UNC 63

I receive no inside information particularly from Mr. Cross. How I know is unimportant. That collectors know is however very important as it directly affects them.

I am NEW and do not have enough knowledge.  However, I do send my collections (with value over $200) to CCGS for grading in order to get a third party's opinion.  Not I don't trust the sellers or my judgement, but would like to obtain additional service.
For me, I just want to secure my collections grading, not for resell purpose to inflate the value.  Upto now, I haven't dispose any of my collections.  May be one day, I will, but not now and not under the grading result.
Some people ask for grading service may want to sell more, but if the note is really AU, how can the grading service to grade as UNC.  Since all the interpretations has been fully disclosed.

Personally, I agree we should have a uniform grading standard rather than multiple standard.

I think glassmancanada has hit some very important things here.

1. Coins and banknotes are like apples and oranges.  The factors affecting grading are very different.  This we know is true.
2. Profit/Investment is a motive for many people (at some point or another).
3. If you knew that you could slab your notes, -- even to a non-recognized standard, and get a better price for them... what would YOU do (if you were profit driven)?
4.  Look at coins: grading in theory should be uniform between all parties, for the same coin.  We know there is discrepencies, even within the companies.  As soon as there is a second person slabbing notes and grading them as a service, then we have the same situation as coins.  This is because we are people with opinions, and not robots.

5. You as a collector and a trader... are you excited to meet the person that wants to trade with you, only to find out that they are only buying/trading for slabbed and graded notes?  Does it make sense to you that the same quality note, will fetch a different price because someone offically graded it? Do you need to have that certification to know that it is the grade that it is?  Does that mean to you that it is accurate? Does that mean to you that it is worth more? Does that mean you will be paying more? Does that mean make it any better of an investment?  It is all relative! The people that capitslize on this are the ones that are taking raw notes and slabbing them with grades "officially".
6. You as a small time seller... Are you excited to have dealers tell you that they can only offer you $80 for certain note, instead of $100 for the same quality note that is slabbed/graded?
7. You the dealer... are you excited to have the opportuntity to under pay for notes, because they do not hold some person's (or team of persons) professional certification?  Are you excited to have the opportunity to inflate prices because of a third party grading service?  Are you wishing that it was you that set up this grading service-- think of all the un-slabbed notes out there. The profit from providing the service alone... think of how much that could be? (what is the motive here?)
8. A little bit of "Caveat Emptor" needs to be recognized (buyer beware). Any buyer should do some research onto what they are buying. For this, I am referring mostly to that on-line auction house.  You wouldn't buy a gold chain without checking it out first, nor would you do that of a diamond.  Why would you do that with a note?  All three are investment vehicles, shouldn't you be checking into your investment? (Whether the payoff is finacially or through personal satisfaction, it is still very important).  This actually applies to any grading system that is out there...
9. You have the book, which details grading, and explains the details that should be listed.  Do you think it is necessary to have to have someone "authenticate" your grading,when you abide by the Catalogue standards?  
10. I wish I had this idea first, I would be rich All I want to do here is give some questions to think about.  What will be the impact of the hobby?  Is this the start of things getting out of hand?  What will this do to the market? Think of both sides, demand and supply, and the motives of the people involve. This will benefit some, and hurt others.  Where will you land when this thing takes off the ground (and you get pushed out of this rocketship)?

I commend glassman for addressing this issue in a forum like this.  It is touchy, but we are all adults here and can remain fair and objective.  I too, welcome replies.  I write this from the stance of someone who collects what he can when he can afford it.  I make no claims of myself being a grading expert- I am learning all the time.  but, the point is, we need to try to look at all sides.  

In my opinion, this other system will only muddle clarity. Especailly since the grading systems that are out there are like comparing Standard to metric.  When side by side, a 10 does not equal a 10.  The fact that it is not recognized by the CPMF or the charlton really doesn't mean anything-- it still has effect.  What is happening here is that people are being exposed to it and the contradictions in grading terms (and numbering grades), which leads to there being followers of that grading system.  This then translates into the possibility of two schools of collectors (at least two), creating division due to the non-standardization of grades, and the mere fact that there is a supposed extra "weight" of truth behind notes that are slabbed and graded.  (Think of what has happened to coins?)

The question: Where do you think this will take the hobby?


Hudson

PS: Finally, here is one of my favorite examples.  I have "whited out" the grading service. Have a look in the Catalogue for the coin grading scheme...and evaluate whether or not this is what it the label says (in grade).  Can anyone honestly say that they believe this possibility will not occur in banknotes? I would not like to be on the recieving end of this one, that is for sure.

The first name has been added to the list. I will update the form as the names come in.

I guess it is time to step up and expose myself to the inevitable criticism that may flow from advocating the 60-65 numerical grading of UNC notes.

I would respectfully disagree with the comment that the current system works "beautifully" as it is. In my view, it is not working well for collectors at all.

A signicant portion ( majority ? ) of collectors are not good at grading. Many tell me that they are not able to grade well. They rely on my grading both when buying and when selling. I appreciate their confidence but I have concern for their lack of knowledge. I grade tons of notes and I make mistakes, and those mistakes are typically OVERGRADING as the eye misses faults. This will be true of any system and of third-party grading too. The coin industry has proven that third party grading is still subjective. As always, the collector must rely on his/her knowledge.

More directly to the issue of the 60-63-65 grades. I will be using this system and in grading notes this past week that I bought at TOREX/Nuphilex/ENS I starting putting a 60 or 63 or 65 on the tag. It will be a few months before I use those terms on my published lists but I will - along with a simple description of what each mines - in my opinion.

Over the years I have noticed a very distinct difference between what I will call an UNC-60 or 'commercial UNC' note ( original or pressed, clearly not circulated, but handling and counting creases are heavy, or centering not great ) versus an UNC-63 ( above average, counting creases are light, centering decent, original) versus an UNC-65 ( 'gem' quality, perfect paper, no counting creases, excellent centering, unimproveable ). These distinctions do exist and the 65 is decidedly more scarce and worth much more.

The 60-63-65 system is standard in the US and will be here INEVITABLY. So too with third party grading. Fight it or work with it , that is the choice. [i]Be assured the abuses that we see now will be equally available with numeric and third party grading. Neither is a guarantee. Best action any collector can take - LEARN TO GRADE.[/i]Hate long posts so will stop now.

OleDon

Hello every one.Just joined today as this subject is of great interest to me.The reason being I had the good fortune to purchase a canadian note in graded unc condition which cost $14k +.
[size=14]That's funny, your last post says you bought a GEM UNC 65 note. So what you're saying is that the note you bought is better than everybody elses because it is in better condition than what the best possible note can be (UNC). The truth is you paid too much, the seller got exactly what they wanted from you.... a premium. It would be different if you chose to pay that price due to the rarity of finding such a note in UNC condition but you were simply sold on the concept that you were getting something better.[/size]
In the add this seller references a dealer Don Olmstead that has also decided introducing different grade levels is appropriate.As one of the previous posters stated,I also am not qualified to give an opinion,but I do have a rather large investment in graded canadian paper money.

[size=14]So it's your investment in over graded notes you are trying to protect.[/size]

The seller has just posted a listing on e-bay with the following thoughts so your responses and considerations are greatly appreciated:

This listing features a Very Popular "Blue Chip" Dominion of Canada $4 note from 1900. This numeric 4's 1900 variety is the 2nd most valuable and desirable variety of this 1900/02 issue

The Note Features Lady and Lord Minto and a popular seen of the Sault Ste. Marie U.S. Locks at center.  Charlton Catalogue# DC-16 on page 165 of your 18th edition price guide. The note has a $3750 book price in Very Fine, this note grades Very Fine and has been graded conservatively as such. A modest time adjusted premium over 2005 book pricing is factored and certification costs included in the price you see.

I was actually hoping for more as the note was purchased as a higher graded note from one of Canada's top dealers (VF/EF if I recall correctly) and according to Charlton standards I believe it meets the criteria of a slightly higher graded note.  I have provided you a 1000 pixels wide high resolution scan for you to make up your own mind.  I do however stand by the PMG assigned grade and it is good to see that they are using a conservative approach on notes which could easily grade higher and have graded higher in the Canadian dealer market.  Let me say it is the best VF 20 I have seen in a very long time. A very attractively centered note for the issue & type.  No Tears, splits, holes or punctures of any kind and it appears to be original in every way.

PMG is one of the most respected paper money grading firms in North America, see http://www.pmgnotes.com/.  Very sophisticated USA based buyers of premium CDN currency that I work with, when buying slabbed notes, prefer them in a PCGS http://www.pcgs.com/ (who is now grading Canadian currency) or PMG holder.  I am recommending these two companies if you want your slabbed and certified notes to be graded by a firm which is internationally recognized and highly established. I have also spent time with representatives from both companies, determined how they grade, and found them to be credible.

It is my position that having 3rd party grading and increased standardization is an improvement over the current system.
 
[size=14]Please explain how? By confusing the collector and making him pay for the privilege.[/size]
 I support everyone agreeing to one system and one standard of grading paper money.[size=14] It will never happen because collectors and dealers are not on the same page. Collectors want banknotes, dealers want profits.[/size] It won’t be perfect but better than what we have now for sure. [size=14]Are you a dealer?[/size] Let’s let a few highly credible companies sort it out [size=14](yea like that works in politics too)[/size]rather than every dealer, every collector, every amateur, every self described expert have their own grading system or own interpretation of the grading system (whatever grading system they choose to use). [size=14]The guide is for the collector not the dealer. It is a guide for him/her to make a sound choice of grade when purchasing a note and it doesn't matter from who they buy it. You cannot take that choice away from the collector and force him to buy graded notes. The system now allows him/her to choose another source for the note he/she wants if the collector feels the seller is overgrading. If we move to a grading service it becomes a "take it an like it" attitude. Now if this same collector wants his note he needs to be ready to bend over and grab his/hers ankles! Sorry but my momma taught me that was wrong.[/size]

If the expertise of the 3rd party firm is in doubt I would recommend the doubters do some due diligence on how the grading system works and who the graders are. In the end if a buyer feels they know more than the grading firm they can cut it out of the holder, grade it themselves, and stick it in another holder with their own grading sticker on it if they like. [size=14]Ha ha ha you said it 3rd party grading is absolutely unnecessary.[/size]

The top COLLECTORS [size=14]Who?? Guy's like you who spend 14K+ on a note? So what the MAJORITY of collectors don't count? [/size]of CDN currency in the world are DEMANDING 3rd party grading and the dealers are being shown the way by these collectors. The existing AU and UNC grading tiers used in Canada are overly simplistic [size=14](ever heard the term K.I.S.S.?)[/size]and those who have had the most influence over the older, overly simplified, system are abandoning it themselves because they recognize it doesn’t cut the mustard anymore, the market is growing up. [size=14]So are the profits and that what it's all about.[/size] Additional pressure is coming now from USA based buyers who are driving much of the buy side activity. [size=14]Who cares, that means nothing to the true collector who the catalogue is printed for.[/size] They have found that many CDN dealers & auctioneers have OVER GRADED their notes. When sent down to PMG or PCGS for the most part they often come back LOWER GRADED than advertised, NOT higher. [size=14]That doesn't prove anything, if I were a 3rd party grading service I could deem it necessary to contradict your grades in order to get your business. After all if the grade is the same why use my service?[/size]  It's time we get off our high grading horse (we could start with you) here in Canada because we arent any better than anywhere else, [size=14](really?)[/size] in theory maybe, but not in practice. [size=14]I'm proud to be a Canadian and that means being different..different in the way we do business, our mannerisms and our way of life and if any of what we are makes us better than somewhere else i want to embrace that.[/size]

We [size=14](YOU)[/size] are moving fast to a universal 68-70 point grading system with UNC starting at 60 Choice at 63 and GEM at 65. It is the AU and UNC tiers of the existing system that need to be built up the most. What do mean by UNC, isn’t a GEM UNC with perfect centering slightly better than one without? [size=14]First of all I don't know what GEM UNC is, it's not in my collectors guide. A note that is not perfectly centred is "UNC" not well centered or something to that effect and would sell for less than full UNC.[/size] If so do we call that 1 or 2 points higher than the one with imperfect centering? I prefer to let the firms with professional paper money graders (who provide written guarantees where 'if they make a mistake they own it') and who do this all day long sort that out and if I disagree with their assessment I can challenge it by sending it for a 2nd opinion elsewhere. The largest dealers in Canada are moving for towards this improved model as evidenced by my approach and other major dealers like the highly recommended one referenced who has recently spoken on the issue here: http://images.andale.com/f2/105/123/17891141/1140638189609_1142388542146_Untitled_Scanned_01.jpg

Some resistance is to be expected as change scares a lot of people, particularly those who are not in a position to keep pace, people hate being left behind. Change and uncertainly scares some people more than others; it has been this way for millenniums. It is true that market inefficiency of grading will produce frequent profit making opportunities for many participants until the standardization has fully taken place and we are all reading from the same page.

3rd party grading of coins has been a success overall but has had many challenges and is far from perfect; for example over the years certain 3rd party coin grading firms have developed reputations as being accurate, conservative or too aggressive. The evolution of 3rd party grading of paper money is bound to produce similar results/disparities.

We are at the early stage of market adoption of 3rd party grading of Canadian Paper Money and I recommend you consider firms which provide written grading guarantees such as this one: http://www.pmgnotes.com/writtenguarantee.asp.

I predict you will see a mass market movement towards 3rd party grading in the near future, the short term inefficiency will be outweighed by standardization benefits in the long run.

If a link is required I can post it but not sure if that's within the rules?
If one of the most established dealers in Canada is adopting the system,can we afford to ignore the change that seems to be taking place r

I ran out of room on that last one.
C'mon all you collectors I know you are out there. Don't make me do all the talking. We want to hear from you!!