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Grading U.S. Stamps


In 2001, Professional Stamp Experts presented to the philatelic community a grading system for United States postage stamps. For the first time, all attributes of a stamp - centering, soundness and eye appeal - were incorporated into a single grading model, and a method for arriving at a single net grade for a stamp was established.


In the ensuing years, this model has been discussed with many of the nation's leading dealers and collectors. PSE has examined and graded over 50,000 stamps, and carefully observed where the system worked, and where improvements were needed. If there were inconsistencies, changes were made.


In the spring of 2002, PSE began publishing the Stamp Market Quarterly, a guide to the market value of the most collectible U.S. stamps. This was followed by an establishment of the PSE Set Registry, where the nation's finest sets can be listed and compared, and by the PSE Population Report, listing by grade the quantities of stamps graded by the PSE. In late 2005, the Philatelic Foundation in New York adopted PSE's numerical scale for the grading of U.S. stamps and in 2006, Scott Publishing Co. also recognized that scale.


This will examine how U.S. stamps are graded, and present PSE's model for fairly and impartially evaluating single U.S. stamps and coil pairs.

 

What is Grading?


Grading is the process of grouping stamps of a given Scott number and state, (e.g., used, Mint OGNH, Mint OGPH, etc.) with a similar fair market value into discrete categories. For example, a used Scott no. 1 worth in the $150 to $200 range would fall into the "good" category, one that might sell in the $300 to $400 category would be "fine," a $500 to $600 copy might be graded "very fine" and a $2,500 example would likely qualify as "Superb." because mint stamps are usually worth more than used stamps or because some lower grade used stamps are worth more than higher grade mint examples (e.g. Scott no. 39) or because of the large premium afforded to "never hinged" stamps, comparisons are only valid among stamps of the same state.


It is important to appreciate that a stamp can achieve the grade of "fine 70" through two very different paths. The stamp can be completely sound (faultless) and have its design close to the perforations on one or two sides. Conversely, the stamp may have near perfect centering, yet have a fault such as a crease, a thin, or a toning spot, and still have a net grade of "fine."


What grading actually attempts to say is that the two stamps have approximately equal market value. Not to all collectors at all times, of course, but across the broad market there should be informed buyers willing to pay a "fine" price for either stamp within a reasonable length of time. There would of course be collectors who would not want a faulty stamp at any price. Conversely, there are other collectors who are interested in a well-centered front, and would consider an XF-Superb centered stamp with a thin to be well worth a "fine" price.


If the above sounds somewhat mercenary, then a reality check is in order. The collectibles business revolves around money. It is the common denominator, which enables dealers and collectors to interact and conduct commerce. To compare a faultless, off-center stamp to a perfectly centered stamp with a fault is impossible without using market value as an arbiter.


Despite the aura of precision that the use of numerals lends to grading, it is important to keep in mind that grading remains both an art and a science. Grades are essentially ranges of condition, and any given grade contains both "low end" examples that just made the grade, to "high end" examples that just missed the next higher grade.


In reality, there is far greater difference between the worst XF 90 and the best XF 90 than there is between the best XF 90 and the worst XF-Superb 95. This is easy to see. Take any stamp, for example a Scott no. 231 (a two cent Colombian) and imagine arranging all copies that exist from worst to best. Then draw lines between the grade ranges separating the 90s from the 95s, the 95s from the 98s, etc. The two stamps on either side of the 90/95 line are essentially the same stamp! In fact, a number of stamps on either side of the 90/95 line are probably nearly indistinguishable. Yet, several hundred stamps may separate the worst XF 90 from the best XF 90.


Add to this the fact that two different people may not arrange all these stamps in the exact same order and the fact that you yourself may not arrange these stamps in the same order if you had to do it a second time. In essence, while grading is the best attempt to place a relative rank on a stamp's condition and value, it is by no means absolute. Two experts may have legitimate differences of opinion, and those stamps near the dividing line between grades are particularly vulnerable to disagreement.

 

Which Stamps are not Graded?


PSE does not grade multiples from sheet stamps, booklet panes, or coil strips of three or more stamps. Nor does PSE grade fake or altered or counterfeit stamps. Common items which fall into this category include fake early coils, mid-19th century used stamps which have had their cancels removed to simulate unused stamps, 19th century proofs which have been altered to resemble issued stamps, fake Scott no. 461 and fake Scott no. 519.


Finally, PSE does not grade damaged stamps, i.e., ones which are grossly faulty or extensively repaired. Market values (if they even exist) for these types of stamps are simply too inconsistent and arbitrary.


The Grading System

 


A number of diverse factors come into play when determining the grade of a stamp, and any system that compresses these factors into a single numerical (or adjectival) grade is necessarily complex. However, such challenges are not unique to stamps.


The grading of sports cards attempts to balance such diverse attributes as edges, corners, surfaces, centering and registration quality, all of which must be weighed to arrive at a single, numerical grade. Similarly, rare coins must have attributes such as strike, surface preservation (marks, scratches), luster, and toning (eye appeal), all of which must be considered when determining a final grade. Difficult? Yes. Controversial? At times. Impossible? No.


The preliminary grade of a stamp has two components:


Soundness (the presence or absence of faults.)

and

Centering (the balance among the four margins.)


This concept of combining soundness and centering is the heart of the PSE Grading System. For faultless stamps, the preliminary grade is the same as the centering grade. For stamps with faults, the PSE Grading System is an attempt to model the value that the marketplace assigns to stamps with faults.


PSE appreciates the fact that all collectors will not view faults equally. What to some might be a "fatal flaw" would to others be "no big deal," at least insofar as their willingness to add the stamp to their collection.


It is a fact that a significant majority of pre-1890 U.S. stamps and a majority of 1890-1920 stamps have a fault of some sort. To shrug off that portion of the market with statements like "faults decrease the value of the stamp" and "let the market determine how faulty stamps should be valued" begs the question and leaves all but fully knowledgeable collectors at a severe disadvantage.


A third component,
eye appeal (color, impression, cancellation) allows for some adjustment of the preliminary grade to arrive at the final grade.


For mint (unused) stamps, a notion is made of the gum condition. That notation follows the grade of the stamp, and is not a factor in determining the grade. it does however, play a major role in determining the fair market value of a stamp.


Reprinted from 2006 edition "A Guide to Grading and Expertizing United States Postage Stamps"

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