When you get into the business (or hobby) of buying and selling old, rare or numismatic coins, one of the most basic things you will need to understand is coin grading. Without this essential information, you will encounter issues when determining the proper value of a coin(s) before entering into a transaction. The purpose of grading a coin is to determine its market value based on how well the coin was originally struck and the condition of the coin or extent of wear that has occurred subsequent to the mintage of the coin.
While an important factor, a coin’s grade is just one of the many factors that will determine its value. Other factors include the coin’s liquidity, quality, rarity, and purity. This article is intended to give you a solid foundation on the subject of grading coins so that you will be well versed when it comes to grading your own coins or before entering into a coin transaction.
The 70-Point Grading Scale
Coins are graded on a 70-point scale, known as the Sheldon Scale, which is the standard in the rare coin industry. This scale ranges from a grade of Poor (P-1) to Perfect Mint State (MS-70). The most common grades you will see include:
- P-1, Poor: The coin is barely identifiable but it must have a date and mintmark.
- FR-2, Fair: The coin is worn and almost smooth but it doesn’t have as much damage as a Poor coin.
- G-4, Good: The coin is heavily worn and the inscriptions are merging into the rim. Most details are gone.
- VG-8, Very Good: The coin has a good deal of wear, but the major details are still clear. There is little central detail left.
- F-12: Fine: The coin has a good bit of wear, but the wear is even and the details stand out.
- VF-20: Very Fine: The coin is moderately worn but there are some fine details remaining. Letters should be legible with full, clear rims.
- EF-40: Extremely Fine: The coin is lightly worn with all details clear.
- AU-58: Almost Uncirculated: There are slight wear marks on the high points, but the coin displays almost full mint luster. These coins are commonly referred to as “sliders.”
- MS-63, Mint State: The coin is uncirculated but has contact marks, a slight impairment to the luster with an average to weak strike.
- MS-65: Mint State Choice: The coin is uncirculated with strong luster and very few contact marks with an above-average strike.
- MS-70: Mint State Perfect: The coin is perfect with no microscopic flaws.
The coin grading system may seem a little complicated at first, but it’s important to understand before buying or selling old, rare or collectible coins. One easy way to break it down is to separate your coins based on those that are in circulated condition, those that are nearly uncirculated and those that are in uncirculated condition. In particular, the difference between a high end almost uncirculated coin (AU-58) and an uncirculated coin can be a bit difficult to differentiate at first, as AU-58 coins tend to have almost complete mint luster. It’s important to pay attention to the high points of the coin to determine if they display evidence of wear or not.
Note: Grading standards can vary from coin type and even from date to date depending on several factors. As an example, missing parts of a date on a Buffalo Nickel or Standing Liberty quarter are more acceptable than with most other coins, as the date is one of the high points on the coin.
How Coins are Graded
Now that you understand the scale used to grade coins, what is the actual grading process? And how can you analyze your own coins to get an idea of their grade before you sell a coin collection?
Grading coins is as much an art as a science and being able to specify an exact grade requires a lot of skill, which is why you probably want to have very rare or valuable coins professionally graded before you sell your coins. Still, you can get a ballpark idea of a coin’s grade on your own with a bit of knowledge.
Grading Coins on Your Own
To get a good idea of a coin’s grade, you will need excellent lighting and a good magnifier that magnifies 5-8 times. Follow these steps:
- Determine which category the coin belongs in. Is it uncirculated, and therefore in Mint State condition? Are there very slight signs of wear on the high points, making it Almost Uncirculated? Or does the coin fall into the Circulated category? This latter category is where most coins will fall.
- Compare your coin to the standards listed on the Sheldon Scale. The numbers on the scale are not proportional, which can make it a bit difficult to understand the subtle differences. This means the loss of detail between EF-40 and VF-20 is not the same as the difference between MS-60 and EF-40 as they fall in separate categories. Use the description of each grade to properly categorize your coins.
You can also view examples of specific coins by grade. For example, here is an article on grading Morgan dollars. If you want to be more precise in your grading, it may be worth investing in a copy of The Official ANA Grading Standards, which breaks down the grade for every major United States Coin type with pictures.
After grading your own coins, the next step is to determine out how much a coin dealer will pay. Determining coin dealer prices is a topic worthy of a separate article, but it’s important to remember that you should expect to receive wholesale values, not retail prices published in most online coin price guides.
Professional Coin Grading
It’s not necessary to have every coin you own professionally graded, or buy only professionally graded coins. However, the advantage is clear for high-grade and very rare coins, as a professionally graded coin establishes trust and quality. Furthermore, it guarantees that the coin is authentic and removes any subjectivity with respect to the grade of the coin. Grading does cost money, however, so before having coins professionally graded you’ll want to first check if the price is worth it.
The two most respected coin grading companies are The Professional Coin Grading Service (PCGS) and Numismatic Guaranty Corp. (NGC). Be cautious when you have coins graded, as some coin grading companies have been known to over-grade coins and have a bad reputation in the industry.
If you’re just trying to sell a coin collection or a handful of coins, professional grading isn’t always necessary. Instead, you can take the coins to a few coin dealers you trust and obtain a coin appraisal, or their opinion of the grade of the coin. Ask for the coin’s grade before obtaining an offer price to help you determine if you’re on the same page with respect to the condition of the coin.
The Bottom Line
The takeaway from this article is there can be a huge difference in value from one grade to another, especially on condition sensitive or rare coins. The Sheldon Scale discussed above provides coin collectors and coin dealers with a standard way to exchange information about coins. Becoming familiar with coin grading is the first step to being successful when you buy and sell rare coins.
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