Gold Coin - Grading Coins

Grading Coins

A coin's "grade" is a visual evaluation of the amount of wear on a coin. Coins with little wear are graded higher and therefore assigned higher prices than those with a lot of wear. However, low-grade, extremely rare coins can easily be more valuable than more widely available, higher grade coins of common dates.

In the early years of coin collecting, three general terms were used to describe a coin's grade:

• Good - Where details were visible but circulation had worn the surface
• Fine - Features were less worn from circulation and a bit of the mint luster showed on the surfaces
• Uncirculated - Details were sharp and there was a luster approaching the state of the coin at the mint, prior to general circulation

As the collector market for coins grew rapidly in the late 19th century and early 20th century, it became apparent that a more precise grading standard was needed. Some coins were simply more fine than others, and some uncirculated coins showed more luster and far fewer marks than others. Terms like "gem uncirculated" and "very fine" began to see use, as more precise grading descriptions allowed for more precise pricing for the booming collector market. In 1948, a well-known numismatist by the name of Dr. William Sheldon attempted to standardized coin grading by proposing what is now known as the Sheldon Scale.

Sheldon's scale, included in his famous work "Penny Whimsy", was originally devised specifically for United States large cents, but it is now applied to all series. The scale runs from 0 to 70, where 0 means that you can tell that it was once a coin while 70 means that it is perfect. 60 is uncirculated, what the general public would consider perfect, with no wear whatsoever. There is a direct mapping from this scale to the older descriptive terms, but they are not always used in the same way.

Below are the general characteristics that define different coin grades in the United States system. When grading coins, any defect should be noted, such as bent, scratched, etc.. Cleaning or mutilations of any kind should be mentioned.

• Basal or Poor - (PO1) A piece of metal that can be identified as a coin.
• Fair - (FR2) The type of coin can be identified, the date may or may not be visible.
• About Good - (AG3) The date can be read, but parts of the coin and legend are worn smooth.
• Good - (G4 and G6) Legends, designs and dates are visible but heavily worn.
• Very Good - (VG8 and VG10) Designs and date are clear but lacking details. The "full rim" (the line around the edge of the coin where it was raised up) must be visible.
• Fine - (F12 and F15) All major details will be visible with the major details virtually complete. In this case, "Fine" describes concerning the condition of the coin - not the purity as described above.
• Very Fine - (VF20, VF25, VF30, and VF35) More details are visible with major details virtually complete.
• Extremely Fine (XF or EF) - (EF40/XF40 and EF45/XF45) Light wear on the high points with some mint luster present.
• Almost Uncirculated (AU) - (AU50, AU53, AU55, and AU58) Small trace of wear visible on the highest points with at least half of the mint luster still present.
• Uncirculated (UNC) or Mint State - (MS60 through MS70 inclusive) No trace of wear with some small nicks or marks present.
• Proof - (PR or PF; numerical designation typically between 40 and 70). Coins specially struck for collectors. Usually mirror-like surface. Sand blast and matte proof in some series.

Mint State (MS) - (Mint state 60 - 70) "Uncirculated" and "Mint State" are terms that are many times used interchangeably. MS 70 is considered a perfect coin. Extremely few regular issue coins are considered MS-70 although it is common for new, modern bullion coins to be given a grade of MS-70.

The grading standards are different in different countries. The main standards applied outside the United States are presented in the following table. Coin grading is not an exact science. It is a subjective exercise and depends on the qualification and the experience of the appraiser. Industry leaders were extremely concerned that without a standardized grading system, the rare coin industry could face enormous problems. Therefore on February 3, 1986 the Professional Coin Grading Service (PCGS) was formed and in 1987 the Numismatic Guaranty Corporation. Both associations have the same goal of grading coins. Other prominent grading organizations are the American Numismatic Association Certification Service (ANACS) and the Independent Coin Graders. The grading is usually done by three independent appraisers. A grading finalizer assigns the final grade of the coin and thereafter the coin is sonically sealed in a protective, inert plastic holder known as "slab". Other associations followed and are at present active.

This third-party appraisal of a coin's physical condition, backed by a guarantee, and a national network of reputable coin dealers provided an extremely reliable form of protection for rare coin consumers who could then participate in the coin market with greater confidence.