Grading is perhaps the most confusing and controversial area of coin collecting. Grading is important, particularly when establishing the value of a coin because its worth is closely related to its state of preservation, a condition indicated by an assigned grade. Higher grade coins are not only more appealing to look at than heavier worn pieces, they’re usually far less common too, thus they have greater value. The ability to accurately determine the grade of a coin is one skill a collector should learn, because even a tiny amount of wear can reduce the price of a coin substantially.
The amount of wear is the primary consideration in grading. Grading is entirely subjective, as there are no instruments or scientific means available to measure the amount of wear and determine a coin’s grade. In other words, a coin grade, traditionally expressed in adjectival terms such as Good or Fine, is simply nothing more than one person’s opinion of the condition of a coin, often leading to inconsistent conclusions.
As coin prices rose sharply in the 1970’s, inconsistent grading practices came to the fore, as subtle differences in grade could mean hundreds, if not thousands, of dollars in trading value. The coin collecting community began clamoring for a standardized grading system.
In 1977, the American Numismatic Association developed a 70 point numerical scale to indicate degrees of wear. Condition “1” indicates a very badly worn coin and “59” has only the slightest trace of wear. Conditions 60 through 70 are reserved for describing Uncirculated (i.e. no wear) coins, with “70” being a coin exhibiting no wear and absolutely no imperfections.
The ANA 70 point scale did not resolve coin grading inconsistencies, but it was clearly a step in the right direction. By the mid-1980’s, the use of a numerical grade to describe coin quality was prevalent throughout the industry. In 1986, the ANA tightened its grading interpretations to conform to marketplace concerns. That same year, the Professional Coin Grading Service (PCGS) was founded, followed by Numismatic Guaranty Corporation (NGC) in 1987. These organizations are still in business today and have helped provide stability in the realm of grading coins.
Since this system was implemented, it has been found practical to associate specific numbers with their adjectival counterparts:
GOOD (G-4): Usually refers to a well-worn clean coin retaining all lettering, with basic features outlined.
VERY GOOD (VG-8): In some cases the word “LIBERTY” on the headband or shield can be used to determine the grade. Several letters must show to be Very Good.
FINE (F-12): All the major design is usually visible, but worn. The word “LIBERTY” is complete in most coin types.
VERY FINE (VF-20): Some of the more detailed features will be visible.
EXTREMELY FINE (XF-40): Virtually all details will be easily seen.
ABOUT UNCIRCULATED (AU-50): Describes a coin that has experienced only a slight amount of wear on the highest points. It will often retain its mint luster.
Then there are the Uncirculated grades. The term “MS” is the abbreviation for “Mint State”:
TYPICAL UNCIRCULATED (MS-60): A coin with no evidence of wear, but with a generous number of small blemishes (e.g. nicks, marks, and scratches).
SELECT UNCIRCULATED (MS-63): A nicer coin than above because of fewer blemishes.
CHOICE UNCIRCULATED (MS-65): A better coin still with only scattered blemishes.
GEM UNCIRCULATED (MS-67): A grade with virtually no blemishes.
PERFECT UNCIRCULATED (MS-70): A coin, even under extreme magnification, shows not even a single blemish.
The use of “in-between” grades, such as VF-30, XF-45, AU-55, or MS-64 is employed to render more accurate descriptions.
Proof coins are also addressed by the ANA scale. Technically, Proof is not a grade but a method of minting. Proof coins are generally not intended for circulation, and are made by highly polished dies striking specially prepared blanks, resulting in a coin with very shiny, mirror like surface, distinct from regularly produced coins. Proof coins are sold directly from the US Mint to collectors and dealers the year they are produced, and are graded by the ANA standards as follows:
TYPICAL PROOF (PF-60): Has a fair number of blemishes (e.g. nicks, marks, and scratches).
SELECT PROOF (PF-63): Has fewer blemishes than above.
CHOICE PROOF (PF-65): Has only a few scattered blemishes.
GEM PROOF (PF-67): Shows only a very few, minute blemishes.
PERFECT PROOF (PF-70): Has not one single blemish.
Proofs which have somehow made it into circulation or have experienced wear otherwise are assigned lower numbers accordingly, such as PF-55 or PF-50, and so on.
Serious silver coin collectors should learn as much about grading as possible. There are several excellent guide books available that can assist you enormously to this end. Three of the best coin grading books are:
· American Numismatic Association Grading Standards for US Coins
· The Official Guide to Coin Grading and Counterfeit Detection
Another wise purchase is a good magnifying lens. ANA standards call for a 10X magnifying lens as the accepted minimum, so that’s probably the best first choice. It is also desirable to use a lens of lesser magnification so that a fairly large amount of the coin surface can be studies at one time. Make sure that any lens you buy is of high optic quality… a magnifier won’t do much good if the enlarged images are distorted. Later on, a 20X to 40X stereoscope should be purchased if you plan on investing in rare and valuable coins.
The development and general acceptance of a standardized numerical coin grading system is an indication of the sophistication US coin collecting has achieved. Despite the inherent subjectivity, there is more consistency now in grading than ever before. This has enhanced the image of the hobby and is drawing many new collectors into the fold, thus forming a solid base of support for prices of collectible coins as we head into the future.
The Coin Grading Guide was written by numismatic expert, Daniel J. Goevert.