Coin Grading Explained

Numismatic Coin grading is a process used to determine the physical condition and market value of a coin. It can also be referred to as certifying, rating, authenticating, or slabbing.

An independent third party will thoroughly review the coin and give it a numerical grade based on strict standards such as the strength of the strike, contact marks, a trace of wear, and eye appeal. In most cases, the higher the grade, the more the coin is worth.

Coin grading is important because it gives collectors a way to verify the price range they should be willing to pay for a coin. Coin collectors pay more for higher-grade coins because they’re harder to come by than pieces with significant blemishes.

The grades range from Poor (almost totally worn out) to Perfect Uncirculated (no flaws and zero wear and tear). There are several more grades between those two extremes which is why it requires a professionally trained eye for accuracy.

With experience and a lot of practice,  coin collectors may be able to grade with moderate accuracy, but it’s always best to consult with a professional to avoid making costly mistakes.

Early Coin Grading Scales

Rarity and condition are the two key elements used to establish the value of a coin. Rarity is fairly easy to establish, and most collectors agree on the rarity of a coin. However, the condition of a coin can be more of a challenge to decipher.

In the early days of collecting, there were three general terms to describe a coin’s grade.

• Good: circulation had worn the surface somewhat, but details were still visible
• Fine: a bit of the mint luster was still showing, and fewer details were worn from circulation
• Uncirculated: sharp details and almost perfect mint luster prior to circulation

As the popularity of coin collecting grew rapidly from the late 1800s and early 1900s, a more precise grading standard was needed. It became apparent that some coins were more fine than others, and some uncirculated coins had more luster than others.

This was when we began to see terms like “gem uncirculated” and “very fine.” The grading descriptions became more precise for more precise pricing in a booming collector market.

The Sheldon Grading System

In 1948, a numismatist named Dr. William Sheldon proposed a way to standardize the coin grading system with what is now known as the Sheldon Grading System. He originally devised his scale for large cents, but it’s now applied to all series.

The Sheldon Scale ranges from 1 to 70. Coins that received high points are in better condition and more valuable. The theory behind Sheldon’s scale was that a coin graded as “70” would be worth 70 times as much as “1.”

Sheldon’s grading system was a huge improvement over grades like Good and Fine, but subjective opinion still left a lot of room for disagreement between two parties. This became a problem as the stakes got much higher for coins of significant value. As little as a one-point difference in grade could lead to hundreds or possibly thousands of dollars difference in value.

The European Grading System

The European Grading System has a list of classifications rather than using a numerical system, and it can vary slightly by country.

The English make a distinct differentiation between the grade of a coin and its quality. The quality of a coin is used to describe the finish when struck, and there are three different standards: Proof, Brilliant Uncirculated (BU), and Bullion.

Grading relates to the coin's condition in terms of appearance and the amount of wear. The most common terms used are, Fine, Very Fine, Extremely Fine, and Uncirculated.

The grades are then split into divisions. “Nearly” and “About” are sub-grades, whereas “Good” is an over-grade. For example, About Very Fine is just below Very Fine, while Good Very Fine would be just above Very Fine.

European Grading System: In Practice

In order from lowest to highest, here is an example of the grading system in the UK:

• Poor (P): extremely worn, missing details, but you can still identify the type of coin
• Fair (FR): the coin has significant wear and only just discernible what type it is
• Good (G): the coin has a considerable amount of wear, coin is discernible, but lettering may not be visible
• Very Good (VG): the coin has a lot of wear, and details are discernible but worn
• Fine (F): the coin has considerable wear but still very collectible
• Very Fine (VF): the coin has obvious but relatively restricted wear on the highest portions
• Extremely Fine (EF): an attractive coin that has minor wear except on the high points
• About Uncirculated (AU): a coin designated as About Uncirculated
• Uncirculated (Unc): the coin has never been released into circulation
• Brilliant Uncirculated (Brilliant Unc): minimal or no toning, bright and shiny as it came from the mint
• Choice Uncirculated (Choice Unc): better than average uncirculated with fewer bag marks and is well-struck
• Gem Uncirculated (Gem Unc): the highest grade, full luster, exceptional strike, no nicks
• Mint State (MS): a grading term that refers to the highest grade
• Fleur de Coin (FDC): a French term to represent a full mint state coin in impeccable condition

The American Numismatic Association Scale

Coin grading was raised to a new level of consistency in 1987 with the founding of Numismatic Guaranty Corporation (NGC). The American Numismatic Association commissioned a panel of professional numismatists to help define the grading system for coins using the Sheldon Scale as their basis.

The group established grading tiers of preservation in descending order: Mint State, About Uncirculated, Extremely Fine, Very Fine, and Fine. Then, you have Very Good, Good, and About Good. Most numismatists and grading services also use two additional terms for the lowest grades, Fair and Poor.

The higher tiers may have two or more “sub-grades” denoting the corresponding Sheldon Scale number, such as ExtraFine-40 or Almost Uncirculated-50. This allows for further clarification for coins that exceed the standard for a given tier but don’t quite meet the criteria for the next level.

Not all numismatists use the numerical scale, and grades are commonly abbreviated: A grade of Fine-15 may be seen as Fine, F-15, F, or simply 15.

Coin Grading Standards

As published in “The Official American Numismatic AssociationGrading Standards for United States Coins,” Mint State graded coins are judged on the following criteria.

• Contact Marks: the appearance of minor nicks and abrasions found on the surface of the coin from handling and the manufacturing process.

• Hairlines: minuscule scratches across the coin’s surface as the result of coming in contact with a cloth or abrasive material.

• Luster: the sheen on a newly minted coin. The light will spin across the surface when rotated under a single light source.

• Eye Appeal: the overall look of the coin being graded. This is how all the aspects come together to make the coin eye-popping or simply mundane.

The Professional Coin Grading Service (PCGS) built its grading standards from the Sheldon Scale when it first introduced the concept of encapsulated, third-party grading in 1986.

PCGS uses the numerical grades MS-60 through MS-70 to indicate a business strike coin that was never released in circulation. A Mint State coin can range from one covered with scratches and marks (MS-60) to a flawless example (MS-70).

How Are U.S. Coins Authenticated?

U.S. coins are authenticated through a third-party certification and grading service. The Professional Coin Grading Service (PCGS) and Numismatic Guaranty Corporation (NGC) are the most commonly used grading companies. They consistently authenticate, certify, grade, and seal or encapsulate coins for a small fee.

Coin Dealers for Coin Collectors

At Bullion Shark, we offer a constantly evolving inventory of rare coins. From Morgan dollars to stunning American Silver Eagles. If you’re looking for a shipwreck coin or one of the first pieces of currency from the reign of Julius Caesar, rare coins allow you to own a bit of history.

Check out our list of resources and add to your collection today.

Sources:

History of the Coin Grading System | NGC

Coin Grading Made Simple | The Spruce Crafts

British Grading System | The Royal Mint

FAQ

What is coin grading?

Coin grading is the process of determining the condition or state of preservation of a coin. It involves assessing various aspects of a coin, including its luster, surface preservation, strike, and any signs of wear or damage. The grade assigned to a coin helps to determine its market value and collectibility.

Who grades coins?

Coins are graded by professional grading services or third-party grading companies that specialize in evaluating the condition of coins. The most reputable and widely recognized grading services include the Professional Coin Grading Service (PCGS), the Numismatic Guaranty Corporation (NGC), and the American Numismatic Association Certification Service (ANACS). These organizations employ expert numismatists to grade coins accurately and consistently.

How are coins graded?

Coins are graded on a scale that typically ranges from Poor (P-1) to Perfect Mint State (MS-70) for uncirculated coins, or from About Good (AG-3) to Proof (PR-70) for proof coins. The grading process involves a detailed examination of the coin's features under magnification, assessing its luster, strike quality, and the presence of any wear, marks, or flaws.

What do coin grade abbreviations mean?

Coin grade abbreviations represent specific points on the grading scale, with each abbreviation indicating the coin's condition. Common abbreviations include:

• MS (Mint State): Used for uncirculated coins, ranging from MS-60 (no wear but with noticeable marks or flaws) to MS-70 (perfect condition with no marks or wear).
• PR or PF (Proof): Indicates coins struck with a special process for collectors, ranging from PR-60 to PR-70.
• VG (Very Good), F (Fine), VF (Very Fine), XF or EF (Extremely Fine), and AU (Almost Uncirculated) are used for circulated coins, indicating increasing levels of preservation and less wear.

Why is coin grading important?

Coin grading is important because it provides a standardized way to assess and compare the condition of coins. This standardization is crucial for determining the value of a coin, as a coin's grade can significantly impact its price. Grading also helps collectors make informed decisions when buying or selling coins and ensures transparency in the numismatic market.

Can I grade coins myself?

While collectors can learn to estimate the grade of their coins, professional grading by a reputable service is recommended for accuracy and credibility, especially for valuable or rare coins. Self-grading requires experience and knowledge of numismatic standards, and even experienced collectors may not have the tools and expertise of professional graders.

How does coin grading affect value?

Coin grading directly affects a coin's value, with higher-grade coins typically commanding higher prices. The grade reflects the coin's condition and rarity in that condition, influencing its desirability among collectors. For example, a coin in Mint State condition is generally worth more than the same coin in a lower grade due to its superior preservation and appearance.

How does the grading process differ between circulated and uncirculated coins?

The grading process for circulated and uncirculated coins fundamentally focuses on the same aspects of a coin's condition, such as its luster, strike, and the presence of wear or damage. However, the criteria and emphasis differ significantly due to the distinct nature of these coins. For circulated coins, graders pay close attention to the degree of wear and how it affects the coin's details and features. The evaluation involves assessing how much of the original design remains visible and the extent to which circulation has diminished the coin's relief and luster. In contrast, the grading of uncirculated coins centers more on the absence of wear, looking for any signs of handling or contact marks that could detract from the coin's mint condition. The presence of original luster and the sharpness of the coin's details are critical in determining the higher grades within the uncirculated category. Essentially, while both types of coins are subject to a detailed examination, the grading of circulated coins is more about quantifying wear, whereas for uncirculated coins, it's about identifying imperfections.

What are the most common mistakes or misconceptions collectors have about coin grading?

One common misconception among collectors is that the grading scale is linear and evenly spaced, meaning that the difference in value and quality between each grade is perceived as consistent across the scale. In reality, the scale is more nuanced, with the differences between higher grades being much finer and more subjective, especially within the Mint State (MS) category. Another mistake is underestimating the impact of a coin's eye appeal on its grade and value. Coins with exceptional eye appeal can command higher prices even if they have similar technical grades to other coins. Collectors sometimes also overestimate the condition of their coins, overlooking minor flaws that can significantly impact the grade. This is why professional grading is crucial, as it provides an objective assessment that can help avoid these misconceptions.

How do collectors dispute a coin's grade if they believe it has been inaccurately assessed?

If collectors believe their coin has been inaccurately graded, most professional grading services offer a review or re-evaluation process. The first step is typically to submit the coin for a re-grade or "crossover" service if the coin was previously graded by another service. This involves sending the coin back to the grading service with a request for re-evaluation, often specifying the disagreement with the initial grade. It's important to note that there may be a fee associated with this service. If the collector still disagrees with the reassessed grade, some services may offer a more detailed review process or a panel evaluation for an additional fee. Throughout this process, clear communication and providing any relevant information or evidence that supports the collector's case can be helpful. However, collectors should also be prepared to accept the possibility that the professional graders' expertise and final assessment may uphold the original grade.