Intro to Grading Coins

Grading coins accurately is one of the most valuable skills a numismatist can learn.  What exactly is meant by grading coins, and why is this important?  “Coin Grade” is an expression used within the coin hobby to indicate the condition, or amount of wear on a coin.  The grade is important, because after rarity and demand, it is the most critical factor determining the coin value.  Generally speaking, the higher the grade of a coin, the greater the coin value.

The science of grading coins is not the same as the science of physics or mathematics, where formulas yield an answer “Z”, given inputs “X” and “Y”.  No, grading coins with great precision is a talent, resulting from the nexus of knowledge, experience, and practice.

Easy to use ANA guide illustrates how to grade coins accurately.

Fortunately, the novice coin collector need not be intimidated by the subjectivity aspect of grading coins.  Any person, even a newcomer, can develop enough skill and confidence to approximate the condition of nearly any coin, through diligent reading and studying as many coins as possible, whose conditions are already known.  The first step in gaining a clearer understanding of how to grade coins is to acquire the “bible” of grading coins, the Official American Numismatic Association Grading Standards for United States Coins.  Produced by the American Numismatic Association, this valuable reference is the foundation upon which all other coin grading books are written, and deserves a place in the personal libraries of all coin collectors.  We strongly recommend it.  Full Review here.

Historical Overview on US Coin Grading

Going back to the 1950s and before, coin grading was limited to a few adjectival terms, such as Good, Fine, Uncirculated, and Proof.  Accordingly, numismatic references of those times conformed to the same set of adjectives to approximate retail coin values.

The importance of grading is magnified by the case of the 1892-S Morgan silver dollar.  The first 1892-S above grades AU-58, and the second specimen comes in at MS-65.  To the uninformed, there may not appear to be much difference between the two, but in the open marketplace, the MS-65 can bring well over $100,000, while the AU-58 is generally valued at under $10,000.   Photos courtesy of Ira & Larry Goldberg Coins & Collectibles, Inc., Beverly Hills, CA.

Varying distinctions of Uncirculated (today's equivalent of MS-60, MS-63, etc.) and Proof were recognized in some advertisements and auction bills by employing modifying descriptors such as "Gem Uncirculated" or "Choice Proof", for example.  However, with no clear point of reference or consistency on how the modifying descriptors were invoked, most publishers resorted to listing values for only one "Uncirculated" grade and one "Proof" grade.

In the late 1970s, as coin prices escalated dramatically, most notably for pristine, high quality specimens, varying distinctions of "Uncirculated" and "Proof" became evermore critical.  Descriptors "Choice" and "Gem" were replaced by numerically assigned grades, utilizing the newly developed 70 point ANA scale, based on a numeric system introduced by Dr. William Sheldon in the 1940s.  Uncirculated coins were differentiated as MS-60, MS-65, or MS-70.  A few years later, grades MS-63 and MS-67 joined the fray.  Although not applied consistently (a situation that gave the coin business a black eye), the practice of assigning a numerical grade to indicate quality was universal by the mid-1980s, and eventually brought some consistency to coin collecting that was absent as the hobby passed through its formative years.

Throughout the 1990’s and into the new millennium, more grading subtleties were introduced within the framework of the grading system, such as the wider acceptance of “in-between” grades MS-62 or MS-64, or coin coloration, for example.

Though not perfect, the numerical grading system brought more consistency to the coin collecting hobby.  The Coin Value Tables™ featured on this site by US Coin Values Advisor reflect the historic availability of numeric grades to describe coins.

The 70 Point Coin Grade Scale

The process of coin grading is highly subjective.  Even though talent and experience is the key to grading coins accurately on a consistent basis, beginners can come reasonably close to approximating grades with a few simple guidelines.  The American Numismatic Association's 0-70 point numeric system is frequently invoked to assign coin grade.  The following grades and descriptions are the most recognized milestones on the typical coin grading continuum.

Coin Grading Companies Change the Face of the Hobby

Complaints over inconsistent grading practices reached a crescendo by the mid 1980s.  While one dealer might assign a coin a certain grade, another dealer might give the same coin a slightly higher or lower grade.  In the numismatic profession, subtle grade differences can mean literally thousands of dollars in trading value.  In 1986, several organizations began offering third party grading services, for a fee.  Coins submitted to these coin grading companies were evaluated by a panel of experts.  Each coin was then encapsulated in a tamper evident container and returned to the sender.  By the late 1980s, the coin grading companies captured the trust of the coin industry, at last providing some much desired consistency in grading coins.

The impact of the coin grading companies was enormous.  Encapsulated coins (known as “slabs” by insiders) became highly liquid commodities, being traded readily by confident buyers and sellers, often sight unseen.  This activity won the attention of millions of first-time coin buyers and several Wall Street brokerage firms, pushing the slab market to dizzying heights by the spring of 1989.

Eventually, many slabbed coin prices plunged back towards reality as the coin grading companies began releasing their population reports.  These reports indicated how many of what types and coin grades passed through their systems, thus revealing a more likely approximation of each coin’s true scarcity.  Especially had hit were the common date coins, which even in very high mint  state conditions were much more abundant that realized just a few years earlier.  In the early 1990’s, the great run-up of the 1980’s crash landed to become nothing more than a memory.  Around 1995, the market began a slow ascendancy, then picked up momentum at the very end of the 20th century, and carrying all the way up until today, with no respite in sight.

The coin grading companies have forever changed the face of coin trading.  Though not perfect, the concept of third party coin grading has proven to be a stabilizing effect and have earned a permanent role in the coin business.

Who are the Coin Grading Companies Today?

There are quite a few coin grading companies operating today.  What follows is a list of the most widely known grading services, listed in alphabetical order.  Please note the descriptions below were provided by the companies themselves.  Grading services that are among the most trusted by experienced numismatists are: ANACS, ICG, NGC, and PCGS, not necessarily in that order.

For readers who would like to see examples of slabs issued by most of these services and then some, we recommend a visit to a coin grading companies summary page, where photos are placed side-by-side for comparative purposes.

ANACS
http://www.anacs.com
Our graders understand coin collectors' needs, particularly the need for accuracy. Auction results consistently demonstrate that ANACS certified coins realize fair market value in the open market environment. What's more, collectors can submit coins directly to ANACS.

ASA Accugrade
http://www.asa-accugrade.com
You will never get a run-around at ASA we are here to serve your certification needs with the best quality service at the best possible prices in the industry today.

Independent Coin Grading (ICG)
http://www.icgcoin.com
Absolute unbiased grading. No possibility of bias because all coins are submitted to ICG through a third party receiving company. No conflict of interest - ever! ICG owners and employees are not allowed to buy or sell coins - they lose their jobs and any stock they hold in the company! Most importantly, ICG offers expert, consistent grading by some of the most respected names in the business.

Numismatic Guaranty Corporation (NGC)
http://www.NGCcoin.com
NGC is recognized for consistent, accurate grading. Because of this NGC graded coins are readily accepted by authorized NGC member/dealers as well as other dealers across America and around the world. NGC is the official grading service of the American Numismatic Association. The selection and endorsement of America's only official coin collecting organization chartered by Congress is another assurance of the integrity and quality of NGC's grading services.

Numistrust Corporation

http://www.numistrust.com/index.shtml

We are a fully insured, comprehensive coin grading service that prides itself on conservative grading procedures and the best in customer support. Our mission is to take the uncertainty out of third party grading by providing a safe and stable grading standard for the coin community to rely on and trust in.

Professional Coin Grading Service (PCGS)
http://www.pcgs.com
The Professional Coin Grading Service began serving the coin-buying public on February 3, 1986.  The firm is responsible for dramatic improvements throughout the rare coin industry which have forever changed the way rare coins are bought and sold. In addition to standardized grading. PCGS offered a cash-backed grading guarantee, problem-free coins, safe long-term storage, and sight-unseen trading. Together, these elements have created unprecedented public support for the rare coin industry.

Sovereign Entities
http://www.segsgrading.com
We are the most recent service to enter the arena of "third party grading" services. SEGS is a new corporation with revolutionary approaches and concepts, new creative ideas, commitments, policies, and designs that will enhance and surpass the expectations of the consumer.

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