How to Grade Coins

Coin Grades used in Authenticating Collectable Coins.

How to grade coins depends on how the coin is described using the country of origin, type, denomination, date, mint mark, variety and condition.

With all but the last of these, there is rarely any ambiguity.

However, the state of preservation or condition often generates different grading opinions, so a standard system of grading coins needed to evolve to allow coin collectors to more clearly determine and communicate their coins relative quality.

Many novice coin collectors begin by inheriting a small set of coins from a relative.

The first question they asked is invariably 'How much are these coins worth?'

The first step in answering the 'worth' question is finding out how you grade coins and then to grade the coins in the collection.

However despite the many innovations in grading coins over the last few decades, the process is still as much an art as it is science.

Business Strikes

Coins meant for use in daily commerce are referred to as Business Strikes and are generally mass-produced.

Experienced dealers and collectors will issue a judgment based on observations made and knowledge gained over many years. Even then, skilled practitioners can arrive at widely different conclusions.

The most basic answer is: a coin like any other item traded on a free market, is worth what someone is willing to pay for it.

That said, grading coins plays a substantial part in assessing the value of those coins.

Traditional coin grades run from Poor through Fair, Almost Good, Good, Very Good, Fine, Very Fine, Extra Fine, Almost Uncirculated, Uncirculated and Mint.

Placing a coin in any one of these categories is always a judgment call, but there are several common factors widely employed.

Firstly, the coin is examined by eye and under magnification to look for its overall condition.

All but a very few uncirculated coins will have various defects, the most common of which are called 'bag dents'. Almost all coins, even many so-called uncirculated coins are placed together in a bag and banging against each another produces small nicks, dents and other damage.

Circulated coins typically get handled many thousands of times even within only a few years. As they get more and more worn, the surface and edges degrade through the various rankings.

Naturally, the high points on coins tend to receive more wear than the rest of the surface. Letters and numbers are the chief features that suffer abuse but devices (images) suffer too. As details become harder to detect, less in 'mint condition', the grade of the coin gradually lowers.

For an Indian Head Cent, for example, it's important to be able to make out the letters that spell out 'liberty' on the headband of the coin's indian figure.

For a Buffalo Nickel, the key to a high grade is having a distinct and well-formed horn and tail.

More contemporary grading systems have much finer grades. Beginning with the Sheldon system, which uses the numbers 1 to 70 creating increasingly sophisticated and detailed grades.

Coin Grading Systems

The Dr. William Sheldon numerical grading system

Sheldon's numerical system shows how to grade coins and has been extended far beyond early American copper coins and is now the generally accepted standard for grading in most areas of North America. Not all of the numbers in the range
are used, and the following are the more commonly seen numerical grades and their adjectival equivalents:

Grading Proofs - How to Grade Coin Proofs, Proof-Likes and Specimens ...

The UK, Canada and other countries produce special coins for official presentation or for collectors.

These Specimens, Proofs and Proof-Likes are usually carefully produced from specially prepared dies and are given special handling and packaging.

These pieces are quite noticeably different in quality from business strikes, and are classified and collected separately from them.

Proofs or collectible coins are designated with the prefixes PF, PL and SP, and assigned a numerical grade: 60, 63, 65 and so on.

Impaired proof pieces (those that have sustained wear through either mishandling or circulation) are assigned grades below 60, such as SP-55, and PF-50.

Except in years or varieties where only Proofs or Specimens were issued, it is the exception to find a grade assigned below 50 since the surface and strike characteristics that are generally required for correct attribution are most likely gone

In 1986, PCGS (The Professional Coin Grading Service) adapted and extended a system to create combinations of letters and numbers to designate a grade. You may now see: PO-1, AG-3, VF-25, MS-60 (MS = Mint State) and similar grades. The system is widely used today.

Grading isn't the only factor that determines the worth or price of a collectible coin, but it plays a large role.

Rarity is important, as with any collectible, but is much less a factor than is commonly thought. Age is also an important factor, but something like a common 1921 Morgan Dollar in poor condition, might not even be worth a dollar.