An Introduction to Coin Grading
In numismatics, the grade of a coin refers to a shorthand method of describing the coin’s physical condition. During the early years of coin collecting, grades were limited to Good, Fine and Uncirculated, which described the following conditions:
- Good: Details of the design still visible but
circulation had worn the surface of the devices.
- Fine: Details less worn from circulation with
a small amount of mint luster still evident.
- Uncirculated: Details still quite sharp with luster near
the original state of the coin as it was struck at the mint.
In those days, the rare coin market was limited to a small number of collectors trading with each other, and the three definitions were enough. However, as the market grew collectors realized that some Fine coins were of higher quality than other Fine coins and that some uncirculated specimens were far above other examples in detail, luster, and overall appearance. Soon, grading descriptors such as Very Fine, Extra Fine and Gem Uncirculated began to emerge, as collectors sought to more accurately determine the condition and values of their coins.
Today, coins are graded utilizing a universally accepted system known as the Sheldon Scale, named after Dr. William Sheldon who, in 1948, standardized coin grading. Sheldon invented a system of determining the condition of a coin and assigning a grade based on a numeric scale of 1 to 70. A “1” was poor, almost completely worn out with hardly any recognizable features, and a “70” was perfectly uncirculated, a coin with absolutely no wear nor flaws or disturbances of any kind. His system was initially intended only for the Large Cents he personally collected but today, with some modifications, is applied to all series of coins. Today’s version of the Sheldon Scale is as follows:
- MS60 to MS70–Uncirculated or Mint State.
- AU58–Very Choice About Uncirculated.
- AU55–Choice About Uncirculated.
- AU50—About Uncirculated.
- EF45–Choice Extremely Fine. In discussion, most numismatists call this grade “XF.”
- EF40—Extremely Fine.
- VF30–Choice Very Fine.
- VF20—Very Fine.
- VG8—Very Good.
- AG3—About Good.
- **There is also a separate descriptive prefix, “PR”, reserved for Proof coinage. Numeric descriptors for the these coins remain the same.
Furthermore, the MS60 to MS70 grades for uncirculated coins are broken down into separate numeric descriptors, with criteria as follows. This list is taken verbatim from the Fifth Edition of Official ANA Grading Standards for United States Coins published by the American Numismatic Association:
- MS70–The perfect coin. Has very attractive sharp strike and original luster of the highest quality for the date and mint. No contact marks are visible under magnification. There are absolutely no hairlines, scuff marks or defects. Attractive and outstanding eye appeal. Copper coins must be bright with full original color and luster.
- MS69–Must have very attractive sharp strike and full original luster for the date and mint, with no more than two small non-detracting contact marks or flaws. No hairlines or scuff marks can be seen. Has exceptional eye appeal. Copper coins must be bright with full original color and luster.
- MS68–Attractive sharp strike and full original luster for the date and mint, with no more than four light scattered contact marks or flaws. No hairlines or scuff marks show. Exceptional eye appeal. Copper coins must have lustrous original color.
- MS67–Has full original luster and sharp strike for date and mint. May have three or four very small contact marks and one more noticeable but not detracting mark. On comparable coins, one or two small single hairlines may show under magnification, or one or two partially hidden scuff marks or flaws may be present. Eye appeal is exceptional. Copper coins have lustrous original color.
- MS66–Must have above average quality of strike and full original mint luster, with no more than two or three minor but noticeable contact marks. A few very light hairlines may show under magnification, or there may be one or two light scuff marks showing on frosted surfaces or in the field. The eye appeal must be above average and very pleasing for the date and mint. Copper coins display full original or lightly toned color as designated.
- MS65–Shows an attractive high quality of luster and strike for the date and mint. A few small scattered contact marks may be present, and one or two small patches of hairlines may show under magnification. Noticeable light scuff marks on the high points of the design. Overall quality is above average and overall eye appeal is very pleasing. Copper coins have full luster with original or darkened color as designated.
- MS64–Has at least average luster and strike for the type. Several small contact marks in groups, as well as one or two moderately heavy marks may be present. One or two small patches of hairlines may show under low magnification. Noticeable light scuff marks or defects might be seen within the design or in the field. Attractive overall quality with a pleasing eye appeal. Copper coins may be slightly dull. Color should be designated.
- MS63–Mint luster may be slightly impaired. Numerous small contact marks, and a few scattered heavy marks or defects may be seen. Small hairlines are visible without magnification. Several detracting scuff marks or defects may be present throughout the design or in the fields. The general quality is about average, but overall the coin is rather attractive. Copper pieces may be darkened or dull. Color should be designated.
- MS62–An impaired or dull luster may be evident. Clusters of small marks may be present throughout with a few large marks or nicks or dings in prime focal areas. Hairlines may be very noticeable. Large unattractive scuff marks might be seen on major features. The strike, rim and planchet quality may be noticeably below average. Overall eye appeal is generally acceptable. Copper coins will show a diminished color and tone.
- MS61–Mint luster may be diminished or noticeably impaired, and the surface has clusters of large and small contact marks throughout. Hairlines could be very noticeable. Scuff marks may show as unattractive patches on large areas ore major features. Small rim nicks, striking or planchet defects may show, and the quality may be noticeably poor. Eye appeal is somewhat unattractive. Copper pieces will be generally dull, dark and possibly spotted.
- MS60–Unattractive, dull or washed out mint luster may mark this coin. There may be many large detracting contact marks, or damage spots, but absolutely no trace of wear. There could be heavy concentration of hairlines, or unattractive large areas of scuff marks. Rim nicks may be present, and eye appeal is very poor. Copper coins may be dark, dull and spotted.
- Above list copyright © American Numismatic Association
The advent and acceptance of the Sheldon Scale was a vast improvement over vague grades such as Good and Fine but there was still much margin for disagreement between trading parties, which was based on subjective opinion. For a collector or buyer with an uneducated eye this presented a problem. If the person was unable to distinguish between a MS63 and MS65 coin, he or she was at the mercy of the seller who had established the stated grade. A one-point difference in grade can mean hundreds or even thousands of dollars difference in value, and with so much relying on widely varying opinions it was difficult to justify purchasing high-value coins.
With practice and the diligent study of appropriate books many people can learn to grade with a moderate degree of accuracy. However, few can ever learn to grade with the precision required to become a professional. The grade of a coin goes a long way in determining the coin’s value, and often a seemingly insignificant, easily overlooked flaw can make thousands of dollars of difference in market value. The American Numismatic Association offers seminars and courses in coin grading at both beginner and advanced levels during their annual Summer Conferences, and this is an excellent place to begin for anyone interested in the art of grading. The ANA also offers an excellent book on the subject, Official ANA Grading Standards for United States Coins, which is available from them at their website or at your local bookseller.
If rare coin dealers only dealt amongst themselves, there would be no need for coin grading as the two parties would simply decide on the value of the coin and conduct business accordingly. But the coin market has expanded far beyond this type of transaction with many people looking into rare U.S. coinage as a way of diversifying an investment portfolio with tangible assets. Such market participants have become aware that the fundamental factors in determining rare coin values is the grade of the coin in question. Thus, the ability to determine the grade of an ungraded coin or to recognize if a graded coin is under graded is of the utmost importance. A coin graded MS65 may have market value many times greater than the same coin graded MS64, although the difference between the two may be virtually undetectable to the untrained eye. A coin sold by one dealer as an MS65 may be sold by another dealer as MS64 or even MS63 and an uneducated buyer could be victimized by product misrepresentation. In still other situations, the buyer is trapped by wide ranging definitions due to the absence of a true standard, which is why we today have companies dedicated to grading coins to a prescribed and universal industry standard.
In the mid-1980s, two companies began grading coins and offering their services to the numismatic community. Professional Coin Grading Service (PCGS) of Newport Beach, California and Numismatic Guaranty Corporation (NGC) of Parsippany, New Jersey and more recently, in 1998, Independent Grading Company (ICG), of Denver, Colorado. The grading services examine rare coins, assigning grades and unique serial numbers, and then encapsulating the coins and the tags in sonically-sealed, tamper-evident holders. Holdered coins are now traded on the market, although there are still a vast number of “raw” or un-encapsulated coins available. Encapsulated coins are also called “slabbed” coins. With these certified coins, a buyer can be assured that market value and the condition of the coin in question is established and accepted as an industry standard and the coin can be safely purchased with no fear of misrepresentation. It should also be noted that any individual who plans on buying raw, ungraded coins learn as much about grading as possible, for the old Latin adage of Caveat Emptor (Buyer Beware) still rings true today.