The primary purpose of grading a coin is to determine the coin's market value. Ascertaining a coin's value is dependent on how well the coin was struck initially, the coin's level of preservation, and how much wear and damage the coin has sustained. For most practical purposes, especially for beginners, we're going to concentrate on how to evaluate the amount of wear the coin has and where it fits on the 70-point scale.
Remember, coin grading is not an exact science. It is an opinion based upon a standard definition that most coin dealers and numismatists would agree with. The differences come in when minor details in a coin's appearance may push it to a higher grade if it's a positive influence. On the contrary, the difference may be a minor defect that a push it into a lower grade. The size and position of the imperfection and its effect on appearance is where one person may grade the coin higher and another one to grade the coin lower.
Study coins that have been graded by a trusted coin dealer and try to determine why they graded the coin as such. If you are not sure why a specific coin received a particular grade, ask the dealer to explain it. Coin dealers are more than willing to share their knowledge and create well-educated coin collectors. However, seek a trusted and valued coin dealer amongst experienced coin collectors. Some coin dealers over-grade their coins to sell them at a higher price. When you go to sell that coin, honest coin dealers will grade the coin properly, and you will not be able to recover the money that you overpaid for the coin initially.
The 70-Point Coin Grading Scale
When numismatists grade coins, they are assigned a numeric value on the Sheldon Scale. The Sheldon Scale ranges from a grade of Poor (P-1) to Perfect Mint State (MS-70). Originally coins were graded using adjectives to describe the condition of the coin (Good, Fair, Excellent, Etc.). Unfortunately, coin collectors and coin dealers had differing interpretations of what each one of these words meant.
In the 1970s, professional numismatists got together and agreed-upon standards for CoinGrading. These numismatists now assign grades at crucial points on this seventy-point scale, with the most commonly used numeric points used along with the original adjective grade. The most common coin grades are as follows:
- (P-1) Poor - Barely identifiable and possibly damaged; must have a date and mintmark if used; otherwise, pretty thrashed.
- (FR-2) Fair - Worn almost smooth but lacking the damage a coin graded Poor usually has. Enough detail must remain to identify the coin.
- (G-4) Good - Heavily worn such that inscriptions merge into the rims in places; major features are mostly obliterated.
- (VG-8) Very Good - Very worn, but all major design elements are evident, albeit faint. Little if any central detail remains.
- (F-12) Fine - Very worn, but wear is even, and overall design elements stand out boldly. Almost fully-separated rims from the field.
- (VF-20) Very Fine - Moderately worn, with some finer details persisting. All letters of LIBERTY or the motto are readable. The rim's on both sides of the coin are full and separated from the field.
- (EF-40) Extremely Fine - Lightly worn; all devices are clear, significant devices are bold. The finer details are bold and clear but may show some evidence of light wear.
- (AU-50) About Uncirculated - Slight traces of wear on high points of the coin's design; may have contact marks, and eye appeal should be acceptable.
- (AU-58) Very Choice About Uncirculated - Slightest hints of wear marks, no significant contact marks, almost full mint luster, and positive eye appeal.
- (MS-60) Mint State Basal - Strictly uncirculated; no evidence of wear on the highest points of the coin but an ugly coin with subdued luster, noticeable contact marks, hairlines, etc.
- (MS-63) Mint State Acceptable - Uncirculated, but with contact marks and nicks, slightly impaired luster, fundamentally appealing appearance. The strike is average to weak.
- (MS-65) Mint State Choice - Uncirculated with strong mint luster, very few contact marks, and excellent eye appeal. The strike is above average.
- (MS-68) Mint State Premium Quality - Uncirculated with perfect luster, no visible contact marks to the naked eye, exceptional eye appeal. The strike is sharp and attractive.
- (MS-69) Mint State Almost Perfect - Uncirculated with perfect luster, sharp and attractive strike, and very exceptional eye appeal. A perfect coin except for tiny flaws (only visible under 8x magnification) in planchet, strike, or contact marks.
- (MS-70) Mint State Perfect - The perfect coin. There are no microscopic flaws visible under 8x magnification; the strike is sharp, and the coin is perfectly centered on a perfect planchet. Bright and complete, original luster and outstanding eye appeal that is rarely seen on a coin.
The Three Coin-Grading Buckets
From the newcomer's perspective, the most misunderstood aspect of coin grading is how the grading scale works. Think of it as having three "buckets."
Circulated coins have the widest scale for grading. These range from P-1 through EF-49 grades. P-run, or poor, is the lowest grade a coin can be graded. This is a coin that is just barely recognizable even though it has heavy wear and most of the detail has been worn away. At the upper end of the scale, this would be a circulated coin that has slight wear on the highest points of the coin. This keeps it out of the About Uncirculated category.
Likewise, the AU portion of the scale starts at 50 and runs through 59. The AU-50 coin might never have circulated in commerce, but because it has scuff marks, has been through several coin-counting machines, and has been handled a small amount, it is no longer in Mint State. So we put it in the AU bucket and give it the bottom grade of AU-50 if it's ugly and AU-58 if it's not. This is oversimplifying a little, but it demystifies why the grading scale seems to go from "appealing coins" to "ugly coins" and then back to "appealing."
The MS scale (from MS-60 to MS-70) isn't just a continuation of the previous scale of AU coins. It is an entirely separate mini-scale of 11 grades that begins with the "basal state" MS-60 Uncirculated coin. This is an ugly, bag-marked, no-luster dog, but it is technically Uncirculated. By comparison, the AU-58 coin beneath it has attractive eye appeal and nearly full luster. The reason a coin that grades an AU-58 is because it looks much nicer than a coin that grades MS-60. Additionally, they are actually in separate "buckets" of the grading scale.
How to Grade Circulated Coins
The third bucket is the range of circulated grades, from P-1 to EF-49 (although EF-45 is the highest circulated grade you'll probably see being used.) Most beginners looking for grading help have circulated coins, and fortunately, circulated coins are the easiest for the novice to grade. It helps to have a Mint State (a.k.a. uncirculated) specimen of the coin type under consideration to make comparisons to, but this isn't a requirement.
First of all, you'll need to have an excellent light source, such as a 75-watt bulb in a lamp close to where you are sitting. If you're using an LED light bulb, you should use a bright white bulb so you can discern any color differences on the surface of the coin. Secondly, you'll need a decent magnifier, preferably something that magnifies about 5 to 8 times (expressed as 5x to 8x). Anything stronger than 8x isn't usually used in coin grading, and anything lower than 5x is too weak to see important details and small damage marks.
Determine which "bucket" your coin fits into. Is it Uncirculated (Mint State)? Does it have only the slightest hints of wear on the high points (About Uncirculated)? Or does it fall in the most common bucket, the Circulated coin bucket?
Compare your coin to the scale shown above to determine where it fits on the scale. Keep in mind that the numbers are not proportional; in other words, the amount of detail loss between EF-40 and EF-20 is not the same as that which is lost between MS-60 and EF-40 (remember, they're in different buckets.) In fact, the coin that grades EF-40 has lost only about 5% to 10% of its detail, but the coin that grades F-20 has lost about 60%. Use the written descriptions to place your coin as best you can. If you want more precise grading, I recommend "The Official ANA Grading Standards" book, which breaks the grades out for every major U.S. coin type, along with photos to help you determine the correct grade.
Now that you know the grade of your coins, you will be able to determine your coins' value.
Edited by James Bucki