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Use the Proper Tools
If you can, remove the coin from it's holder. Work over a soft cloth or pad in case you drop the coin. Hold it underneath a desk lamp that uses an incandescent bulb (60 - 75 watts) that is about 18 inches above the coin. For extremely small coins use a magnifying glass that is no greater than 3X power. Do not use a loupe (8X - 10X) to initially look at the coin. Only use your loupe to get a closer look at suspected problems on the coin.Continue to 2 of 18 below.
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Look at the Whole Coin without Magnification
Look at the entire coin without using a magnifying glass or loupe. Get an overall impression of the coin and determine the level of eye appeal. Ask yourself the following questions:Continue to 3 of 18 below.
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Determine If the Coin Is Circulated or Uncirculated
Sometimes it is obvious that a coin has been circulated. If the condition of the coin is such that you are questioning if it's circulated or uncirculated, look at the design high points (as indicated in red on the photo) for signs of wear. A break in the mint luster in these areas is usually an indication that the coin is circulated.Continue to 4 of 18 below.
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Prime Focal Areas
The prime focal areas of the coin are the areas that your eye is drawn to first. It is usually the major device on the coin. On the Kennedy half-dollar example the prime focal area is indicated by red. The secondary focal areas are indicated with orange and the third level focal areas are indicated by yellow.
Any imperfections or marks in the prime focal areas are more severe than if the same size and type of imperfection was in the third level focal area. For example, a small scrape on Kennedy's cheek would be more noticeable than the same size and type of scrape hidden in the details of his hair.Continue to 5 of 18 below.
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Look at the Prime Focal Areas First
In our example of the Kennedy half-dollar, the prime focal area is the cheek and face area of the portrait. Look closely at this area first and determine if there are any noticeable imperfections that jump out at you. Make a mental note of these as you look at the rest of the coin. Imperfections in his hair and by his ear are third level focal areas and will be less distracting.Continue to 6 of 18 below.
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Inspect the Field of the Coin
Next look at the field of the coin for any noticeable and distracting marks. Small imperfections will not affect the grade of the coin as much as distracting ones. For example, in the area just above "In God" and below the "L" in Liberty there is a very noticeable scrape. This will definitely impact the grade of the coin.Continue to 7 of 18 below.
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Look at the Lettering on the Coin
The lettering on the coin is usually one of secondary focal areas because people tend to look at the date, legends and mottos on a coin in order to identify it. Marks and imperfections in this area will negatively impact the coin's grade. In our example Kennedy half-dollar, there are a few minor imperfections on the lettering but no significant imperfections.Continue to 8 of 18 below.
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Examine the Coin's Rim
One of the areas that is most commonly overlooked when grading a coin is the coins rim. Look for dents and gouges that significantly impact the appearance of your coin.Continue to 9 of 18 below.
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Logically Look at Each Section of the Coin
Now that we have looked at each focal area of the coin we now need to inspect the coin thoroughly for any imperfections or damage that we may have missed. To do this, we will logically divide the coin into eight sections. We will look at each section in a clockwise direction beginning at "12:00 noon".
For this phase of looking at your coin, it would be appropriate to use a magnifying glass or loupe especially for small coins.Continue to 10 of 18 below.
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In Section #1 we see a few major bag marks on Kennedy's hair. These will definitely impact the grade of the coin.Continue to 11 of 18 below.
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In Section #2 there are no outstanding problems in this section. The wear and marks are consistent with a circulated coin.Continue to 12 of 18 below.
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Section #4 has no major distracting marks and the evidence of wear in this section is consistent with a circulated coin.Continue to 14 of 18 below.
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Section #5 has some smaller and assorted bag marks but no other obvious problems in this section.Continue to 15 of 18 below.
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Section #6 has a light scrape beneath the letter "L" in the field in front of Kennedy's face. Otherwise, there are no other major distracting marks in this section.Continue to 16 of 18 below.
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Section #7 has a few minor contact marks in the field in front of Kennedy's eye. This is consistent wear for a circulated coin.Continue to 17 of 18 below.
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In Section #8 we see a few contact marks in Kennedy's hair. This is also consistent for a coin in circulated condition.Continue to 18 of 18 below.
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Making The Grade
Now that you have thoroughly inspected the coin it is obvious that this coin has seen circulation. Although the details of the design are still intact and show little evidence of wear, it is not able to be graded as a Mint State coin. Due to the numerous bag marks and contact marks on the surface of this coin it would be graded About Uncirculated, specifically AU-53.
You would then flip the coin over and perform the same analysis on the reverse. If the reverse grades slightly different than the obverse, usually the obverse grade is used for the entire coin.