Coin grading

Coin grading is the process of determining the grade or condition of a coin, one of the key factors in determining its value. A coin's grade is generally determined by five criteria: strike, preservation, luster, color, and attractiveness. Several grading systems have been developed. Certification services professionally grade coins for tiered fees.

A "grade" measures a coin's appearance. There are generally five main components which determine a coin's grade: strike, surface preservation, luster, coloration and eye appeal. Grading is subjective and even experts can disagree about the grade of a given coin.

U.S. coin grading has evolved over the years to a system of finer and finer grade distinctions. Originally, there were only two grades, new and used. This changed to the letter grading system beginning with the lowest grade – Basal State (also Poor (PO)), then continuing Fair (Fr), About or Almost Good (AG), Good (G), Very Good (VG), Fine (F), Very Fine (VF), Extremely Fine (EF), Almost or About Uncirculated (AU), Uncirculated (Unc) and up to Brilliant Uncirculated (BU). Gem Uncirculated was roughly equivalent in usage to BU at that time. Numerical grades from 1 to 70 now accompany the verbal grades.

The quality of all coins is not equal and collectors felt the necessity of defining the quality of the coins in order to assess their value. Rims, nicks, polishing, scratches and other forms of wear are considered factors in grading a coin. Also, if coins have been in some form of jewelry also affects the grading.

In the early years of coin collecting, three general terms were used to grade coins:

As the collector market for coins grew rapidly in the late 19th and early 20th centuries, it became apparent that a more precise grading standard was needed. Some coins were simply more fine than others, and some uncirculated coins showed more luster and far fewer marks than others. Terms like "gem uncirculated" and "very fine" began to see use, as more precise grading descriptions allowed for more precise pricing for the booming collector market.

In 1948, well-known numismatist Dr. William Herbert Sheldon attempted to standardize coin grading by proposing what is now known as the Sheldon Scale. Sheldon's 1 to 70 grading scale, included in his book "Penny Whimsy", was originally devised for U.S. large cents but it is now applied to all series.

European countries use various, roughly equivalent, grading systems. The main features of their systems are presented in the following table:

Coin certification services emerged in the 1980s as a response to the need for buyers and sellers to agree on grading. For tiered fees, certification services grade, authenticate, attribute, and encapsulate coins in clear, plastic holders.Professional Coin Grading Service (PCGS), Numismatic Guaranty Corporation (NGC), Independent Coin Graders (ICG), and ANACS are the most popular and credible services, according to experts. These are the only services whose coins may be sold on eBAY, the largest rare coin marketplace. All four firms guarantee the grades and authenticity of their certified coins. Together they have certified over 80 million coins.

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Wikipedia