How to Grade Coins?
Coin collecting has a long and storied history, but there wasn't much standardization if you had started in the 19th or early 20th century. Prices were fixed on a person by person basis, with no real consensus on what a particular coin was worth. One dealer might judge a coin as a fine specimen, while another might refuse to pay the price it was purchased for and grade it differently.
This began to change in 1948 with a numismatist named Dr. William Sheldon.
The Sheldon Coin Grading ScaleSome numismatists had already begun to define their collection with terms like "Good," "Fine," and "Uncirculated," three broad buckets that encompassed all the coins that were traded. This worked fine while the market was small, but as the market grew, it became clear that something with more detail was needed.
Sheldon created a grading scale for collecting wheat pennies that ran from 1 to 70, with a coin of 70 value being theoretically 70 times more valuable. His system was simple to use and alleviated some of the nuances the hobby had been struggling with. Coin collectors rapidly adopted Sheldon's system for other coins as well, but there was still a large degree of subjectivity in the way it was applied. This mattered a lot for higher grades, where the difference of one number could mean tens of thousands of dollars of difference.
Grading StandardizationGrades were set in 1985, when many of the top numismatists met and realized that the lack of standardization in grades was a problem across the industry. These coin collectors met over the course of months and created the blueprint for the modern grading services we see today, with PCGS and NGC being the best-known.
Most coins are now graded by third-party grading services like PCGS and NGC. Higher quality coins are often found "encapsulated" or slotted into a sealed holder with a PCGS or NGC grade. These grades are based on the Sheldon grading scale.
This does not mean that a grade is entirely set in stone once it's in the holder. There are times that a coin may have been given a lower or higher grade than it deserves. Usually, this will be discovered by a dealer or collector who is well versed in coin grading.
Grading Coins YourselfGrading coins yourself is a real challenge, especially if you do not have any experience with it. Very minor details can make the difference between a grade, even details that cannot be spotted without magnification and powerful light. A small "rub" or friction mark can knock several grades off a coin and isn't easily spotted, especially for a layperson.
You can take a coin to a dealer to get an assessment, and they will often have a better sense of what the coin is worth. There may be minor disagreements from dealer to dealer if the coin somewhat straddles a grade, but in general, a dealer will have a pretty accurate read on what grade the coin should have. You can also submit coins to PCGS or NGC for a grade yourself or have a dealer do it for you. This is the best option for grading, as especially if you're new, your grade may not be accurate. You should lean on an expert to get the correct grade as it is far too hard to do without specialized knowledge.
APMEX buys and sells coins both in their raw state and in holders from the major grading authorities, and like most coin buyers, we can give you an idea of what grade your coin might get if you sent it in for grading. Contact us today for all your numismatic needs.