Coin Grading: Grade Can Help Determine Coin Value
The numismatic value of a coin depends on three factors: the date and mintmark of the coin, the mintage/population of the coin and its condition or finish. A seemingly small or insignificant flaw can go a long way in affecting a coin’s value. The best way to validate the quality of a coin is to assign a grade to the coin. Through obtaining knowledge about grading, one can accurately define the grade of the coin.
If one is not comfortable in their grading skills, there are two important considerations:
- Know the coin dealer from whom you have purchased the coin. A reliable dealer will stand behind what they sell and they will accurately grade their coins.
- Buy certified coins that have been graded through an independent and reliable third-party.
Any reputable dealer who sells you coins will determine the grade of the coin and hence its value through coin grading, a process which not only helps determine the numerical grade of the coin, it also determines the value of the coin. The grading process is subjective, meaning that they are subjective elements to grading a coin. Strike (how fully the details of the coin are struck), luster (how the coin reflects light back into your eyes) and eye-appeal (how attractive a coin is to your personal standards) are all subjective to the personal likes and dislikes of the viewer.
Professional Coin Grading Service
In the United States, grading companies are ranked into three main tiers based on their reputation for consistent and reliable evaluations and acceptance in the numismatic marketplace. Certified coins by the two top-tiered grading services command the highest premiums in the numismatic marketplace. The Professional Coin Grading Services (PCGS) and the Numismatic Guaranty Corporation (NGC) are rated as “Superior” by the Professional Numismatists Guild. Coins graded by PCGS or NGC are accepted in the marketplace at their stated grade. The middle-tiered grading service ANACS has been in existence the longest, but their grading is considered to be acceptable. ANACS graded coins generally trade at lower premiums than PCGS or NGC graded coins. All of the other companies not mentioned above are considered in the lowest-tier of grading services. Coins graded by any other company will likely be devalued because of inconsistent or “looser” grading standards. When choosing a grading service, it’s best to choose one of the two top-tiered companies PCGS or NGC.
Why is Coin Grading important?
The grade is how numismatists determine the coins “state of preservation”. Grading has been relevant in the United States since coins were starting to be collected in the mid-19th Century. However, coins fit into one of 4 categories: Poor (well-worn with outlines but no details), Good (much wear but details present), Very Fine (lots of details but some wear) and New (no wear and all details present). Prices didn’t vary significantly between grades.
Coin grading remained relatively unchanged for 100 years. In 1949, Dr. William Sheldon decided that there were many additional “states of preservation” of coins. Sheldon developed a system of grading coins on a scale from 1 to 70, with “1” representing a Poor coin lacking virtually all details to “70” representing a “Perfect” coin. The upper portion of the Sheldon scale is for Uncirculated coins grading from 60 to 70. These Uncirculated coins have no wear and are graded based on the severity, number, and location of marks and imperfections. Dr. Sheldon used these 13 “grades” to represent the 1 to 70 scale:
- Almost Good
- Very Good
- Very Fine
- Extra Fine
- Almost Uncirculated
- Brilliant Uncirculated
- Gem Uncirculated
- Perfect Uncirculated
This served the numismatic community well for 30 years. In the mid-1980s a group of coin dealers decided to form an independent third-party coin certification service. The main idea was to standardize grading among dealers and to bring consensus grading to the marketplace.
Grading Coin Services
When a dealer submits a coin to a grading service, it is graded by at least two experts. The two experts must independently agree on the coin’s condition. If they disagree, a third expert, a finalizer, will review it. After grading, a coin is “slabbed” (encapsulated in tamper-resistant plastic with the coin’s consensus grade printed on a tag inside the slab). Companies use encapsulating technology for long-term storage and protection of the coins.
Do All Coins Require Grading or Coin Certification?
The answer is no. Not all coin purchasers need certification and not all coins are worth the time and expense that certification may add to the cost of the coin. If you are a seasoned coin purchaser, you have seen many coins and you can compare any coin offering to other coins within your collection. Further, if the cost of the coin is modest then the cost for this additional certification may be unnecessary and undesirable. Costs for certification may run from $15 to more than $100 per coin, depending on the coin value and the time frame in which the dealer wants it returned to them. So coins of modest value may not demand certification. As an experienced purchaser, you are likely collecting these items and placing them in albums with other similarly graded coins.
Graded Coin Certification
Again, coin certification is likely not desirable in that instance. If you cannot locate a professional and reliable coin dealer, then coin certification may be desirable. If you cannot find a dealer who will stand behind what they sell, coin certification may be desirable. As the buyer, you need to determine if the additional expense is justified and you are comfortable with the additional expense. Even if you are a seasoned collector, certification is certainly advisable for expensive acquisitions. That decision is, ultimately, up to the buyer.
To be sold on eBay, certified coins must be certified by NGC, PCGS, ICG or ANACS
PCGS and NGC both maintain an online census or population report of coins they have graded. These reports help determine whether a coin is rare or common in certified grades. Through NGC certification or PCGS certification, coins receive a unique serial number for identification purposes. PCGS and NGC coin grades can also be further qualified with additional scrutiny from the Certified Acceptance Corporation (CAC). CAC reviews only NGC graded coins or PCGS graded coins and if they agree with the grade, they affix a small sticker to the slab to attest to their acceptance of the grade. This is done, as you might imagine, for an additional fee.
Comparing the Top Two iconic Grading Companies
Professional Coin Grading Services
Thanks to a respected coin grade scale and a reputation for reliability, PCGS graded coins recognize high values in the marketplace. The company offers:
- The PCGS Price Guide as a comprehensive list of PCGS coin values for PCGS-graded coins
- PCGS certification with a money-back guarantee
- PCGS Photograde™ Online: a tool to approximate the grade of a coin
Numismatic Guaranty Corporation
NGC is the official grading service of the American Numismatic Association and the Professional Numismatists Guild, establishing NGC coin grading as an industry standard. Other distinctions include:
- The NGC Collectors Society, an online resource and community where members can discuss NGC coin values and NGC coin prices. Members of the NGC Collector’s Society pay an annual fee so that they can directly submit coins for NGC certification.
- NGC grading scale with a special star designation for coins with exceptional eye appeal, increasing NGC coin values.
- NGC certification number that can be verified online along with NGC Price Guide Values
Certified Acceptance Corporation
Collectors who want to possibly further increase their NGC or PCGS coin values may seek an acceptance certification through the Certified Acceptance Corporation (CAC). CAC has a stickered rating system for coins already graded by PCGS and NGC. Coins receiving a green or gold sticker from CAC may trade for premiums sometimes fetching more than the PCGS price or NGC price listed on their respective websites.
Is Buying a Graded or Certified Coin Worth It?
Professional coin grading services are fee-based. Fees depend on a number of factors such as the declared value of the coin, its condition and requested turnaround time. However, once coins receive coin grades and are certified by a respected coin grading company, their numismatic value may be enhanced by the company’s reputation and grading guarantee. Trusted seals of authenticity and condition may make coins worth more overall. But as the potential buyer, you should discuss these options with your trusted coin dealer to determine whether these additional expenses are justified and financially warranted
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