A coin’s grade is an overall measure of quality based on a host of factors ranging from the original strike, to general wear, to damage. The value of a particular coin is tied to its grade and the difference in value between low, medium and high grades is typically significant. For this reason, it is essential that as a coin collector you invest the time to develop a good understanding of how coins are graded and ultimately learn to grade coins yourself.
Details of coin grading will vary considerably based on the type of coin being graded as well as where the coin is graded. In the United States the grading system published by the American Numismatics Association (ANA) is almost universally accepted. Grades in the ANA system consist of a number and an adjectival description; they range from Poor-1 to MS-70 (MS is an abbreviation for mint state). The numerical part of the ANA grade is known as the Sheldon Scale while the adjectival description is adopted from terminology that was in common use by American collectors and dealers prior to the formalization of the ANA system.
Although the Sheldon and other numerical scales are seen in British and European markets, they have never been fully embraced there, and most collectors and dealers stick with systems that use only adjectival descriptions. The specific descriptive terms vary from country to country and of course from language to language, but there is good consistency in the systems and how they evaluate coins against the criteria valued by collectors. In French grading a very fine coin is described as TTB (Tres Tres Beau) and a perfect coin is said to be Fleur de Coin. In German grading a very fine coin is graded SS (Sher schon) and a perfect coin is STGL (Stempelglanz) It is certainly important to note that the lack of a numerical scale in the British and European methodologies in no way implies that the grading is less precise and exacting. In fact, the United States market has a reputation for being a bit lenient in its grading, and coins leaving the United States for other countries will frequently be re-graded on arrival.
Regardless of which system is used, coin grading takes into consideration a number of factors including wear, marks, luster, strike, and eye appeal. These factors will be considered and weighted differently depending on the coin. A mint state modern coin should have no wear at all except perhaps for minor abrasion marks from being transported in coin bags, and so luster and strike become key factors. When grading circulated coins, different designs will show different patterns of wear and elaborate guides have been assembled with details of these wear patterns to assist in evaluating specific coins. Ancient coins which were engraved and struck by hand will exhibit considerable difference in both strike and engraving quality and these differences will play heavily in the grade assigned.
Although the intent of coin grading systems is to establish an objective set of criteria for evaluating coins, it is inevitable that a certain amount of subjectivity will come into play. While there is no debate that a nicer coin should be worth more than a less-nice coin, coin grading is not without controversy. There are some who feel that the hobby has become overly consumed with coin grades and others who feel that the complexity of the 70-point Sheldon Scale masks the underlying subjectivity.
No discussion of coin grading would be complete without mention of third-party grading companies – companies that for a fee assign a grade and certify the authenticity of a coin. The value of professional grading lies in having a presumably neutral party render an opinion as to the authenticity of a coin and to grade that coin against objective criteria. The practice removes some of the risk collectors face when buying coins in the open market.
These companies have become tremendously influential in the coin trade and this influence is the source of some collector criticism. Some collectors feel that these services constitute an unnecessary expense, driving up coin prices performing a function that collectors and dealers could provide for themselves with training and experience. Others question the role of these services in wholesale grading of modern new issue coins – where tremendous debate ensues over the imperceptible difference between an MS-69 and an MS-70 coin.
Nonetheless, third party grading is here to stay and depending on the area in which you specialize you will need to familiarize yourself with the field. The basic model of operation is that a dealer or collector submits a coin to the service, the coin is authenticated and graded, and then to prevent tampering is encapsulated in a sealed plastic holder typically known as a slab.
There are a rather large number of third party grading companies in the United States and around the world. Some of the best known of these companies are Professional Coin Grading Service (PCGS), Numismatic Guaranty Corporation (NGC), Independent Coin Graders (ICG), and Amos Certification Service (ANACS formerly the American Numismatic Association Certification Service). Of course not being listed here should not be taken to imply that a particular company is not trustworthy, but you should be aware that there are many fly-by-night firms that are quite literally here today and gone tomorrow. If a coin for sale is graded by a company unfamiliar to you, do your homework and research the company before buying the coin.
The following basic descriptions of major grade designations should help provide a general understanding of how grades are determined against the ANA criteria. For more thorough guidance you should consult references related to specific coins.
P-1 A poor coin which has the date and mintmark, but is almost smooth and may be damaged.
FR-2 A fair coin which has considerable wear and is almost smooth.
G-4 A good coin which still has all the inscriptions, but they are barely noticeable and most of the detail is missing.
VG-8 A very good coin with all the major features present, even if they are faint. Most of the central detail is faint or gone.
F-12 A fine and well-worn coin. Design elements are visible and the rims of the coin are nearly completely separated.
VF-20 Very fine coin with moderate wear and some finer details still present. All letters should be readable and the rims are clean and full.
EF-40 An extra fine coin which is lightly worn, all major features are clear and bold.
AU-50 About uncirculated coin, wear which shows only on high points, but still has eye appeal and no major signs of contact.
AU-58 A very choice about uncirculated coin which has only the slightest hints of wear, a positive eye appeal, and no obvious contact marks with full luster.
MS-60 Also known as mint state basal is the lowest mark an uncirculated coin can be given. While uncirculated, a coin with this grade would have poor luster with obvious contact marks and no eye appeal.
MS-63 Mint state acceptable coin which is uncirculated but has an impaired luster, a weaker than average strike, and has moderate eye appeal.
MS-65 Mint state choice coin with a strong luster, several contact marks or no more than two visible marks, great eye appeal, and above average strike.
MS-68 Sharp, attractive coin with fantastic eye appeal and no more than four minor contact marks.
MS-69 Brilliant luster and strike with no more than two contact marks visible only under magnification.
MS-70 A perfect coin free of flaws or scratches, with full luster and impeccable strike.