Anyone new to the coin collecting hobby will wonder how coin values are determined and why a particular coin may be worth more than the same coin that is, at first glance, in similar or better condition. In this blog we will discuss coin grading, how it works, and what resources you can use to better understand coin values.
“Buy the book before the coin.”
While buying a book is perhaps not as interesting as buying a coin, the above is very good advice. You will need to become educated about the fundamentals of coin grading to begin to assess the value of your own coins or the coins you’d like to buy.
So, what book should you buy first? One of the most popular books on coin grading is Grading Coins by Photographs by Q. David Bowers. Another highly regarded coin grading book is Official American Numismatic Association Grading Standards for United States Coins by Kenneth Bresset. Both of these resources will give you a good head start evaluating coins.
What Is Coin Grading?
Coin grading is assigning a grade to a coin based on its overall condition. It’s an art and a skill that can be learned over time, but different coin experts will not always agree, so it’s not purely objective, although coin grading is based on a commonly used scale, the Sheldon Scale.
The Sheldon Scale is named for highly regarded numismatist Dr. William Sheldon who developed it in order to assign value to early copper large cents. It’s a 70-point scale ranging from a 1 (Poor) to 70 (Mint State) with 25 steps in between. PCGS (Professional Coin Grading Services) introduced the concept of third-party grading in 1986 based on the Sheldon Scale. In the United States this is the standard for coin valuations, but many other places use it as well.
If you’re wondering what a grade of 1 or 70 means, that’s understandable. When Dr. Sheldon designed his scale, he wanted the values to be multiples of each other. In other words, he wanted a coin graded a 70 to be 70 times more valuable than the same coin graded a 1. That might not be helpful to the novice coin collector who just wants to determine a coin’s market value, though.
There are several factors that determine the grade a coin will have: the quality of its original strike, how well it’s been preserved, and how much damage it has suffered over time through use and wear. An individual numismatist will also grade based on the aesthetics of its overall appearance. That might vary from person to person. This kind of subjective response to a coin is why grading - while based on expert opinion - will never be an exact science.
From Poor to Perfect
The 70-point grading scale ranges from 1 to 70, not always number by number there are intervals. Coins graded from 1 (P1) to (AU58) are circulated coins. These are coins that were used in trade at one point in time and suffered at least very minor damage because of handling. A coin graded P1 is in very bad shape and is barely recognizable, but it must have a readable date and mint mark if it was minted with these. On the other end of the scale, an AU-50 coin is a circulated coin that has only slight wear that keeps it from being graded About Uncirculated.
The About Uncirculated category encompasses coins graded between a 50 (AU-50) and a (AU-58). They may not have circulated through the money system, but they have been handled so they are no longer in mint condition. The range here between 50-58 will depend more on the attractiveness of the coin than the damage it has suffered.
Beyond that are coins that are in mint condition or Mint State (MS-60 to MS-70). Again, none of these have circulated, but the lower range mint condition coins will be far less attractive than a Mint State Perfect coin like an MS-70 which will be flawless, in perfect condition, bright, and beautiful. In fact, an AU-58 coin can be a much more attractive coin than a MS-60, but condition matters in coin grading and coin collecting. It matters a great deal.
If this seems complicated, that’s because it is. Don’t despair, though! There are resources to help besides books. The American Numismatic Association offers a correspondence course called Grading U.S. Coins Today to members and the general public. There are online resources available, and coin collectors and coin dealers are often enthusiastic about sharing their experience and expertise.
It is important to find a trusted coin dealer before you begin developing your collection. Unfortunately, the industry does have its sharks, and new hobbyists can be taken advantage of if they are not careful. At Grand Rapids Coins we are always happy to talk to our customers and evaluate their collections. If you have questions about coins or coin grading, feel free to ask. We are here to help our customers and keep the coin collecting hobby thriving.