Origins of Rare Coin Grading



Coin grading, as Kathy Mullen mentioned in “Introduction to Coin Grading”, is the process of determining the grade or condition of a coin, and it’s one of the key factors in determining coin values as a collector’s item. The appearance of a coin can be broken down into several key components – strike, surface preservation, luster, coloration, and eye appeal – and then the grade is assigned accordingly based on the overall quality of the piece.

Coin grading has evolved along with the coin collecting hobby over hundreds of years. The earliest systems simply used a one- or two-word description or a letter grade to describe a coin’s condition. Later William H. Sheldon developed a numerical grade scale of 1-70, and although it was originally intended for large cents, collectors found that the system translated well for any type of coin. The current system of grading in the United States combines the letter grade and numerical grade, ranging from a PR-01 (poor coin with an identifiable date) to MS-70 (perfect uncirculated) for regular business strike coins. The system, which is credited to the American Numismatic Association, is detailed in James L. Halperin’s How to Grade U.S. Coins.  

If you’ve been collecting long enough, you may remember a time when the grading of coins fell entirely to the coin collectors and dealers themselves. However, as more investors became interested in coins in the early 1980s, and there was a limited supply of bullion coins available, non-experts needed a way to establish confidence in collectible coin valuation. Based on this need, professional coin grading services were established to authenticate and grade coins, and then “slab” them, or encapsulate them in a protective hard plastic shell. In the United States, the Professional Coin Grading Service (PCGS) and Numismatic Guaranty Corporation (NGC) became the most recognized coin grading services, and both are quite reputable. 

Investors and collectors sometimes find that, particularly in uncommon grades for a particular coin, there can be variations in the assessments of even the professional grading services. Coin collectors will say to “Always buy the coin, not the plastic,” meaning that if you are impressed by a coin’s appearance, there is a good chance that others will be as well, regardless of the grade assigned by a professional coin grading service.  Conversely, if a coin has a high technical grade but lacks eye appeal, it will likely be very difficult to sell. If you are interested in learning more about the grade of a particular coin, contact Mullen Coins for an expert analysis.

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