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The Importance of Coin Grading and Certification for Authentication

The Importance of Coin Grading and Certification for Authentication

December 29, 20232087 view(s)

Whether you've been in the numismatic industry for a while or you're just getting started, you know that coin quality matters. 

As the world of coin collecting continues to shift into the digital realm, it's becoming even more important to check the authenticity of the precious metals you buy and sell. 

While most providers are legitimate, the free-form nature of the internet means that unscrupulous parties can make their way onto your screen. If you're concerned about quality, a process called coin grading can assuage those fears. 

Today, we're sharing what this procedure entails and why it's so important as you add to your collection, one coin at a time. 

What Is Coin Grading? 

Coin grading is a process wherein a certified inspector validates the physical condition of a coin. To do so, they'll measure the coin against a scale. 

This scale ranges from Poor to Perfect Uncirculated. A coin in Poor condition is almost entirely worn out, while one in Perfect Uncirculated condition is found to be almost entirely intact, with zero signs of wear and tear, and no visible flaws. 

While these two extremes are grading options, the majority of coins fall somewhere in the middle of the scale. In most cases, the only Perfect Uncirculated coins are those that have been professionally stored since the very day they were minted. These coins are also called Mint State coins. 

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When Did It Begin?

This method of coin grading hasn't always been the gold standard of quality in the numismatic sector. Instead, its history traces back to 1949. That year, coin collector William Sheldon released a book called "Early American Cents."

Within it, he shared a new system for ranking and grading precious coins. The system, which would soon become known as the Sheldon Scale, originally ranked coins numerically, with 1 being the lowest quality and 70 being the highest. 

The premise was that the coins would increase incrementally in value. This means a coin with a 70 rating would essentially be worth 70 times as much as one that only received a ranking of 1. 

While Sheldon's system would eventually change form, it created the foundation upon which today's coin grading system was established. 

Updates in 1986

The first major change to the Sheldon Scale occurred in 1986. During this year, the Professional Coin Grading Services (PCGS) expanded the system to include a letter grade in addition to the originally stated numerical value. 

The premise behind this change was that a dual-grading approach would make it easier for third parties to rate each coin objectively. They would now have two ways to rank each item, instead of just one. 

Why Is It Necessary?

Without some type of system for determining the quality of a coin, dishonest salespeople could easily advertise and sell coins for far more than they're truly worth. 

While you might think that you can look at a collection of silver coins or gold coins and quickly determine their worth, the reality is that many different factors can affect their value. In addition to physical condition, other elements that coin graders will analyze include: 

  • Denomination
  • Clarity
  • Metal content 

Some of these traits, like clarity, can be subjective. As such, the coin industry needed a standard against which they could measure each coin. The grading system keeps assessments objective and consistent, which ultimately protects buyers and sellers alike. 

If you're an avid coin collector, it's important to make sure any coin you purchase has gone through a third-party grading system. This way, you can ensure its value and authenticity before investing in it. 

Understanding the Grading Scale

Today, coin graders use a two-step grading system. In addition to assigning each coin a number on a scale from 1 to 70, they also grade them based on 12 possible adjectives, often represented by acronyms. 

As mentioned, Poor is the lowest adjective a coin can have, and Mint State is the highest. 

If a coin was circulated after being minted but was only in production for a short time and still looks almost brand-new, that coin is called About Uncirculated. Beyond that, the conditions or grades go in descending order as follows:

  • Extremely Fine
  • Very Fine
  • Fine
  • Very Good
  • Good
  • About Good
  • Fair
  • Poor

While uncirculated coins can also be measured for quality and condition, this scale applies mostly to circulated coins. Many uncirculated coins have heavy, noticeable markings on them. These occur when the coins rub against other coins while in storage, or during the minting process. 

As you might imagine, coins that are carefully preserved will nearly always be ranked highest on the grading scale. Likewise, they'll also have the highest resale value.  

Let's take a closer look at what each value means. 

Mint State (MS)

There are two categories within Mint State, and each is designated as MS. The first is Mint State Choice, which has a numerical value between MS60 and MS64. The second is Mint State Gem, which is valued between MS65 and MS70. 

Of the two, Mint State Gem is the highest quality. Mint State Choice will be very similar in appearance but may have a few bag marks or blemishes. 

About Uncirculated (AU)

Coins rated as About Uncirculated have sharp, clearly visible lettering and designs. They also maintain at least half of their original luster, though they may have slight traces of wear on their highest points. 

These coins have a numerical value of 50, 53, 55, or 58.

Extremely Fine (EF or XF)

EF coins will have a degree of obvious wear on their highest points, yet the overall design is still clear. This is the category in which coins begin to have very obvious eye appeal, which only improves as the rankings go higher. 

These coins have a numerical value of 40 or 45.

Very Fine (VF)

Coins that exhibit small amounts of inconsistent wear are often classified as VF on the scale. The lettering will be slightly worn, but all the marks should still be visible. Likewise, details like the coin's rims will be distinct and recognizable, though they might be somewhat marred. 

These coins have a numerical value of 20, 25, 30, or 35.

Fine (F)

The small details on fine coins aren't usually as recognizable as the ones on coins ranked VF or higher. However, they will still have a defined rim, as well as legible lettering and an overall clear design. Any wear they exhibit will be evenly distributed across the coin. 

These coins have a numerical value of 12 or 15. 

Very Good (VG)

In VG coins, the wear is less consistent and is normally medium to heavy. However, the coin will still have an intact rim, as well as distinguishable design features that are discernable, if not clear. 

These coins have a numerical value of 7, 8, or 10. 

Good (G)

A Good coin has a heavy amount of wear and tear, but its distinct lettering might not be recognizable. Likewise, its designs will mostly be indiscernible, visible only by their outlines. Of the intact features, date and type will still be visible. 

These coins have a numerical value of 4, 5, or 6. 

About Good (AG)

As with a Good coin, the date and type of an AG coin will be visible, but it won't be as distinct. While letters and overall design will still be clear, those details may be heavily marked up. 

These coins have a numerical value of 3.

Fair (F or FR)

Fair coins have gone through a significant amount of damage, to the point where the outline is barely distinguishable. However, the date on them should still be legible enough for identification. This is the main feature that distinguishes a Fair coin from a Poor one. 

These coins have a numerical value of 2. 

Poor (P or PO)

Also called Basal coins, Poor coins are considered the most damaged and lowest-quality ones on the scale. While the shape of the coin might be intact, nearly all of its markings will be worn to the point where they're smooth. 

In addition, any lettering or dates on the coin will be illegible. These coins have a numerical value of 1.

What About BU Coins?

Note that while these are the recognized coin grading categories, there is also a level beyond Mint State. These are called Brilliant Uncirculated (BU) coins, though the designation isn't an official coin certification.

Coins that have not been circulated and are in pristine condition are normally considered BU. The only caveat is that they're so new that no one has professionally graded them yet. 

As a result, BU coins aren't found in a designated grading service holder, nor do they contain an official grade label. 

The Importance of Coin Grading and Certification for Authentication

Learn About Our Professional Coin Grading Services 

The U.S. Gold Bureau is proud to be an authorized dealer for both the Numismatic Guaranty Corporation (NGC) and the PCGS. The precious metals we sell have gone through an extensive coin grading process and you can be confident in their quality. 

We built our company on the premise of trust and integrity, and we value your business. When you're ready to expand your portfolio, feel free to shop our collections online or reach out to us for more information!

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