| In Coin collecting, Coin grading is the | | | | largely ridding the marketplace of inferior |
| process of determining the grade or condition | | | | counterfeits. Unfortunately, some better |
| of a coin, the key factor in its value as a | | | | counterfeits have since come into being, |
| collector's item. | | | | further justifying the need for professional |
| | | | authentication in a |
| Overview | | | | counterfeit-authentication arms race. |
| | | | |
| Coin grading has evolved over the years to a | | | | Grading services |
| system of finer and finer grade distinctions, | | | | |
| particularly when talking about US coins. In | | | | As of 2006, there are four prevalent coin |
| the beginning, people collected ancients and | | | | grading services, which in addition to PCGS, |
| there were two grades, new and used. | | | | include NGC (Numismatic Guaranty |
| | | | Corporation), ANACS, and ICG, though ICG is |
| This evolved for a time to the letter grading | | | | sometimes criticized for its grading of |
| system beginning with the lowest grade | | | | modern coins. There are subtle variation in |
| – Basal State (also Poor (PO)), then | | | | the grades assigned by each of these major |
| continuing Fair (Fr), Almost Good (AG), Good | | | | services, and prospective buyers are |
| (G), Very Good (VG), Fine (F), Very Fine | | | | encouraged to seek professional or expert |
| (VF), Extra Fine (EF or XF), Almost or About | | | | advice before making any important rare coin |
| Uncirculated (AU), Uncirculated (Unc) and up | | | | purchase. |
| to Brilliant or Beautiful Uncirculated (BU). | | | | |
| Gem Uncirculated was roughly equivalent in | | | | An interesting contender among grading |
| usage to BU at that time. | | | | services was Compugrade. They sought |
| | | | (ultimately unsuccessfully) to remove the |
| William H. Sheldon in his book Penny Whimsy | | | | human from the loop, and have a computer |
| is credited with coming up with the Sheldon | | | | grade their coins. It is uncertain whether |
| Scale in the 1950s, a numeric system going | | | | this technology was ever successfully |
| from 1-70. It was intended to reflect that | | | | employed. Ultimately people decided that |
| the relative value of a 1794 Large Cent, | | | | computers weren't very consistent in their |
| which was then worth $1 in Basal State and | | | | grading of coins and they lost favor. |
| $60 in Uncirculated MS-60. Thus yet another | | | | |
| non-decimal system was born. | | | | Complexity |
| | | | |
| This numerical system was used primarily | | | | It is difficult to imagine that there will be |
| within the community of large copper | | | | yet finer distinctions in grading in the |
| collectors (a very specialized part of | | | | future, yet it's already happening. Series |
| numismatics that often has its own ideas | | | | specific strike distinctions such as FSB |
| about things compared to the rest of the coin | | | | (Fully Split Bands) for Mercury and Roosevelt |
| collecting community) until the mid 1980s. | | | | Dimes, FBL (Full Bell Lines) for Franklin |
| | | | Half Dollars, FH (Full Head) for Standing |
| Distinctions | | | | Liberty Quarters, 5 and 6 step Jefferson |
| | | | Nickels and so forth are creating rarities |
| In 1986, PCGS (Professional Coin Grading | | | | out of coins formerly thought of as common. |
| Service) was incorporated. They | | | | |
| authenticated, graded and encapsulated coins | | | | The depth of mirrors on proof coinage has led |
| in a protective hard plastic shell. They used | | | | to terms of distinction such as Cameo, Deep |
| a combination of the two older systems | | | | Cameo, Ultra Cameo and so forth. Also, |
| putting letters and numbers together so that | | | | uncirculated coins are sometimes deemed |
| the grades became BS-1 (or PO-1), FR-2, AG-3, | | | | Mirror Proof-like and Deep mirror Proof-like. |
| G-4, G-6, VG-8, VG-10, F-12, F-15, VF-20, | | | | |
| VF-25, VF-30, VF-35, XF-40, XF-45, AU-50, | | | | People are bidding up coins based upon their |
| AU-53, AU-55, AU-58, MS-60, MS-61, MS-62, | | | | population rarity (several grading services |
| MS-63, MS-64, MS-65, MS-66, MS-67, MS-68, | | | | publish population reports letting you know |
| MS-69 and MS-70. They also issued limited | | | | how many times they've granted a particular |
| guarantees for the value of coins they had | | | | grade to a particular coin), and these other |
| graded. | | | | fine distinctions, and clever marketing by |
| | | | both the grading services and numismatic |
| The march to finer and finer distinction had | | | | firms. Ultimately, some of these schemes will |
| taken another huge step. Along side this | | | | prove popular over time, and others will turn |
| scale was a similar one for proof coins PR-01 | | | | out to be market bubbles. It's impossible to |
| through PR-70 that was roughly equivalent to | | | | say which will stand the test of time in the |
| the MS scale, except for proof coins. This is | | | | eyes of collectors and investors. |
| important as in some issues distinguishing | | | | |
| between mint state (for commerce) and proof | | | | With all of these factors to consider, and |
| coins is very difficult and specialized and | | | | the distinction between grades being so fine |
| the price differences can be large in favor | | | | in many cases, it becomes more and more |
| of either MS or PR. | | | | difficult for the average collector to keep |
| | | | up. The general public is even less likely to |
| The idea was to make coins easily tradable on | | | | understand this explosion of grades and the |
| an open market. However, because they used | | | | subsequent valuations. Nevertheless, there |
| technical grading rather than market grading | | | | are many good books and web sites that can |
| there are limits to their system, | | | | assist in determining the approximate grade |
| particularly in relating the grade directly | | | | of coins. |
| to a value. One thing PCGS did accomplish was | | | | |