When ordering a fine gold or silver coin from an online precious metals dealer, how do you know what condition the coin is in? The image that some dealers use to advertise their products is a stock image provided by the manufacturing mint, not an image of the coin the customer will receive. Stock images are intended to clearly represent the devices on the obverse and the reverse of the coin, but may misrepresent the quality of the coin a customer purchases.
To make the quality of a coin more transparent, coin dealers list the “grade” of the coin. Before a coin grading scale was invented, all coins were sorted into two categories: new and used. Unfortunately, numismatists and collectors found that many coins fell somewhere in between with varying quality levels. To better describe the actual state of precious metal coins, a grading system was devised.
Invention of the Coin Grading System
Most coins stamped by the U.S. Mint are graded using the Sheldon Coin Grading Scale of Numismatic Guaranty Corporation (NGC), the official grading service of the American Numismatic Association (ANA). The only other main grading service in the industry, Professional Coin Grading Service (PCGS), also uses the Sheldon Scale.
The original grading system was invented by Dr. William H. Sheldon in 1949. Sheldon was an American psychologist and coin collector who is best known for his controversial study of the human body and his firmly held belief that “physique equals destiny.” In numismatics, Sheldon developed a numeric scale from 1 to 70 to determine a coin’s quality – a grading system that is still widely used by American coin collectors today.
Coin Grade Meanings
The ANA uses a 70-point scale to grade the condition of a coin, with 70 being the best grade possible. A corresponding adjective prefix of 1-2 letters is also issued with a coin’s grade to further clarify its quality.
See the chart below for an overview of the coin grading scale from best (70) to worst condition (1):
|MS (Mint State)||60-70||Perfect condition; no signs of wear; lower grades may indicate contact marks and slightly less luster|
|AU (About Uncirculated)||50, 53, 55, 58||Minor evidence of light wear only on highest points of the design|
|XF (Extremely Fine)||40, 45||Light overall wear on design; traces of Mint luster still evident|
|VF (Very Fine)||20, 25, 30, 35||Light to moderate wear on high points of coin design; all features are still sharp and well-defined|
|F (Fine)||12, 15||Moderate to considerable overall wear, but general appearance is still pleasing|
|VG (Very Good)||8, 10||Worn; primary features are clear and bold, though flat|
|G (Good)||4, 6||Heavily worn; design outline visible but details faded in areas; not desirable for collectors|
|AG (About Good)||3||Very heavily worn with some portions of legends and lettering date barely readable|
|FA (Fair)||2||Nearly entirely worn smooth|
|PR (Poor)||1||Unidentifiable except for a mint mark and date; worst grade a coin can get|
Proof and Uncirculated Coins
Two primary categories of coins are “proof” and “uncirculated”. A proof coin has a mirror-like finish on the fields of the coin, and there is little to no difference in the finish of the fields and devices on an uncirculated coin. Neither of these designations, however, guaranteed that a coin will be MS-70. It is important to realize that these designations do not necessarily indicate the condition of a coin, but rather their method of manufacture.
The “proof” and “uncirculated” designations are independent of production quality. Newly minted proof and uncirculated coins will be graded less than MS70 if the devices are damaged or obscured, and if the the fields are marred or have color spots.
Benefits of Graded Coins
Rather than treating the evaluation of a coin’s quality like a guessing game (which was essentially what you had to do before the Sheldon Scale was developed), coin grading allows numismatists and collectors to feel confident in the condition of their investment before buying. This reliability gives graded coins a higher numismatic value over its mere “melt value” – or the worth of the precious metals contained in the coin.
The condition of the coin is just one factor in calculating a coin’s true worth, albeit an important one. Thanks to the current grading system, collectors can have the knowledge they need to ensure that the precious metal coins they buy meet their expectations in terms of quality and value.
At Provident Metals, we buy and sell all types of rare and valuable graded coins – from uncirculated, Mint State American Silver Eagles to 5,000 piece bags of circulated copper Lincoln pennies. Browse our website to find that missing piece to complete your coin collection, or scan our knowledge center and blog to learn more about coin collecting and investing.