Coin grading is not an exact science. It requires a keen eye for detail and a lot of attention. Although it remains a subjective area, numismatists and coin dealers have some degree of professional consensus about coin grading.
The primary goal of grading a coin is to determine its market value. Coin grading, therefore, depends on how well the coin was struck initially, how much damage and wear the coin has sustained, and the coin’s level of preservation. The nicer the coin’s condition, the higher its value.
Back in the old days, buyers just had to take dealers at their word, and often dealers made tremendous profits by misrepresenting the grade of a coin. Fortunately, that has changed, and you can learn how to grade coins on your own. Grading takes time and practice, but it’s worth the effort.
As a beginner, you want to learn how to grade coins with the 70-Point coin grading scale (The Sheldon Grading Scale). That means you should start with a basic understanding of how the coin grading scale works.
The Sheldon Grading Scale
When coin collectors or numismatists grade coins, they assign a numeric value on the 70-point coin grading scale. The scale ranges from a grade of Poor (P-1) to Perfect Mint State (MS-70). Originally, coin dealers and collectors used adjectives to describe the coin’s condition, but they would have different interpretations of what each of the words meant.
The older system used words such as Poor, Fair, Good, etc., leading to discrepancies between what one dealer would call “Poor” and what another would. In the 1970s, professional numismatists got together and agreed upon coin grading standards. Today, numismatists assign grades at crucial points on the Sheldon scale.
Developed in 1949 by Dr. William Sheldon, the Sheldon system was first devised to determine the quality of large size cents but soon became the industry standard.
The first thing you need to do when grading coins is to place them in one of three main categories.
- Uncirculated (Mint State or MS) Coins
- About Uncirculated (AU) Coins
- Circulated Coins
Think of these categories as different “mini-scales.”
Circulated coins are the most common and have the widest scale for grading. They range from P-1 through EF-49. Most beginners learn how to grade coins using circulated coins as they’re easy to find and easiest for the beginner to grade. Circulated coins simply mean they have been used in public for trading rather than coming directly from the mint.
P-1 is the lowest grade you can grade a coin and represents a coin that’s just barely recognizable. The rims will be nearly flat or flat at this level, and most of the detail will be worn away. At the upper end of the scale would be a circulated coin with slight wear on the highest points of the coin.
The AU portion of the Sheldon scale starts at AU-50 through AU-59. An AU-50 coin might never have been used in commerce, but because it has visible scuff marks, has been handled slightly, or has been through a couple of coin-counting machines, it’s no longer in mint state. To simplify the scale, an ugly AU coin would fall in the bottom grade of the category (AU-50) while a really nice coin would be categorized as (AU-59).
The MS scale (from MS-60 to MS-70) begins with the MS-60 Uncirculated coin. This is an ugly, unmarked, lack-luster coin, but since it’s technically Uncirculated, it’s in an entirely different category from an AU-58 graded coin, which is nearly full-luster and has an attractive eye appeal.
An AU-58 coin, therefore, may look more appealing than an MS-60 coin, but that’s because they’re in separate categories of the grading scale. An MS-70 coin has no post-production imperfections. This may help to explain why the grading scale seems to jump from “pretty” coins to “ugly” and back to “pretty” coins again.
How to Grade Coins
Step 1
First things first, you’ll need to have an excellent source of light, such as a 75 or 100-watt bulb in a lamp close to where you’ll be grading coins. You’ll also need a decent magnifier – something that magnifies about 5 to 8 times (expressed as 5x to 8x).
Anything lower than 5x is too weak to show minor damage marks and important details, while coin grading doesn’t typically require anything stronger than 8x.
Step 2
Examine your coin closely and determine which “mini-scale” it fits into. Is it Circulated (the most common category)? Does it have slight hints of wear in the high points (About Uncirculated)? Or is it Uncirculated (Mint State)?
Step 3
Compare your coin to the mini-scale mentioned above and determine where it fits on the overall scale. Bear in mind that the numbers are not necessarily proportional. That means the amount of detail loss between EF-30 and EF-20 is not the same as that which is lost between MS-60 and EF-50 (remember that they’re in different mini-scales).
A Few Tips to Consider
- Always study coins in good light so you can examine every detail, but keep 12 to 16 niches between the coin you’re grading and the light source.
- Hold the coin you’re grading by its edges, between your thumb and index finger. You can also use your middle finger to prevent the coin from slipping out of your grip. When grading, you want to give the coin a full 45-degree angle by rocking it back and forth while turning it in a circular motion.
- If you have proper lighting, this technique allows you to see light cleaning and hairlines that you might not otherwise see.
- Stay away from fluorescent lights. Instead, stick with a high-quality 75 or 100-watt bulb. Poor-quality bulbs may be cheaper, but they could give off a more yellowish light.
- Only use a magnifying glass if you see something that needs close inspection. Using a magnifying glass too often may place too much focus on minute imperfections, which could result in under-grading.
- If you grade coins too quickly, you could easily miss something important. However, if you spend too much time stressing about the grading process, you could talk yourself into an incorrect grade. Consider taking a break if you’re facing trouble with grading, then return to the coin later.
- Like most things in life, you’ll get better at coin grading with time. Grading lots of coins gives you more experience. Here are a few tips that should help you hone your coin-grading skills.
- Select a major coin-grading service and go to places such as coin auctions, shows, or your local dealer with coins certified by this service. Ignore the label and grade the coin on your own. Don’t look at the grade until you’ve graded the coin yourself.
- This can be an exciting, challenging, and educational activity. Before you know it, your grade will match or get close to the grade from the professional grading service. If your grade is lower than the certified grade, check the coin again and ask yourself why it couldn’t be a higher grade.
- If your grade is higher, examine the coin for minor problems you may have missed the first time. Bear in mind that every grading service may grade coins differently, so don’t get frustrated if you don’t understand why your grading differs significantly from a coin certified by a service you’ve chosen.
- If you’re not sure why a certain coin received a particular grade, ask the dealer to explain it to you. Coin dealers will gladly share their knowledge and provide the information you need.
How to Ensure You Never Pay More Than You Should for Old Coins
When it comes to coin grading, beware of coin collectors who overestimate or underestimate the grade for various reasons. As an amateur, getting the grade of a coin wrong could be the difference between paying several hundred or thousands of dollars, even if you’re off by just one grade.
To avoid errors, never grade a coin from an image. Poor or misleading images can make accurate grading very difficult. If possible, try to examine the coin you’re grading so you can study its weight, how it feels, and other finer details.
If You’re Uncertain, Seek Professional Advice
Although you can learn how to grade coins yourself, it takes years of experience to do it correctly. Collectors will often think their coins are in better shape than they actually are, so always be on your guard.
If you’re in the market for a high-value coin, your best bet would be to seek professional or independent advice. Ultimately, a coin’s value depends on how much someone is willing to pay for it. If two passionate collectors are interested in a particular coin, the price could increase significantly.
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