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A Guide to Coin Grading
Collecting coins is one of the oldest hobbies in the history of mankind, with archeological evidence suggesting that people began to collect coins as far back as the 4th or 3rd century B.C. Today, coin collecting is more than a hobby for some, but a passion that doubles as a means of building wealth over the course of a lifetime. Understanding modern coin collecting and the importance of grading, requires looking backwards in time first.
History of Coinage
Originally, coins were more than just currency used to buy and sell goods. The designs on early coinage were viewed as miniature works of art. Ancient coins featured images ranging from famous rulers to historic events and mythological creatures. As time moved along, the 15th and 16th century saw coin collecting become the domain of the rich and powerful, and was often referred to as the “hobby for kings.”
By the 19th century, ordinary people had both the financial ability and access to coinage to begin their own collections. The vast majority of the collections of ordinary individuals contained national currency issued by sovereign governments.
Introduction to Coin Grading
Prior to the formation of the Professional Coin Grading Service (PCGS) and Numismatic Guaranty Corporation (NGC) in the United States, the valuation and grading of historic and modern coins was very difficult. Physical condition of the coin is always used as the primary baseline in assessing the value of any collectible coin.
Dr. Willian Herbert Sheldon invented a rudimentary scale for grading coins in 1949. Early on, there were just three broad categories into which coins were classified, and these included the following:
- Good: to qualify, these coins had to maintain most of the details of the design intact.
- Fine: to qualify, these coins had to exhibit clear detail and some of its luster on the surfaces.
- Uncirculated: to qualify, these coins should never have been in general circulation and still exhibit their full mint state condition.
However, it was quickly discovered that even two Fine coins could have subtle differences that weren’t enough to separate them to Good or Uncirculated. How was the world to determine the difference in value between two coins of Fine condition with minor differences? The Sheldon Numeric Scale grew to feature grades from 1 to 70, with 70 being the highest possible grade and representing a perfect specimen with no flaws.
Today, the Sheldon Scale is divided into three broad categories with room for enhancement based upon the specific certification number. For example, the scale now includes the following categories and positions on the grading scale:
- Circulated 1-45: These coins were issued for public use, typically as currency.
- About Uncirculated 50-59: Coins that were never issued to the public, but may show evidence of wear and tear. Therefore, these cannot be considered mint state.
- Uncirculated 60-70: Coins in this range never entered public circulation and retain many of the original characteristics of the mint. Often classified as Mint State.
The general purpose of the Sheldon Scale is to help differentiate between two of the same coin with slight variations in quality. Most of these variations are only spotted by trained professionals working for the PCGS, NGC, or other certification companies. The thought process involved in the grading scale, in a broad sense, dictates that a graded 70 coin is 70 times more valuable than one graded 1.
Sample Case: The Morgan Silver Dollar
One of America’s most popular historic coins and rarest specimens today is the Morgan Silver Dollar. Produced by the United States Mint at its New Orleans Mint (O), Carson City Mint (CC), San Francisco Mint (S), and Philadelphia Mint (no mint mark) between 1878 and 1904, and again in 1921. While the average melt value of a Morgan Silver Dollar today is just $15 to $20, the collectible numismatic value is much higher.
Starting at the bottom of the spectrum, a cull Morgan Silver Dollar from the Philadelphia Mint is worth just $25 as a collector’s item. Move up the scale to a PCGS AU-55 (About Uncirculated) specimen from the San Francisco Mint with slight wear on less than 50% of the design and full details, and the Morgan is worth.
Even coins in the same rough range can have massive differences in value. For example, there are two Mint State 63 Morgan Silver Dollars graded by the PCGS worth vastly different sums. Both are from the New Orleans Mint, and the standard coin is worth $315, while the other New Orleans Mint specimen is part of a series that had an oval-shaped “O” mint mark instead, and bears a value of $1,435.
At the very top of the scale is a PCGS MS 68 Morgan Silver Dollar from the Carson City Mint worth $881,250. This coin was very sharply struck and features only miniscule imperfections, making it an ideal collector’s item. You can see how very small differences can have a significant impact on the value of any coin during the grading and certification process.