Coin Grades and Their Relative Value in Coin Collecting

Novice coin collectors might begin their collection by inheriting a set of coins from a relative. One of the first questions invariably asked is "how much are these worth?" The first thing to find out is what is the grade of the coins?

Despite many improvements the methods of grading coins in the last decade, the process of grading coins is still as much an art as it is a science. Knowledgeable dealers issue a judgment based on observations and information achieved through many years of experience. Skilled practitioners can arrive at widely varying conclusions.

Basically the answer lies with the coin, as with any other investment product, any item traded within a free market system is only worth what someone is willing to pay for it. In this context, grading does play a far-reaching role in terms of assessment of the value of the coin.

Grading of coins traditionally runs through poor, fair, almost good, very good, fine, very fine, extra fine, almost un-circulated, un-circulated and brilliant, so as it seems the less the coin has been seen the better the grading. The ability to actually grade a coin is a judgment call; however there are a number of factors that determine this call:

  • Examination of the coin under magnification to determine overall condition, un-circulated coins will contain certain defects, the most common of which are called "bag dents". When coins are placed together in a bag, the way in which they are generally transported produce nicks, dents and other small aspect of damage.
  • Very typically, circulated coins are handled thousands of times, as they are handled more they become more worn, edges and surfaces decay and this degrades them.
  • The high points of a coin receive wear sooner than the other surfaces. Numbers and letters generally suffer first, but images (or devices) also suffer. These are more difficult to detect and makes the coin in "less than mint condition" this also causes the coin to be graded lower.

For example in an "Indian Head Cent" it is very important to ensure that the letters spelling out "liberty" can distinctly be seen on the headband of the Indian. In the instance of a Buffalo Nickel, a high-grade coin will have a well-formed head and tail.

Finer grades are used in more contemporary grading systems. There is the Sheldon System, this has established points from one to seventy; this has created an increasingly sophisticated system of detailed grades.

The Professional Coin Grading Service adapted this system in 1986 to extend it and add combinations of numbers to define coinage grades. So you might see PO-1, MS-60, and VF-25 MS meaning Mint State. This particular system is used extensively, worldwide today.

Grading is no the one deciding factor that determines the value of a collectible coin. Rarity too is a deciding factor, as this is the case with any collectible. It does play a large role, but age is also a factor, although a 1921 Morgan Dollar in bad condition may be worth even less than a dollar is worth today.

Self-assessment is valuable, so therefore is educating ones-self to the skills involved in self-assessment of coin values. Of course one of the most invaluable ways to assess the value of a coin or collection is to obtain at least two expert opinions, weigh up your options, because if your coin or collection came from a loved ones’ private collection, the sentimental value may be worth much more to you than any dollar value.

Related Article: