Coin-Grading Basics

A coin’s grade is defined as the labeling and categorizing of its condition or state based on wear and handling. It is the main determining factor of a coin’s value. 

Until recent decades, coin grading wasn’t a standardized practice. Dealers determined grades using instinct, prior knowledge, and personal observations. 

In the 1950s, coin values sharply increased. Slight differences in grade meant a considerable price difference. For example, the 1841 copper large cent is worth $19 in a Good grade but jumps to $250 in  About Uncirculated and $950 in Mint State-63.

Coin values have continued to rise over the past 70 years. Today, third-party grading companies independently grade and encapsulate coins. This standardizes the grading process and, coincidentally, increases the value of third-party professionally graded coins.

To Grade or Not to Grade?

So, what’s this grading stuff all about? How does an everyday collector determine which coins to have professionally graded (a costly endeavor)and which coins to grade themself?

If you haven’t already done so, the initial step is to sort and organize coins by series. Every series has specific wear and tear attributes that affect each coin’s grade and value. Learning some essential attributes common to most coin series is easy. So, let’s pull out our magnifying loupe and incandescent lighting and begin.

Helpful Guides

When beginning the coin-grading process, comparison is paramount. Attend coin shows, talk to dealers, and participate in coin club meetings. You can find numerous coins in these settings, many already labeled and graded. The opportunity to see your coin in multiple grades is second to none. 

If traveling isn’t in the cards, I recommend starting with a guidebook with photographs and detailed descriptions of grade variations. I’d recommend The Official ANA Grading Standards for United States Coins by Kenneth Bressett and Grading Coins by Photographs by Q. David Bowers. 

Both books (newer editions are recommended) contain detailed, high-resolution color photos of each U.S. coin and each grade category (not to be confused with each specific numbered grade). The details and explanations therein are unmatched. 

The Internet also holds much information about grading and some excellent photos; however, it is very saturated and sometimes difficult to discern facts from opinions.

I recommend utilizing reputable websites with online catalogs or phone apps like the PCGS Price Guide. It’s very convenient, and you can access a vast database of coin information from anywhere, especially at a coin show or flea market, right from your smartphone. If a piece piques your interest, you can compare its grade and asking price to the price guide.

For historical purposes, I also recommend A Guide to the Grading of United States Coins by Martin R. Brown and John W. Dunn. Published in 1958, this reference shows diagrams and sketches (not photos) of graded categorized coins. It’s fascinating to see how far we’ve come!

The Right Equipment

First things first—let’s discuss lighting, magnification, and handling. Always use gloves when handling your coins, and hold the coin by the edge using your thumb and index finger. Never touch the obverse and reverse surfaces. Our skin contains oil that leaves behind fingerprints that can quickly ruin a coin. Observe the coin with the naked eye to get an initial impression. Don’t waste your time with a magnifier if you aren’t impressed. Use a 5x to 7x magnifier to get a closer look. Hold the glass near your eye and bring the coin closer until it comes into focus. Proper lighting is also crucial. Ideally, use a 100-watt incandescent bulb positioned 3 feet away or a 50-watt bulb about 1 foot away.

Technical vs. Market Grading

There are two grading styles: technical and market.

Technical grading uses standards that measure the degree and location of wear and minting-process issues that detract from eye appeal, such as weak strikes, nicks, or scratches. These elements do not detract from a coin’s value and typically include coins in circulated condition.

Market grading is usually reserved for uncirculated or mint-state coins, and eye appeal is significant. Determining factors include luster, the strength of the strike, and the absence of marks or scratches.

To put it simply, with technical grading, you are “grading” the coin. With market grading, you are “pricing” the coin. 

Six factors help determine a coin’s grade: color/toning, strike, luster, cleaned/whizzed, contact marks, and damage.

Looking for Wear

Now that you know some basic grading factors, you can search for wear on the coin.

Here are some familiar places to look for wear:

• High points. The areas of highest relief on a coin are also the first to show evidence of abrasion or wear.
• Hair. The intricate lines of hair fade quickly with wear, and it becomes less detailed (think receding hairlines).
• Facial features. Certain facial features wear faster than others, especially ears and jawlines.
• Stars. Many older coins have rings of stars in the design. When worn, these stars appear flat and dull.
• Legends. Depending on the coin’s initial strike, the legibility of the legends (or inscriptions) is very important when grading a coin, especially the date.

Once you’ve determined eye appeal and wear, it’s time to consult the grading scale and grade your coin.

Bringing It All Together

Once you’ve determined eye appeal and wear, it’s time to consult the grading scale and grade your coin. Dr. William Sheldon, a well-known large-cent collector, introduced a 70-point numerical grading scale in 1949 for his cents. Today’s grading system is loosely based on his work.

These are the 7 categories in the 70-point scale:

GOOD

VERY GOOD

FINE

VERY FINE

EXTREMELY FINE

ABOUT UNCIRCULATED

UNCIRCULATED or MINT

These seven categories are further broken down into numbers 1-70.

After viewing and evaluating your coin, cross-check your observations with the book descriptions to understand the grade category. Then, fine-tune your observations to determine which numbered grade best matches your coin. For uncirculated or mint-state coins, determine their worth, graded versus ungraded. Having a third-party grade and slab (or encapsulate) the coin is often worth the fee. This process typically increases a coin’s value and ensures authenticity. 

Conclusion

Grading coins is no easy task; it takes a lot of knowledge, experience, patience, and time. In-person classes, such as the ANA’s grading courses at Summer Seminar or Witter Coin U, are taught by knowledgeable professionals, and you can delve beyond the basics. However, I hope this guide has been a helpful starting point for collectors just dipping their toes into the grading waters. Let the grading begin!