Should I Get My Coins Graded? – A Review

By | January 4, 2016

Graded Coin

Graded Coin in an Encapsulated Holder

As time goes on, every collector or investor in coins becomes interested in the quality of his holdings. Inevitably this brings up the question of Coin Grading. The collector-investor becomes aware of “professionally graded coins” versus “raw coins.” They begin to wonder: “Should I get my coins graded?”

Coin Grading: An Assessment of a Coin’s Quality and Value

1932-D quarter

Ungraded Circulated 1932-D Washington Quarter. Can You Determine the Grade?

Visualize this scenario: You are looking on eBay for that special coin for your investment, a 1932-D Washington quarter, one of the key coins in the series and quite valuable, especially in higher quality grades. Finally, after weeks of looking you see a specimen advertised in “very fine” condition and at a price you like. But what does the seller mean by “Very Fine”? And even if you know what “Very Fine” means, how can you be sure?

That’s where professional grading services come in. A professionally graded coin has been examined by unbiased numismatic experts who will apply a rigorous set of observational criteria to determine the degree of wear the coin has undergone since it was struck at the mint.

The Grading of Coins

 Walking Liberty

Ungraded , Well-Worn Walking Liberty Half Dollar. How Would You Grade It?

It’s easy to envision the three basic grades of coins:

  • Uncirculated: A coin in the same condition as when it was freshly minted and has never been in general circulation.
  • Circulated: Any coin that has been handled or put into use since its minting. They can range from a coin that is in poor condition with lots of wear all to way up to a coin that is almost uncirculated.
  • Proof: Specially high-grade coins made from polished dies and often double stuck. They are known for their excellent detail and special polished look.

As you may imagine, people recognize different degrees of comparison within each of these three basic grades. This gave rise to a descriptive system that many hobbyists still use. In this system, any coin can range in the following grades: Poor, Fair, About Good (AG), Good (G), Very Good (VG), Fine (F), Very Fine (VF), Extra Fine (XF), Almost Uncirculated (AU), Uncirculated (UNC), Brilliant Uncirculated (BU) and Proof (PRF). In most cases, the higher the grade, the more valuable a coin is, especially in the case of scarce and rare coins.

"Good" vs. "Very Good"

Range of Grades for the Morgan Dollar

Even with the descriptive system just described, there is a lot of subjectivity. In order to add more rigor and a degree of quantification to coin grading, the American Numismatic Association developed a numerical coin grading standard. It ranges from 1 to 70, with 70 being a coin in a “perfect state” and 1 being a specimen in poor or “basal” condition. Professional grading services now assign a verbal and numerical grade to coins. For example MS-68 is a mint state coin in superb gem condition, AU-58 is choice almost-uncirculated coin, and so on.

Indeed, lately some services now assign “+” grading to those specimens that are at the higher quality end of their determined grade. For example, a MS-68+.

Grading Services

PCGS

PCGS

In the 1980’s, coin grading and certification services came to the fore in order to satisfy the need for buyers and sellers to agree on the exact grading of coins. For a fee, these agencies authenticate, attribute, and encapsulate coins in air-tight, clear, plastic holders. The big four in the professional coin grading business are PCGS (Professional Coin Grading Service), NGC (Numismatic Guaranty Corporation), ICG (Independent Coin Graders) and ANACS (Americas Oldest Grading Service).  Today, nearly 100 million coins have been graded by these third-party services.

Should you buy Professionally Graded Coins?

The question of whether to buy graded or raw coins comes up regularly. For many, it’s a matter of personal choice. Remember this: You will be paying a premium for graded coins, especially for those which are rare and in the higher grades, but you will know what you are buying. For that reason, most investors in rare and scarce issues deal only in certified specimens.

Should I get my Coins Graded?

Australian Bullion Coin

Professionally Graded Australian Bullion Coin. MS-70

The answer to this question depends on what you own. Let’s look at several different scenarios and see if professional grading is a good idea:

  • Rare and Scarce Coins: These are the coins that are highly sought after by collectors and investors, especially in the higher mint state grades. They are in high demand and in low supply. When these coins are certified, they always command an even higher price than when in the raw state. Slight upgrades on the grading scale can mean hundreds or thousands of dollars difference. The collector-investor would do well to have coins such as these graded.
  • Key and Semi-Key Coins: These are the scarcer coins in any series and hence highly sought after, especially in higher grades. It is a good idea to have any raw key or semi-key coins graded. That will almost always increase their value when sold.
  • Modern Bullion Coins: Bullion Coins such as the American Silver Eagle or the Canadian Maple Leaf are not produced for general circulation. Hence, they are almost always found the same way they left the mint, either in proof or uncirculated condition. Hence, the need to get these coins professionally graded is rather low.
  • Common Issues and Junk Silver Coins: Most of these coins carry rather small numismatic add-on value above current melt value, especially in the lower grades. It rarely pays to have these graded professionally.

Learning more about Grading Coins

Looking at coins that are graded with your own eyes and reading about coin grading will enhance your ability to make sound judgements on the quality of coins, whether they are raw or ungraded. Books with crisp photos of graded coins are especially useful. Here are several good books on the subject:



Sometimes it’s good to get a detailed opinion on buying raw coins from someone who does it extensively. Check out this description of buying raw coins from eBay and why it can make good sense.

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