It takes both experience and competence to grade coins the way professionals do. Few of us have the time or patience to learn how to grade coins with the degree of accuracy that would be necessary to determine minute differences in appeal and value of rare coins. That is something that is best left to those who do it on a daily basis as part of their routine business.
What is important for all collectors is to learn the basics of grading techniques, the terms used to describe various grades, and why differences in grade can make a significant difference in the value of coins. It is one thing to realize that everyone wants to own the nicest looking coins they can afford. It is quite another ability to be able to determine the exact grade of two similar coins, and to know if one is better than another, and how much better or more valuable it is.
In extreme cases two very similar-looking coins might be graded quite differently, and because of the difference one might be valued hundreds, or even thousands, of dollars less than the other. That doesn’t happen often, but it can, and it does make that much difference in the appeal and value of one coin over another. The reason is that some coins are known to be very rare in high grade, even though they may be rather common in a lower state of preservation.
An example of how coins vary in price according to grade can be seen in the 1924-S Buffalo nickel. Most of those coins were poorly struck at the mint, and lack details even when in new condition. With even the slightest degree of wear they begin to look rather flat and ugly. Nice, sharply struck, specimens are in high demand and consequently worth a big premium for each degree of betterment in condition. A coin of this date and mint in Fine condition is valued at about $30.00, but one in Very Fine condition is worth over $400.00, and one even a little bit better sells for around $1,000.00.
To the untrained eye, there would be seem to be very little difference in the grade of each of these coins, and to further complicate matters, the value of any of them would also vary according to how well struck the piece is. If the mint mark is exceptionally sharp, the value could double. Conversely, a poorly struck coin might be priced at only half. The difference has to do with scarcity, eye appeal and the desire to own something that is better than average.
There was a time when most coins were traded directly between buyer and seller. It was relatively easy to see if a coin was pleasing or not, and if it would fit in with the rest of a collection. In time that practice changed with the necessity of selling through advertisements, and by mail. When the coins could not be personally examined, they had to be described in standard terms that would be understood by all. Over the years a system of grading terms has been developed and standardized so that a potential buyer can pretty much picture what a coin looks like even without seeing it.
Terms like “Very Good” and “Fine” could be confusing to someone unfamiliar with grading terms if there were no other reference points, so a series of numbers is also sometimes used in conjunction with the terms to make it clear which grades are higher than others. The system of adjectives, abbreviations and numbers used most frequently by collectors and dealers is the one sanctioned as being official by the American Numismatic Association.
Learning to grade is not as difficult as some people think. The best way to start is to work with an accumulation of several hundred old Lincoln pennies. Spread them out before you and then attempt to sort them into piles of coins that seem to have about the same degree of wear. You don’t have to be too picky about it at first. Just make a general attempt to categorize them into about nine piles of coins that look pretty much alike in decreasing amount of luster or detail. You will soon see that there is a pattern to the way that coins wear, and that they all seem to fit into categories.
Next, you should begin to learn the names of the different categories, and fix in your mind an image of how much wear can be expected for coins in each grade level. The following chart shows terms and abbreviations that apply to all coins. They can be interpolated from your training with the Lincoln cents:
About Good (AG-3)—Very heavily worn, with portions of lettering, date and design worn away. Date may be barely readable.
Good (G-4)—Heavily worn, with design visible but faint in some spots. Some details are worn smooth.
Fine (F-12)—Shows moderate to considerable even wear throughout. Entire design is bold with overall pleasing appearance.
Very Fine (VF-20)—A moderate amount of wear is noticeable on the high points of design. Main features are very bold.
Extremely Fine (EF-40)—Design is lightly worn throughout, but still retains full sharpness in every detail. Some mint luster remains.
About Uncirculated (AU-50)—Shows only the slightest trace of rub on the highest points. Still retains nearly full mint luster and brilliance.
Uncirculated (MS-60)—No trace of wear, but has numerous marks and blemishes from rough handling while in storage.
Brilliant Uncirculated (MS-63)—A choice specimen with full brilliant luster, and only light marks from contact with other coins.
“Type” Coins Rate High With Collectors
Any variation of a basic type is called a ‘variety’ or ‘variation.’ In the case of the Buffalo nickel, the first design used early in 1913 was slightly different than that used later in the year (the words FIVE CENTS were on a raised mound), so there are two Varieties of the Buffalo nickel Type coin. Avid collectors usually save examples of all types and major varieties of each U.S. series of designs. In the nickels, for instance, they would have the Shield, Liberty Head, Buffalo and Jefferson designs, as well as the variations for each of them.
Collecting Type coins is growing in popularity because it is an inexpensive way to own examples of all the different designs of U.S. coins. And the demand is having an effect on the availability of those coins. Older coins like the Indian cent, Buffalo nickel or Mercury dime, can no longer be found in circulation, although all of them can still be purchased at reasonable prices.
A beginning Type set can be formed by saving one each of all the different coin designs found in change. A Lincoln cent, Jefferson nickel, Roosevelt dime, Washington quarter and Kennedy half dollar will be easy to find. If you are lucky you may be able to get a Susan B. Anthony dollar, or even an old Eisenhower dollar coin at the bank. With persistence you may also locate an old Wheat Back Lincoln cent or the Bicentennial quarter and dollar that were made in 1976. Keep your eyes open for other designs and join in the fun of building a Type set of U.S. coins.