Introduction to Coin Grading

Introduction to Coin Grading - A Coin Magnifying Glass

Introduction to Coin Grading

Most of the experienced coin dealers or re-sellers I see on eBay don’t offer a coin grading in their listings without providing some type of disclaimer that they are not expert graders.  Some are even more cautious and clearly indicate that “the grading is up to you”, or “we’ll let you decide what you think the value of this coin is”.

When it comes to coin collecting, I frequently overhear customers debate about their coins. Unfortunately, there is no universally accepted coin grading standard.  Coin grading points differ between Canada and the United States (ICCS vs. PGCS).  Even the coin grading in the UK or Europe differ.  Consequently, the fact that no commonly accepted grading standard is still yet to be agreed upon doesn’t make things easier in this pastime.

Often, hobby collectors dispute how much their collection is worth based on their own criteria, not always the most objective approach to coin grading.  So many hobby collectors set them up for disappointment when they try to sell back their coins, but for get that dealers will not pay market price, but rather dealer prices, often discounted at 10-50% of market price.

To be sure, more experienced coin dealers or collectors are a step ahead of this and can determine from the selling price and seller’s feedback score what grading the coin may be expected to be but they will never offer a firm guarantee that their grading will be accepted by another coin dealer.

 

What You First Need to Know

Coin grading is an area of expertise that shouldn’t be taken lightly.  There is no standardized and widely accepted method to grade a coin but there is much information available to provide a basis for discussion.

I recommend a reputable coin grading service such as ICCS, out of Toronto.  However, I don’t always have the luxury of certifying a coin as there are associated costs and oftentimes the coin is certified to a lesser value than I would have thought.

Additionally, coins are valued based on their age, rarity, demand, condition, and denomination.  Another key factor, which drives up a coin’s value, is if there is demand for it in current markets.

Things You’ll Need for Coin Grading – A Beginner’s Starter Kit for Coin Collecting

First, you’ll need a keen eye.  Secondly, you’ll need time and patience, unless you’re just in it for the buying and reselling aspect.  Thirdly, you’ll need some accessories.

Here are the essentials for your coin collection:

  • A Magnifying glass
  • A Coin Cloth
  • A pair of white cotton gloves
  • A reference guide such as the Charlton’s.
  • A coin binder
    • Plastic sheets to hold coins (standard binder; 20 coin holders per sheet
    • Cardboard coin holders, usually called “a quad”
  • A secure storage area
  • A log sheet or inventory spreadsheet

Preferably, your coins should be stored out of sunlight and in a cool dry place in order to be well preserved for years to come.

A basic magnifying glass is really all you need.  There are various types of coing magnifying glasses, which fit easily in your pocket.

Make it fun for the kids by using empty egg cartons and marking in the various denominations they need to chase to fill the carton.  This is something my mother introduced me to do when I was a young boy.

Your storage area should be secure and private.  Unless you visit many trade shows with the intention to sell or trade coins, you may already have a small travel kit with only some key pieces from your collection.

 

The Various Grades of Coin Grading

When I consider the value or grade of a coin, I consider many things, such as market value, current trends, other references such as the Charlton Guides.

To evaluate a coin, first there are some basic notions that need to be understood.  For example, coins are mostly appraised according to the obverse side.  If you didn’t know, the obverse side is the side with the Queen’s portrait.  On older Canadian coins, prior to the Queen Elizabeth II’s coronation, the obverse side would be that of King Edward (1902-1910), King George V (1911-1936), King George VI (1937-1952).

Obverse Side Descriptions

1858-1901       Obverse:         Queen Victoria (various portraits)

1902-1910       Obverse:         King Edward

1911-1936       Obverse:         King George V

1937-1952       Obverse:         King George VI

1953-Present  Obverse:         Queen Elizabeth II (various portraits)

Reverse Side Descriptions

Reverse sides of Canadian coins have varied greatly over the years, offering many commemorative versions.  These sides have included the maple leaf, animals, NHL hockey teams, the Canadian provinces, various Olympics and Olympic sports, remembrance to war veterans, etc.

Generally Accepted Coin Grading

To begin with, most collectors base their grading on the Sheldon grading system, which offers a 70-point scale of “mint state” coins.  Depending on several factors as to whether the coin has been previously graded or certified, some graders will base their appraisals based on a comparison to another similarly certified coin.

Below is an excerpt of the Sheldon system for coin grading.

Uncirculated Coins

  • MS-70 – The perfect, pristine coin
  • MS-64 to MS-69 – a few scuffs when seen under magnification; small hairlines visible without magnification; most lustre intact
  • MS-63 – Some mirror-like qualities lost on the lustre; Copper pieces will appear slightly darkened
  • MS-60 to MS-62 – Contact marks caused by “bag nicks” or other coins; good eye appeal; scuffs and small marks seen under magnification

Circulated Coins

  • MS-50 – About/Almost Uncirculated
  • MS-40 – Extra Fine
  • MS-20 to MS-25 – Very Fine
  • MS-12 – Very Good
  • MS-4 – Good – Rim of coin worn; outline of portrait apparent, but no detail such as eyes or beads in crown are perceptible, even under magnification.

Proof (PR)

A PR finish is now the highest quality finish you can find at the RCM.  The finish offers a frosted relief against a mirror-like background.

Proof coins are not intended for general circulation.  They are struck for collectors and dealers.  PR graded coins usually are interchangeable with MS-67, MS-68, MS-69, or even MS-70, depending on the grading system being referred to.

Brilliant Uncirculated (BU), Specimen (SP), Proof-Like (PL), Uncirculated (UNC), and MS-63

BU coins are often interchangeable with PL, UNC, and MS-63 graded coins.  There will be no traces of wear, no scratches on the background, no contact marks with other coins.  The background will be near mirror-like.  While some of these coins may have been intended for general circulation, they will not have been circulated as they would have come in rolls directly from the bank.

PL coins are also widely available in PL sets, which offer decimal coins in a sealed plastic envelope.

 

Canadian Proof Like Sets Introduction to Coin Collecting
Introduction to Coin Collecting – 1979 Canadian Proof Like PL Set

 

About/Almost Uncirculated (AU)

  • Almost no wear on the eyebrow or other high relief points; background would have lost some of its mirror-like shine.

Extra Fine (EF)

  • There may be slight wear on the hair and wreath.  Look for a worn eyebrow.  Mint shine will not be mirror-like.

Very Fine (VF)

  • The hairline will show wear from the eye down to the nape of the neck.  The four central leaves of the laurel wreath will show wear.

Fine (F)

  • The laurel leaves should seem almost worn.  No more hair detail around the ear is apparent.  The dress folds will appear as worn.

Very Good (VG)

  • All details of the Queen’s laurel leaves will appear worn.  The worn parts can also be seen on the folds of her dress’s shoulder straps.

Good (G)

  • Coin’s lettering is showing wear; coin dates almost not visible; only basic outline of the portrait remains; coin details largely flattened and worn.

 

How About Banknote Grading?

Bank note selling activity will continue to rise for the coming years.  Some notes will continue to fetch spectacular prices on eBay and on specialized coin sites like Colonial Acres.

However, bank note grading is much different and follows a different system.  For more about bank note grading, see a reputable firm such as BCS, in Kitchener.  The different grading cannot be applied to coin grading.

Banknotes are much more fragile and see the wear of time much sooner if not kept well stored.  Coins will eventually tarnish =, nick, and otherwise mark.

A Closing Note (No Pun Intended!) on the Future of Coin Grading

In the meantime, I’m constantly faced with tough questions regarding coin grading and ultimately, the value of my customers’ coins, because no clear standardized coin grading system is in use.  Questions such as whether is MS-63 the same as BU (Brilliant Uncirculated) often come up and while everyone may debate whether a coin is BU, PL, or MS-63, at least the coin price stays close for these grades.

If you ask me, the MS-63 would be the slightly more valuable grade of the other two.  The next most valuable would be BU, and lastly PL or Proof Like.  Then again, Proof (PR) is expected to fetch more than MS-63.  But hey, that’s my take on the current trends.

As a new collector, you’ll have to develop trust with your coin dealer.  Shopping on eBay is easy, but not necessarily gratifying.  You coin dealer will a more reliable source.  Holding and studying a coin is much more exciting than buying something from eBay.  With that being said, a coin dealer may be more experienced than you, but not necessarily an expert.  Hopefully, he or she can explain why they feel a coin deserves a particular grade.

 

Thank you for reading “Introduction to Coin Grading”

Author