How to Grade Coins
Appraisers consider a variety of factors when grading coins. Their assessment estimates each coin’s market value, indicating how much one could get for selling their coins. This guide will show you how we grade coins following some of the most common methods.
Examine Coins Up Close
Appraisers know they may miss fine details if they just look at coins the way the public does. They set up a bright lamp near their workspace to make sure they see every detail. This light source usually sits 12 inches away from the coin, so it doesn’t create glare. Appraisers also examine their coins through a magnifier. Most appraisers use a magnifier that makes each coin between 6x and 8x larger. This magnification helps them see small damage or bag marks that would go undetected by the naked eye.
Evaluate Wear Using the Sheldon Scale
Wear is one of the key factors influencing a coin’s worth. Coins with very little wear fetch much more than comparable coins showing wear and tear. Originally, coin appraisers used adjectives such as “good” and “excellent” to describe a coin’s wear. However, these adjectives are fairly subjective, so appraisers now use the more precise Sheldon Scale.
The Sheldon Scale is a 70-point scale ranking coins from poor (P-1) to perfect mint state (MS-70). A poor (P-1) coin must have a visible date and mintmark if used, but identifying it is incredibly difficult due to the damage it’s sustained. In contrast, a perfect mint state (MS-70) coin is flawless, even when viewed under a microscope. The design is perfectly centered and the strike crisp and clear. It would also have a bright luster that makes it look brand new. Only uncirculated coins ever fall into this category, because coins sustain wear when they’re used and touched.
Mint state coins receive MS-60 to MS-70 gradings. Uncirculated coins are not circulated to the public. However, unlike mint state coins, they show some damage from coin-counting machines or minor handling. These coins get AU-50 to AU-59 gradings. Circulated coins get numerical grades from 1 to 49.
After P-1 comes FR-2, for fair condition. Once a coin gets a 4 grade, it gets a G letter for good. At 8, the letter grade becomes VG, or very good. At 12, coins are F, or fine. At 20, coins get a VF rating for fine. Extremely fine circulated coins have rankings between EF-40 and EF-49.
While minor imperfections matter, appraisers know not to focus too much on tiny flaws. Obsessing about every little problem can lead to undervaluation.
Does the Coin Show Evidence of Cleaning?
While shiny, unblemished coins are appealing, appraisers make sure that shine doesn’t come from cleaning. They know natural coins typically have higher values than cleaned coins. That’s because cleaning removes the natural patina. The patina is part of a coin’s history and its way of protecting itself against the elements.
Abrasive cleaners can even remove metal from a coin’s surface. Their surface becomes hyper reflective. Appraisers will usually spot many tiny hairline marks along a cleaned coin’s surface when they view cleaned coins under a magnifier. Collectors don’t want cleaned coins for all these reasons, and appraisers know it. Cleaning a coin can slash its value by half or even more.
How Rare Is Each Coin?
A coin’s rarity adds to its worth. Die errors and misprints are mistakes that can actually make coins more valuable. For example, the 2004-D Wisconsin state quarters have extra leaves. Coins with these extra leaves are in high demand, which impacts their value.
Very old coins can also be especially rare and valuable as time goes on. Many old coins become lost over time, so the ones that remain often become desirable.
Limited edition coins can also become very valuable over time. Limited edition status doesn’t always boost value, but appraisers get to know which limited edition coins buyers covet. They value these coins according to the market demand.
Is the Coin in Demand?
Appraisers also keep their eye on the market to learn which coins are in high demand. They read trade publications, watch online auctions, and conduct online searches to learn what coins buyers want. As the demand for coins soars, so does their value. Several factors can impact a coin’s demand, including its age, its scarcity, and its condition. However, simply having an appealing design can also play a part. Appraisers understand that if a coin is in demand, sellers can charge more for it.
What Is the Coin’s Bullion Value?
A coin’s bullion value is the value of its metal. While modern coins in circulation are not made of precious metals, historic U.S. coins are a different matter. Coins made before 1933 are made of gold and silver. Along with their age, their bullion value can be substantial, even if the coin has sustained serious damage.
In the 1980s, the Mint began releasing gold and silver commemorative and bullion coins. You’ll also find platinum and palladium commemorative and bullion coins here and abroad. The value of their precious metals is always considered when appraising these coins. These coins come marked with the purity of their metal.
Historic coins don’t have these markings, but appraisers know most historic gold and silver U.S. coins are 90% pure. Multiplying the purity percentage by the current market value provides the current bullion value. Appraisers considering the bullion value weigh coins to determine how much of the metal they have.
Usually, coins are more valued for their scarcity or age than their metal. However, bullion value can make coins in poor condition much more valuable.
These tips can help you learn more about the value of your own coin collection, but they’re no substitute for an expert appraisal.