Coin Grading Methods

A knowledge of coin grading methods is a necessity for any coin collector. It is important to have some idea of coin grading standards so that a collector can obtain the best value as he or she continues to add to a collection. Whether searching through a tray of coins at a garage sale or staring through the glass at a showcase in a dealer's shop, it is good to have some idea about the value of the coins one wishes to purchase. The time may come when a person wishes to sell their own collection. Perhaps a non-collector who inherits a set of coins may wish to liquidate the collection. In each of these situations, an awareness of coin grading methods will be helpful in order to receive the best price for the transaction.

As with any other pursuit, educating oneself about coin collecting can result in greater enjoyment of the hobby and save the collector from costly 'beginner' mistakes. For example, avoid purchasing coins from home shopping advertisements found on the television. These outfits are reputed to charge unsuspecting customers several times an item's actual value. Other dealers may arrange coins which are only slightly valuable in special sets with attractive packaging at inflated prices. Happily, coin grading standards and books are available to help keep the collector from stumbling over such 'bargains'. Many of the books have pictures to aid in identifying an item's grade.

Collecting used to be reserved for wealthy individuals. Others were probably too busy just surviving to have time for such pursuits. If one did have time for a hobby, it would probably be one which helped provide for family needs (like hunting) or produced crafts to sell for additional income. Also, people generally did not collect their own coinage, but preferred coins from some exotic place. Even now, sets of coins from around the world are popular, especially with children who are just beginning to explore the hobby. This can help develop an interest in exploring other places and cultures.

These days, everyone seems to be collecting something. There are few items which are not being collected. Some retailers seek to take advantage of the public's collecting frenzy by marketing merchandise of all grades of quality in sets or collections. Coin dealers are not immune to this strategy. Some will employ unscrupulous coin grading methods. People will buy just about anything if it is attractively presented. The desire to complete a set may become nearly compulsive. One is reminded of the words found in Ecclesiastes 5:11 -- When goods increase, they are increased that eat them: and what good is there to the owners thereof, saving the beholding of them with their eyes? Collecting can be an interesting hobby; however, this should not become the focus of a life.

At first, many collectors are primarily concerned with obtaining various examples of coins which interest them. As time goes on, though, they may want to obtain coins which are the best example of that particular type. Although professionals may evaluate an item according to the quality or characteristics of the die that produced it, or even of the metal blank itself, most collectors are concerned primarily with the coin's conditon and the amount (or lack) of damage or wear which is evident. There are also subjective qualities that are desirable, which add to the appeal of the item. This leads to a problem in coin grading standards. What if two people assign a different grade to the same object?

Coins used to be described by various adjectives, according to their appearance. These terms eventually settled into accepted coin grading standards like 'poor', 'good', 'fine', and 'uncirculated'. However, when a coin seemed to fall into a category which was somewhere in between, further degrees of description were required. After all, a collector would not pay 'fine' prices for items which were not quite at that level, while dealers did not want to sell a coin which was better than 'good' at a lower price! Therefore, additional levels such as 'very good' or 'nearly fine' helped distinguish (and price) coins which were between levels.

Third-party coin grading methods brought about additional fine-tuning to coin grading standards. A grading scale developed by Dr. William Sheldon in 1949 only became widely accepted after third-party grading arose in the 1980s. His 70-point grading system remains in use today. At present, there are three tiers (levels) of third-party grading. The first two tiers have only two companies in each, a grouping which developed over time by popular consensus. The first tier has undisputed dominance, for it offers two (and, if necessary, three) independent evaluations of the coins submitted to the company and guarantees their grades and the authenticity of coins in company holders. The second tier offers similar experience with a lower price and faster results, but does not have the continuity in management and standards that the first tier companies enjoy. The third tier is composed of every other company in the business. Some propose a five tier system, in order to help distinguish between legitimate (yet perhaps new or smaller) companies and others who engage in coin grading methods which can only be described as fraud or scams. However, even if the tier system continues to develop, the responsibility to be aware of various citeria for determining value will continue to remain with the collector.

Coin Grading Services

There are numerous coin grading services or coin grading companies available for the collector needing them. Doing only a little research will yield about 18 grading companies. Each of these coin grading companies provide many similar services, but with differing prices and perhaps services that differ in small ways as well. Some of these services have been around for quite a long time, while others are just getting started. Also, some are not as reputable as others, so careful consideration of the services offered would be a good idea.

Before valuing services existed, individuals very experienced in collecting devised scales or methods to assist collectors in valuing collections. The earliest scale was developed in 1949, and the author wrote a helpful detailed book describing it in detail. This scale is still widely in use today across the world. Originally it was developed to assist in grading copper cents produced between the late 1700's and very early 1800's. The developer of this scale also created what is called a Base Value, where other similar coinage in the same denomination family could be valued, by multiplying the base value by the current value in the scale.

Later in the late 1950's, two men wrote a new book which appealed to a large audience of collectors. Rather than relying on simple number scales, it also contained pictures or photographs of coinage, and described how to go about the valuation process. The text was upgraded several times through the 1970's, and was eventually accepted by a large American coin association. The need for coin grading services kept on growing, despite this new information. This paved the way for ever more valuing methods and services to come.

As time progressed and more and more collectors came on the scene needing services, gradually professional numismatic associations began offering grading services to collectors. However the primary reason for beginning this type of service was to help prevent counterfeit coins from being circulated. The locations of their establishment is in an area of the country that can draw and utilize the services of professionals who make their life's work numismatics. At first the company only provided authentication services, but then as the company grew, provided coin grading services as well.

Other coin grading companies began enclosing coins in special packages to protect them. Problems many grading companies faced were duplication or counterfeiting of authentication certifications. There were so many coins waiting to be authenticated, the companies could not keep up with the backlogs. Some offer expertise in identifying whizzed coinage, or those that are artificially altered so that they appear to be of a higher grade than they are. Companies set up pricing depending on how quickly customers wanted to have coins authenticated. The highest prices are charged at collector shows on a "authenticate it here and now" basis. Some collectors investigate grading companies to find out how many of what types of coins pass through their doors, and in this way discover what coins are being bought and valued in the market today. Just as these types of companies value coinage, our loving Lord values His creation even more. "Behold the fowls of the air: for they sow not, neither do they reap, nor gather into barns; yet your heavenly Father feedeth them. Are ye not much better than they"? (Matthew 6:26 KJV).

For a very short period of time, a few companies decided to grade coins by computer, thinking that this method would provide more of a precise means of authenticating and valuing currency. However, it soon became evident that computers can not delineate very fine flaws in coins, and also that computers can not judge or use the human quality of objectivity in the process. Therefore, this method was soon dropped in favor of the human element which was more reliable.

Coin grading methods change every now and then, fluctuating with the way collectors in the hobby value coinage. The system is definitely not a static one, but will continue to change through the decades, as systems become better and better, and more and more descriptions are needed to describe them in a precise manner. There will always be a need for coin grading entities to provide their expertise as long as there is coinage being circulated. Coin collectors will always do well and serve the quality of collections by remaining knowledgeable about how coins are valued in the various markets where coin shows are held. Staying aware of the fact that this knowledge is not static and gaining experience in the ability to grade and value coinage ensures that the collector will never fall prey to those who would try to sell counterfeit currency to collectors.

Collectors try to use coin grading companies who do not have something to gain by providing their expertise. If the company does not deal in selling coinage they have been viewed as more reputable. In more recent times, a couple of entities have come together to provide a publication in book form and online that evaluates the companies that value and authenticate coinage. These entities have done this so that those new to the coin collecting company as well as seasoned collectors will have some way to better gauge the reputations of organizations such as these. Some of the oldest organizations, two to be exact, were given the superior grade, and only one company was given a poor grade. Most companies fell into the middle to lower rated categories. It would be worth the collector's time and energy to read and digest what is contained in this information.

There is still much to learn and consider in the interesting hobby of coin collecting, and the availability of coin grading services, if they are good ones, to help the collector on to finally putting together a wonderful collection. It can be a life long hobby, the results of which can be handed down from generation to generation.

Copyright© 1996-2015 ChristiaNet®. All Rights Reserved.