Prior to the 1980’s rare coin dealers often did their own coin grading which was a huge conflict of interest. Fraudulent grading demonstrated the need for third-party grading services, such as the Professional Coin Grading Service (PCGS) and the Numismatic Guaranty Corporation (NGC). These third-party services are now widely accepted and set the coin grading standard in the industry.
Coin grades issued by third-party services protect both collectors and investors from fraudulent practices. When a third-party site issues coin grades, they also tend to return the coin in a sealed container, or slab, which will show signs if it has been tampered with. Here’s a little more about how to understand coin grades and how the system works.
American Numismatic Association
The American Numismatic Association (ANA) is a nonprofit organization dedicated to the education and support of the study of coins. The ANA coin grades are divided into 24 grades of either circulated or uncirculated coins. There are 13 grades of circulated coins and 11 grades of uncirculated coins. Uncirculated coins have the most value for collectors and investors because they have the least amount of wear and imperfections. Coins are graded according to details such as strike strength, mint luster, wear marks, and other details. Coin grades are often issued by more than one professional grader to ensure authenticity and accuracy.
There are 24 different circulated coin grades issued by third-party services. The lowest circulated coin grades start at Poor – 1 and the highest circulated coin grades run through Very Choice About Uncirculated – 58. Remember, there are 22 other circulated coin grades between Poor and Very Choice About Uncirculated. There are many factors and characteristics which can be used to determine a coin’s grade which also gives it a market value.
Uncirculated coin grades start at MS – 60, which stands for ‘Mint State 60. Mint State coins have no trace of wear anywhere on them because they have not been circulated or run through various counting machines. The highest coin grades are MS – 70 which are perfect coins. Coin grades MS – 70 are the rarest and most valuable grades. They also have the highest market value so are the most sought after by collectors and investors.
Third-Party Coin Grades
Third-party coin grades have brought massive value to the market. They protect both investors and collectors by offering a standardized grading scale along with authenticity certification. The grade a coin is given in the marketplace can greatly affect its future value appreciation or lack thereof. There are multiple third-party coin grading companies available these days, in addition to the Professional Coin Grading Service (PCGS) and the Numismatic Guaranty Corporation (NGC). These are just two of the most widely recognized and respected by the American Numismatic Association (ANA).
Developing Coin Grades
Uncirculated coin grades used to be limited to MS – 60, MS – 65, and MS – 70. The American Numismatic Association (ANA) eventually approved the use of a more detailed system after seeing the immense need for different coin grades in the industry. The current coin grading system helps improve liquidity, offers guaranteed grading, and safer long-term storage options for those who need it. If the need arises, coin grades could change over the years with approval from the proper institutions, but the current system seems to be working pretty well, even if it does seem complicated.