How Grading Works
Posted on June 24, 2014
Determining the value of a specific coin used to be a lot more subjective before the mid-1980s when the two grading services—NGC and PCGS--came on stream. Today, these internationally recognized services will grade specific coins on behalf of the owner or established coin management firms like HCC.Coins are graded on a scale from 1 to 70, with higher numbers represented the highest quality examples. Nearly all coins have some degree of flaws in their surface appearance and it is the number of those “imperfections” that establish the grading number. It is important to note that coins are made by dies which will begin to show signs of wear after several thousand coins are produced. To put this in perspective, the first few thousand (or more) coins minted will have sharper detail than the one millionth coin. And sharper detail offers more value.
In general, there are only three categories of coins. Uncirculated (or mint state) coins are standard “production” coins which if graded high, can have the highest value. Proof coins are made at much slower production speed, with highly polished dies and are offered to collectors at premium prices. “Proof” refers to the production process.
Circulated coins will show some signs of wear, and the condition and value of a specific rare coin will be determined by the grading service. The grading, plus the rarity of the coin will establish the value. Normally coins with a grading of MS/PR 60 or higher are considered excellent examples.