Coin Grading

I’ve always wondered about coins or rounds that get “graded” and “slabbed”, and why they are sold at big premiums. The grading is all based on verifying the authenticity of the coin, and checking the quality or amount of perfection the coin has after production. The “slab” is just the coin holder, putting the now graded coin into the hard rectangular plastic as opposed to the regular round protective plastic capsules.

Sheldon Grading Scale
Named after numismatist William Sheldon, the Sheldon Scale was originally created in 1949 to grade large cents. Over time it has been modified and then adopted by all coin grading companies. The scale goes from 1 to 70, with 1 being the poorest possible condition and 70 being the highest possible quality. It was originally meant that at a scale grade of 1, if this coin were worth $1, then a scale grade of 70 of the equivalent coin would be worth $70.

It is possible that even when coins are newly minted at a factory, they may be considered less than perfect. That is because during the factory process, coins could drop on top of each other, making contact during production resulting in minor dings and dents. Anything above a 60 grade is reserved for uncirculated coins. Grading companies will put each coin under a microscope to inspect the coin for imperfections.

Terms To Know
On a graded slab, you may see something like “MS70” or “PF69”. Let’s quickly discuss what it all means.

70 grade: uncirculated with no imperfections at 5x magnification

69 grade: just below perfect with nearly imperceptible imperfections

MS: stands for Mint State, meaning a coin that is uncirculated.

PF: is a designation used for Proofs

1st Day of Issue: reserved for a coin that is received by a grading company within one day of its first day of issue.

Early Releases/First Releases/First Strike: These are designated for coins received by a grading company to be graded within the first 30 days of issue. Don’t be fooled, they all mean the same thing.

*Something to consider: coin dies that are used to strike the design into a coin’s blank will wear out over time and require replacing. So the last few coins being struck on the “first die” could actually produce a lower quality design than the first few coins of the second die being switched in.

Grading Companies
The slabs I see the most of are NGC, followed by PCGS. Both of these I would consider as the most liquid and easy to sell.

PCGS: The Professional Coin Grading Service launched in 1986 and consistently costs the most when buying and fetches the highest prices of any of the coin rating companies. This is partly based on the reputation that they are extremely tough at giving out grades of 70. Any additional designations such as “First Strike” will tend to pick up more money.

NGC: Around since 1995, Numismatic Guaranty Corporation is very popular and the most common. NGC graded coins get the next highest prices after PCGS. You may see labels such as “Early Releases” or “First Releases”. Don’t be fooled: even if one may sound better than the other, these designations are actually identical!

ANACS: is a mouthful. American Numismatic Association Certification Service graded coins are not as common and does not command high resale prices, most likely due to investing all their time coming up with a really smart name but forgetting to do the necessary marketing relative to PCGS or NGC. They are the oldest grading company since 1972, yet I don’t see too many of their graded coins for sale.

ICG: Independent Coin Graders is the fourth and newest grading company, since 1995. They seem to have the lowest volume of graded coins for sale, and I rarely see any of theirs available.

Why Such High Premiums?
Any person or company that wants to get a coin graded has to pay a fee to the grading company. Obviously that fee is going to get marked into the resale price, as well as the additional hassle that comes with getting the coin graded. Of course, for the collector who demands perfection, it’s up to you what price you are willing to pay to get that grading guarantee.

The Verdict
In my opinion the quality of the grading between these companies is negligible to most untrained eyes (and maybe even trained eyes). I’m sure they’re all professional and very skilled. But in reality the only thing that matters in the end is who can generate the best resale price. And in the secondary market, the company that commands the biggest prices on equivalent rated coins is clearly PCGS. The runner up is NGC. If going for graded coins, it would be very difficult for me to venture into the other 2 companies as their resale market is harder to determine. I would also consider graded coins as falling into the category of collecting and less about stacking silver.

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