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Coin Grading Guide

30-Sep-2010

Grading is without a doubt one of the hardest challenges faced by new collectors. When browsing a dealer's inventory, the various terminology used can be very confusing at first and with some seemingly less attractive coins being graded higher than more attractive coins, it's a wonder any new collectors actually figure out how it all works.

One of the greatest problems faced by collectors when learning to grade is the fact that everyone grades differently. There are a number of methods used in grading, then there are a number of standards which coins are graded to, and finally there is the personal bias of the grader. All of these put together spell out a very inconsistent system. This lack of consistency encourages collectors to form their own style of grading again adding to the complexity of the market.

In this article I will explain the predominant grading methods and their applications in a way that is accessible to any new collector to use as a starting reference to better understand gradings used in the coin market.


Grading Systems

The two most commonly used grading systems are referred to as technical grading and market grading. Technical grading aims to provide a perfectly consistent approach to grading by measuring the quantitative facts of a coin. This is not to be confused with numerical grading which can be used in both a technical and market grading system. Market grading aims to provide a grading most consistent with how saleable the market considers a coin.

Technical Grading

Technical grading works by starting at the top grading, and working your way down through each fault. In circulated grades, the procedure is to measure the amount of wear, equate this to a grading, then subtract from this grading for each fault depending on the severity of the fault relative to the grading. Higher grades should be less tolerant of faults than lower grades.

In mint state grades, one takes the top grade, then subtracts for each fault, whether post or pre-mint, then limits the grading based on the coin's strike strength.

Market Grading

Market grading always employs some degree of technical grading so the basic approach is the same. Where market grading differs is when certain qualities of a coin may affect its saleability. Here is a number of situations where this may occur:

If a coin has above average eye appeal, it may be assign a market grading higher than its technical grading. Conversely, if a coin has below average eye appeal it may be assigned a market grading below its technical grading.

If a coin has some slight wear, but otherwise resembles a choice or gem uncirculated coin then it may be given the market grading of uncirculated as the market may accept it as being equally desirable to a typical uncirculated coin.

If the coin is poorly struck for its type, it may be assigned a lower market grading as the market is unwilling to accept it at the technical grading.


Grading Circulation Coins

The first step in grading a coin is to determine if it is shows signs of circulation. The best measure of this is to find circulation wear. Wear can be detected as a disturbance in the natural reflectivity of a coin. This natural reflectivity is known as mint lustre. As the top layer of the coin is rubbed, the reflectivity around that area changes. The problem here is that reflectivity can be faked, it can't be faked well, but to the untrained eye a doctored coin may be perceived as a mint state coin. Please see our article on Understanding Lustre for more information. Differentiating between mint lustre and artificially contrived reflectivity is one of the most important skills involved in grading, do not miss this.

Detail

The most common technique in measuring wear is by using detail. It is simple, it can be precisely defined and it can be easily explained. Then problem is that it relies on detail being identical when all coins are struck - this is simply not the case. Some coins are struck with more detail, some are struck with very little. Despite its obvious flaw, it is the only reasonable tool available in grading lower grade coins as you will see later but that is the limit of where it should be used.

Wear

Wear is the primary aspect of a coin that determines the grading of circulated coins. Wear can be detected by a relative alteration in the reflectivity around the questionable point. If a coin shows overall lustrous surfaces with lustre missing on the highest point, then that point has some minor wear, though it won't necessarily preclude an uncirculated grading. This only works for higher grade coins, once a coin is worn to the point where it is devoid of original surfaces, one must rely on details in order to grade the coin.

Assuming your coin is of a reasonably high grading, you will notice one of the following patterns in the natural reflectivity of the coin. It will be confined to the legends, it will be dulled in the fields and bright in the legends, it will be bright in the fields and legends, but dulled over high points on the design, or it will be completely bright.

If your coin fits the first two patterns, then your coin is of a high grading, but shows signs of circulation and should be graded as a circulated coin. If your coin fits the fourth pattern, then it has not been circulated and should be graded as a mint state coin.

If your coin fits the third pattern, it is unclear if it has been circulated. Observe these high points under a bright, indirect light and glass, if they show minor crossed hairlines then those surfaces were probably worn during the bagging process and your coin can still be graded as a mint state coin, if it shows a more circular pattern, then it has probably been worn and should be graded as a circulated coin.

Circulated Coins

Circulated grades can be split up into two sections, coins with full details as struck, and coins with noticeable wear. The former can be effectively graded by measuring the percentage of original surfaces remaining in the exposed areas, the latter by details.

Mint State Coins

Grading mint state coins works by measuring a number of factors, strike, surfaces and lustre. To see the factors that affect strike, see Understanding Strike, for the standards affecting lustre, see Understanding Lustre. Surfaces are measured depending on the severity and number of marks.

Grading Scales

There are two basic grading scales in use in Australia today, the adjectival system and the Sheldon numerical system. The standards themselves depend on the grader, but below is a table comparing PCGS standards with typical Australian technical standards. Note that many dealers employ market grading which usually results in much higher gradings due to its favouring of doctored coins.


AU58

A coin with minor rub on the highest points. It may have surface hairlines throughout.


Grading can be determined by rotating the coin under the light, the highest points will reflect light with less intensity. If surface hairlines have already worn away the original surfaces dulling lustre, then the coin may still grade AU58 but this technique may prove ineffective.


By shining a light that reflects directly into the lens, worn points will appear discoloured though this effect can be hidden through dipping or cleaning and if paired with surface hairlines, it will almost certainly indicate an problem coin that cannot be graded.

about Uncirculated

aUNC

A coin with only minor rub on the highest points. Hairlines or friction should be at a minimum.


good Extremely Fine

gEF

A coin with minor hairlines or friction present in the fields dulling lustre around isolated points. Rub should be minimal.

Extremely Fine

EF

A coin with minor hairlines or friction present throughout the exposed surfaces. Rub should be minimal.

AU55

A coin with noticeable rub on the highest points. It may have surface hairlines throughout but friction should be at a minimum. No more than 25% of the coin's original lustre should be lost to friction, though surface hairlines may also serve in dulling the lustre.

about Extremely Fine

aEF

A coin with noticeable rub on the highest points and friction or hairlines throughout a good majority of the coin's exposed surfaces. Some originality must be present in the exposed surfaces.

AU53

A coin with noticeable rub on the highest points with isolated regions of worn detail. It may have surface hairlines throughout and up to 50% of the coin's original lustre can be lost to friction.

AU50

A coin with isolated regions of worn detail. Friction will have worn away most if not all of the coin's original lustre and any surface hairlines if present, will have been worn away also.

good Very Fine

gVF

A coin with full details as struck but with noticeable flattening of some details and friction throughout exposed surfaces.

XF45

A coin with some important details missing due to wear, lustre will be absent from the exposed regions but overall details should appear as strong as was struck.

XF40

A coin with multiple important details missing due to wear. The main design should be in tact and appear as strong as was struck.

Very Fine

VF

A coin with multiple important details missing due to wear. The main design should be in tact and appear as strong as was struck.

VF20

A coin with flattening to much of the design though all lettering and the general design should be present, detail will be lacking. Rims should be strong and appear as struck though with wear throughout.

Fine

F

A coin with flattening to most of the design though all lettering and the general design should be present, detail will be lacking. Rims should be strong and appear as struck though with wear throughout.

F12

A coin with flattening to most of the design with isolated points of the general design missing. Rims will start to show noticeable evidence of wear.

Very Good

VG

A coin with flattening to most of the design with isolated points of the general design missing. Rims will start to show noticeable evidence of wear.

VG8

A coin with flattening to all of the design though the general shape of the design should be present. Rims will show some flattening into the design though the general outline should be complete.

G4

A coin with flattening to all of the design with only basic details present. Rims will be flattened with minor regions worn into the design. Legends should still begin to show signs of flattening into the design though should be completely legible.

Good

G

A coin with flattening to all of the design with only basic details present. Rims will be flattened with minor regions worn into the design. Legends should still begin to show signs of flattening into the design though should be completely legible.

AG3

A coin with flattening to all of the design with only the basic outline present. Rims will be mostly worn away with some parts of the legend worn to an illegible state.

F2

A coin with heavy wear throughout with only the basic outline present. Much of the legends will have completely worn away though the basic design should still be easily identifiable.

Fair

A coin with heavy wear throughout with only the basic outline present. Much of the legends will have completely worn away though the basic design should still be easily identifiable.

P1

A coin nearly completely worn with only basic identifying features present.

Poor

P

A coin nearly completely worn with only basic identifying features present.


Adjectival standards applied to softer metals such as gold tend to be far more tolerant of surface hairlines due to their abundance generally implying higher gradings than is listed here if wear is due to surface hairlines and not circulation friction.

Numerical gradings listed here are raw gradings determined by wear, coins with detracting marks or other defects may be lowered in grading or rejected.

Mint state gradings cannot be consistently translated between standards as they each prioritise different qualities. Below is a table that rates the minimum qualities required by each grading under the numerical and adjectival standards.


Grading

Surfaces

Strike

Lustre

Brilliance (Copper only)

MS70

Perfect

Perfect

Full

No requirement

MS69

Virtually Perfect

Virtually Perfect

Full

No requirement

MS68

No noticeable imperfections

Only minor missing details

Full

No requirement

MS67

At most one or two minor surface marks in the devices

Only minor missing details

Full

No requirement

MS66

Only a few very minor surface marks in the devices. One or two minor tone spots may be present but not easily noticeable.

Only minor missing details, some minor die clashing or similarly minor strike fault may be present

Full

No requirement

MS65

A few surface marks in the devices, a few minor ones in the exposed areas. A few minor tone spots or one more significant one may be present but not easily noticeable.

Some missing details, minor die clashing or similarly minor strike fault may be present

Full

No requirement

MS64

Some minor surface marks in the exposed areas or one or two heavy ones may be present. A few tone spots may be present but no significant staining. Minor carbon streaking may be present.

Noticeably weak strike, minor die cracks, clashes, filling or similar die faults may be present.

Virtually full

No requirement

MS63

Numerous minor surface marks, some carbon streaking or a couple of heavier marks may be present. Some high points may be slightly affected by bagging or rolling.

Some minor die corrosion may be noticeable or heavy filling, but nothing serious.

Apparently full

No requirement

MS62

Numerous minor surface marks with isolated areas of heavier surface marks or one or two severe marks. Some high points may be lightly affected by bagging or rolling.

Some severe die faults may be present such as missing details through filling or a heavily corroded die.

Lightly subdued in isolated regions.

No requirement

MS61

Numerous surface marks in the exposed areas which lightly subdue the lustre or several severe marks. High points may be worn through bagging or rolling.

Numerous severe die faults may be present which don't affect the ability to identify the coin.

Lightly subdued in exposed regions

No requirement

MS60

Numerous surface marks in the exposed areas which dull the lustre, or a number of severe marks easily noticeable. High points may be worn through bagging or rolling.

Coin identifiable

Mostly subdued in exposed regions

No requirement

Gem Uncirculated

GEM

Free of significant surface marks, no wear, no obvious tone spots or carbon streaking.

Nearly complete strike.

Full

No significant brown toned regions.

Choice Uncirculated

CHU

Light surface marks, high points may be slightly affected by bagging or rolling. No obvious tone spots. Some minor carbon streaking may be present.

A generally problem free strike with noticeable strength and good details.

Apparently full

Considerable red colouring

Uncirculated

UNC

Numerous surface marks, free of any severe marks, high points may be worn through bagging or rolling.

A strike free of significant faults.

Mostly subdued in exposed reigons

No requirement


As you can see from the above table, the Australian adjectival system places much higher priority on strike while PCGS places a higher priority on surfaces. The consequence of this is that a coin graded MS60 with its weakest factor being strike, can still grade as high as CHU while a coin graded MS66 may still only grade CHU if its strike isn't up to GEM standards. NGC grade similarly to PCGS but put less of a priority on surfaces and more on strike making them more closely related to Australian standards.

Intermediate and Split Gradings

A number of intermediate gradings are present in both systems. The prefixes good and about apply to all circulation gradings down to Fine with about applying to VG and Good as well. The prefix good indicates a coin slightly above a particular grading and the prefix about indicates a coin slightly below a particular grading.

The intermediate grades for the numerical system not listed here are G6, VG10, F18, VF25, VF30 and VF35. These are applied with the exact definition for a particular grading doesn't fit well and the coin would best be graded between two listed definitions. In addition, PCGS recent introduced a system called SecurePlus, in which coins that are at least 70% better than a particular definition, but not quite to the standard as the next grade up will be given a grading with the suffix +.

Colour Designations

In addition to basic gradings, copper coins are usually given colour designations based on the amount of original brilliance the coin displays. Under the Sheldon numerical system, the RD suffix is given to coins with 95% original brilliance or more, the RB suffix is given to coins with between 5% and 95% original brilliance, and the BN suffix is given to coins with little to no original brilliance.

One important note here is that the percentage figures have little correlation to the percentage of the coin's surface that is toned, but rather the extent of the coin's surface that is toned. A coin with minor toning over 100% of the coin's surface will still be designated RB or RD (if it's minor enough), while a coin with a deep, brown tone over most of the coin with some 10% lightly toned red, will probably be designated BN.

Under the adjectival system, the prefix Red is given to coins with no areas fully toned brown, the Red & Brown designation is given to coins with some original red brilliance and the Brown designation is given to coins with no original red brilliance.

The adjectival system's designations generally apply to the original colour of the coin when struck while the numerical system's designations generally apply to how toned the coin relative to the original golden color of the bronze alloy. Coins struck on toned planchets can still be designated Red under the adjectival system, but will be designated BN or RB under the numerical system.


Problem Coins

In any standard there are coins that cannot be accurately represented by any grade. This is more likely to occur under the numerical system because of the prioritisation on surfaces which is generally what is affected by problems. A coin's grade rates a number of factors, if one of these factors is unnaturally inferior to the other factors, then the coin cannot be given a grading. Usually such coins are given a comment describing the fault, then the grading it would have otherwise achieved. PCGS slab most of these coins in Genuine holders with no grading and NGC slab most of these coins in detail holders assigning a grading it would have otherwise achieved.

Doctoring

By far the most common reason that a coin cannot be given a grading. Doctored coins have far worse surfaces than their details would indicate. Grading an otherwise uncirculated coin as good VF because it has harshly cleaned surfaces is unrealistic as the coin would still generally realise more. On the other hand, calling in uncirculated would be unrealistic as it would sell for much less. The theory of market grading implies that it should receive a moderated grading in between the two grades but this is rarely the case in practice with some dealers arguing that the cleaning enhances the market grading.

Cleaning comes in a number of forms:

Dipping: can be detected by a dulled white appearance for lower grade silver, or a flattened reflectivity for higher grade silver. One must be careful not to confuse a harshly cleaned coin with a matte finish coin though this is rarely an issue with Australian coins.

Brushing: can be detected with a strong indirect light exposing parallel surface hairlines. Be careful not to confuse these for raised die polishing striations. They can be differentiated by the former scratching into the coin while the latter is raised. This can be difficult to detect when especially fine but another good indicator is that cleaning lines usually break in hard to reach places such as the legends while die polishing striations go underneath them.

Filling: Filling bagmarks can be detected by a small region in the exposed fields without any lustre. This effect is usually quite obvious though once a coin has been brushed, this can be quite hard to pick out. In any case a brushed coin would already be rejected for cleaning.

Buffing: Buffing involves rubbing around a surface mark to make it appear less significant. The end appearance is similar to filling except the region without lustre will be slightly larger.

Filing: Filing involves removing an edge nick by filing off the surface around it. This is quite easy to detect as a flattened diagonal region on the edge.

Whizzing: Whizzing involves harshly brushing an area on a coin in order to create a reflective effect similar to natural mint lustre. It is generally very crude and easily picked out by the hairlines.

Tooling: Tooling involves re-engraving worn regions of a coin's design in order to give the coin the appearance of a higher grade coin. This is usually a manual procedure so imperfections will be easy to detect.

Environmental Damage

Corrosion can cause severe damage to the surface of a coin without significantly affecting detail again having the problem of a coin with a much higher detail grading than surface grading. This can especially be a problem if the coin has been cleaned of the corrosive element. Using a strong light which reflects into a glass should show minor pits on the surface of a corroded and cleaned coin.

Damage

If damage is severe enough, it is general practice that the defect be mentioned along with a details grading rather than factored into the grading. The general rule is if the damage is more severe than the coin could have received through normal circulation for its grade, then it's too severe.


Grading Proof or Specimen Coins

Proof or specimen coins are essentially graded on the same scale under the numerical system except they are always given the PR/PF or SP prefix rather than a specific grade prefix.

Proof coins are graded under similar standards on the adjectival system except that the Uncirculated terms are not used. Instead the FDC (Fleur de Coin) term is used (which too can be used on business strikes though rarely are they worthy). The FDC grading is given to a proof coin that is visually perfect, free of significant tone spots and has the appearance of being as struck, generally this translates from PR64-66, a vast contrast of the accepted definition of a perfect coin.

The term about FDC is also applied for coins with any number of insignificant faults such as marks or tone spots. Once a coin has significant faults or wear, it is graded using circulation grades from good EF and lower.


Third Party Grading

Third party grading involves sending coins to a respected grading service to be authenticated, graded and sealed in a holder, usually called a slab. A number of respected services are involved in this process such as PCGS, NGC or ANACS though one must be careful as numerous smaller services operate which certify sub-standard coins under the assurance of a third-party grading.

Third party services almost always use the Sheldon numerical system with a grading standard that is heavily bias towards technical grading. This is needed to ensure consistency as market gradings change over time. In general they are far stricter at keeping to their standards and filtering problem coins than any dealer but one should note that their application of the Sheldon system does not always equate to Australian adjectival gradings. Due to the inconsistent nature of Australian grading standards, it would be impossible to create a chart for equating third party gradings with Australian adjectival standards and instead we have developed the Blue Sheet for valuing Australian coins straight from their numerical gradings.

Third party grading offers extra assurances such as PCGS' guarantee of grade and authenticity but it still doesn't protect you from overpaying. A common scam performed on eBay is to list a PCGS or NGC graded coin, then list the valuation from an Australian catalogue as though it were graded to Australian standards. This is almost always done with a coin that would grade much lower under Australian standards with the seller pocketing the difference under the assurance of third-party grading. It is important to verify the true value through the Blue Sheet before bidding.


Conclusion


While this article should give you a basic understanding of the general concepts of grading, the techniques and various clues involved in grading accurately are something that can only be picked up with experience. The good news is that if you understood this article, you should be able to grade about 95% of coins with reasonable accuracy.


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