Intro to Coin Grading

As professional numismatists, we are often asked just what makes a coin valuable; or what determines its value?  To begin with, surprisingly, age in and of itself has nothing to do with the value of a coin.  Since antiquity, coins have been made by nearly every nation or culture, and most of such has survived throughout the years.  In fact, many coins from the ancient Roman and Greek civilizations can easily be purchased for a very modest amount today, simply because of their availability.  Many people unfamiliar with coin collecting will wrongly assume the older coins will have the most interest or value.  Unfortunately this is just not so.  So if age has nothing to do with value, then what does?

The criteria for determining value of a coin will be based on two important issues; the condition of the coin, and the number of pieces that have been made or that have survived.  Along with these determinants, occasionally the intrinsic value or popularity of the coin can also play a role in determining value as well. With contemporary coinage, the total number of coins made for a specific year or mint has been recorded, and is easy to find.  However, with coinage prior to the 18^th century, records were rarely kept or did not survive, or were never made in the first place.  Today one can easily determine the total mintage of a contemporary coin from a number of reliable sources, such as the “Red Book”, also known as A Guide Book of United States Coins, issued through Whitman Publishing, or the World Coin Catalog, by Krause Publications.  Both of these resources provide accurate data as to how many coins were made for any specific year for most any country.  As a general rule, however, minor coinage (pennies, nickels, dimes, etc.) are made in much greater quantity that higher denomination coins.  In fact, coins such as United States silver dollars were produced in much smaller amounts than say Indian cents.  The reasons are obvious.  The government needed many more pennies then they did silver dollars; that was true 100 years ago, and it is true today!

Now obviously it would make sense that the fewer of something made, the more desirable it will be to those who save or collect it.  This is no different with coins.  (In fact, we have a section here on our web site that shows many different examples of coins in which few were struck).  These “mintage figures” we speak of will be determined by exactly where the coin was made, and indicated by the coins’ mint mark. (Note: Philadelphia never issued coins with mint marks (P) until the 1980’s).  Coins are made at a few different mints (or branch mints) across the country, so specific location will determine exact mintage of the coin(s) in question.  A perfect illustration of this is found with U.S. silver dollars. In 1895, the Mint struck silver dollars that year in three different places, Philadelphia, New Orleans, and San Francisco.  Although all three examples are difficult to find, it is the Philadelphia mint coin that is exceedingly rare, with estimates of only 880 pieces made.  The difference in value between this coin from Philadelphia and the other two is extremely significant.

Coin grading has often been suggested as an art, but all agree that some technical and scientific principles are applied to the process.  Condition consists of things such as the “grade” of the coin, and other contributing factors, such as strike, bag marks, nicks and scratches, planchet flaws, adjustment marks, or other minting issues or problems.  “Grade” is the term used to express or identify the level of circulation (or not) that a coin exhibits. Often we see the novice assume that the grade (or ranking) of a coin is the sole determining factor in price.  Unfortunately this is not the case.  All of these issues contribute to the value assigned to each coin. As an example, we often illustrate this point with the following: If comparing two identical coins by “grade”, both having the same date and mint mark, and identical wear, yet one of the coins has a scratch on it, are they both worth the same value?  In the market’s opinion, the coin with the scratch is worth less than the coin without the scratch. This is part of the “art” behind coin grading, that is, in identifying those other contributing factors other than grade that will influence the price.  Because of the many nuances of how coins are made (the minting process), this can be a rather tricky process, and often subjective.  One of the ways the market has strived to make this easier for everyone to understand, and eliminate some of the “subjectiveness” to coin grading, was to develop a quantifiable standard.  Today coins are graded using both adjectives to describe a “grade”, such as “Very Fine”, along with numerical numbers assigned to them.  Most often these numerical grades will apply to coins that have never been in circulation, or “uncirculated” as the term is known.  This grading scale, which goes from 1 to 70, was taken from the Sheldon system used for early cents, and originally developed in the 1950’s.  Today this ranking or grading system is the quantifiable part to the process of determining grade, condition, and ultimately value.