| February 2008
A History of U.S. Coin Grading
George J. Cash
What is coin grading?
Coin grading is the process of determining the condition of a coin relative to a set of standards that consider wear, luster, and strike.
The evolution of coin grading
In 1892, Joseph Hooper compiled a list of grading standards that was published in the February issue of The Numismatist magazine. Unfortunately this standard did not take hold, and the problem of a uniform grading system persisted.
In 1949, Dr. William Sheldon published his book, Early American Cents. In this work he devised a 70-point grading system to determine the relative condition of cents. Although he had not intended his system to be used on other coins, his numbering system was adapted for use in grading other coins and is the basis for the grading system now in use.
The next big step came in 1958 with the publication of A Guide to the Grading of United States Coins by Brown and Dunn. This book was widely circulated and used by many in the hobby.
In 1970, James F. Ruddy published his book, Photograde, a collection of over 1,000 pictures of both the obverse and reverse of every circulated grade for every coin listed.
Enter the American Numismatic Association
During the 1960’s and 1970’s, counterfeiting and misrepresentation of coins was widespread. In 1972 the American Numismatic Association (ANA) opened an office in Washington, D.C., to certify coins as authentic. They called this service the American Numismatic Association Certification Service, ANACS for short. The service gave a certificate of authenticity stating that a coin was genuine.
In 1978 the ANA published its first Official ANA Grading Standards for United States Coins. In 1979, ANACS started the commercial grading of coins. While there were limitations to this service, such as not grading commemoratives or split bands, the service grew by leaps and bounds. A certificate was issued showing the grade along with a picture of the coin.
Changing terminology
As grading became more refined, changes were made in describing coins to allow for better distinction among grades. There were originally three classifications for uncirculated coins: (1) Uncirculated – MS60, (2) Choice Uncirculated – MS65, and
(3) Perfect Uncirculated – MS70. These designations were changed and became Choice Uncirculated for MS63, while the former Choice Uncirculated – MS65 became Gem Uncirculated. As the need for further refinement became necessary, one-point increments were used: MS61, MS62, through MS70.
The above-mentioned changes did necessitate the regrading of coins graded under the old system so that a lowering of grades took place.
To slab or not to slab
In 1985 a group of coin dealers established the Professional Coin Graders Service, PCGS. This new company offered several advantages over the ANACS program. First, it did away with the certificate that accompanied the coin; secondly the coin was encapsulated in a sealed hard plastic case that safeguarded against tampering with the information; thirdly, the grading would be done by consensus with three graders reviewing the coin. The coin would then be given to another grader where the final grade would be reached by consensus.
PCGS was quickly followed by other grading services offering to grade coins and place them in slabs: Numismatic Guaranty Corporation (NGC), Independent Coin Graders (IGC), PCI, SEGS, and others. The world of the slabbed coin had arrived.
What determines the grade of a coin?
First things first!
To properly grade coins you must have a good light source and a magnifying glass, usually 5X to 7X magnification.
Well-known and respected Ken Bressett adds two more helpful items: a good memory and 20 years of experience.
There are three factors to consider when grading coins: contact marks, luster, and strike.
(1) Contact marks
Examples of contact marks include marks received from other coins (bag marks), scratches, hairlines (usually caused by abrasive cleaning), marks caused by friction from coin albums or holders, and roll marks caused from coins rubbing together while in rolls. Contact marks are usually associated with mint state coins since in circulated coins they are often worn off. More serious contact marks, such as nicks, gouges, and holes, are very undesirable as are any contact marks in proof coins.
(2) Luster
Luster is the result of light bouncing off the surface of the coin. Luster is not associated with coins below very fine grade. In grades MS64 and above, luster is the factor that most determines the grade of a coin. In proof coins the surfaces of the planchets are highly polished and struck multiple times causing the proof to have strong reflective attributes. In proof coins luster is referred to as reflection.
(3) Strike
Strike determines how sharp the details of a coin will appear. There are several reasons why coins are weakly struck: the striking pressure may be inadequate; the dies may be worn; or if the dies are not level the strike will not be even, with the details being weaker in part of the coin.
Other considerations are coin specific such as full head on the Standing Liberty quarter, full bands on the Mercury dime, or full bell lines on the Franklin half dollar.
Eye appeal
The professional grading services also consider eye appeal as a grading factor. This is a combination of the other three factors—contact marks, luster, and strike—and is difficult to quantify.
In grading your coins you need to remember that all coins are not created the same nor are the elements used in grading coins applied the same. Luster is more important in grading uncirculated coins than circulated coins; marks, or the lack of marks, are more important in grading proof coins than circulated coins; non-proof large size coins tend to have more contact marks than smaller coins.
Technical vs. market grading
Technical grading is the academic approach to coin grading that adheres to the hard and fast guidelines for a particular coin. Market grading, as the name implies, is the grade the buying market places on a coin. A coin may be weakly struck and technically be graded an MS64, but the market may only grade it as a MS60.
The future of the grading services
As the number of grading services narrows, the strength of the two major services, PCGS and NGC, grows. The recent purchase of ANACS is under question. SEGS and other "second tier" services have not been able to break the lock the big two have on the acceptance by the trade.
At the F.U.N. show on January 10th of this year, the ANA and PNG (Professional Numismatic Guild) were served with a law suit, which also names eBay, that claims defamation and interfering with business. (eBay adopted a policy that coins graded by services other than PCGS, NGC, ANACS, or ICG cannot be listed as certified.)
The services that are still active will need to create new ways to keep customers. There are two areas that have appeared and are slowly growing. The first is the practice of grading "slightly dipped" coins. ANACS has been doing this for the last two years as have some of the lesser used services.
The second "windfall" for the grading services will be the adaptation of a 100- point grading system which will cause all of the coins now slabbed under the old 70-point system to have to be resubmitted for grading under the new system. Think in terms of millions of dollars of profit for the grading companies.
While all of this is underway, a new company, Collectors Acceptance Corporation, (CAC) offers to grade the graders by issuing a tamper proof "seal of approval" across the other grading companies’ slab.
In addition to these developments, there is movement underway for the ANA to establish a coin grading institute. Stay tuned--it can only get more interesting!
Glossary
Cameo
A coin that has a strong contrast between the fields and the lettering.
Circulation Strike
Also known as a business strike. Coins made for general circulation.
Deep Cameo
A coin with especially strong contrast between the portrait and the mirror-like field. ANA refers to this as semantics.
Full Band
The separation between the horizontal bands on the fasces on the Mercury dime reverse.
Full Bell Lines
Describes the line that extends from the lettering on the bell up to the and including the lines that extend to the clapper. To be a full bell line, these lines must be sharp and unbroken.
Full Head
Used to describe the Standing Liberty quarter which has a fully detailed head.
Full Steps
Describes the steps on the reverse of the Jefferson five-cent coin. To qualify as a full step, the steps must be unbroken completely across all the steps.
Luster
The amount of light reflecting from the surface of a coin.
Marks
Indentations on coins from coming into contact with other objects. Marks include scratches, nicks, cuts, hairlines, etc.
Obverse Side
The front of a coin. The "heads" side.
Proof Strike
Coins made for collectors that have a highly polished finish and sharp details.
Reverse Side
The back of a coin. The "tails" side.
Strike
The sharpness of detail in a coin. Usually applied to higher grade coins.
Grading Books
1. Making the Grade. Amos Press. Easy to use. Great colored pictures. A must have for beginners.
2. The Offical American Numismatic Association Grading Standards
for United States Coins. Whitman Publishing. Excellent book. Should be in every collection.
3. Official Guide to Coin Grading and Counterfeit Detection. Random House. The PCGS Grading book.
4. Grading Guide for Modern U.S. Coins. Whitman Publishing. The NGC grading book. Includes grading tips and census reports.
5. Photograde. Whitman Publishing. James Ruddy’s original. Good introduction & individual descriptions.
6. How to Grade U.S. Coins. James Halperin. Step-by-step guide.
Books on Counterfeiting
1. Numismatic Forgery. Charles M. Larson. Zyruss Press.
Shows how forgeries are manufactured.
2. United States Gold Counterfeit Detection Guide. Bill Faviz. Whitman Press.
A must have--before you purchase any gold coins.
3. Detecting Counterfeit Gold Coins, Book 2. John Devine, printer.
Limited coverage, but well done.
4. Counterfeit Detection, Vol 2. Numismatist Magazine.
Articles from The Numismatist.
5. Counterfeit Detection Guide. Whitman Press.
Bill Fivaz. Convenient pocket guide for key dates.
ANA Correspondence Courses
1. Grading Mint State U.S. Coins
Video and correspondence course.
2. Grading Coins Today: An ANA Correspondence Course
3. Detecting Counterfeit and Altered U.S. Coins
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