Coin Grading System

History and Basics of the Coin Grading System

Coin collecting is a form of enjoyment dating back to ancient times. Kings and Emperors minted and collected coins as gifts for visiting dignitaries. While saving and collecting coins due to their value goes back to the beginning of coinage, collecting coins as art was a later development. Known as the “Hobby of Kings” and the “King of Hobbies”, modern coin collecting is generally believed to have begun in the fourteenth century.

Numismatics reached its peak during the Middle Ages and the early Renaissance due to great demand. In this period, ancient coins were collected by many European Kings, Princes, and nobility.

Coin grading has evolved over the years to a system of finer and finer grade distinctions, particularly when talking about United States minted coins.   In the beginning, people collected the rare ancient coins of which there were two grades, new and used.

This evolved for a time to the letter grading system beginning with the lowest grade – Basal State (also Poor (PO)), then continuing Fair (Fr), About or Almost Good (AG), Good (G), Very Good (VG), Fine (F), Very Fine (VF), Extra Fine (EF or XF), Almost or About Uncirculated (AU), Uncirculated (Unc) and up to Brilliant or Beautiful Uncirculated (BU). Gem Uncirculated was roughly equivalent in usage to BU at that time.

William H. Sheldon in his book Penny Whimsy is credited with coming up with the Sheldon Scale in the 1950s, a numeric system going from 1-70. It was intended to be a reflection of the value of a 1794 Large Cent, which was then worth $1 in Basal State and $70 in Uncirculated MS-70.

This numerical system was used primarily within the community of large copper coin collectors (a very specialized part of numismatics that often has its own ideas about quality and grading compared to the rest of the coin collecting community) until the mid 1980s.

Grading systems improved such in the 1980’s to become a true science.  But still only the collector knows for sure what the coin is worth when and if he accepts the strike price.

The advantage of doing business in an auction is another approach to getting a better sales price for higher grades.  It gives you the opportunity to strike the price and see if the seller will reach your level of expectation.  As a seller, you can have price protection by enabling a Reserve Price.  In times of uncertainty, cash is king and this is the collector’s opportunity – thus willing sellers want your trade.

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