Coin Grading Explained

 

Coin grading is the process of determining the state of preservation and wear of a coin. A common misconception is that grading rates only the appearance of a coin when in actuality it focuses on the level of preservation. The grading company sonically seals the coin in an airtight plastic slab that maintains the coins quality. This plastic casing protects it from wear & tear and environmental damage that can devalue a coin.

Coins are rated from Poor (which is the lowest grade) to Perfect Uncirculated (the perfect coin) and most coins fall somewhere in between. The purpose of coin grading is to determine the market value of the coin. The coin in the best state of preservation will almost always have the highest value. A small flaw on a coin can mean a major difference in price and that is why accuracy in grading is vital.

Coin Grading is Important because:

  • It establishes the authenticity of a coin and provides reassurance that the coin has not been altered or changed.
  • It provides protection from contaminants as the slab is tamper proof and sonically sealed.
  • The unique identification number allows for easy identification by the coins owner.
  • The grade helps in gauging the coins market value.
  • It guarantees the quality of a coin.

How to Decode the Grading Capsule:

Coin Grading Explained

THE IMPORTANCE OF
CHOOSING THE CORRECT GRADING COMPANY

The grading company that you choose to grade your coin and the name of the company that appears on your graded coins are as crucial to the market value of your coin as the grade itself. When it comes to coins (and South African coins in particular), the Professional Coin Grading Service (PCGS) and the Numismatic Guaranty Corporation (NGC) are the two most reputable and credible companies in the industry.

Prices of coins in catalogues, on websites and from dealers are all based on the grading standards of these companies who follow strict guidelines set out by the American Numismatic Association (ANA). PCGS and NGC have established reputations, a higher consistency in grading and a better ability in detecting counterfeit coins. If you choose a lesser company to grade your coin or buy a coin graded by a lesser company then you are only guessing at the true value. New grading services emerge all the time. Some of them may be honest attempts to establish legitimate operations. However, the slabs of most of these services provide no more value than a dealer marking a grade in pencil on a 2x2 cardboard coin holder. So, caveat emptor (buyer beware).

Some companies grade coins more leniently than ANA standards which can lead to unsuspecting buyers paying substantially more for a coin than they would otherwise. Utilize reputable companies and you lessen your chances of getting stuck with an overgraded, doctored or counterfeit coin.

Collectors and investors have more faith in PCGS and NGC coins. These coins have a higher demand in the market and command higher premiums. The grading policies of these two companies make it possible to buy coins – sight unseen – and be confident with what you are getting.

WHAT IS A PCGS GENUINE COIN?

Mint Silver Set
Click image to enlarge

A “PCGS Genuine” coin is a coin that failed to grade because of some problem with it. In the past, coins that were genuine but ‘ungradable’ were returned to the owner ungraded and unslabbed. Now, PCGS puts these coins into holders without a grade, just the designation that they are genuine along with a code explaining why the coin failed to grade.

  • “Both NGC and PCGS were rated ‘superior’ in the 2004 and 2006 surveys of PNG (Professional Numismatists Guild)   and ICTA (Industry Council for Tangible Assets) members in terms of grading accuracy and ability to detect altered,     repaired, damaged, cleaned and counterfeit coins.
  • ANACS is regarded as more liberal with grading in general than PCGS or NGC.”
 

Did you know?

Did you know

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Understanding "No Grade"

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A guide to the states of condition that can cause a coin to be rejected for NGC certification.

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