Coin Grading

Silver Bullion CoinsCoin grading provides a basis to describe the condition of the coin (worn out or mint condition), this makes them easier to trade in the market. In the past, people trade coin based on TWO condition only: old or new. As time passes, more sophiscated standards has evolved to enable us to illustrate the condition of the coin fairly accurate.

Technically speaking, since bullion coins are traded based on the intrinsic precious metal content, i.e. how much of the gold in your bullion coin’s worth, hence the condition of the bullion coin does not affect the coin value. You can even go as far to say that even the bullion coin is reduced to a lump of shapeless metal, it should sell at the same price as a newly minted version of the same coin. Though this might sound correct, in reality, most bullion coin are easier sold if they are in good condition, as buyers would often refrain from buying coins that are severely tarnished or distorted in shape. Furthermore, there are many series of bullion coin like the Canadian Maple Leaf gold coin and the Chinese Panda gold coin that are traded at a premium price higher than their gold value, as these coins are considered collectible items by their own right, hence it is important to keep coins in good condition to ensure that they are tradable.

Three major standards are in application today by the three prevailing institution offering coin grading services, the Professional Coin Grading Service (PCGS), the Numismatic Guaranty Corporation (NGC) and the ANACS which is formed by the American Numismatic Association (ANA). As their systems might have subtle differences, therefore it is advisable for purchasers to obtain professional consultance prior to acquiring an expensive coin.

Nevertheless, all these standards are relevant or at least based from the Letter Grading System, where a coin is given a letter grade that denotes its quality ranging from:
• Basal State (or Poor (PO): You see a lump of metal that can be roughly recognized as a coin
• Fair (Fr): The coin is worn in all areas that you can barely see the design on the face
• About or Almost Good (AG): Very worn coin where the date and legent might be barely discernible
• Good (G)
• Very Good (VG)
• Fine (F): The coin has most of its edges and higher points extensively worn, but its design is still visible
• Very Fine (VF): The coin has most of its edges and high points that are worn but the design is clearly visible
• Extra Fine (EF or XF): The coin looks as if new or uncirculated, but more closer inspection will reveal that its highest points are slightly worn off
• Almost or About Uncirculated (AU)
• Uncirculated (Unc): A coin that has never been circulated, may have bag marks
• Brilliant or Beautiful Uncirculated (BU) or Gem Uncirculated: Newly Minted coins that have never been in cirulation, may have very slight imperfections

In the 1950s, the system further evolves as William H. Sheldon in his book Penny Whimsy comes out with the Sheldon Scale, where the grading is based on a numerical system of 1 to 70, where one is Basal (PO)and 70 is Brilliant Uncirculated (BU).

Later on in 1986, the Professional Coin Grading Service (PCGS) was incorporated and they combine both the letter and the numbering system into grades that becames the MS scale, ranging from BS-1 (or PO-1), FR-2, AG-3, G-4, G-6, VG-8, VG-10, F-12, F-15, VF-20, VF-25, VF-30, VF-35, XF-40, XF-45, AU-50, AU-53, AU-55, AU-58, MS-60, MS-61, MS-62, MS-63, MS-64, MS-65, MS-66, MS-67, MS-68, MS-69 up to MS-70. There is also another standard developed later for proof coins from PR-01(or PF-01) to PR-70 (or PF-70).