Scarcity of a coin is a key to its value, but condition is equally important. For modern coins, records are kept of the number of minted coins, so rarity is fairly easy to determine. An exception to this is when the mint makes an error; there is no way to check the amount of coins that may have slipped by inspectors, although informed estimates can be made based on when the error is found. While scarcity is generally measurable in quantitative terms, valuing a coin’s condition is much more subjective.
The Internet has helped collectors be able to value their coins, because they can see pictures of similar coins and compare their own. This is much more accurate than looking at pictures in a coin book. Experienced coin collectors can often judge their own collection in this way. But the best way to get a coin graded is to submit it to a professionally registered coin grader. These professional have all the resources and experience required to accurately judge both scarcity and condition. After determining a value, the coin will typically be placed in a slab-a sealed plastic holder that is guaranteed by the grading firm to prevent damage to the coin.
Be aware, though, that there is an inherent problem with using professional grading firms to evaluate your collection. These firms make money by grading coins, and collectors want to have the highest grade possible for their coins. If the firm is less than 100% reputable, it may be a bit more lenient that other appraisers. If one grading firm has a reputation for being a bit more liberal with its grades more collectors will use that firm and it will be more profitable. So there is a financial incentive to these firms to grade “high.” You can avoid this problem by using only reputable firms.
After the coins are graded, the firm will label them. The name of the firm that has graded it can affect the value of a collection; likewise a collection is usually more valuable if only one firm has graded the coins.
Dr. William Shelby developed the coin grading scale used in the United States. It is based on 70 points, with 70 being the perfect coin. In addition to the numeric grade, there is also a letter designation assigned to each coin. For example, the letters MS stand for “mint state”; these are uncirculated coins with no scars, blemishes or other marks. To give you an idea of how rare an MS-70 rating would be, the average new penny from a brand new roll is MS-63. A coin graded MS-68 would be one in 100,000.
A grade of AU means “almost uncirculated” This level includes AU-59 to AU-50. The letters XF or EF stand for extremely fine, and coins with this grading have very little wear. A very fine (VF) coin will show some wear, but most of the detail is visible. Coins in this category will be more affordable, but still quite collectible.
There are a number of resources available if you want to learn more about grading your own coins. Visit your local library to find books on coin collecting and grading; your local coin or hobby shop may also have some good titles to consider. To talk to an expert, plan to visit one of the various coin conventions or money shows; you are sure to find someone there who will give you some inside tips on how to evaluate a coin. And you can find any number of coin appraisers, both locally and nationally, by doing a quick search online. Be sure that the appraiser has the appropriate credentials and experience to give you a fair and valid appraisal.
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David Hall has been collecting coins for many years and his book is a list of the things he has learned.