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Why Graded Coins Trump Ungraded Coins

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If you’ve just started collecting coins you’ll certainly have heard or read about graded and un-graded coins. Both are readily available to buy and sell online, however if you are serious about building up a truly valuable and impressive coin collection, then you’d be wise to invest only in graded coins. These coins will always realise far higher prices on auctions and in private sales than ungraded coins, even if the latter is in exceptional condition. This is because ungraded coins have no guarantee. Their value could be less than what it’s advertised for, the quality could be worse than what is depicted in its online photographs, or worse still it could be a fake.

 

If you own a coin that you genuinely believe is of substantial value, then it is worth taking the time and money to have it certified, especially if you are interested in selling it in the future and want to realise its full potential.

 

In the past, coin grading was a vague process and coins were categorized as either uncirculated (stored since they were minted), good (mostly well preserved) or fine (detail is clear and there is still some lustre). As time went on, it became evident that a clearly defined and internationally accepted grading system needed to be established.

Nowadays, a coin is given a grade (and subsequent market value) based on its appearance and overall condition and there are five critical elements that help determine this.

 

1. The surface condition: the number of marks and scratches on the surface and the severity of these.

2. Strike: This can be either a weak or strong strike and refers to how strongly the design is stamped onto the coin.

3. Colouration: This looks at how much the coin has changed from its original colour and discolouration could be due to age, improper cleaning, storage, or handling of the coin.

4. Lustre: How much of the original shine is still intact.

5. Eye appeal: This incorporates all of the above elements

 

When a coin is graded it is given a numerical value between 1 and 70. A PO-1 represents a barely identifiable coin and a MS/PR-70 represents a perfect coin with a full strike and no markings (these are incredibly rare). PO stands for basal (poor) state and MS stands for mint state. Between these opposite grades, in ascending order you get:

 

• Fair (Fair): This is where you can identify the type of coin, although it might be bent or have holes

• Almost Good (AG): The design is outlined, parts of the legend are worn and smooth and the date is difficult to make out

• Good (G): This is heavily worn, but the date, legend and design are visible

• Very Good (VG): This is well worn with a clear design, legend and date, but it lack details

• Fine (F): Moderate to heavy wear, entire design, legend and date are clear and bold, but it might still lack details

• Very Fine (VF): Light to medium wear, all major details are defined and sharp

• Extremely Fine (XF or EF): Very light wear only on the highest points, clearly defined, still has lustre

• Almost Uncirculated (AU) Very small trace of wear only on the highest points. Very hard to tell the different between an AU and an Unc. Coins.

 

It’s vital that you get a reputable coin grading service to evaluate your coins and presently the NGC (Numismatic Guaranty Corporation) and PCGS (Professional Coin Grading Service) form the top tier of a three tier grading service. They are the two most reliable and consistent services and use a consensus method of grading. Added to this, they guarantee the grades and authenticity of the coins. A NGC or PCGS coin grading and approval have a higher demand in the market. The unique and historic NGC certified 1898 Single 9 Pond, was sold by South Cape Coins for tens of millions of South African rands.

 

Although ungraded coins are undoubtedly cheaper, they are a hugely risky investment and as is pointed out, the true value of a coin lies in having it graded correctly, by an established and knowledgeable coin grading service.

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