Why You Should Learn to Grade for Yourself

In the history of the numismatic market, one of the main topics has always been coin grading. Defined as a label to describe the condition of the coin, a coin’s grade is inseparably intertwined with its value. Coins of the same rarity with lower grades are worth less than coins that qualify for higher grades.

Many years ago, controversial psychologist William Sheldon introduced a numbering system for different coin grades. With a scale from 1 (basal state) to 70 (top-of-the-line Mint State), the numbers were based on U.S. large cents and were supposed to be directly related to the value of a particular coin. That is, a coin worth $1 in its basal state would be worth $8 in Very Good condition or $60 in the lowest Mint-State grade.

Although the scale as such probably wasn’t even applicable to large cents when Sheldon proposed it, the scale numbers have been applied to coin grades since the American Numismatic Association adopted Sheldon’s scale in the 1970s. The ANA also increased the Sheldon numbers well beyond those proposed in 1958’s Penny Whimsy, which was a revision of 1949’s Early American Cents.

As an illustration of this expansion of the numbers, Sheldon used two numbers for the grade of Very Fine, 20 and 30. Today’s version has four numbers: 20, 25, 30 and 35. Whereas Sheldon had only one number for a coin deemed to be About Uncirculated (50), grading services today recognize four numbers (50, 53, 55, 58).

An even more extreme illustration lies in the designation of Mint State. For Sheldon, there were only three numbers: 60, 65, and 70. Graders today apply all whole numbers between 60 and 70.

At this point, you might ask, “Why are the additional numbers needed?” The answer has to do with coin values. For example, consider a specific rare coin that’s valued at $1,000 in just-made-the-grade MS-60 and $5,000 in MS-65. What about a piece that’s obviously better than MS-60 but doesn’t quite reach the MS-65 grade. What’s it going to be worth?

It’s obviously going to be worth more than $1,000 and less than $5,000. But how much more or less? With the different in-between grades, you can cover the spread in values, and a coin in MS-64 can have a value of $4,000, an MS-63 a value of $3,000, and so on.

With this brief introduction to numerical grading, it’s now time to consider the title question: Why should you learn to grade for yourself?

Although it’s hard to believe, back before the beginning of the major grading services (ANACS, NGC, PCGS), coins at a coin show were typically found in 2x2 holders or 2x2 brown paper envelopes with the dealer’s grade plainly marked on the holder. This was a grade that used adjectives to describe it such as Very Good or Very Fine or Gem Uncirculated. Sometimes pluses were added if the dealer thought the coin was particularly nice for the grade.

Some dealers applied grades that could best be described as optimistic. That is, the coin in reality might be a grade or two (or more) below the grade indicated on the holder. In addition, many coins had serious problems (cleaning, damage, whizzing) not described on the holder.

As a footnote to this, I encountered one dealer at a show who had all of his coins priced but ungraded. His response when I questioned this? “I grade it $25 or $50 or whatever the price is. You can supply your own grade.” For this dealer, you would obviously need to know how to grade for yourself so that you could see if his price corresponded to the grade you had in mind.

Nowadays, many of the coins you’ll see at a show are certified for grade. Some PCGS and NGC coins may even have CAC (green bean) stickers. CAC stands for Certified Acceptance Corporation, a company that for a fee evaluates NGC- or PCGS-graded coins to determine if they are solid or high-end for their grades. If so, they have a green, tamper-evident holographic sticker attached to their holders.

If you submit a coin and it does not earn a green bean, it doesn’t mean that the coin is incorrectly graded. It just means that it didn’t have enough quality in CAC’s opinion to merit receiving a green bean.

Of course, coins in ANACS, NGC, or PCGS slabs aren’t the only certified coins you’ll see at a coin show. Other certification services, such as ICG (Independent Coin Graders) have their adherents.

At this point, you are probably thinking that if all the coins you’re interested in are certified by a major service, you can be sure they’re correctly graded. Unfortunately, this is not always true. Although the major services provide a great service and assign accurate grades most of the time, sometimes the grades are not what they should be.

Although it’s not common, I’ve found there are certified coins that are under-graded, just as there are over-graded coins. As I’m writing this, on eBay there is an AG-3 NGC-graded 1916-D Mercury dime. In my opinion, the coin might qualify for a G-4 grade if removed from its holder and submitted again to NGC or to another service. In fact, it’s got more detail on the reverse than a 1916-D NGC G-4 that Heritage sold at auction recently for $960, which is the wholesale value for the date in G-4. If I hadn’t just bought a new car, I might buy the coin on eBay.

My point here is that if you know how to grade for yourself, you can spot certified coins that are either over-graded or under-graded. In fact, I’ve read there are some coin dealers who make a good living playing what they call the “crackout game.” That is, they look for coins that are clearly under-graded, buy them, crack them out of their slabs, and resubmit them to either the same or a different service.

Even if the eBay coin didn’t receive a higher grade, I’m almost certain that it would qualify for a green bean, which would increase its value, according to what I’ve read. The current wholesale value for the 1916-D in AG-3 is $660, whereas it’s worth $792 with a CAC sticker.

In my opinion, you can’t entirely trust third-party grading, even by the big three services. In addition to certified coins that might be somewhat over-graded, there are some accurately graded certified coins that are just plain ugly. Perhaps they have mottled toning that no one likes. I once made the mistake of bidding on a coin in an auction whose pictures I hadn’t seen. I don’t know how that happened, but when I did look at the pictures I saw that the coin had overall toning that was virtually black!

Needless to say, no one else wanted that dog of a coin, and my bid was the winner. I don’t know why I didn’t return the coin. Perhaps I felt that my oversight needed to be punished. I’ve repressed how much I lost on the coin when I sold it to a dealer, but I’m sure it was a substantial amount.

Although there are some dealers who only sell certified coins, you’ll find that many dealers still buy and sell uncertified (raw) coins. Many coins’ values are not high enough to justify the effort and cost of their certification. Into this category, you can put most all circulated U.S. coins minted after about 1940. Most base metal foreign coins fall into this group as well.

Some collectors even pride themselves on not owning any certified coins. If you’re one of these collectors or just a collector of inexpensive material with a smattering of slabs you’ve picked up here and there, then you definitely should learn to grade for yourself.

But how do you go about learning to grade? Cited in the ANA’s Grading Standards for United States Coins, Ken Bressett of Red Book (Guide Book of United States Coins) fame listed four things needed to learn how to grade coins: (1) a good magnifying glass, (2) a good light, (3) a good memory, and (4) 20 years of experience. In other words, you’re not going to teach yourself how to be an accurate grader overnight. You’re going to have to look at coins in different grades, study and remember their characteristics, and read all you can about the grading process.

The reading part obviously involves the purchase of some grading guides. In addition to the ANA guide I cited earlier, I have in my numismatic library Q. David Bowers’ Grading Coins by Photographs (2nd edition), the PCGS’ Official Guide to Coin Grading and Counterfeit Detection, and the third edition of Coin World’s Making the Grade. Of historical interest are my copies of Brown and Dunn’s A Guide to the Grading of United States Coins (5th edition), James L. Halperin’s How to Grade U.S. Coins and James F. Ruddy’s New Photograde (17th edition). New Photograde wasn’t actually in its 17th edition. It was really just the 17th printing. Halperin’s book focused on grading uncirculated and proof coins, so it wasn’t nearly as comprehensive as the others I listed.

Looking up these books online, I learned there are new editions available of some of them. Obviously, you don’t need all of the guides that I listed in order to learn how to grade U.S. coins. Three that I would recommend are the ANA guide (7th edition), Bowers’ Grading Coins by Photographs (2nd edition), and Making the Grade.

Both the ANA guide and Grading Coins by Photographs are available on either Amazon or eBay for reasonable prices, but I was aghast at the price for Making the Grade. On eBay, a new copy is listed at $49.97 plus $7.50 shipping, whereas on Amazon a new copy will set you back at least $99.95. There are also seven used copies for $99.95 and up.

At this point, let’s assume that you’ve purchased one or more grading guides and committed them to memory. Just joking, of course. I suspect that none or few of my readers have photographic memories.

After you’ve obtained a book on grading U.S. coins such as the ANA guide, it’s a good idea to read through the introductory material. Here you will find a lot of useful information.

One piece of advice is to “Pick a series that is popular and for which many ‘slabbed’ examples can be found in dealers’ shops and at coin shows.” Of course, if you live in a relatively rural area like I do, there are probably no shops or shows coming to your area.

I agree that you should concentrate on a single series at first, learning to grade it the old-fashioned way, by comparing coins that are available with the pictures and descriptions in the guide. If you start like I did, it’ll be the Lincoln cent series that you choose.

Concentrating on the Lincoln cents before 1959, the Wheaties (those with wheat stalks on the reverse), buy a few rolls of mixed dates on eBay. You’ll want rolls of early dates (pre-1940) and a few rolls of Lincolns in the 1940s and 1950s. Assume that these are “educational” rolls, and don’t expect to find anything valuable. These will be part of your learning experience.

First, sort through the coins and take out any that are damaged, cleaned or otherwise unsightly. These are what I call “spenders” unless they happen to be scarce dates, which is exceedingly unlikely.

Next, sort the remaining coins into three piles: ones that are well worn, ones that are obviously worn but still retain major design characteristics and cents that have received little wear. You can refine the piles further using the pictured grades in the guide along with their verbal descriptions.

In grading these circulated Lincolns back in the ’50s, the focus was on the wheat stalks. If a coin had no or almost no detail in the ends of the stalks, then it would be graded Good (G-4 or G-6). About half of the lines at the top of the stalks warranted a grade of Very Good (VG-8 or VG-10). A coin with virtually complete wheat lines merited a grade of Fine (F-12 or F-15). And on it went, with the coins showing progressively less wear and more detail for grades of VF and XF. An About Uncirculated (AU-50, -55, -58) coin might have a good bit of mint luster and wear only on the highest points of the coin (cheeks and jaw on the obverse, tops of the stalks on the reverse).

A penny with no wear on the high points and possibly full mint luster will merit an Uncirculated grade (Mint State 60-70). Chances are good that you won’t find many of these in your eBay purchases. Marks or blemishes on the coin will determine which Mint State grade it receives. As you would expect, the greater the number of defects, the lower the MS grade.

To check your grading results, look on eBay at certified examples of the same date and mintmark. If your coin matches a certified example of the same grade, you’re learning how to grade Lincoln cents.

When you feel comfortable grading Lincolns, you can move on to another denomination with easily obtainable circulated and uncirculated examples. Jefferson nickels were hot when I was doing a lot of my roll searching. Without going into further detail about them, it should be fairly easy and inexpensive to secure coins that you can use to develop your grading skills. Once again, you can compare your decisions with those of professional graders by looking at certified coins on eBay.

Alternatively, you can find examples of virtually every date and grade in the Heritage Auctions archives (HA.com). At the time I’m writing this, nearly 3 million coins exist in the archives.

Another worthwhile source of auction results can be found at www.pcgs.com/auctionprices. This site appears to be an excellent place to look at dramatic enlargements of coins in Mint State grades. Similarly, you can find more of the same types of photographic enlargements of certified coins on the NGC website (www.ngccoin.com/auction-central/us).

Of course, if you live in a city with coin shops and the occasional coin show, then you should be able to study both certified and raw coins to your heart’s content.

In this short piece on the need to learn to grade for yourself, I haven’t touched on any of the nuances of grading. One of these has to do with the quality of the strike on some coins in many series. For example, on page 118 of the 6th edition of the ANA grading guide you’ll find notes about Buffalo nickels that begin, “Often Buffalo nickels were weakly struck, and lack details even on Uncirculated examples.” A lengthy list of such nickels follows, and there’s a sentence that reads, “Nickels dated 1919-S, 1920-S, 1923-S, 1925-S, and especially 1926-D are seldom found with full details.”

I note this because a dealer once showed me an original roll of 1926-D nickels, each coin with blazing mint luster. The coins were beautiful but were so weakly struck that the extent of the horn on the buffalo would have placed them in the VG category!

If you stick with inexpensive raw coins, then grading skills won’t be terribly important for preventing you from making a costly mistake. However, if you plan to pursue scarce and expensive coins, particularly coins in high grades, then having some grading skills will be well worth your time and effort.

I believe that most collectors can learn to grade coins on their own, and with diligent and dedicated study, it may not take 20 years to become proficient. And there’s always more to learn. After more than 65 years of exposure to both common and rare coins, I don’t pretend to know it all.

But I’m still studying!