When purchasing a coin to add to your collection, you should be primarily concerned about three questions: Is it authentic? Does it have problems (such as scratches, corrosion, or other damage)? And what is the coin’s grade?
Sending the coin to a professional grading service is one way to evaluate these questions. Numismatic experts at the grading service will examine the coin, assign a numerical grade, and seal the coin into a hard plastic “slab.”
The grades assigned to the coins by several major grading companies are generally accepted by coin collectors and dealers to be accurate. Because of this, coins that have been graded and slabbed by a top grading company are frequently traded sight-unseen.
Grading Services
There are several well-respected coin grading services that can be trusted to authenticate, note problems, and grade the coin. These include ANACS, ICG, PCGS, and NGC. ANACS was one of the first grading companies, and has long been a trusted company known for its high standards. ICG, or Independent Coin Grading ,is a newer company that has quickly gained the respect of collectors.
PCGS, or Professional Coin Grading Service, is considered by many collectors to be the best grading service. This respected coin grading service pioneered the use of the 1-70 numerical scale, which has since been adopted by almost all coin grading companies. NGC, the official grading service of the American Numismatic Association and The Professional Numismatists Guild, is one of the most recognized coin grading organizations among coin collectors and dealers, and has built a reputation for consistent grading.
If you are purchasing valuable coins, it is strongly recommended that you purchase only coins that have been certified or grading by one of these top coin grading companies. A graded coin is easier to compare with other coins, and it’s easier to determine the coin’s fair market value based on its physical condition.
Do not pay a premium price for any “certified” or “graded” coin that has not been graded by one of these top four companies. Instead, consider the coin to be ungraded, and judge it based solely on your evaluation of the coin itself, not the grade it has been given.
Not all grading companies are equal; in recent years, dozens of other coin grading services have also joined the industry. Examples include NCS, PCI, TruGrade, NTC/Numistrust, and ASA/Accugrade; there are also dozens of other companies. Many collectors question the grades given by such companies or feel that they consistently over-grade coins.
Third-Party Grading
The most respected services, such as PCGS and NGC, are what’s known as “third-party grading.” They do not buy or sell any of the coins sent to them for grading. In contrast, some grading companies grade and then sell their own coins. This is problematic because there is quite a bit of incentive to give a coin the highest grade possible, even if it doesn’t quality.
For example, SGS or “Star Grading Service” is one such self-slabber. You will see few SGS coins graded below MS70, which is essentially impossible. This is one reason why experienced collectors and dealers tend to stay away from these coin grading services.
Regardless of which grading company you use, it is important to note that coin graders are human and the grading process is subjective. Do not always depend on the grades given by the grading service. Scrutinize the coin yourself to judge its condition, regardless of the grade it’s been given.