The Importance of Rare Coin Grading

PCGS - The Importance of Coin Grading PCGS coins

This report will give you all the facts on how PCGS grades coins, details on grading guarantees and why certifying your coins adds value and liquidity to your investor grade, rare coin collection.

If rare coin dealers only dealt with other rare coin dealers, there would be no need for coin grading. The two would simply decide on the value of the coin and conduct business accordingly. However, the coin market has expanded far beyond dealer to dealer transactions.

When the rare coin market was limited to a small number of numismatists trading with each other, three broad definitions were enough to determine grade: "Good" -- a coin with most of the detail intact; "Fine" -- a coin with clear detail and some luster on its surfaces; and "Uncirculated" -- a coin which had never been in general circulation and therefore retained its Mint State condition.

As the market grew, collectors realized that some "fine" coins were finer than others. Even some uncirculated coins rose above the rest in detail, luster, and general appearance.

Soon terms such as "very fine" and "extra fine" began to emerge, as collectors sought to further define the condition of their coins -- and increase their value. In 1948, Dr. William Sheldon, a renowned numismatist, developed the Sheldon Scale, assigning grades from "one" through "70" to coins on the theory that a "70" would be worth seventy times as much as a "one".

Although coin collectors agreed on the scale, they could not agree on the standard -- and assigning a Sheldon Scale grade to any given coin was still a matter of subjective opinion.

The Beginning of the Rare Coin Revolution
In 1985, a small group of the nation's leading rare coin experts recognized that in order for the rare coin industry to realize its potential, several serious problems needed to be addressed.

Market participants soon became aware that one of the fundamental factors in determining rare coin values is the physical condition, or grade, of the coin. They learned that a coin graded Mint State 65, for example, may have market value many times greater than the same coin graded Mint State 64 -- although the difference in an MS65 coin and an MS64 coin may be virtually undetectable to the untrained eye. A coin sold by one dealer as an MS65 may be sold by another dealer as an MS64 (or less). In some cases a coin buyer could be victimized by product misrepresentation. In other cases, he was caught in the middle of a dilemma of wide ranging definitions due to the absence of a true standard. In other situations, they were simply caught in the middle of divergent definitions, due to the absence of a universal standard.

The PCGS Solution To Grading
Industry leaders were deeply concerned that without standardized grading the rare coin industry could face major problems. Over the course of many months of meetings, the blueprint for the Professional Coin Grading Service evolved.

The advent of the third-party appraisal of a coin's physical condition, backed by a guarantee, and a national network of reputable coin dealers could provide an extremely reliable form of protection for rare coin consumers. PCGS would create a climate in which consumers could participate in the coin market with greater confidence. The concept would revolutionize the rare coin industry. The Professional Coin Grading Service began serving the coin-buying public on February 3, 1986.

The firm is responsible for dramatic improvements throughout the rare coin industry which have forever changed the way rare coins are bought and sold. In addition to standardized grading, PCGS offers a cash-backed grading guarantee, problem-free coins, safe long-term storage, and sight-unseen trading. Together, these elements have created unprecedented public support for the rare coin industry.

Encapsulation & Long-Term Storage
PCGS pioneered the tamper-evident, sonically-sealed, high security capsule as a method of reinforcing its Guarantee of Grade & Authenticity of each PCGS coin.

In addition, the unique certification number permanently sealed inside each coin capsule may be utilized by the coin's owner as a reliable means of identification after the PCGS coin re-enters the marketplace.

Equally important, PCGS's hard plastic holder provides optimum protection for safe, long-term storage of rare coins. The Series Number and Coin Number used on the PCGS certification insert correspond to the numbers listed in the PCGS Guide to collecting coins.

PCGS Guarantee of Grade & Authenticity
The Guarantee of Grade & Authenticity is fundamental to PCGS's concept of third-party grading. The cash-back policy ensures the accuracy of the grade assigned to any PCGS coin as long as it remains in its tamper-evident holder. If a coin is believed to be improperly graded, and a discrepancy is found when resubmitted through PCGS's Guarantee Resubmission service, the guarantee entitles the coin's owner to options designed for his protection.

PROBLEM-FREE COINS - PCGS has a policy prohibiting the encapsulation of coins with problems such as: artificial toning, excessive cleaning, environmental damage, PVC damage, major scratches, or planchet flaws. (Note: PCGS does not refund grading fees on coins which must be rejected, since the coin must be examined to determine its status.)

Behind the Scenes at PCGS
PCGS's staff of graders is selected from an elite group of world-class numismatic experts. Each grader is experienced not only in the PCGS standards, but also in the proper handling of all numismatic items.

During grading, each coin is carefully and independently examined. PCGS utilizes a grading scale based on published standards and an extensive grading set of coins. Once the grading process is complete, the coin (with a certification tag indicating its individual identification number, denomination and grade), is sonically sealed inside a tamper-evident coin capsule.

Coin Encapsulation ANA

Once graded, each coin is sonically sealed inside its protective, tamper- evident PCGS NumisCap holder. A special tag within indicates the coin's certification number, grade, date, denomination, unique bar code and pedigree if applicable.

Final Verification
As a final quality control check, all PCGS graded coins go back to the grading room for review by a "verifying" grader. The verifier carefully examines each coin through its Tamper-evident holder to ensure the integrity of the sealed capsule, and to check the accuracy of all certification information.

Trading Networks
Working in tandem with the PCGS Guarantee is the important link provided by computerized numismatic exchanges and their member firms. Such computerized trading networks have made it possible for many PCGS certified coins to be bought and sold sight-unseen -- and coast-to-coast through electronic trading networks, via telephone and internet auctions.

RareCoins.com is a division of Austin Rare Coins, Inc. and we are a member dealer of the Professional Coin Grading Service, PCGS.