By: Larry Michelson
As a relative newcomer to coin collecting I decided to enroll in one of the ANA’s many courses, Grading 1, at their annual summer seminars held in Colorado Springs. The course is taught over four days with classes lasting six hours each. Our instructors were phenomenal. They were Matt Kleinstuber, Don Bonser and Steve Roach. This article is intended to provide you with a description of the course and of certain things that were taught. One caution, the following material is nothing more than my recollection of the course and the rewriting of my notes. This is intended to expose you to various factors to consider in the continuation of your collecting/investing experience. This article is not intended to be an expert’s opinion as I am at the other end of the spectrum. Also keep in mind, that a number of my comments are purposely general in nature. For specifics and to learn more about any of these topics I would suggest that you purchase books, take courses and/or do additional research.
Importance of Knowing How to Grade
Why should grading be important to you? Well, it’s your money and the more you know about how to assess a coin(1) that you are thinking about buying the more informed decision that you will be able to make. Most people place a strict reliance on a grade assigned to the coin by a third-party grading service instead of learning on their own. There is an old adage which is, “Buy the coin, not the holder”.
Brief Outline of the Course
The first day and a half of the course consisted of lectures, screen projections of coins with commentaries, and questions and answers. We then began grading coins individually. Each of 18 students in the class was handed a coin that was in a holder (aka “slab”) graded by one of the major grading services. We were initially given two minutes to grade a coin (the amount of time per coin was steadily reduced as we became more accustomed on how to grade). You record your grade and pass it to the next person until everyone has had an opportunity to grade each of the 18 coins in that round. Just prior to reviewing each coin with us of the projected image, an instructor (who did not know the grade ahead of time) would give you his opinion and what he thought the grade should be. Another instructor would review the coin and point out various factors on why the coin received the grade. What I found very interesting was that the instructors did not agree with each on every coin. Yes, they came within one or two grades of each other but what this showed me was that grading is very subjective even though it is based on objective written standards. It is an art, based on objective written standards.
We were given the opportunity to grade all kinds of coins, tokens and metals and even some world coins. These included coins made from gold, silver, nickel and copper. The lesson was that once you learn how to grade a coin and similarly become familiar with the unique characteristics that each of these base metals possess (to be discussed in more detail below) you can have a fairly educated guess as to a grade of a coin without being familiar with it. Obviously, each coin series has its nuances, but remember, this is a general observation.
Some of the areas that we touched upon appeared on the surface to be very basic but in hindsight they were extremely important. In grading you want to attempt to mimic the environment and use of the tools and methods that the grading services employ, such as:
1. Lighting– When grading a coin you should only use incandescent light bulbs of 75 or 100 watts. You never want to grade under florescent or LED lighting. Moreover, you want to be in a dark environment with the only source of lighting being the incandescent lighting.
2. Magnification– The ideal magnification to determine a coin’s condition is in the 7x range (this is where the object is magnified seven times). You don’t want a loupe that is too strong that it will point out too many details nor one that is too weak that won’t point out enough details. Grading services typically do not want too strong of magnification because they can see all that they need using the above strength in order to assign a grade. You should observe the coin using their criteria, not yours.
3. Loupe– The type of loupe recommended to use is a Hastings Triplet style loupe (Note: This is a type of loupe and not the name of a manufacturer). This type of loupe bonds three lenses which virtually eliminate distortion at the outer edges of the loupe. The ANA store sells these and they are made by Bausch & Lomb and others.
4. How to hold a coin– You are to hold a coin by the edges only! Never put your fingers on the surface of a coin. The same applies even if you decide to wear gloves(which is not recommended).
5. How to view coins– We were taught that you hold the loupe close to your eye and then bring the coin toward the loupe. You do not want to hold the coin far from you and bring the loupe to it. In addition, you want to be as close to the light source as possible.
6. Importance of rotation– When viewing a coin you first want to get a general impression of it prior to using the loupe. You should never solely observe a coin while looking directly at it. You should rotate the coin in an undulating fashion both clockwise and counterclockwise as there are items that you may not see while looking at the coin directly or in only one direction or rotation because of the way that the light reflects off of the coin’s surface.
7. Three sides to a coin– There are three sides to a coin that must be observed. Obviously the obverse (front) and reverse (back), but you must also pay attention to the rim (edge) of the coin. The rim’s groves are referred to as denticles. These are the small, tooth-like design elements that appear all the way around the perimeter of a coin. You should also be aware that there are certain coin series that do not have denticles such as the $2.5 and $5 gold Indian Head Eagles.
8. Coin Storage– We learned the proper way to store your coins. Coins are best kept in an environment that has low humidity and is cool, if possible. If you choose to keep coins in clear plastic flips they should be placed in Mylar flips. You do not want to keep them in PVC flips because over time the chemicals in PVC can affect the surface of a coin and consequently, reduce its grade. Further, if you store them in older paper books made to hold coins this could prove problematic.
9. Some Important Definitions– The following words are important when describing coins:
“Device”- Any raised or incused design element that results after a coin is struck and includes both the obverse and reverse. Examples are faces, animals (eagles/buffalos), buildings, monuments, mint and date marks and inscriptions.
“Field”- The field is the flat surface area of a coin that does not contain the device.
“Prime Focal Area”- The area(s) of the coin that your eyes are naturally drawn to. It’s condition generally carries the most weight when determining a grade. This can include the device as well as the field depending on the coin series being graded.
“Mint State”- A mint state coin is a coin that is uncirculated and not manufactured like a proof coin. It contains luster and its grades range from MS60-MS70.
“Proof”- A proof coin is a coin that is usually made for collectors. It is struck several times and uses specially polished or otherwise prepared dies and planchets. It does not throw off luster like a non-proof coin but rather has a reflective mirror surface. A proof coin will always maintain its designation as a proof coin even if it enters into circulation.
How Grading Services decide on a Final Grade
Grades are based on the Sheldon scale using numbers from 1-70 and letters/words. Look at virtually any grading standards book and these will be laid out for you. The higher the number, the better the grade and vice-versa. We also learned that there is a distinction between technical grading and market grading standards. Currently, most of the major grading service companies use market grading. These grades are generally higher than the grades that would be assigned under the rules governing technical grading. The book, “ANA Grading Standards” describes the criteria for technical grading.
There are literally millions of coins that have been graded. The grading services usually end up with a final grade by utilizing “consensus grading”. In the normal situation, when there are three graders assigned to look at a coin, then the final grade is based on a consensus of the three graders. If there is a strong disagreement about what grade to assign to a coin or if the coin being graded is very valuable where a one point grade difference can mean the difference between tens or hundreds of thousand of dollars, then the final grade is the grade decided by a finalizer (essentially the person who makes the final decision).
Let me give you an example of consensus grading where under each set of facts the ultimate grade remains the same. Assume that there are 3 graders and 2 of them graded the coin MS63 and one graded it MS64, then the grade assigned would be MS63. Coins like these are referred to as “Premium Quality” for the grade since they are at the upper end of the grade. If instead all three graded the coin, MS63, then the coin would still receive a MS63 grade and be referred to as “Solid for the Grade”. Lastly, if the third grader graded the coin MS62 then the coin would still receive a grade of MS63 and be referred to as either “low”, “weak or “poor” for the grade.
Here’s the lesson we learned: NOT ALL EQUALLY GRADED COINS ARE EQUAL! By learning how to grade you can be more selective in your coin acquisitions. Additionally, it is very common that the seller also doesn’t know how to grade and would sell a Premium Quality coin for the same price as he would charge for a lower quality coin of the same grade.
How much weight to place on the obverse, reverse and rim
In determining the final grade of a coin different weights are given for different areas on a coin and also as to which side of the coin you are examining. As a general rule you would place approximately 80% of the importance on the prime focal area of the coin and 20% for the non-prime focal areas. Moreover, this is to be differentiated from the weight given in grading the obverse versus the reverse. Typically with most coins, about 80% of the grade is attributable to the obverse and 20% to the reverse. So keep in mind, that these two 80/20 rules are separate and distinct from each other but both must be part of your equation. One caveat. Earlier I mentioned the importance of also observing the rim. The rim typically does not enter the grading equation unless there is something unusual about it such as damage. Damage to a rim typically occurs when the indentation onto the coin’s surface extends past the denticles.
Base metals and their effect on grades
The different characteristics attributable to each base metal that is used in making a coin need to be considered in grading coins. The four primary base metals used in the manufacture of U.S. coins are: gold, silver, nickel and copper. For example, gold and copper are softer metals so they tend to be better struck than either nickel (the hardest) or silver. At the same time, as softer metals, they tend to pick up marks and scratches much easier. So contact marks on gold are not as important in determining the grade as the same type of contact marks would be on a nickel coin.
One special point to keep in mind. Gold coins are for the most part made containing some copper. When you see red dots on the surface of a gold coin these are the natural copper spots and do not affect the grade (other than in eye appeal).
Finally, the type metal also impacts the toning process to a coin. I will discuss toning in greater detail later.
For copper coins, such as Lincoln cents, we learned the difference between red, red/brown and brown and how to determine the color designation. We learned what percentage (approximately) of the coin must be red to grade red, red/brown to grade red/brown or brown to grade brown. Moreover, we learned that it is the overall average of both the obverse and reverse that is considered when designating a color. The best color is red and the worst color is brown.
Four Crucial Elements
When grading a Mint State (a coin that grades from 60-70 on the Sheldon scale) or a Proof coin the four most important elements are:
1. Contact Marks- the number of them and distinguishing between contact marks and other type marks, scratches, damage to a coin. Sometimes this is referred to as “bag marks”.
2. Strike-how strong or weak is the strike
3. Luster- How much luster does the coin exhibit both in quantity and in quality.
4. Eye Appeal – how does the overall coin look to you- what’s your impression.
The first 3 are much more objective in nature whereas eye appeal is more subjective.
This is one of the four factors that must be considered. How are contact marks created and what is their effect on a grade? We learned how coins make their journey from the minting process to our hands. Typically after a coin has been struck it is intermingled with hundreds or thousands of similar coins that have just been struck. They are dropped in bulk on a cement floor and hand shoveled into funnels. They jostle against each other, may end up in bags (i.e., “bag marks”), etc… This may not be exactly right or occur in all instances but the point is, that during this process coins are constantly in contact and hitting against each other which in turn creates the marks. These type of marks are called contact marks and for the most part (depending upon their severity and quantity) are not a factor in determining at coin’s grade (until you get to the higher end of the grading scale).
Other type of lines or marks that typically do not affect the grade of a coin are lines caused by overly polishing a die, a worn die or a defect to the die itself. We learned that these type of lines appear on the surface of the coin and do not cut into the coin’s suface and are referred to as “die polish lines”. One way to determine if a line is caused by a scratch into the surface versus a line that appears on top of the surface is that die lines tend to stop at the devices and appear on top of the coin’s surface. Whereas, scratches into the coin’s surface generally will cross into both the field and the device and are caused b something other than the die.
The second main factor to consider in arriving at a grade is the strike. The strike is the process by which the dies are impressed on the planchet in between the dies. The planchet is the blank metal that the die impression is struck against. A strike can be weak, strong or in-between. The result of a weak strike is that the details are lightly impressed on the coin. Whereas a strong strike will exhibit all of the details very sharply. If all other factors are equal except that one coin is weakly struck and the other not, the weakly struck coin should grade lower.
A new or newer die typically has a strong strike compared to an older die that wears down over time. Some mints, are know for having stronger strikes while others are know for weaker strikes. This was especially true for coins struck in the mid 1800’s long before modern transportation which meant that die deliveries were limited and late. So for example, the dies for the Philadelphia mint were replaced more frequently than dies in San Francisco or New Orleans since it took sometimes months before new dies could be delivered to those mints. Consequently, the mint directors in those areas had to make their dies last longer and incur much more usage resulting in weaker strikes. Another method of preserving a die that was employed was to use less striking force than otherwise desired in an ideal situation.
In addition to these factors sometimes the way that the die is manufactured or damaged after being manufactured will result in a weak/strong strike. At other times the die may receive too much rubbing or polishing that causes indents into the die itself. These indentations in the die are filled by the flowing metal when the coins are struck on the planchet. This results in lines appearing on the surface of a coin. This is called die polish lines.
Strike vs Wear
A weak strike must be distinguished from wear to a coin. A common mistake is to think that a weakly struck coin looks the way that it does because of wear to the coin and consequently will result in a lower grade. There are many series, mints, and years where it is known that the coins were weakly struck. With this knowledge (many sources available) you will know that the coin’s flattened look may be as a result of the weak strike characteristics and not wear.
A few words about wear and its impact on a grade. When attempting to determine a grade for a coin the presence of wear is crucial. Obviously, for the mint state coins all of the aforementioned numbers one through four must be present. As these factors tend to degrade, the grade assigned to a coin decreases. Wear can be seen by the discoloration or rubbing away of areas on a coin (which typically occur at a coin’s high points from being handled). When wear is evident it definitely affects the coin’s grade much more so than contact marks.
The third main factor that must be taken into account is luster, or lack thereof. What creates luster is that when a coin is struck, the metal flows into the die. During the process this metal flow creates grooves (“flow lines”) which deepen over time. These flow lines cause light to reflect in all directions resulting in what is referred to as, “luster”.
Typically coins with the greatest amount of luster grade higher than similar coins with much less luster. The luster appears in the form of the shape of an hourglass with the smallest portion starting from the middle and working its way out. It has a cartwheel shape appearance that can be seen by rotating and undulating the coin. You should note that the type of reflective light on a proof coin’s surface will be reflective and more mirror like and not one that throws off the characteristics typically associated with the luster type reflection that you can see in non-proof coins. Luster may be reduced by contact marks. Also, in situations where you see less luster or subdued luster not caused by wear, this can be an indication that the coin has been dipped or cleaned by using a foreign chemical.
The fourth main factor to consider when grading coins is eye appeal. As I mentioned, eye appeal is subjective and specific to the viewer;- how does the coin look to you with the naked eye. Is it shiny, white, colored, reflective, dark, marks, scratches, beat up, plain, worn, flat, gorgeous, ugly, etc… Only you can tell how it looks to you. Beauty is in the eye of the beholder, so to speak.
Having said that here are some additional factors to consider as they apply to eye appeal:
1. Toning– Toning describes colors that appear on coins. How does toning impact grades? Many high-grade mint state or proof coins have toning. Most coins do not have toning. When you see color on a coin it may be as a result of natural or unnatural causes. Toning is a natural process that occurs when the metal is exposed to air and other elements causing colors to appear on the coin’s surface. We learned one way that you can distinguish natural toning from unnatural (aka artificial toning) is to observe the color pattern. The color pattern for natural toning is always in the following order: red, orange, yellow, green, blue, indigo and violet (ROYGBIV). This does not necessarily mean that the first color to appear on the most outer band will be red. It may actually be some other color. However, once a color has commenced the color pattern must move from the outside of the coin towards the center of the coin in the ROYGBIV order. If you don’t see that order then this is artificial toning. Artificial toning occurs when someone tries to “doctor” the coin to make it look better by applying chemicals to the coin. I don’t want to leave you with the impression that all doctoring of coins are bad. In fact sometimes a coin can be properly cleaned and some of the grading companies actually offer this service.
2. “PL”, “DMPL”, “CAM” and “DCAM” There are some proof coins that have exceptional eye appeal and if they do they can also be assigned the designation of cameo (aka “CAM”) or deep (ultra) cameo (aka “DCAM”) assuming that they meet certain subjective tests. A cameo designation would mean that the raised devises of the coin would have a frosty, almost white, looking appearance against the almost dark looking background of the field resulting in a contrasting appearance. Whereas the deep cameo has a much sharper contrast of the frosty looking devices against a dark field.
There are non-proof coins that also have exceptional eye appeal. These mint state coins that meet certain subjective criteria will be awarded a designation of “PL” for “Proof-Like” or “DMPL” for “Deep Mirror Proof-Like”. Note the word, “Deep” or “Ultra” are used by different grading services but have the same meaning. A Proof Like coin is very reflective and you can see your finger about three or four inches away from the coin’s surface while maintaining its cartwheel appearing luster. A Deep Mirror Proof-Like coin will allow you to see your finger reflected off the coin’s surface at least of a distance of eight to twelve inches.
3. Portrait vs. Non-Portrait Coins
In grading “portrait” coins there are certain tests that apply to virtually all portrait coins. Coins that contain the profile of a face of a person are called “portrait coins”. Some common examples of portrait coins are Morgan and Eisenhower silver dollars, Kennedy halves and Barber halves. There are many, many more both U.S. and world coins. Coins that do not contain such a profile are called non-portrait coins and their devices are commonly in the middle of the obverse. Some examples of these are Standing Liberty quarters, Seated halves and Walking Liberty halves.
In a portrait coin you want to concentrate on the “prime focal areas”. This is because people’s eyes tend to be drawn to these areas first. These are typically the cheek and neck and the open field in front of the face so special attention must be paid to these areas and hence, greatly affect the eye appeal.
Specific Coins and their designations
There are several series of coins that in addition to a grade may contain designations such as:
1. Full Bell Lines (“FBL”). This is a designation that applies to Franklin half dollars if they meet certain criteria. To determine if there are full bell lines you must look at the set of horizontal lines on the bell on the reverse. There are two sets of lines. One set is located at the base of the bell and the other set towards the middle. Usually the bottom set is the one that is considered. However, one grading service requires the observation of both sets of horizontal lines and it’s determination of whether or not that coin is FBL. The horizontal lines must be at least 95% complete and unobstructed to qualify. This is determined without regard to the crack of the lines resulting from the crack in the bell design itself. Meaning that crack is supposed to be there.
2. Full Steps (“FS”). This applies to the Jefferson nickel series. We learned how to determine whether or not it could have the designation of full steps. These are the steps at the base of Monticello on the reverse. Full Steps can either be designated five steps (five of the steps are complete) or six steps (where all six steps are complete). A formula is used as follows. The steps are broken into 4 quadrants. There are a total of 24 part steps. You then look at each of the 24 separate steps to determine if it is complete and unobstructed. You total your score. If the score is 24 then you have a six Full Steps. If it totals 20-23, inclusive, then you have five Full Steps.
3. Full Bands (“FB”) or Full Split Bands. This designation applies to Mercury (aka Winged Head Liberty) dimes. For this, you look at the middle set of the 2 horizontal bands that bind the fasces on the reverse. If the bands are unbroken, have complete separation between each other and are well raised due to the strong strike, then it receives the Full Split Bands designation. If however, the bands are flatter (still with complete separation) then it will be referred to as “Split” bands.
4. Full Torch (“FT”) or Full Bands (“FB”). This designation applies to Roosevelt dimes and depending on the grading service one will refer to it as “FT” and the other as “FB”. One grading service requires that both the upper and lower pair of bands on the torch to show full separation. The lines separating the bands must be full and unbroken. The other service also requires that the vertical lines of the torch must be defined.
5. Full Head (“FH”). This designation applies to the Standing Liberty 25 cent coin. In order to be classified as FH you look at the head. All 3 leaves must be at least 95% visible and the “ear hole” must also be visible.
The art of grading is so crucially important in your growth as a collector/investor. Although this article was intended to expose you to some of the basic things that I learned and how that may entice you to become a better grader, I welcome the more experienced of you to please write in to correct any errors that you see or provide any comments that you have. Also, please remember that this was Grading 1. There are also Grading 2 and Grading 3 courses for the more advanced student and should be considered as essential in your learning experience.
If you have any comments or questions, please leave a comment below or send us an email: [email protected].
1 For purposes of this article when I use the word, “coins” I am also including tokens and medals, as the content warrants.