Pricing and Grading: Backbone of Collecting Coins

Monday, March 1, 1999

        For collectors there are various important factors in purchasing coins, such as the educational aspect or just for the fun of it, but for the purposes of this article we will emphasize pricing and grading. The NumisMedia Price Guide provides information that enables you to evaluate properly graded coins. Over the years, many dealers have mentioned they don't make money when they sell a coin, they make money when they buy the coin. This means if you pay a relevant price for a coin that coincides with the grade, the dealer's profit is merely a factor of time. When will the coin be sold? All too many times dealers have purchased coins thinking they were slightly nicer at first glance, later discovering a tiny mark, or some discoloration. This usually occurs because they are trying to buy too many coins and moving too fast so they can proceed to the next deal. One of the more important elements that we all learn in numismatics is the measurement of profits occurs when you buy the coin. Don't ever forget it; it applies to collectors as well as dealers.

        How does this axiom apply to collectors? If one selects coins they like, and they are totally satisfied with the condition, then price becomes a factor of affordability. If the coin is within their price range, then quality and price intersect and the collecting process has begun. Since the art of grading a coin is very subjective, that is non-scientific, it is the most arguable element of the decision making process of collecting coins. Much like works of art, coins are visual; they don't do anything but they can be quite absorbing. However, most coins have been minted by the thousands, hundreds of thousands, or even in the millions, where art is likely unique. Besides the mintage, the quality of preservation is the most important countenance to a collector. Over the last hundred years or so, coin collecting has changed dramatically. From the days when trading coins was a true social event between the buyer and the seller, to today's coins in plastic holders exchanged in a matter of minutes with fewer words than it takes to say "beauty is in the eye of the beholder".

        The major grading services have provided three very important keys to the impressive advances our hobby has made in the last ten years. The foremost is the protection of coins in a plastic holder. Some will argue that a holder protects the coin from potential damage and improper handling but may not prevent environmental damage over a period of time. Air, moisture, and chemicals can all have an adverse affect on the toning process of the metal. A second factor is one of grading. The grading services are not perfect; if they were, there would be no upgrades, nor downgrades. There would be one grade. What the grading services have done is create a closer set of standards that the numismatic hobby can somewhat agree upon. Prior to inception of these services, you could find very little consensus on the grade of a particular coin; now at least, we are as close to a standard as might be expected. We may still argue that a particular coin does not make the designated grade, but at least we have a foundation from which to grow. Lastly, the grading services have removed most of the doubt concerning the authenticity of the coins they certify. This had always been a major stumbling block when it came to the unscrupulous sale of counterfeit coins. It is still a problem today as we see raw counterfeits being sold on some Internet auctions. The grading services do a magnificent job of policing the counterfeit process and removing them from numismatic society.

        Education is of utmost importance to life in general; whether it is the beginner or the advanced collector, we should all continue to grow. The following reference books should increase your knowledge of numismatics.

Official A.N.A. Grading Standards for United States Coins, edited by Ken Bressett
How to Grade U.S. Coins, by James L. Halperin
Official Guide to Coin Grading and Counterfeit Detection, Q. David Bowers, John W. Dannreuther
The History of U.S. Coinage, by Q. David Bowers
Helpful Hints for Enjoying Coin Collecting, By Bill Fivaz