Coin Collecting FAQ - Coin Collecting Part 2

7. Grading
8. Pricing
9. What's the best way to clean my coins?
10. How can one tell when a coin has been cleaned, especially if it was cleaned long ago?
11. How should I store my coins?
12. Tools of the trade
13. How can I protect my collection from loss by fire or theft?

The condition of a coin is commonly summarized by a grade. Because the value of collectible coins often varies dramatically with grade and overly generous grading is not uncommon, reasonable grading proficiency is an important skill for collectors. The material presented here is intended only as an introduction to the subject. Grading is a skill that can only be developed over time through referrals to grading guides, consultation with experienced collectors and dealers, and lots of practice.

Published standards set objective criteria for grading, yet some amount of subjectivity is inevitable -- even expert graders will often assign slightly different grades to the same coin. While you can often ask an experienced grader for an opinion, being able to make your own reasonable assessment of grade is your best protection.

An overview of American Numismatic Association standards follows. ANA standards are widely used in the U.S. but are not the only system used. Much of the rest of the world uses the grades Fair, Fine, Very Fine, Extremely Fine, Uncirculated and Fleur-de-coin.

Numerals used in coin grades have been taken from the Sheldon scale (see Coin Grading).

Uncirculated Coins

Coins with no wear at all are referred to as uncirculated or in mint state (MS). Grades from MS-60 to MS-70 in one point increments are used for mint state coins. Criteria include luster; the number, size and location of contact marks; the number, size and location of any hairlines, and the quality of the strike and overall eye appeal..

An MS-60 coin may have dull luster and numerous contact marks in prime focal areas, as long as there is no wear. To merit MS-65, a coin should have brilliant cartwheel luster (attractive toning is permissible), at most a few inconspicuous contact marks, no hairlines, and nearly complete striking details. Grades from MS-61 to MS-64 cover intermediate parts of this range. Truly exceptional coins may be graded MS-66, MS-67 or, if absolutely flawless, as high as the theoretical maximum of MS-70. Many numismatists consider MS-70 to be an unobtainable ideal.

Terms such as brilliant uncirculated (BU), choice BU, gem BU, select BU and premium BU are still used in lieu of numerical grades by some dealers, auctioneers and others. Correlations between these terms and the numeric MS grades are difficult at best, because of inconsistent usage and in some cases overgrading.

Market values for many uncirculated coins vary dramatically from one grade to the next. Remember that whether a coin is described with a numerical or an adjectival grade, it's only someone's opinion. Until you are comfortable with your ability to grade uncirculated coins, make liberal use of other opinions, such as those available with slabbed coins or from experienced collectors and dealers you trust, or concentrate on circulated coins.

Circulated Coins

For circulated coins the grade is primarily an indication of how much wear has occurred and generally does not take into account the presence or absence of dings, scratches, toning, dirt and other foreign substances (though such information may also be noted).

ANA grading standards recognize 11 grades for circulated coins (listed here with brief, generic descriptions):

• AU-58, very choice about uncirculated: just traces of wear on a coin with nearly full luster and no major detracting contact marks
• AU-55, choice about uncirculated: small traces of wear visible on the highest points
• AU-50, about uncirculated: very light wear on the highest points; still has at least half of the original mint luster
• EF-45 or XF-45, choice extremely fine: all design details are sharp; some mint luster remains, though perhaps only in "protected areas"
• EF-40 or XF-40, extremely fine: slightly more wear than a "45"; traces of mint luster may show
• VF-30, choice very fine: light even wear on high points, all lettering and design details are sharp
• VF-20, very fine: most details are still well defined; high points are smooth
• F-12, fine: major elements are still clear but details are worn away
• VG-8, very good: major design elements, letters and numerals are worn but clear
• G-4, good: major design elements are outlined but details are gone; for some series the date may not be sharp and the rim may not be complete.
• AG-3, about good: heavily worn; date may be barely discernable

While coins more worn than AG are rarely collected, two additional grades are nevertheless used to characterize them:

• F-2, fair -- very heavily worn; major portions may be completely smooth
• P-1, poor, filler or cull -- barely recognizable

While not included in the ANA standards, intermediate grades like AU-53, VF-35, F-15 and G-6 are used by some dealers and grading services. When a grader believes a coin is better than the minimum requirements but not nice enough for the next higher grade "+" or "PQ" may be included (e.g. MS64PQ or VG+) or a range may be given (e.g. F-VF).

Split Grades

When there are significant differences between the obverse and reverse sides, a split grade may be assigned. Split grades are denoted with a "/". For example, "F/VF" means that the obverse is F and the reverse is VF.

The overall grade is often determined by the obverse. An intermediate value may be appropriate when the difference is significant, especially if the reverse is lower. A coin graded MS-60/61 would be considered to have an overall grade of MS-60, and another at MS-65/63 could be considered to have an overall grade of MS-64.

You can find more information and pictures of coins for each grade on our Coin Grading pages.

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Coin prices are a function of supply and demand. Market prices decline when inventories cannot be moved at current levels and eventually rise when insufficient quantities are available to meet current demand. Of course, if the buyer or seller is unaware of current trends, a transaction may occur outside the normal range of prices.

Demand is ultimately established by collectors and investors but often more directly by dealers, who must sell coins for more than they pay for them to cover expenses and make a profit. Consequently, there are multiple tiers of prices for any particular collectible coin. Retail refers to prices dealers charge most collectors and investors, while wholesale means prices they charge each other. Collectors and investors with a substantial market presence (spending considerable amounts, especially on a regular basis with the same dealer) may be able to buy at or near wholesale levels. Published price guides list typical prices for retail and wholesale transactions -- actual prices may be somewhat higher or lower.

Dealers will usually pay less than wholesale when buying coins from the public. Therefore, collectors and investors should be aware that it is difficult to "get their money back," should the need arise to sell their holdings. Of course, they may do better by bypassing a dealer altogether, but it is seldom easy to find another collector or investor looking for the specific coins one wants to sell, and even then the potential buyer will consider it an opportunity to acquire the coins at a discount. In addition, there are some advantages to purchasing coins from a dealer. A reputable dealer will guarantee the authenticity of the merchandise. He or she will be knowledgable enough to form reasonable opinions on grades, to detect problems that may be missed by less experienced persons and will usually be willing to share knowledge with the public, especially customers.

In most cases, the best answer is DO NOT CLEAN COINS. While you might think they'll look nicer if shiny, collectors prefer coins with an original appearance. Cleaning a coin may reduce its collector value by half or more.

Cleaning coins is similar to restoring works of art - they're both jobs best left to professionals who have the knowledge and experience to know when it's advisable, what techniques will work best and how to use them properly.

Never abrasively clean coins. Even wiping with a soft cloth will cause small but undesirable scratches, which will reduce the coin's value.

If the surface of a coin appears to be tarnished, it is best left alone. The color change is the result of a natural process, which collectors call toning. Atoms on the surface of the coin have reacted chemically, often with sulfur compounds. The reaction cannot be reversed. "Dips" which strip molecules from the surface are available. Dipping is the quintessential example of a technique that should be used only by professionals, if at all. Additionally, natural toning sometimes increases the value of a coin (i.e. when it's considered attractive).

Dirt and other foreign substances adhering to a coin can sometimes be safely removed. Try soaking the coin for a few days either in olive oil or soapy water, followed by a thorough rinse with tap water. Dry the coin with compressed air or allow it to air dry. Do not rub the coin. Commercial coin cleaners may also be carefully used to more quickly loosen foreign substances.

For more information about coin cleaning refer to our Coin Cleaning page.

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Contributed by Mike Locke (karenml@rahul.net)

If the coin has been cleaned with an abrasive, the coin will have hairlines. Have a look at the coins in Overton's half dollar book; a large proportion (maybe 20%) of them appear to have been harshly cleaned with an abrasive. Also, abrasive cleaning often leaves some crud in the recesses of the coin (untouched dirt or left over abrasive).

If the coin has been dipped, it may or may not be detectable. A bright white 1801 half dollar is immediately suspect. Although it is possible for such an original coin to exist, it is unlikely. Also dipping can strip the lustre off of the coin, with the end result that there is no lustre where you would expect it to be for a coin in said condition (XF and better coins).

A natural coin has a particular appearance which reflects the history of its storage. Haphazardly stored coins tend to have a "dirty" appearance to the toning. Coins that have lived for a long time in a coin cabinet tend to have spectacular colored toning. Coins stored in a clean metal vault (such as an old style "piggy" bank) may stay white (or red) for a long time. Coins stored in albums develop either the familiar "ring toning" (slide type albums) or the much less desireable "one sided toning" (all cardboard albums). Coins stored in mint bags often show spectacular rainbow toning, similar to that seen on coins stored in coin cabinets.

Copper/bronze/brass coins that have been cleaned have an unnatural color, often looking like a toned gold coin. Even after they retone, they tend it tends to be uneven and a slightly odd color (watch out for dark areas). See that red in the recesses of that VF copper coin? Not a good sign! Naturally toned, *circulated* copper tends to be very uniform in color, although they might be dark and dirty around the lettering and similar protected areas. Uncirculated copper may tone very unevenly (especially proofs), so do not automatically count this against such a coin.

Exactly the other way around, silver coins that have been cleaned tend to be extremely uniform in color after they retone, including the tops of the letters and protected areas. Silver coins with natural toning will usually show some variation in the color at these places. Be aware that a uniform slate gray color can be produced on silver very easily with a number of chemicals. Finally, a heavily toned and subsequently dipped silver coin will tend to have a gray appearance caused by surface roughness rather than tarnish. This can be detected by careful examination with a strong magnifier.

The ANA advises that sudden "hard line" changes in color do not occur on naturally toned coins. Naturally toned coins exhibit a gradual change in color or darkness. In any event, its mostly a matter of looking at a lot of coins and forming your own opinions. Assuming that you are buying coins for your personal collection, in the final say, it is *your opinion* that really matters.

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Environment

A relatively constant, moderate temperature and low humidity are preferable for long term storage of numismatic collectibles. Placing packets of silica gel in coin storage areas helps control atmospheric moisture.

Holders

Several types of "containers" for coins are available. Most anything will do for coins with little numismatic value, while nearly airtight holders made of inert materials are a good idea for valuable coins.

• Bags, jars and boxes are adequate for pocket change and circulated bullion coins.
• Paper envelopes of various sizes are sometimes used for one or more coins. Be sure to use envelopes made explicitly for holding coins, or your coins may change color (tone) over time due to reaction with sulfur or other chemicals present in the paper.
• Various brands of folders and albums are sold for series and type sets. When properly used, they offer some protection from wear and handling. Over several years coins may tone due to reaction with sulfur or other chemicals present, and they are therefore not a good choice for long term storage of higher grade coins.
• Plastic flips are available in various materials. "Soft" flips are made from polyvinyl chloride (PVC) which decomposes over time with disastrous results for coins. They are therefore not suitable for long term storage. Mylar and acetate flips do not contain PVC. However, they are hard (may scratch the coin if not inserted and removed carefully) and brittle. While not airtight, they are reasonable choices for moderate value coins that will be "left alone" for multiple years but less so for coins to be shipped or that will be removed and reinserted.
• Mylar-lined cardboard, often called "2x2s" but also available in other sizes, are similar to plastic flips. A coin is placed between the two halves, which are then stapled together (some brands contain an adhesive).
• Tubes are plastic containers designed to hold a number of the same size coins. They are fine for bulk storage of circulated coins and can be used for higher grade coins, provided the coins do not move. A disadvantage is that the coins cannot be viewed without being removed from the tube.
• Hard plastic holders are preferable for more valuable coins. They are not known to contain any materials that harm coins and offer good protection against scratches and other physical damage. They are available for individual and small sets of coins.
• Slabs are sonically sealed hard plastic holders for individual coins. They offer good (though still not perfect) protection. Because of the expense of having a coin slabbed, they are generally suitable only for more valuable coins.

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What tools and other resources does a numismatist need? The answer depends on the material being collected and its value. At a minimum, collectors should have a magnifier and an applicable reference book, though someone collecting only coins from circulation may be able to get by without them. A comfortable location with a suitable light source for examining coins is also advisable.

All sorts of magnifiers are available. For grading, 4-10 times magnification is sufficient, with 7x magnification considered by many to be ideal. Collectors of die varieties need 10x magnification or more.

Anyone purchasing coins should own at least one general reference book with information on dates and mintmarks, major varieties, grading guidelines and prices. Additional references examining topics in more detail (e.g. grading, counterfeit detection or die varieties) are often useful. Periodicals will have more recent pricing information and news. Good reference works can pay for themselves several times over by helping you avoid bad decisions.

Recommended lighting for examining coins is an incandescent source of about 75 watts (higher if other light sources are in the room) located within half a meter of where you'll hold the coins. Some people prefer halogen lamps, while fluorescent lights should be avoided. Find a comfortable location in your home where you won't be frequently distracted.

Depending on the collector's interests and value of the collectibles, other useful tools sometimes include a microscope, gloves, mask, velvet pad, additional references, metal detector, scale and/or photographic equipment.

A number of precautions can be taken to minimize the possibility of loss by fire or theft. Which ones make sense depend on the value of the collection and the relative risks. Note that most homeowner insurance policies specifically exclude coins and other numismatic items from coverage. A rider can be obtained for an additional premium, or a separate policy can be obtained. ANA offers optional insurance for collections to its members. Maintain records about your collection and store a copy separately from the coins.

Most safes providing protection from fires do not provide very good protection from theft, and vice versa.

A fire can damage or destroy numismatic collectibles. Even if the flames don't touch your coins, the heat may be sufficient to melt them. One option is to keep your collection in a home safe providing protection from fires. Another option is to keep the collection (or at least the most valuable parts) in a bank safe deposit box.

Top priority for preventing theft should be measures to prevent or dissuade a burglar from entering your home, such as lighting and locks. More extensive tips are available from law enforcement agencies. Consider storing your collection (or at least the most valuable parts) in a safe deposit box.

Be discrete about being a coin collector. Avoid telling anyone you don't know well and trust, and when the subject does come up, be sure to mention that you keep the coins in a safe deposit box or the collection isn't worth much (even if not strictly true). The more people you tell about your collection, the more likely that information will eventually reach the wrong person. If you regularly receive coins and/or promotional materials in the mail, consider getting a post office box and having all numismatically related mail sent there. (A PO box offers little additional security in the UK, where anyone can write to the PO to obtain the real address behind it.)

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