The advent and acceptance of the Sheldon Scale was a vast improvement over vague grades such as Good and Fine but there was still much margin for disagreement between trading parties, which was based on subjective opinion. For a collector or buyer with an uneducated eye this presented a problem. If the person was unable to distinguish between a MS63 and MS65 coin, he or she was at the mercy of the seller who had established the stated grade. A one-point difference in grade can mean hundreds or even thousands of dollars difference in value, and with so much relying on widely varying opinions it was difficult to justify purchasing high-value coins. With practice and the diligent study of appropriate books many people can learn to grade with a moderate degree of accuracy. However, few can ever learn to grade with the precision required to become a professional. The grade of a coin goes a long way in determining the coin's value, and often a seemingly insignificant, easily overlooked flaw can make thousands of dollars of difference in market value. The American Numismatic Association offers seminars and courses in coin grading at both beginner and advanced levels during their annual Summer Conferences, and this is an excellent place to begin for anyone interested in the art of grading. The ANA also offers an excellent book on the subject, Official ANA Grading Standards for United States Coins, which is available from them at their website or at your local bookseller. If rare coin dealers only dealt amongst themselves, there would be no need for coin grading as the two parties would simply decide on the value of the coin and conduct business accordingly. But the coin market has expanded far beyond this type of transaction with many people looking into rare U.S. coinage as a way of diversifying an investment portfolio with tangible assets. Such market participants have become aware that the fundamental factors in determining rare coin values is the grade of the coin in question. Thus, the ability to determine the grade of an ungraded coin or to recognize if a graded coin is undergraded is of the utmost importance. A coin graded MS65 may have market value many times greater than the same coin graded MS64, although the difference between the two may be virtually undetectable to the untrained eye. A coin sold by one dealer as an MS65 may be sold by another dealer as MS64 or even MS63 and an uneducated buyer could be victimized by product misrepresentation. In still other situations, the buyer is trapped by wide ranging definitions due to the absence of a true standard, which is why we today have companies dedicated to grading coins to a prescribed and universal industry standard.
In numismatics, the grade of a coin refers to a shorthand method of describing the coin's physical condition. During the early years of coin collecting, grades were limited to Good, Fine and Uncirculated, which described the following conditions:
In those days, the rare coin market was limited to a small number of collectors trading with each other, and the three definitions were enough. However, as the market grew collectors realized that some Fine coins were of higher quality than other Fine coins and that some uncirculated specimens were far above other examples in detail, luster, and overall appearance. Soon, grading descriptors such as Very Fine, Extra Fine and Gem Uncirculated began to emerge, as collectors sought to more accurately determine the condition and values of their coins.
Today's version of the Sheldon Scale
• MS60 to MS70--Uncirculated or Mint State
• AU58--Very Choice About Uncirculated.
• AU55--Choice About Uncirculated.
• AU50--About Uncirculated.
• EF45--Choice Extremely Fine. In discussion, most numismatists call this grade "XF."
• EF40--Extremely Fine.
• VF30--Choice Very Fine.
• VF20--Very Fine.
• VG8--Very Good.
• AG3--About Good.
• **There is also a separate descriptive prefix, "PR", reserved for Proof coinage. Numeric descriptors for the these coins remain the same.
Today, coins are graded utilizing a universally accepted system known as the Sheldon Scale, named after Dr. William Sheldon who, in 1948, standardized coin grading. Sheldon invented a system of determining the condition of a coin and assigning a grade based on a numeric scale of 1 to 70. A "1" was poor, almost completely worn out with hardly any recognizable features, and a "70" was perfectly uncirculated, a coin with absolutely no wear nor flaws or disturbances of any kind. His system was initially intended only for the Large Cents he personally collected but today, with some modifications, is applied to all series of coins.