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The Challenge of Grading Circulating Coins

by Michael Fazzari

I once gave a presentation dealing with coin grading at a club meeting in Maryland. I thought my speech was well done and informative; yet after the question and answer period was over, a member came up to say that she was mildly disappointed as I had just skimmed over the circulated grades and focused mostly on the Uncirculated grades. She wanted an explanation of the circulated grades that she was able to collect. I was reminded of this oversight by a "Letter to the Editor" that I clipped out of this publication. I confess to another oversight on my part as the letter appeared in a summer issue back in 2017!

Long-time collectors know there is a wealth of information about grading circulated coins as close as their computer. Additionally, there are several excellent grading guides with descriptions and images of coins grading from AG to AU. That’s one reason that I spend very little time teaching about coins grading below Extremely Fine. Additionally, their price and the spread in value between grades is usually small if the coins are not considered to be “rare.” Nevertheless, let me give it a try here as everyone cannot afford a collection of high-grade coins. 

Figure 1: Indian cent design with major design detail.

Figure 1: Indian cent design with major design detail.

Once a coin drops from the Mint State grade due to a noticeable amount of friction, from any cause, I believe most numismatists grade it by the amount of its original detail remaining. Unfortunately, “a noticeable amount of friction” has become totally ambiguous ever since the decades-old definition of Mint State (MS) — NO TRACE OF WEAR — was abandoned. Today, it is a very subjective determination that has absolutely no set parameters. MS is anything an individual or grading service says it is. Thus, for decades, coins with the appearance of minor circulation from any cause that are actually not Mint State but AU, have been graded in the low Mint State range to express their value and eye appeal. Additionally, the amount of detail remaining on a coin can be very hard for many collectors to determine when the normal design that should be present on a coin was never completed due to a weak strike or worn dies. In many extreme cases, a “flatly struck” AU coin can look the same as one grading XF to many collectors!

Figure 2: Minor detail present for Fine grade.

Figure 2: Minor detail present for Fine grade.

I like to use the amount of “original” mint luster remaining on a coin in combination with the amount of detail present when grading a coin that has circulated. This would be simple except for the fact that many circulated coins have been improperly cleaned. While cleaned, buffed, polished, and whizzed coins all have luster (the reflection of light from their surface) this luster is markedly different from the original mint luster remaining on the surface or just in the recesses of a naturally circulated coin. Lacking the aid of original luster, knowledge of what a coin’s fully struck design should look like becomes essential. For a Twentieth Century coin, we can examine examples struck as Proofs. Earlier coin types require more sleuthing as there are images on the Internet to go by.

One problem occurring with grading circulated coins occurs when one side of a coin is markedly different in appearance (grade) from the other. On many older coin types, it is not uncommon to see a VG obverse combined with an AG reverse with only the bottom half of each letter visible. That’s the reason “Split-Grading” was used originally. It more closely described the condition of a coin than assigning a single number. MS-63 does not fully describe a commonly seen MS-63/67 Morgan dollar and I’ll bet that most of us would rather own that coin than an MS-63/63 of the same date!

Figure 3: Uncirculated coin with rub.  All the very fine detail present.

Figure 3: Uncirculated coin with rub. All the very fine detail present.

Another problematic complication with grading circulated coins is introduced because there are no published standards for how much scratch damage, spots, and rim dings affect a coin’s grade. Technically, they don’t lessen its details grade, but they do affect its value. That’s what “Net” grading attempts to convey. As a better, more consistent solution, the major grading services have resurrected the old “Technical Grading System” (renamed “Detail Grading”) to be able to apply normally accepted grading standards to problem coins based on their amount of circulation. It’s simple: grade the coin, identify the problem.

Unfortunately, even a modern “Detail” grade can introduce problems of subjectivity into the equation that were not encountered in the original “Technical System.” That’s because some cleaning, rim damage, environmental damage, and scratches may be considered to be “market acceptable” and are often “overlooked” the older and more worn a coin gets. More subjectivity is introduced as graders try to evaluate how the number, location, and severity of scratches, spots, and other defects affect the coin’s value. There, I have mentioned that ugly word, “VALUE.” A coin’s value is the main reason that grading coins commercially is complicated for non-professionals and is a major factor causing “gradeflation!” Should a coin’s grade be increased as the years pass because its value (not its condition) increased? Should a coin with a damaged or corroded edge be “detailed” if no one can see it until it is removed from its slab and the guarantee is no longer valid?

I recommend every collector read the description of the circulated grades found in the ANA Grading Guide. Become acquainted with the terminology used to describe coins. Generally, a leaf (major detail) that is just outlined and flat (Fig. 1) can be found on coins grading Good. Once its internal veins start to show (minor detail) you are in the F and above ranges (Fig. 2). When an abundance of luster and the very fine details of the design (on a normally struck, unmolested coin) are present, the coin is in the AU to MS range. With complete details present, only the loss of surface, seen as a change of color, will keep it out of the Mint State grade for strict graders. I like to call the coin shown in Figure 3 an “Unc/w rub.”