HOW COINS ARE GRADED
by Art Arbutine
By now everyone knows what a “slab” is. In case you are one of the very few who don’t, a slab contains a coin that was sent out to a grading service for authentication and grading, and was retuned in a 2 X 3 inch hard plastic case sonically sealed with an indicated coin grade. The little hard plastic cases are nicknamed, “slabs”
When a person gets a graded coin from either of the two services mentioned here, they can be sure that the coin is genuine; it has not been cleaned, altered or has environmental damage. If the coin has problems, but genuine, it will come back slabbed without a specific grade. Typical would be “Cleaned Unc details”, meaning the coin is uncirculated but due to the cleaning (or other problems) they cannot assign a specific MS (Mint State) grade. If a coin is declared counterfeit it will be returned to the sender and not put in a slab.
There are many grading services. The two that are widely accepted by dealers and collectors are NGC and PCGS. Their standards are strict and reliable enough that their slabs are widely accepted and usually traded at the assigned grade. Dealers often sell each other NGC and PCGS coins over the phone or internet without the buyer having seen the coin. Note: Coin grading is completely unregulated. You could declare yourself as an expert and start a coin grading service, perfectly legal.
Some grading services are so lax in their grading, their MS67 grade might be only MS61 or less from the big two and they may constantly grade very high and are used mainly for near-fraudulent sales by internet sellers, telemarketers, and TV promoters. Some of the fringe grading services are one man operations that slab their own coins as well coins that are submitted.
Few people know anything about the actual grading of coins. Here is how it works: The legitimate grading companies receive coins to be graded. A clerk assigns each coin a reference number and then places the incoming coins in a tray which is given to a coin grader who knows nothing about the coin’s origin. The coin grader then grades each coin and the results are entered into a computer. Then the tray of coins is given to another grader who does know what grade was previously assigned. Sometime a third grader is in the process, depending on circumstances.
The results of each grader’s opinion go via computer to a “finalizer”, a senior member and a grading expert. The finalizer looks at each coin and then at what the graders indicated. If one grader thought a dollar was MS63 and two others MS64 and the finalizer thinks MS64, the coin is assigned MS64. If a particular grader continually grades too high or too low, the finalizer will consult with him thus standards will be maintained. If the finalizer thinks a particular coin is cleaned and one grader thinks “MS62” and another thinks MS64, the coin will be put aside and there will be a conference among the three to determine the proper grade. Coin grading is subjective. Coin graders, collectors and dealers often disagree among themselves on certain coins.
Coins cannot be sent directly to PCGS or NGC by collectors or investors. They must be submitted through an authorized dealer, which we are with both services. If you bring us coins to be submitted, we will screen the coins to see if they are worthy of the cost of grading. If your coin looks great but has been (to us) obviously cleaned, there is no use sending that coin for grading. Some coins would be worth the same in or out of a slab and we will give you advice what to send and what to not. This is a no-charge service. We will try to educate you (if you need it) when we examine your coins.
