Investing in Coins : Grade and Authenticity
Antique Coins - Grade of Preservation
The trade price (the price most dealers active in the series would buy at) is influenced to a very substantial degree (in many cased it is by far the most important factor) by the coins grade of preservation. Much can be found on the internet and in numismatic literature about grading, in a nutshell it is a scale of abbreviations or numbers which should indicate how much wear the coins has. The vast majority of antique coins will have been in general circulation as was their function and be worn accordingly, in rare cases some have been preserved by chance or design in the original mint state or close to it. It is the closeness to the coins original mint state that defines its value the closer it is the higher its value.
The degrees of wear a coin may have which may vary from pristine to a worn virtually blank disc are in theory infinite depending on the how fine a scale is used to measure the wear. Standard British Grading recognises a handful of main grade categories, beware in the current British market there are no published grading scales or empirical standards that are universally adhered to. The vast majority of coins offered for sale are being offered by dealers that own them, some operators particularly in the new internet auction market place have recently entered the numismatic trade or are part-time or rank amateurs. They all have a financial interest in grading their coin as high as they feel able to justify, if and when the same coin is offered to another dealer that dealer's assessment of grade may be different if so usually lower.
Mainstream established numismatic auction houses are usually under less financial pressure to grade coins as high as possible, they are not supplying one or a few retail clients rather they will have many thousands of clients who receive their catalogues. Their top buyers will include many dealers and seasoned collectors the type of people who would recognise and not tolerate inconsistent or exaggerated grading. These auction houses will have full time dedicated cataloguers whose incentive will be for impartial, professional, accurate grading that is designed to satisfy the buyer and the seller and stand up to the scrutiny of the many other professionals and seasoned collectors who will view the coins in the run up to the auction.
The danger to the novice buyer of subjective grading where the owner/seller of the coins is naturally attempting to get the highest price for his stock and his grading of it may be influenced accordingly became a serious issue in the US market in the 1970s. To counter the problem a 'third party' grading system was created whereby coins are submitted to an independent company who for a flat fee give their assessment of the coins grades, authenticate it as genuine and then seal it in a tamper proof sealed plastic holder. This system became available in the UK in 2008 with CGS-UK, the UK and Europe's first numismatic grading company. These third party grading companies also feature extensive internet support with CGS-UK having a My Page function which provides members with amongst other things valuation reports, image galleries and grade rankings.
Top quality copies of key rarities and gold coins have been around for many years, in recent times a new wave of decent to good copies of more commonplace coins have been entering the market from the Far East where in some countries it is perfectly legal to manufacture them. However they may enter the UK market masquerading as the genuine item and will almost certainly be of the quality to fool the beginner, amateur and inexperienced dealer. Third party grading companies including the UK's CGS LTD, mainstream numismatic auctions and dealers who are members of the British Numismatic Trade Association or have a solid reputation will refund clients who purchase coins which may later be proved a forgery.
Coins that are considered to be the finest known of their date or type (they are the highest grade example known) attract premium prices. This can lead to owner's claims that their coin is the finest known when in reality no scientific study has been carried out to support this. Third party grading companies on the other hand always have statistical support for such finest known types as they all use numerical grades and publish for their main series population reports which show how many coins have been graded of each date and type and the highest known grade. The major US companies PCGS and NGC have extensively populated reports for USA coinage and Finest Known types as reported in these tables can realise tens of thousands of dollars even for recent coins.
Coin Grading Services UK (see www.coingradingservices.co.uk) have a comprehensive population report for the English Milled series 1658 to present. CGS have only been trading since 2007 so compared to the population reports for USA coins on the PCGS and NGC sites which have been trading since the 1980s the figures are tiny. However prices for finest known examples of CGS graded English Milled coins are also tiny in comparison to USA finest known types, and some believe there will be much potential for value growth as the CGS product becomes more widely collected.
Buy "certified coins" these are coins that that have been graded by coin grading companies, which will also have been encapsulated (often termed "slabbed") in a tamper proof holder (designed for safe long term storage). These coins will have an objective grade and a guarantee of authenticity.
If you wish to own finest known types it also makes sense to acquire certified coins which have a statistical basis to the finest known attribution.