Anyone with a coin collection understands that its value is more than just monetary. Most coins that live in collections have some sort of history or sentimental value, but it’s worth thinking about certifying your coins too.
Certifying a coin costs between $15 and $125. The coin’s value and how fast you need it certified are the two most important factors. Certification guarantees the validity of a coin’s heritage and sets its price, making it useful for collectors looking to sell their coins.
However, there is much more to the decision to certify a coin or collection than just the price. Below, we will take an in-depth look at the certification process, its costs and whether it is worth the cost of certifying your coin collection.
Why Coin Certification Exists
Certification plays the role of helping set a price for a coin or coin collection that will be used when a dealer or collector purchases that coin or coin collection. In essence, the proof of certification is also proof that the coin or coin collection was assessed by a professional coin grader who has determined its price.
Certifying a coin or coin collection is not just about setting a price, as many think it is. There are several reasons to certify a coin, entire coin collection or coins within a collection. Each helps ensure the best and fairest price is paid for any coin that bears the certification. Specifically, certification:
- Establishes the condition it is in and grades it
- Sets a price based on grade
- Documents the value of a coin or coin collection
- Sets a standard for pricing
- Protects the buyer and the seller
- Provides a framework for coin grading and a standard for coin quality
Verifying The Value Of A Coin
All coins have a base value and they possess this value based on three factors:
- The date and mintmark
- The coin’s rarity
- The coin’s condition
Each factor plays a significant role in driving a coin’s value up or down. A coin that was recently minted and is not exceedingly rare, but is in great condition will have some value, but not as much as a coin that is older and rarer.
A coin that is in extremely poor condition will not grade as highly as a coin in good condition, regardless of rarity, unless it is so rare that the average collector will never easily come across it.
What grading and certification does is set a standard for the coin in question for all three factors and then comes up with an overall grade. That grade translates into a price for the coin, which can serve as the baseline for selling or purchasing that coin.
A Functional Framework
In essence, what it does is provide dealers with a framework for pricing a coin, and it gives coin buyers or owners the same framework to place a value on their property. This allows them to know, when buying or selling, whether a coin is fairly priced or whether the asking price is either based on incorrect data or unfairly priced.
Correspondingly, the cost of certifying the coin is driven by the same three factors. A coin that was minted 200 years ago but is common will not cost as much as a rare coin to certify. If that coin is in poor condition, the price to certify will be less than one that is in mint condition.
Protects The Buyer
Why would a collector choose to certify their coin collection? The short answer is that a certified coin is a guarantee for both the buyer and the seller that they are getting what they paid for.
A buyer (whether a dealer or a collector) can be certain that the price being asked is fair and in line with what other sellers would ask for. If the asking price is not part of the certified price or is not in line with what other dealers would sell for, the buyer knows that the dealer is in error and asking for too much.
Protects The Seller
At the same time, certification lets the seller know that the coins being sold are authentic and worth what they are asking. That allows them to build in any profit into the asking price and be able to justify it if questioned.
For the coin collection industry, certification provides a framework to assess and set the price of a coin or a coin collection. It also sets a baseline price that serves as the bottom-line value of a coin or a collection. All prices from the certification value upwards are negotiable, while the baseline price is not.
Creates Quality Control
To understand how grading and certification create quality control, one must first understand the history of each. Coin collecting started to become very popular in the late 1800s. Pricing for coins, based on the condition and rarity of a coin, was lumped into one of three categories:
- Good: The coin had been in circulation but details were visible
- Fine: Details were sharper than the status of good and looked like mint condition
- Uncirculated: These coins had never been circulated and their sharpness and luster were vivid
While this system of grading worked in theory, it was controversial in practice. If a coin had a rating of Good and Fine, for example, the difference in rating might mean a lot in terms of price, but was very ambiguous in terms of criteria. Much of the determination between the two standards was subjective. This led to confusion and often disputes.
Uncirculated coins also caused pricing and value issues. Not all Uncirculated coins were equal. Some had greater degrees of luster or more precise details. Quality could vary between locations where the coins were minted.
Additionally, quality control issues during transport could degrade mint-condition coins enough so that they conflicted with coins of the same pedigree in terms of luster and precise details.
For example, if a collector had a coin that was minted in Philadelphia that was Uncirculated, it might have a different luster and precision than one minted in Denver. This could lead to “mint condition” coins having the same mint date but being worth more or less, depending on the condition they were in.
Disputes Regarding Valuation
The result of this was coins and coin collections that had value that was disputed by both collectors and dealers. Additionally, there was no base price for a coin based on any standard. That led to difficulties setting coin prices and it created conflicts between buyers and sellers.
As coin collecting rose in popularity in the early 1900s, a more precise method of grading coins was clearly needed. Some mint condition coins were “more fine” than others and some circulated coins were clearly less worn than others. This led to coin collection terms like “gem uncirculated” and “very fine” as coin condition descriptions were broadened.
In 1948, a numerical grading standard was created. Ranging from 1 and going up to 70, with 70 being mint and 1 being barely discernable as a coin, the Sheldon Scale became the standard, first for large denomination coins and then for all coins.
There Was Still Confusion
This system worked but it was still subjective. Additionally, it was hard to tell the differences between numerical grades if the numbers were close. It takes a very experienced eye, for instance, to differentiate between a 55 and a 60.
The confusion that arose from that led to the founding of the Numismatic Guaranty Corporation (NGC). This organization established a hard-set standard for grading coins. It provided a standard for dealers and collectors to evaluate and set prices.
The grading system NGC uses today serves as an objective assessor of value and default quality control measure for coin transactions. NGC is the standard for the coin collection industry, but other organizations that evaluate coins have been established too. One such organization is the Professional Coin Grading Service (PCGS).
Both the NGC and PCGS are rated as “superior” evaluation vendors by the Professional Numismatists Guild.
Coins graded by either the PCGS or the NGC are accepted as the official grade of a coin and considered “first-tier” evaluators. Another organization, the American Numismatic Association Coin Service (ANACS), was created in 1972 and is a reputable service for coin value assessments, but is not considered as reliable as either PCGS or NGC.
All other coin evaluators are considered to be the lowest tier of the grading services. This means that they use less stringent and more inconsistent criteria for coin assessment, which can (and usually does) lead to a downgrade in the coin grade when the coin is put up for sale.
The Sheldon scale for coin evaluation ranges from 1 through 70. Dr. Sheldon devised the system because he realized that coins could come in dozens of varieties of condition. Those varieties can affect the price and likelihood a coin will sell. Additionally, the condition of a coin when given a Sheldon scale number can affect its rarity.
Rare coins can possess degrees of rareness. If a coin had limited circulation, its condition could vary depending on if it was circulated or not. Additionally, if a coin is not common, one in mint condition will score higher than one that shows wear and tear.
The basic scale starts with 1, which would be a coin that shows heavy wear and tear and lacks virtually all details. The scale ends with 70, which would be a coin in “perfect” condition.
Uncirculated coins are graded from 60 through 70.
In the 1 through 70 grading scale, there are 13 categories:
- Almost Good
- Very Good
- Very Fine
- Extra Fine
- Almost Uncirculated
- Brilliant Uncirculated
- Gem Uncirculated
- Perfect Uncirculated
Over time, each categorization was more specifically defined to represent the potential state of a coin more adequately. While the new system was substantially better than what had existed before it, it still was highly subjective. It served as a foundation for coin grading, but there were no “final say” criteria for either dealers or sellers.
A Third-Party Authority
That reality led to the creation of an independent, third-party certification service by coin dealers in the 1980s. The goal was to standardize the grading system across coin assessors. It was hoped the standardization of grading would accomplish three things:
- The elusive “final say” criteria for coin grades
- An objective party with no stake in the outcome of the valuation
- A grading system both sellers and buyers could rely on as “official”
Part of achieving all three goals is the assessment process itself. Every coin submitted for evaluation for grading is examined by two experts. Each expert must independently assign the same grade to a coin. If there is disagreement, a third expert is brought in to review the coin. Their assessment is considered final.
The Coin Certification Process
Once a coin has been given a final grade, it is “slabbed.” To slab a coin means to place it in a tamper-resistant plastic pouch. The coin grade is printed on a card that is also placed inside the slab. This ensures the quality of the coin will not degrade for as long as the coin is maintained in the plastic pouch.
In this state, the coin should not degrade from its official grade unless it is removed (which also negates the grading). Additionally, the card and tamper-resistant status acts as a “statement of quality.”
Is Certification Necessary
It is never necessary to get a coin certified. However, some coins warrant certification more than others. Essentially, grading and certification of a coin or coin collection ensures that all parties to any transactions of the coin or coin collection get an accurate price that is fair.
Ideally, if a dealer sells a certified coin to a collector for $5, that collector should be able to resell the same coin for $5. Thus, if a coin or coin collection is worth more than the going rate for grading and certification, it is worth getting either graded and certified.
The bottom price for grading and certification is $15. The ceiling is around $125. The cost of grading and certifying is typically built into the final asking price. As mentioned, each price is based on rarity, mint date and condition, as well as the timeframe in which the owner of the coin needs the certification. That also helps determine the value of grading and certification.
The Decision Process
If a collector has a coin worth $5, it is unlikely that grading and certification would verify the cost of the coin more than the lowest certification cost. Conversely, if a dealer is selling a coin worth $1,000, getting it graded and certified is not only a good idea, but is a highly recommended move. It verifies the rarity and the condition of the coin, and it proves the coin’s value.
$15 through $125 is a wide range, which is why establishing a baseline price for grading and certification is difficult. A major driver of the price is the timeframe in which it needs to be examined.
For a dealer with a coin worth more than $15 with no timeframe on getting the certification completed, the investment is worth it. This is because certification verifies the price of the coin should the owner decide to sell it individually or as part of a coin collection.
There is one exception when very low value coins should be certified, although it has nothing to do with the intended purpose of certification in terms of ensuring quality, standards and fairness. That is when a collection has a lot of coins that are not worth very much.
Getting the lower valued coins certified (if the owner of the collection does not lose money on the certification) could be a driver for convincing a buyer to purchase an entire collection. For example, a coin worth $20 by itself might not be worth certifying, but if a collector has 10 at that valuation, it might be worth it because the collector might be able to sell all 10.
A Successful Formula
Age, rarity and condition combine with the timeframe in which a certification is needed to formulate the price of certification. Certification typically ranges from $15 to more than $100. Because the minimum one can expect to pay for certification is $15, lower value coins are not worth the effort, unless there are a lot of them in a collection.
For higher value coins, getting coins graded and certified ensures you get at least that amount in any sale and it provides the buyer with the assurance that a coin or coin collection is authentic.
Coin certification serves to protect the coin collector and the coin dealer. It provides a framework for establishing a selling price for any coin. It is based on date minted, rarity and condition. With one exception, certification is only a good investment for high value coins. We hope this guide on certifying coins helps you decide if your coin or coin collection should be certified.