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How to become a coin collector :: A beginners guide to coin collecting part 2  (part 1)

Grade - Coins are given a grade for their overall condition and degree of wear. While coin grading is highly subjective and vulnerable to opinion, some agreed upon standards in the hobby exist. The early days of coin collecting produced a pretty basic but effective method for grading coins. Terms like Poor, Fair, Good, Fine, Extra Fine, Almost Uncirculated and Uncirculated did very well to capture the condition of a coin. Many collectors, and especially European collectors, prefer to grade coins adjectively.

Enter Dr. William Sheldon. A psychologist and numismatist who created the "Sheldon scale", to grade coins on a numeric basis from 1 to 70. The intention was to create a common and accurate grading system to reflect the value of the 1794 large cent - at the the time worth about one dollar at the bottom of the scale and seventy dollars at the top. Grading coins in such a detailed manner would eventually lend itself to trading coins sight unseen between dealers and investors, and allow for more accurate dollar values to be placed on coin collections.

Once coin grading and certification services started to become popular in the late 80's, it became even more important to settle on a common grading standard. Currently, a descriptive scale aligned against Sheldon's numerical system is the commonly accepted and agreed upon scale for American coin grading. European collectors have been known to use a refined version of the descriptive scale and tend to be more conservative in their grading practices.

A note on certification services: Don't rest on the certified grade of a coin and market value based on said grade. Coin slabbing and certification is a very

American ScaleEuropean ScaleStandard
A Perfect specimen struck as intended. No defects visible under 5x magnification. Perfect and unbroken lustre. Any toning should be superbly beautiful not to detract form the grade.
Near Perfectly Uncirculated. Strike should be awesome with 99% of intended detail, with breathtaking lustre. Any toning must be outstanding.
Superb Gem Uncirculated. Exceptional strike, exceptional lustre and any surface flaws should be virtually unoticable against the focal points of the coin. Any toning should be grand with exceptional hues.
Superb Gem Uncirculated. Exceptional strike, exceptional lustre. Surface flaws should be well hidden if any at all. Eye appeal is strong and any toning should be approaching beautiful.
Gem Uncirculated. Exceptional lustre, minimal bag marks should be nearly unoticable at cursory glance. If toned, should be very attractive. Coin should have an excellent strike.
Gem Uncirculated. Exceptional lustre, minimal bag marks should not be distracting. Eye appeal should be positive and any toning should be attractive.
Near Gem Uncirculated. Great lustre, good eye appeal. Bag marks are visible but should be less significant. Major marks are exceptable, but should not be oeverly distracting or outright damage. Toning should be attractive if visible.
Choice Uncirculated. Coin should have very good lustre. Moderate but less distracting bag marks can be seen. Toning should be fairly pleasant if visible.
Uncirculated. Some bag marks, poor lustre or weak strike. Lacks good eye appeal.
Uncirculated, but with heavy bag marks, weak strike or unpleasant toning.
Technically Uncirculated. Coin will have heavy bag marks, very weak strike or unpleasant toning.
Wear on highest points may need magnification to notice. Cartwheels very visible and good color. Coin could be mistaken for an uncirculated grade.
Very Light wear on highest points; cartwheels very visible and good color. Friction shows on less than half the coin.
Light wear on highest points; cartwheels mostly present, but friction marks present over much of the coin.
Wear on highest points, no fine detail lost. Fields have contact marks, but should be free of damage.
Fine detail begins to wear. Traces of luster remain; fields begin to dull. There should be no major damage visible.
Wear begins to extend from the high points of devices. Depth is visible and devices generally stand out from the fields.
Wear begins to degrade appearance of devices, and blending occurs. Lettering is crisp.
Features generally worn; detail visible in low relief areas of devices. Majority of lettering should be clear
Features mostly worn; devices and legends clearly stand out. Low relief areas could have some good detail remaining. Majority of lettering should be readable.
Major devices clearly stand out from the fields; overall worn. Lettering is visible and some should be readable.
Well worn, but devices are discernable from the fields.
Well worn. Devices are visible but edges still merge into fields. Rims should be complete and most lettering should be decipherable.
Design is apperent. Major devices are outlined and visible, minor detail is well worn. Most lettering should be visible.
Rims are worn and likely not visible, but some detail and lettering can be seen. Little difference between devices and fields
Some detail may be visible, but well worn. Rims will likely be worn away, and coin has little eye appeal
Also refered to as Basal State. Resembles a coin. Type and date may be determined, but little else.
Roll over each grade designation to view grade description.
MS70Fleur de Coin
MS69   -   
MS68   -   
MS67Gem Brilliant Uncirculated
MS66   -   
MS65Choice Brilliant Uncirculated
MS64   -   
MS63Brilliant Uncirculated
MS62   -   
MS61   -   
AU58   -   
AU55Good Extremely Fine
AU50Extremely Fine
XF45About Extremely Fine
XF40Good Very Fine
VF30Very Fine
VF20About Very Fine
F16Good Fine
AF10About Fine
VG8Very Good
useful service, but it can also add many coins to the market that are priced at a premium simply because they are certified at a particular grade, especially when it comes to modern issue coins. As I've mentioned already, grading is subjective and lends itself to personal opinion. This is true for professional graders as well. Just because a coin might be certified at a particular technical grade, does not mean it has great eye appeal and will command market price. A coin is still the same coin whether sealed in plastic or not, and should be valued based on the appearance of the coin, not what holder it's sealed in.

It's important to become skilled in the fundamentals of coin grading. As you progress in your hobby, you will inevitably require key date specimens at one time or another, or you will progress to collecting coins of higher value in general. Coins that are limited in availability will realize a more significant price increase between grades, and more so as you approach mint state grades. A good example would be Barber half dollars or Standing Liberty quarters, for their low mintage or low surviving specimens in higher grades. The difference between almost uncirculated and uncirculated is one jump that may seem obvious, but can require magnification and at least adequate lighting to tell for sure. Each coin design has it's own wear patterns as well, so be familiar with grade as it applies to what coins your collecting or interested in. Again, while grading is still a subjective skill, being armed with a good fundamental knowledge of grading characteristics will help you purchase the grade of coins you desire for the best price.

Basic care of coins :: Common practice

- No sweaty fingers. Coins are made of metal and all metals oxidize one way or another. Acids and oils from your skin can and will damage coins. Damage is more noticeably true in higher grade coins especially with proof or proof like surfaces, but a nasty fingerprint can show up in time from unwashed hands on lower grade coins just as easily. Using thin cotton gloves when handling coins isn't bad idea if your handling a coin outside of a flip or similar container made for easy viewing.

- Don't talk over your coins. Little drops of flying spittle can cause damage. Acids from the coffee or soda left floating around in your mouth are still acidic. Again, higher grade coins are at greater risk, but a carbon spot on any coin is a real eye sore.

- Don't clean your coins. There is no good way for a hobbyist to clean his own coins without causing even a minor amount of damage.

And aside from proof or uncirculated coins, shiny coins are not better. There are several products and techniques available to consumers to clean or restore coins, as well as professional restorations services. The consumer level techniques, while possibly making the coin look better to the unseasoned eye, always damage the coin by removing metal chemically or mechanically. Professional restoration services can be useful for very rare or historical value specimens.

- Store your coins properly - At a stable temperature and humidity, in appropriate containers. Storing coins in a very damp basement is bad. Storing coins in an environment where the temperature fluctuates heavily can also be bad, as this can promote condensation which can damage containers and flips, create and environment for molds and fungus and possibly create some very unattractive toning. There are many products available for storing and protecting your coin collection. From simple cardboard "flips" with a cellophane window that staples closed and clear mylar flips, to hard plastic coin holders and tubes to plastic holders with carbon inserts, depending on how much you wish to spend on coin storage.

- Inspect your coins often - Inspecting your coins may not seem like a problem right now, but over time you may find yourself sharing coin hobby time with other things, and a couple of months can easily pass between times engaged in your coin collection. A couple of months isn't a long time, but make sure you get to them at least once a year. Especially if your storage environment resembles what was mentioned in the previous point.

- Catalog your coins. Knowing what you have is a good thing. If you enjoy the hobby, you will buy coins. After several years of collecting you will probably have quite a few coins. If you know what you have, you won't buy duplicates. If a catastrophe like flood or fire befall your collection, it will help for insurance claims to have record of value.

- Enjoy your coins - Coins are works of art as much as they are items of value. Each coin design was born from an artists imagination and creative technique, and was meant to be enjoyed. Share your coins with others; promote the hobby. Coin collecting is a relaxing and thoughtful hobby and is best enjoyed among friends and family.

Investing in Coins :: Collecting for profit

With the ebb and flow of traditional investment vehicles, currencies and the global economy, it is never a bad idea to have a diverse investment portfolio. The past few years have seen a significant increase in the value of precious metals due to regional housing values falling, rising oil prices, fluctuating currencies and inflation fears. Precious metals such as Gold and Silver have often been thought of as stable or lower risk investment than investing in the stock market. While this may seem true at a glance, it's not always the case. During times of economic uncertanty many investors turn their more volitile investments into Gold and Silver holdings, and when the clouds clear, will sell off some precious metal holdings to return to higher yielding investments. The increased buying will drive up the price (creating a nice profit oppurtunity for those that collect long term), just as selling will cause prices to fall. These precious metal market spikes happen more as hedge against a rough economy than long term investment strategies.

An obvious precious metal addition to your portfolio as a Numismatist could be Bullion coins. Commonly struck in 1 ounce coins at .999 fine Gold, Silver and Platinum, Bullion Coins are both practical as an investment and enjoyable as collectable coins. Most countries that mint coins also mint bullion coins, either as a straight bullion product much like Chinese Panda coins, American Eagles and Mexican Libertads; or as a quasi-commemorative coin, like the Australian Kookaburra Chinese calendar series, or Ilse of Man bullion coins. Another option for adding precious metal to your savings chest is by purchasing low grade or cull US coins, pre 1964 in quantity. Pre 1964 US Coins in denominations of dimes, quarters, half dollars and dollars contain upwards of 90% silver and retain their melt value in precious metal.

The tricky part of collecting coins as an investment - and where a collector needs to be careful, comes from the numismatic or collectable value of coins. Collectable value adds another dimension aside from valuation that traditional investments lack. Coin collecting can be a very trendy and often hyped hobby, and investing in coins of strictly numismatic significance is speculative at best. Coins fall in and out of favor to collectors all the time, based on events as simple as whim or a new hoard of coins surfacing in the market generating enthusiasm for a particular series. If your collecting blank as an investment, and over time interest in blank wanes within the community, you could be left sitting on a no growth investment based on interest at large.

You'll also need to be a very good judge in condition of coins, including: identifying damaged coins, forgeries and cleaned coins; along with a solid ability to grade. There are plenty of unscrupoulus dealers and collectors who would love to make a quick buck on someone unable to notice a slight flaw that could cause a coin to grade much lower than it was presented. There are plenty of slider coins and cleaned coins on the market that even the certification services have overlooked and slabbed as genuine. strongly advises new coin collectors to concentrate on coin collecting as a hobby, not as way to make money or retire on. While the possibilities exist for profit, it is highly unwise to look at coin collecting than anything more than a hobby until you've developed proper grading skills and some authority in the hobby. There are to many unstable factors in collectable coins to be considered a safe investment.

Conclusion :: Some final words

Coin collecting is a wonderful, intriguing, life long hobby that can be as involved or layed back as you desire it to be. The variety and specializations within the hobby are so vast that it is easy to make coin collecting very unique and personal. As with any hobby or endeavor you take on that needs a financial investment, it is important to research and learn. Don't take one persons or one web sites information as your only source of truth. Verify what you learn with other resources and become a well educated collector. Numismatics is a thoughtful hobby as much as it is a collecting hobby, and the more you know the more you will enjoy the hobby!

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