Buying A Graded Coin Makes Cents...

Collecting coins seems to have gone the way of playing jacks or marbles, and stamp collecting of course. However, it seems to be making a comeback, according to who you talk to. If you know what you're doing, you can really get yourself some excellent deals—particularly with rare coins— and make some real money. Because of the problems associated with most hobbies that involve collectable items, issues such as counterfeiting are always a problem. That is why several highly regarded coin grading services exist that use recognized standards when grading coins to ensure authenticity and quality, and ultimately, value.

Given a collector is dealing in a tradable commodity, it is essential to know the value of coins when they are ready to sell or purchase them. Coin grading services are charged with determining coin grade to determine the coin's value. Put simply, there are a range of grades, from "poor" to "perfectly uncirculated." When grading a coin, the professional grader looks for quality, the physical condition of the coin, how much interest it offers to collectors, and how rare it is. In addition, one must consider the basic law of supply and demand. One year a certain coin may be in big demand, but the next year, something more interesting comes along, with an accompanying increase in value as a result of demand.

Just like rare gems, coin grading can often provide slightly varying results, or standards, between companies. However, a properly graded coin is essential for the serious collector. You will need a professional to verify the value or grade of the coin, before any transactions occur. Just think appraised value for gems. An opinion provided by a professional coin grading service, such as those listed below, will provide sufficient proof to a potential investor that the coin meets the standards determined by the industry.

Each grading company operates differently. In the U.S., the Professional Numismatists Guild (PNG) have rated two coin grading companies as Superior— the Professional Coin Grading Services (PCGS) and the Numismatic Guaranty Corporation (NGC). Another grading service, and one of the oldest, is the American Numismatic Association Certification Service (ANACS). However, ANACS-graded coins generally trade at lower premiums than PCGS or NGC graded coins. Other coin grading companies exist but in terms of standards, they tend to be more "loose" in grading. So it is best to use those companies recommended by the PNG if you are keen to get into the coin trading game.

The most important thing to remember is that overall, numismatists value coin quality, the "look" of the coin, and its rarity more than anything else. Coins that have all these characteristics are going to be more valuable than those that do not. That is why a professional coin grader is critical to ensure investment in particular coin is not a waste of "coin."