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Coin Grading

Coins are graded by the numismatic community using a scale from 1 to 70, with 1 an object barely recognizable as a coin and 70 a perfect coin. Coins in uncirculated condition, that is, showing no signs of wear, grade between 60 and 70. These coin grades are considered "Mint State" and are prefaced with the letters MS (e.g. MS-65). The chart below indicates common coin grades

Numerical Grade Name(s) of Grade Definition
G-4 Good Well-worn with design faint but still apparent in some areas; Outline of figure on coin visible; date legible
VG-8 Very Good  Well-worn coin design but major design elements still apparent, although possibly flat
F-12 Fine  Significant wear thoughout coin, but design details are still apparent and coin has a generally good appearence
VF-20 Very Fine  Significant wear on highest points, although all design details are clear
EF or XF 40-45 Extra Fine  Slightly worn, but all design details are well defined; some original luster may remain
AU-50-55 Almost Uncirculated  Coin will have traces of wear on high points; All design details present; coin may have good luster and eye appeal
MS-60 Brillant Uncirculated (BU); Mint State  No trace of wear; may have knicks or bag marks, spots, or areas without luster; very common for large coins to have bag marks from contact with adjacent coins due to their weight (Note: MS-60 coins sometimes have a less appealing appearence that AU-grade coins due to bag marks and spots)
MS-63 Choice Brillant Uncirculated  No trace of wear; a few imperfections that prevent it from receiving a higher grade
MS-65 Gem Brillant Uncirculated  No trace of wear; Better than average uncirculated coin; few marks; may be lightly toned; MS-65 and above are considered investment grades
MS-67  As above, but almost flawless
MS-69  Virtually flawless
MS-70 Perfect Coin  Flawless; Rarely exists for coins intended for circulation 

Coin grading is an inherently subjective activity.  Well-established criteria exist for each of the above grades.  Nevertheless, buying high-grade coins can still be risky for all but the most experienced collectors since small differences in a coin's appearance can drastically affect the values of higher grade coins.  For these reasons, a number of independent certification services exist.  The coin owner mails the coin to the certification service, which grades the coin and encapsulates it in a rigid plastic, tamper-proof holder.  Many high-grade coins for sale online have been certified. 

The number of surviving coins in the higher grades sharply declines.  In addition, demand for near-perfect coins far among investors and serious collectors far exceeds demand for lower grades.  As a result, the price increases drastically for coins in grades of MS-65 and above.  These high-grade coins are free of any significant imperfections and few of them exist.  Small denomination coins were frequently circulated and therefore were subject to more wear; as a result, MS-60 and even AU (almost uncirculated) coins command high values.  Larger denominations, particularly the half dollar and dollar coins, rarely circulated to their high face value (for the time) and bulky size.  As a result, large numbers of uncirculated coins exist, marred only by "bag-marks" from coins above and beneath them.  Therefore, only high-grade uncirculated coins (e.g. MS-65 grade coins) tend to drastically increase in value over circulated coins. 

Those buying coins for stricly for investment purposes may prefer to stick with high-grade coins.  However, for collectors, AU and low-end uncirculated coinage often presents a much better value, while still showing all original design details in an attractive manner. 

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