Hi,
For most investors and collectors, numismatic coins provide more than mere metal content—you gain rarity, history, and in some cases, tremendous monetary gains. But with the promising gains comes the special set of risks, particularly in the area of grading variations. When buying into collect or certified coins, the grading risk is something you should learn more about in order for you to safeguard your investment.
Let’s go over the specifics of what grading inaccuracies are, why they occur, and how they can affect the bottom line.
What Is Coin Grading?
Grade is the act of appraising the physical state of a coin on a 70-point grade in which MS-70 (Mint State 70) denotes a perfect, uncirculated coin. A higher grade means the more valuable a coin can be—especially if it is rare.
Professional grading is undertaken by the large third-party providers like:
- PCGS (Professional Coin Grading Service)
- NGC (Numismatic Guaranty Company)
These businesses package coins in tamper-evident holders with a label depicting the grade, date, mint mark, and certification number. That provides the product with authenticity, confidence in the marketplace, and price disclosure—theoretically.
Grade Discrepancies: Things That Could Go Wrong
Despite the credibility of grading services, the grade is still subjective. A grader’s MS-66 can be someone else’s MS-67. Even coins graded by the same service can grade differently if re-submitted, especially if the grades are borderline.
Differences in marking could arise from:
- Human judgment variations
- Grade fatigue or bias
- Subtle weaknesses overlooked or overemphasized
- Inconsistencies between grading companies
Others will even bring out slabs and resubmit coins in hopes of a higher grade. The “grade game” can lead to mispriced markets and unanticipated risk for the buyer.
Financial Implications of a Single-Point Discrepancy
A single grade point can totally transform the price of a coin. For example:
- A Morgan Silver Dollar in the grade MS-64 could sell for $100
- The same coin in the condition of MS-65 may fetch $250 or more
If someone is paying MS-65 prices for a coin the market believes is MS-64, the resale value drops—often by significantly. That is especially risky for investors more focused on appreciation than on long-term collecting.
Reducing the Risk of Grading
In the event numismatic coins are in consideration in a precious metals holding, the following are some recommendations for risk mitigation:
- Buy from Established Dealers
Dealing with reputable bullion dealers like AU Bullion, who have transparent prices and only sell genuine, professionally graded coins from well-known companies. - Understand the Grading Scale
Familiarize yourself with the Sheldon Scale and normal discrepancies between PCGS and NGC. Crossover-graded coins (acceptable by both) are preferred by some investors. - Be Wary of Potential Overgrades or “In-House Graded” Coins
Avoid coins graded by private companies or unlicensed companies, which over-grade coins in the hope of making maximum prices. - Diversify Your Investments
Don’t invest the whole portfolio in high-premium collectibles. Diversify with bullion coins such as Gold Maple Leafs, Silver Eagles, or Platinum bars in order to maintain intrinsic metal value. - Understand Market Demand
A coin’s rarity, demand, and numismatic value are just as crucial as grade. A very high-grade coin lacking in collector appeal may still have little premium.
Final Thoughts
Numismatic coins can provide a valuable complement to your precious metals plan—but they introduce more complexity. Grade disagreements are one of the largest potential financial risks in the space. Knowing how grading takes place and where the landmines are can help you make smarter, safer investment choices.
Here at AU Bullion, we’re committed to helping investors and collectors buy and sell in the precious metals marketplace with confidence. Whether it’s bullion, authorized coins, or something in between, our knowledgeable staff is prepared to help guide you every step along the way.
