Gold Coin Grading
Probably one of the most famous and reliable independent coin grading services is the PGCS.
The PCGS (Professional Coin Grading Service), based in Long Beach, California undertakes the grading of coin collections from the most famous down to the itty bitty little collection a mild enthusiast might have.
It is not just a case of dealing with rare coins or rare coin dealers dealing with other rare coin dealers. The rare coin market is now far to large for individual dealer transactions.
Grading coins is not a matter of a coin being "fine" or "good" or "poor" any longer. More exact definitions to specify the quality of a coin are needed. Especially when disagreements over what constitutes each grading could occur.
As it says on the pcgs website:
"When the rare coin market was limited to a small number of numismatists trading with each other, three broad definitions were enough to determine grade: "Good" -- a coin with most of the detail intact; "Fine" -- a coin with clear detail and some luster on its surfaces; and "Uncirculated" -- a coin which had never been in general circulation and therefore retained its Mint State condition.
"Soon terms such as "very fine" and "extra fine" began to emerge, as collectors sought to further define the condition of their coins -- and increase their value. In 1948, Dr. William Sheldon, a renowned numismatist, developed the Sheldon Scale, assigning grades from "one" through "70" to coins on the theory that a "70" would be worth seventy times as much as a "one"."
It took some time to establish a standard with which all coin dealers could agree to but this did eventuate and market participants started to become aware of the major fundamental factors determining coin quality. i.e. the physical condition of the coin. The site goes on to say:
"Market participants soon became aware that one of the fundamental factors in determining rare coin values is the physical condition, or grade, of the coin. They learned that a coin graded Mint State 65, for example, may have market value many times greater than the same coin graded Mint State 64 -- although the difference in an MS65 coin and an MS64 coin may be virtually undetectable to the untrained eye. A coin sold by one dealer as an MS65 may be sold by another dealer as an MS64 (or less). In some cases a coin buyer could be victimized by product misrepresentation. In other cases, he was caught in the middle of a dilemma of wide ranging definitions due to the absence of a true standard. In other situations, they were simply caught in the middle of divergent definitions, due to the absence of a universal standard."
"Industry leaders were deeply concerned that without standardized grading the rare coin industry could face major problems."
So the PCGS now provides a standardized system of grading coins to everyone's agreement. This means that anyone can offer up their collection for grading and this grading will be accepted by others, A very important point when the time comes for a resell.
It also means that when you are looking at acquiring, not just one coin perhaps but an entire collection, then you would be justifiably entitled to ask for the official coin grading as provided by the PCGS.
You will then have and know the value of the collection you are thinking of buying. This applies very much to coin auctions and exhibitions as well.