Graded gold coins carry numismatic value for their rarity or physical condition, and therefore often sell for a substantial amount more than the current value of the gold they contain. Grading is a determination of the physical condition of the coin.
If the coin is scratched or the design shows wear, it will receive a lower grade than one in perfect condition. Because gold is a relatively soft metal, damage is a concern when buying gold coins, particularly those containing .999 or .9999 pure gold, rather than a gold alloy.
The Grading Process
In order to be considered “graded,” a coin must be sent to a professional grading companies. There are a number of different grading companies that offer to grade gold bullion coins. Among the most reputable are PCGS, NGC, and ANACS. If you are considering having a gold coin graded, stick to one of these top four companies, as many collectors question the grades assigned by other companies.
Nearly any gold bullion coin can be graded by one of these companies. In order to have a coin graded, it must be physically examined by a professional grading service. Numismatic experts will examine the coin. After assigning it a grade, it will be sealed into a hard plastic “slab,” which ensures that the coin remains in the same condition in which it was graded. Coins that have been graded and slabbed by a recognized grading service are often traded sight-unseen, as investors are generally willing to accept the grade assigned as an accurate reflection of the coin’s condition.
These companies assign the coin a numerical grade between 1 and 70. The higher the number, the better the condition of the coin. At the lowest numbers, the coin is so worn that only a few details of the design are discernible. “High-grade” coins are generally considered to be those graded at least 60 or above. Factors affecting this grade include how well the coin was initially struck, how much overall wear it has sustained over time, and and presence of any damage such as scratches.
Because gold bullion coins are intended for investors or collectors rather than circulation, many examples are in very nice physical condition. As the grading scale progresses to the higher numbers, the difference between the numbers – for example, a coin graded 64 and one graded 65 – becomes very small.
All grades between MS60 and MS70 are considered “mint state” coins, with the distinctions mainly based on eye appeal and the presence or absence of hairlines or other flaws present when the coin was minted. An MS-70 (“mint state perfect”) coin must show no microscopic flaws at 5x-8x magnification.
In addition to guaranteeing the coin’s cosmetic condition, grading also guarantees the authenticity. For precious metal investors, this means a guarantee that the coin contains the precious metal it should, rather than being a counterfeit coin with no intrinsic metal value.
Graded gold coins with a high grade such as MS69 or MS70 command a higher price than ungraded examples, even if the two coins visibly appear to be in the same condition. High-grade gold coins make for impressive displays because of their stunning physical perfection. They are not marred by scratches or other damage. They are also more sought after by collectors, increasing the potential value of your investment.