Getting Started With Gold and Silver: Coin Grading


When it comes to buying gold and silver, there are some things you’re going to want to know about even if you’re never going to put that knowledge to use. If you’re like most people looking to protect your wealth, one of those pieces of knowledge that’s useful to have is knowing about coin grading.

For those people looking to protect retirement savings with gold and silver, especially when buying gold and silver through a gold IRA, coin grading isn’t going to come into play. It’s important to remember that a gold IRA, like any other IRA, cannot own collectible coins, only bullion coins. Bullion coins aren’t graded, while collectible coins are. And we’ve discussed the difference between bullion coins and collectible coins before.

But knowing about coin grading can help you determine when someone is trying to offer you collectible coins versus bullion coins. And if you decide after buying gold and silver bullion coins that you want to branch off to do a little gold and silver coin collecting, knowing about coin grading can come in handy.

Mint State vs. Proof State

There are two primary types of coins when it comes to grading: mint state and proof state. Mint state means coins that come straight from the mint with minimal, if any, extra handling.

For circulating coins, these are coins that come straight off the production line into bags to get sorted or shipped. Some special mint state coins, such as those used to produce mint sets, may see special handling to make sure that they don’t receive bag marks, but otherwise these coins are going to get knocked around a fair bit in handling.

Proof coins, by contrast, receive special care from the outset. The dies used to produce them are often polished to produce a mirror finish on the flat parts of the coin’s surface. Dies are replaced more often, and are often used on special presses operated by a single individual.

The blanks used to make proof coins are often polished first, then struck multiple times to ensure that the coin’s details are ultra-crisp. Each coin is then inspected under a magnifying glass or microscope to ensure it is free of defects, and handled with white gloves. Rejection rates can be high, as often only the most perfect coins are released for sale.

As you might expect, the prices for proof coins reflect that extra care and handling, as well as the smaller number of coins produced. Proof coins are normally considered collectible coins, although there are proof versions of bullion coins produced too, such as proof versions of the American Silver Eagle and American Gold Eagle bullion coins.

Where some people can be led astray, however, is in believing that proof coins will always be significantly more valuable than mint state coins. Yes, proof coins generally retain higher premiums than mint state coins, but that generally is the result of collector demand.

It can happen that during times of rising gold and silver prices, the intrinsic metal value of proof coins rises so much that the premium on proof coins versus mint state coins doesn’t rise as much, or that the price of proof coins doesn’t rise as much as that of mint state coins. So if you’re looking to buy proof coins, that is something you’re going to want to be aware of.

Coin Condition

Coin condition largely won’t matter if you’re buying gold and silver coins for a gold IRA. Many of those coins will come directly from mints, or pass through wholesalers and distributors in packaging that keeps them relatively free from damage.

Most people who buy gold and silver coins are also going to buy them for their gold and silver content, not for their numismatic value or collectibility, so condition generally isn’t a consideration. Still, there are some people who may get their hands on a particularly good example of an American Silver Eagle or American Gold Eagle and want to have it examined by a numismatic grading service.

This isn’t going to be something you can do with gold and silver coins held in an IRA, because those coins are going to be in the physical possession of a bullion depository that works with your IRA custodian to safeguard your IRA assets. But if you buy gold and silver coins to store at home, getting your coins graded is certainly something you are free to do.

In general, coins are graded on the following scale:

  • Good – G
  • Very Good – VG
  • Fine – F
  • Very Fine – VF
  • Extremely Fine – EF
  • About Uncirculated – AU
  • Uncirculated (or Mint State) – MS

Coins that have been submitted for grading to numismatic organizations will be given one of these grades, along with a numeric value normally ranging from 4 (Good) to 70 (Uncirculated). They will also be placed in a plastic holder, known as a slab, that often features a holographic seal along with a serial number and barcode.

Among the best respected coin grading services are PCGS, ANACS, and NGC. You may encounter people trying to sell coins in slabs from other grading services, which may or may not have similar grading standards.

You’re risking the possibility first of all that those coins may be counterfeit. And secondly, you’re potentially paying a premium for a coin that may not actually be in as good a condition as it’s alleged to be in. That’s why there’s a saying in the coin world: buy the coin, not the slab.

Choosing a Trusted Partner

The risk of buying counterfeit coins, buying overgraded coins, or otherwise getting taken for a ride is one reason it can be so difficult to make heads or tails of precious metals when you’re a first time buyer. And it’s one reason buying collectible coins can be very risky.

That’s why so many people choose to stick to buying gold and silver bullion coins that are purchased for their intrinsic metal value, rather than buying collectible coins. Bullion coins are bought not for their rarity or collector value, but rather for their investment value. Gold and silver coins have been popular stores of wealth and safe haven assets for centuries, and continue to play that role today.

With over $1 billion in successful precious metals placements and relationships with numerous mints around the world, Goldco has established itself as a major player in the precious metals industry. We work directly with mints to ensure that the bullion coins you buy are 100% authentic, and we work with trusted custodians and depositories to make sure that your assets are properly managed and protected.

Whether you choose to buy coins for a gold IRA or just want to buy gold coins to store at home, Goldco has options available for you. Call Goldco today to talk to our precious metals experts and learn more about the benefits of owning gold and silver.


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About the Author: Paul-Martin Foss