The Basics of Buying
Grading & Certification
“For hundreds of years, rare coins and precious metals have proven themselves to be an excellent hedge against inflation and source of "ready" money in times of disaster. There is no reason to think this will change in the future. Gone are the days when coin collecting was only a passive hobby for those who would study the history and artistry of these enjoyable objects. It has now grown into an activity where speculation on the future demand for rare coins has made them a part of many investment portfolios. The shift in emphasis from collecting to investing has created a new market and demand for coins, resulting in more stringent grading methods, and pricing geared to the perceived rarity of coins in various levels of uncirculated perfection. Coins in high grades of condition that have been certified and encapsulated (slabbed) may be valued at multiples of similar coins that have not been so graded.”
–The Official Red Book: A Guide Book of United States Coins.
There is no more conservative voice than that of the coin enthusiast’s trusted old friend, the Red Book. Back when IPM first began promoting graded modern issue coins, we were treading new ground. Nowadays, graded coins of all types are widely recognized as having a very real advantage over their ungraded and uncertified counterparts, as the above quote makes abundantly clear. The advent of third-party coin certification revolutionized coin markets in the 1980’s, allowing anyone to confidently trade rare and precious metals coins without having to be an expert in judging coins by the ANA/Sheldon numerical scale. With universally respected third party opinions assigned to certified coins, the guesswork was removed and, for the first time, many thousands of Americans became investors and collectors of rare and precious metals coins. IPM is proud to offer coins from two of the most respected names in third-party coin certification: Numismatic Guaranty Corporation (NGC) and Professional Coin Grading Service (PCGS). Both of these services are universally known throughout the numismatic community, and collectors and dealers generally prefer NGC and PCGS certified coins over those certified by other services, simply because of the instant name recognition that these two names provide. This adds an extra measure of security and liquidity to your coin holdings. When a coin is submitted to NGC or PCGS, it is examined by not one, but an entire panel of expert numismatists. Each grader independently scores the coin using the Sheldon numerical scale. Once a grade is agreed upon, the coin is encased in a plastic holder that both serves to protect the condition of the coin and to guarantee the authenticity of the grade, as any attempt to tamper with the holder is readily apparent. A serial number and barcode are encased with the coin, to readily identify it in a computerized database. NGC and PCGS certified coins are found in most of the top rare coin collections and are the norm, rather than the exception in the rare U.S. coin market. IPM is proud to hold member-dealer status with both of these organizations!
A Brief History - The Sheldon/ANA Grading Scale
Collecting U.S. coins has a long and rich history. Collecting began to develop significant momentum in the late 1800’s and early 1900’s. At that time, there was no such thing as a standardized grading scale. It was certainly recognized that all coins were not equal, but claims of quality were somewhat subjective and collectors had to be careful and knowledgeable to avoid making expensive mistakes as they built their collections.
It became apparent to all that a more precise grading system was needed, but it was not until 1948 that Dr. William Sheldon first introduced a more scientific, objective system for grading coins.
The Sheldon Scale (also called the ANA scale, after the American Numismatic Association) ranks coins on a scale ranging from 1 for the poorest specimens, up to 70 for an absolutely flawless and technically perfect coin. The top range of the Sheldon Scale, from 60 to 70, is reserved for uncirculated or ‘Mint State’ coins. This portion of the scale is of great interest to collectors of both rare coins and modern issue precious metal coins.
Among rare U.S. coins, a single number’s difference in grade can make thousands, sometimes millions of dollars in difference in terms of a coin’s value. No rare U.S. gold issues survive in specimens that grade at a perfect MS-70. Many such issues are represented by specimens that “only” grade in the MS-65 range or less, including some pieces that have fetched millions of dollars at auction.
IPM deals exclusively in Brilliant Uncirculated modern issue coins that have not been handled, and which are preserved in their original state. Most U.S. American Eagle coins can reasonably be expected to leave the Mint at around MS-65 if they are not handled or allowed to slide against or otherwise contact other coins. Even when one takes many fresh, pristine coins delivered directly from the Mint, finding specimens that grade MS-68, MS-69 or even a perfect MS-70 is not something one can take for granted. That is why IPM is proud to be able to offer certain modern issue Eagle coins in these ultra high grades. They are museum quality specimens that are available today at affordable prices. Over the long term, these specimens can command great attention and respect in the collector market, just as ultra-gem U.S. gold issues from the era of circulating gold coinage do today.
Sets and Series
Collectors and investors alike have found that rare coin collections can greatly enhance their portfolios. Many collections provide the same diversification found in standard investment portfolios and as far as return on investment, many collections are sold for more as a whole than the combined value of individual coins. IPM finds that the best strategy for adding precious metals to a portfolio is set building. The two most basic approaches are building by “type” or by “series.” A type set consists of coins sharing one specific trait such as denomination, designer or design. A series is comprised of one coin from each date and mint of a certain type.