Proof coins are valuable to investors and collectors because they are the first specimens of a mintage and often have unique and distinguishing characteristics that make them valuable and highly desirable.
But even among high-quality proof coins, there are subtle differences that can affect their value and collectability. When looking to purchase proof coins as an investment or to add them to an existing collection, its crucial to understand how the grading system in distinguishing high-quality proof coins.
As a case in point, lets look at this 1875 Trade dollar that was recently purchased at a July auction for $25,000. It was listed at the time of auction with a proof grade of 67.
Proof coins are graded on a 70-point scale, but only those coins with a grade of 60 or higher are considered worthy of investment. Youll often see this number grade in the coins description with a PF or PR, which stands for proof.
At the top grade of 70 are proof coins of perfection. No flaws can be seen even at 5x magnification. These coins represent the best strikes of the mintage and are the most valuable proof specimens to own.
Naturally, the quality and value of the proof coins decreases as you go down the scale. The differences between the grades are often based on common qualities for imperfections, strike and wear.
Imperfections Flaws will be barely perceptible at higher grades, but gradually become more visible as you go down the scale. At PF-64 and below, imperfections become more obvious to the naked eye.
Strike How strong was the imprint at the time of stamping? Proof grades above 65 are generally considered to be well struck. At 64 and lower, strike quality is judged to be average.
Wear The highest investment-grade proofs should have no signs of wear, indicating they were kept out of circulation. Any sign of wear drops the proof grade below 60 and reduces its potential value.
The creator of the original 70-point scale was William H. Sheldon, a psychologist by profession but a fervent numismatist whose lasting contribution to the coin world is the foundation of todays grading system.
It was Sheldons classification system that deemed any grade above 60 as mint state, to identify coins that had been withheld from general circulation and preserved for their investable value.
Sheldons grading system was adapted by the two leading coin-grading firms, Numismatic Guaranty Corporation (NGC) and Professional Coin Grading Service (PCGS). Both firms interpret Sheldons original scale with slight differences. Therefore, you may see different proof grades for the same coin, based on which firm issued the rating.
That was the case for the 1875 Trade dollar sold at the July auction. The PF-67 grade was issued by NGC in 2016. But the previous year, PCGS gave the same coin a 66 grade.
Whats interesting is that the Trade dollar was purchased at a lower price this year even though it had a higher grade. In 2015, the same coin was sold at auction for over $28,000.
Sometimes grades arent everythingmarket sentiment can often play a bigger role in determining a coins value. Moreover, the grading system is subjective after all, with a strong human element at work.
But the grading scale can be an important tool for investors and collectors, to help them understand the quality of the coins they are considering for purchase and the value they can add to their overall holdings.