Buying gold coins as an investment doesn’t mean you have to know what all the abbreviations and phrases mean concerning coins and numismatics mean, and understanding them all can be a little daunting. So below we’ll talk about Weights and Mass, Measurements, Fineness and Coin Conditions. Feel free to send us any questions you have and we may add your answers to this section in the future.
Weights and Mass
When it comes to the weight or mass of a coin, especially in US versus foreign or old US versus the new US Bullion coins (the silver, gold and platinum eagles), we need to know what system of weight measure with which we are dealing.
Metals are usually weighed by the Troy system. But in the United Sates, we use the Avoirdupois system. But if you just remember a few basic weights, that will allow you to get the general idea.
Here are the Avoirdupois weights:
1 ounce = 437.5 grains
1 ounce = 28.35 grams
1 pound = 16 ounces
2.2 pounds = 1 Kilogram
Here are the Troy weights:
1 ounce Troy = 480 grains
1 ounce Troy = 31.103 grams
1 pound Troy = 12 ounces Troy
2.7 pounds Troy = 1 Kilogram
Note that the units of grains and grams are the same in both the Avoirdupois and the Troy weight systems.
When it comes to coins, one conversion you might want to memorize is:
1 pound Avoirdupois = 14.583 ounces Troy
The diameters of all coins are measured in the metric system. For example:
Lincoln cent = 19 mm
Jefferson Nickel = 21.2 mm
Roosevelt Dime = 17.9 mm
Washington Quarter = 24.3 mm
Kennedy Half Dollar = 30.6 mm
A Silver or an Eisenhower Dollar = 38.1 mm
Now let’s talk about all those weird abbreviations and phrases you see associated with certain coins.
Coins are usually made of an alloy. In other words, other metals are mixed into the coin to make it more durable. Fineness is the actual gold content in a coin or bar and expressed in grams or troy ounces.
Karat weight is a unit of fineness for gold equal to 1/24 part of pure gold in an alloy. For example, pure gold which is 1000 fine, is 24 karat and a fineness of .583.3 is expressed as 14 karat, etc.. Below is a karat weight to fineness conversion chart.
KARATS VS FINENESS:
24 karats = 1000 fine
23 karats = 958.3 fine
22 karats = 916.6 fine
21 karats = 875.0 fine
20 karats = 833.3 fine
18 karats = 750.0 fine
16 karats = 666.7 fine
14 karats = 583.3 fine
10 karats = 416.6 fine
The fineness is often converted to a percent, as well. If a gold coin has a fineness of .900, the decimal point is moved two places to the right and that number is expressed as a percent – that is 90.0% pure gold. If a gold coin has a fineness of .850, then the gold coin is 85.0% pure, etc.. But fineness is not the only way to value a coin.
A coin’s “grade” is a visual evaluation of the amount of wear on a coin. Coins with little wear are graded higher and therefore assigned higher prices than those with a lot of wear. However, low-grade, extremely rare coins can easily be more valuable than more widely available, higher grade coins of common dates.
Below are the general characteristics that you will see that define different coin grades. When grading coins, any defect should be noted, such as bent, scratched, etc.. Cleaning or mutilations of any kind should me mentioned. (i.e., Very Fine with rim nick at 3 O’clock, small scratches on obverse). Note that “Fine” as described below is concerning the condition of the coin – not the purity as described above.
This is by no means a complete guide. For more information about old U.S. gold coins and grading them we recommend “A Guide Book of United States Coins“, (also known as “The Red Book”) by R.S. Yeoman.
Basal (Basal) – A piece of metal that can be identified as a coin, but that’s about all.
Fair (Fair) – (Mint state 1 to 3) You can identify the type of coin; the date may or may not be visible.
Almost Good (AG) – You can read the date but parts of it and legend are worn smooth.
Good (G) – (Mint state 4 to 6) Legends, designs and dates are visible but heavily worn.
Very Good (VG) – Designs and date are clear but lacking details. You must be able to see a “full rim” – the line around the edge of the coin where it was raised up.
Fine (F) – (Mint state 12 to 15) All major details will be visible with the major details virtually complete.
Very Fine (VF) – (Mint state 20 to 30) More details will be visible with major details virtually complete.
Extremely Fine (XF or EF) – (Mint state 50 to 55) Light wear on the high points with some mint luster present.
Almost Uncirculated (AU) – (Mint state 50 to 55) Small trace of wear visible on the highest points with at least half of the mint luster still present.
Uncirculated (UNC)– (Mint state 60 to 65) No trace of wear with some small nicks or marks present.
Mint State (MS) – (Mint state 60 – 70) “Uncirculated” and “Mint State” are terms that are many times used interchangeably. MS 70 is considered a perfect coin. Extremely few regular issue coins are considered MS-70 although it is common for new, modern bullion coins to be given a grade of MS-70.
Proof (PF) – Coins specially struck for collectors. Usually mirror-like surface. Sand blast and matte proof in some series.
Also, as of January 1, 2003, the Numismatic Guaranty Corporation began applying the designations “CAMEO” and “ULTRA CAMEO” to brilliant proof coins from around the world. These designations previously had been applied by NGC only to United States coins, but they are now applied to world coins as well.
The term “cameo” refers to proof coins that have frosted lettering and features, providing attractive contrast with the mirrored fields of the coin. (“Cameo” is a designation for a coin that has a certain amount of contrast, but not enough to be called “Ultra Cameo”)
Brilliant proof coins may or may not display frosted lettering and devices, but those that do on both sides are popularly known as cameo proofs. The terms “deep cameo” and “ultra cameo” describe cameo coins having the boldest, most attractive contrast. This contrast is highly valued by proof collectors.
Unfortunately, there is no definitive rule about determining if a coin is Ultra Cameo, Cameo, or not at all. This can only be gained through the experience of looking at and studying many coins. As with all of numismatics, look at as many coins as you can. It is the best way to learn about them.
Fields and Devices
Typically, the frosting is achieved by sandblasting the die and then polishing only the fields to a brilliant finish. This leaves a noticeable contrast between fields (all the flat areas of the coin) and devices (raised portions of the design) which is suggestive of the carved cameos from Victorian times.
Below is an example of a proof coin. All of the raised areas of the coin are frosted and referred to as the “devices”. The flat, mirrored areas of the coin are called the “fields”.
PCGS, NGC and Numismatics
Depending on your goals, investing in coins can be a matter of diversifying your investment portfolio, saving for retirement, or an interest in “numismatics” – coin collecting.
Keep in mind, if you want to really learn a lot about coin collecting, what we present here is only the tip of a very large iceberg. Numismatics is in a category all its own. While you can trust us to use PCGS, and NGC certified coins, you should take care and a lot of time to study numismatics for yourself before making decisions on your own and committing any of your assets to rare, numismatic type coins.
Novice coin collectors face many dangers, the most common being overpriced coins from unscrupulous dealers, as well as liquidity. Rare coins (as opposed to bullion coins) appeal to a more specific audience of coin investors and therefore taking the profit from a rare coin investment can take longer as you or your dealer tries to find a buyer willing to pay the right price. The value of a rare coin is more subjective than that of common dated bullion coins which normally sell “sight-unseen” and are therefore more liquid than rare coins. Keep that in mind when choosing to buy rare coins for investment purposes.
This is also why we like to directly communicate with our prospective customers to specifically determine what your goals are before recommending anything to you. Making an actual profit from the trading of old US coins takes much knowledge and experience and that’s where we can help you most.
In the past, overpriced coins basically meant over-graded coins. The practice of putting a coin in a plastic holder with the grade marked on the holder is called “slabbing.” In the 1980’s, over-grading had become very wide spread as deceptive dealers put circulated coins in a plastic holder and label them as uncirculated. (You can purchase your own empty slabs and coin holders online or from your local dealer to help preserve and protect your old coins.)
Many buyers – especially novices – did not catch this misrepresentation until they tried to sell these coins and a knowledgeable buyer caught the “mistake”. Obviously, this made many numismatists very angry as this unethical practice hurt coin collecting. But there was also the issue of lack of a universal standard of grading coins. Again, coin grading can be a subjective issue.
Professional Coin Grading Service (PCGS) – http://www.pcgs.com
Enter the Professional Coin Grading Service (PCGS) on February 3rd 1986. Industry leaders were extremely concerned that without a standardized grading system, the rare coin industry could face enormous problems. After many months of meetings, the Professional Coin Grading Service was formed.
This third-party appraisal of a coin’s physical condition, backed by a guarantee, and a national network of reputable coin dealers provided an extremely reliable form of protection for rare coin consumers who could then participate in the coin market with greater confidence.
PCGS is responsible for dramatic improvements throughout the rare coin industry which have forever changed the way rare coins are bought and sold. The firm does not buy or sell coins. In addition to standardized grading, PCGS offered a cash-backed grading guarantee, problem-free coins, safe long-term storage, and sight-unseen trading. Together, these elements have created unprecedented public support for the rare coin industry.
From the PCGS website:
PCGS pioneered the tamper-evident, sonically-sealed, high security capsule as a method of reinforcing its Guarantee of Grade & Authenticity of each PCGS coin. In addition, the unique certification number permanently sealed inside each coin capsule may be utilized by the coin’s owner as a reliable means of identification after the PCGS coin re-enters the marketplace. Equally important, PCGS’s hard plastic holder provides optimum protection for safe, long-term storage of rare coins.
To date, PCGS has graded over 16 million coins with a cumulative declared value of over 17 billion dollars. Their income comes from grading fees and although not all numismatists always agree with PCGS grades, the company thrives because of the fair, competent and credible standards they have brought to this industry.
The Numismatic Guaranty Corporation (NGC)
In 1987, NGC was founded with the same goals as PCGS. According to the NGC website:
To ensure impartiality and accuracy, three numismatic experts, each with decades of successful professional experience in rare coins, evaluate each coin submitted for grading. A grading finalizer assigns a final grade and the coin is then sonically sealed in a protective, inert plastic holder.
NGC’s full-time grading experts are no longer active in the commercial coin marketplace, and are prohibited from buying or selling coins to ensure impartiality. Most have been with NGC for many years. The NGC grading team’s only interest is in determining accurate grades for coins.
The knowledge, integrity and dedication of NGC’s team of grading experts ensures you a level of grading consistency unparalleled among grading services. This record of consistency, built over the years, has helped to foster greater stability throughout the rare coin marketplace.
PCGS and NGC have been so successful that no major retail firms now “slab” their own coins. No other grading services have become as accepted as these two. Keep in mind that the grade of a slabbed coin is not always final because of the very subjective nature of coin grading. Coin dealers can resubmit their coins for grading in hopes of getting a higher grade.
You may submit your coins to authorized dealers of NGC and PCGS for grading and even check the status online. Their fees for grading depends on the value and category of collectibles you are submitting as well as the turnaround time you desire.
Below are some very important tips that can help you to determine if the price is right when buying coins.
1. Buy from a recognized national dealer or broker who has plenty of experience in the market. A 10-year track record would be our recommended minimum.
2. Be certain that your coins can be bought and delivered at the prices quoted. Don’t just buy the quote – buy the coin. We can sell coins at 10%, 50%…even 75% less than the other guy too… IF we don’t have them. Make sure your dealer can actually deliver the coin at the price quoted.
3. Buy only sight-seen coins with an inspection period. In other words with the option of exchanging the coin if you don’t like the way it looks. Also, be sure that the coins you buy have been bought by the dealer “sight-seen”, and have been inspected for spots or other imperfections by at least two numismatists.
4. Ask your dealer if the coins you purchase offer a two-way market. If your dealer is willing to sell you the coins, you should be able to sell them back to the same dealer. Closely examine dealers buy-back policies. Check that the buy-back price does not vary on a basis of quantity. Also ask about the time factor for repayment. Most reputable dealers will settle a trade within 72 hours.
5. Honest disclosure. An ethical dealer should present both the upside and downside risks associated with the coins you are buying. Short and long-term positioning should be gone over and understood by everyone involved.
6. Buy from a dealer that you have complete trust in. This means checking references and asking as many questions that you need to ask to get satisfying answers. Sure gold has become a popular investment vehicle. But don’t buy because of the hype. Buy because of the facts you get from an informed and experienced organization.
7. Inquire about your dealer’s certification. Certification by one of the recognized independent grading firms, such as the Professional Coin Grading Service (PCGS) or the Numismatic Guaranty Corporation (NGC) provides you the assurance of an independent third party verification of the grade of the coin. Certification also insures that your coin is not a counterfeit and that the grade assigned was issued in conformity with industry standards. Certification is a very necessary part of rare coin investments.