Coin collecting is not about having a large group of coins. More important is the condition, (and maybe the value), of each. The condition is measured by grade which is a numerical scale between 0 and 70. "0" indicates a metal disk that has lost all detail, which "70" represents absolute perfection. Dr. William Shelby developed the point scale in his "Penny Whimsy" publication.
Dr. Shelby was a collector of early American large cents. These were issued from various U.S. mints before 1856. Dr. Shelby noticed that collectors were willing to pay a premium for many of these. There were rarity factors that everyone recognized. As well, collectors paid more for those that were in better, or newer looking, condition. He established the numerical scale based on the then prevailing prices.
Dr. Shelby noticed that certain pennies in one condition were regularly traded for twice as much money as ones in poorer condition. He established his scale in order to factor the price to the range of numbers. That way, collectors could see that a grade "20" was worth half the value of one graded "40". While this correlation existed back in Dr. Shelby's time, the connection between price and grade quickly disintegrated. All we are left with now is the basic Shelby scale of numerical values for condition.
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1. “Mint State”
The Shelby scale defines "Mint State" in the 60 to 70 range. These must have no wear blemishes whatsoever. Coins in this category are uncirculated, generally shiny and new, with absolutely no signs of wear. They can have marks on them in larger or smaller proportions. Such marks can occur during handling at the production mint or while they are in transit. Those that exhibit the most contact marks, (that have absolutely no wear), grade as "MS-60" on the Sheldon scale, ("Mint State 60"). Examples with light contact marks might grade at "MS-63", "MS-64", and so on. An "MS-70" is the definition of absolute perfection. Coins of this grade are exceedingly rare and they show no contact marks or any kind, even under extreme magnification. Most uncirculated coins grade in the "MS-60" to "MS-63" range, with few attaining "MS-64" or "MS-65". "MS-66" and higher are rarely encountered. It is absolutely necessary to use the services of a professional grading company to accurately differentiate between the higher grades.
2. “Almost Uncirculated”
The “Almost Uncirculated” coins have a point grade of 50, 55, or 58, which is determined by the presence of very low amounts of wear. Each coin has a particular wear pattern. The high points on either side will wear faster than the protected areas. A coin graded "AU-58", ("Almost Uncirculated 58"), will be practically indistinguishable from a mint state example. Careful study can identify the difference to a seasoned grader.
Coins with more wear will grade in this category. These can be classified with the terms ”Extremely Fine”, (40, 45), “Very Fine”, (20, 25, 30, and 35) or “Fine” (12, 15), depending on the sharpness of the remaining details on the coins. They show obvious signs of wear but the designs are still intact.Fine details such as strands of hair, or regular patterns of lines, may start to wear through. In many cases, mint luster is still present on these coins. “Very Fine” can be ones which have circulated for 1-3 years. Minor features of the coins may already be gone.
These can be further defined as “Very Good” (8, 10), “Good”, (4, 6), and “Almost Good”, (3), coins. These examples are immediately seen to be heavily worn. Only weak designs can be observed since the other fine details of the coins in the high points are nearly smooth. Full rims must be present for the “Very Good” category. "Good" and "Almost Good" coins may have significant wear at the rims, perhaps even obliterating edge lettering. For “Good” coins, the mint mark and the date must be visible. “Almost Good” are the most worn in this category. They may have large amounts of design missing. Dates and mint marks may be worn away.
The "Fair", (1, 2), coins are “worn out”, but can still be distinguished as to their correct type. As long as one can identify an item, such as a U.S. quarter, it is a “Fair”.
These are "Poor", (0), disks that can be determined to be coins, but the type is indeterminate. They may be interesting due to the wear but are only collectible as examples of their component metal, (copper, silver, gold, etc).
Notice that the grade is not influenced by damage, except for contact marks on uncirculated examples. Any significant damage must be described separately from the grade. For example, "EF-40, Holed", or "VF-30, Scratch", will be used to fully describe certain coins. Damage is highly dependent on the grade, lower grades being generally less likely to have damage noted. A "Good-6" coin might have a small scratch which is not worth noting as such damage is reasonable for such a low-grade coin. On the other hand, corrosion, holes, and gouges, must always be described.
Mishandling can also affect items, but is not a grading factor. Items that have been harshly cleaned, gold plated, or polished, are noted, with the grade. Thus "EF-40, Cleaned", might be a grade attached to a mishandled quarter.
In terms of price, the condition can be used to find the current market value of an item. All coins of a given type and grade will be valued the same, if the grade is completely accurate. If damage, or mishandling, have happened, the price cannot be accurately determined. In these cases, the price can only be the agreed amount between buyer and seller. While there may be some guidelines, such as a cleaned example selling at a 50% discount, there are no firm rules. Buyer demand becomes paramount. Unfortunately, there is a severe drop in demand for damaged items and the prices are heavily discounted to reflect this fact.
With the grade classifications described, it will be easier to get a rough idea of grade. Remember that knowledge of the grades can give collectors advantages!