A coin's condition is one of the most important factors in determining its value. An uncirculated coin, which has no trace of wear, is almost certainly going to be worth more than a circulated, or worn, example of the same coin. The difference in value can sometimes be extreme.
It is therefore essential that collectors fully understand a coin's condition. Originally, a basic system of adjectival grades was used to describe a coin's condition, with additional adjectives added over time. The most heavily worn coin was described as "Poor," while the most pristine was described as "Gem Uncirculated." Other adjectival grades filled the gaps: Fair, About Good, Good, Very Good, Fine, Very Fine, Extremely Fine, About Uncirculated and Uncirculated.
Coins that have been properly stored since the day they were minted are called "uncirculated" or "mint state." If a coin saw circulation for a short time but still looks nearly brand new, it is called (or graded) "About Uncirculated".
The 1–70 scale was established in the mid 80’s. At that time, there was a significant need for an impartial authority not only to assign a grade to a coin, but also to guarantee that the coin was genuine. There are two main grading services that are known and trusted by the coin collecting community and those are Numismatic Guarantee Corporation (NGC) and Professional Coin Grading Service (PCGS). There are others but these two are the titans of coin grading.
Third party grading services use a team of coin graders to authenticate a coin and determine its grade. After the coin is authenticated and graded, it is encapsulated in a secure, tamper-evident holder with a label bearing a description of the coin and its grade. Since third party graders are required to be impartial (they cannot buy or sell coins commercially, or know the identity of the submitter), the grades that they assign are trusted by collectors and dealers around the world.
It's never too early to start thinking about what type of collection you want to build. Below are a few of the different types of sets you can build and what the name of the set is:
- Date Set: a complete set of every date and mintmark issued of a particular coin design
- Type Set: a set that includes one example of each coin design, such as a collection of every one-cent coin design issued by the United States.
- Thematic Set: a collection focused on a particular theme — for example, cats or ships on coins.
- Variety Set: a date set that includes different varieties of each date and mintmark combination. Varieties are differences in the dies used to strike a particular issue. Variety sets are more challenging than other types of sets, and are often built by more advanced collectors.