Overgraded Coins

The key component of coin value is naturally its condition.  This is usually described as its "grade".  The best way to think of this is a comparison of the coin's present state of preservation (amount of wear) as compared to the "ideal" condition, as it was new when it came off of the dies at the Mint of origin.  The most critical component of determining a coin's grade is the amount of wear it has received, but strike, luster, color and originality are all factors that are used today, especially by the grading services.

Due to the need to establish value in the commercial coin market, "grade" has become a substitute for "value", as grade can be listed in a simple shorthand version such as Good or Mint State 63, making it easier to use terminology that theoretically all parties can understand.  In other words, when a dealer states that a particular coin is a "Good", then the person to whom they are speaking should have a mental picture of what the coin looks like, and therefore have a point of comparison in terms of price.  The problem that develops in the coin market is what happens when a coin is overgraded, in other words its present condition is overstated (and therefore it is de facto overpriced).  On the next few pages, you can see some examples of the problems this causes.