The condition has a direct correlation to the cost - whether you're buying new acquisitions to add to your collection, or selling part of your current holdings for profit.
Coin grading specs typically cover the following areas:
- The quality and condition of the blank
- Quality of the die, and how well it was struck
- Any wear and tear caused through circulation and/or general handling
This coinage will also have minimal handling and very little wear and tear.
However, there are specific exceptions, such in the case of "mistake" currency or other irregularities that are not typically seen in wide circulation.
In those instances, it is the rarity itself that lends additional value, along with the other factors listed above.
There is a 70-point scale used for numismatic grading, called the Sheldon Scale.
This scale ranges from (P-1) - the worst condition possible, generally barely recognizable - to (MS-70) which represents perfect mint condition.
These grading specs are comprised of three different types:
- Circulated - currency that has been freely circulated and in use
- About Circulated (AU) - currency that have seen minimal circulation
- Uncirculated (Mint State - MS) - currency that have never seen circulation
From there, you refer to the coin grading specs for the relevant type.
Proper grading requires an excellent light source, suitable magnification, and careful observation of the characteristics of the item to be graded.
While it is relatively simple to learn how to grade, it can take some time before you are an expert on grading a particular type.
The best collectors understand that it's necessary to spend the time and effort on coin grading specs to have the best collection possible.