So what is a third party coin grading company? It is a firm or company that, for a fee, professionally grades a coin, or piece of paper money. The grading service usually performs four major services for the fee that they charge.
The first service is authenticating the coin or paper bill. Authentication determines whether the coin is genuine. The purpose of authentication is to protect the coin collecting community from counterfeits and fakes.
The second service is to determine the grade or the state of preservation of the coin in question. The best companies use a combination of technical standards and market grading based upon the Sheldon 70-point scale. Graders determine the quality of the coinís surfaces using the 70-point scale. 70 is the highest grade possible.
The grader assigns a numeric grade based upon the coinís condition. The more wear the coin received during circulation, the lower the coinís grade will be. Coin grading is part science and art much like any other appraisal process. This is why a companyís reputation is so important when it grades a coin.
The third service is attribution or the identification of varieties and Mint errors, among various attributes that can affect a coinís value.
The fourth service is to encapsulate or ďslabĒ the coin in a tamper-proof plastic holder, to ensure that the coin cannot be switched or otherwise be misrepresented as the coin graded and authenticated by the grading company.
Encapsulation is also helps to protect coins from mishandling, moisture, and other corrosive elements. The quality of the slab seal varies greatly from sonically sealed to completely unsealed. Warranties may guarantee the authentication, the protection, the grade, the attribution, or some or none of the above. The warranty is only as good as the companyís reputation.
Not every coin grading company offers all of these services. Some will slab cleaned or damaged coins and make a notation on the label. Other grading services will not touch such coins and will send them back to their owners.
Coin slabs vary in their composition. They come in all sizes and thicknesses and are constructed from various types of plastics. However most coin slabs are fairly uniform in their size. Some are more scratch and crack resistant than others. Some of the better ones have labels that are very tamper resistant and hard to counterfeit.
The minimal qualifications for a quality coin slab can be judged by what is known as the ďThree S Test,Ē which is Size, Sound, and Seal. The size of the slab should allow it to easily fit into a standard slab storage box.
The sound test is very easy to perform. Just shake the slab next to your ear. You will hear nothing from a quality slab. A lesser quality slab will produce some kind of sound as you shake it.
The seal test is also another easy one to perform. All you need is one of your fingernails. If you can fit the tip of your fingernail anywhere into the slabís seams, it is a poor quality coin slab and the coin is not being properly protected.
As you can see, the quality of coin slabs varies greatly among the various coin grading companies, along with their grading standards and services offered. The best advice is to stick with the premier coin grading companies like PCGS, which has a stellar reputation.