Grading is probably the most controversial and by far the most important area of coin collecting and there are almost no grading guides for world coins. Grading issues have caused disputes between buyers and sellers since collecting begun and will continue to do so for ever more. Grading coins accurately is a skill acquired in time and after looking at many similar/identical coins in all ranges of condition. Many coins fall in between grades, and so terms such as ‘nearly VF’, ‘good VF’, ‘gem BU’ are encountered. The numerical system (1 -70) popular in the USA is not common in Europe but it does allow greater flexibility within key grades. We should bear in mind that their grading system is more generous than that of the UK. E.g. the lower ranges of Almost Uncirculated ( AU50 – 57) allows for some wear which is not acceptable in the UK, so care is needed. There are also differences between European countries where FDC (Fleur De Coin) is used to describe an uncirculated coin but in the UK, FDC is a perfect coin that could only be attributed to the best of proofs and is equivalent to the to the top number on the American system (MS70) and is rarely found

We are not numismatists and our concern is only with gold and silver coins as an investment so the grade is not as critical as it is for a collector of rare coins. Nevertheless the condition of a coin is important and numismatists agree that in most cases the condition of the coin is more important than its rarity.

There are key grades and grades between these grades so it is often easier to start with buckets, Circulated, Almost Uncirculated and Uncirculated.

The coin should be graded on its weakest side, look for overall wear and loss of design detail such as strands of hair, feathers or coats of arms.  Detecting wear can be made more difficult where relief is low particularly applicable to coins of Edward VII and George V

Some tips for sovereigns

The majority of Sovereigns since 1820 contain Benedetto  Pistrucci’s fantastic engraving of St. George slaying the dragon and there are some high points that can indicate wear.  Look at the helmet above the eye this is the first place wear occurs, the strap across St George’s chest, the fingers on the hand, signs of wear on the reins, relief of the sword against the flank. This reverse covered a number of monarchs on the obverse. In general look for detail of the ears on males and hair on females.

Look at the example below of a 1918 Halfcrown. With examination under magnification the slightest rubbing can be seen on the ear, cheek and moustache. A very nice coin but not Uncirculated

1918 Halfcrown AU (About Uncirculated) American AU58-59

KEY GRADES

I have listed the Key grades below with some sample coins of various denominations to give an idea of grading but please remember this is subjective and maybe variable in the eyes of the expert who would examine with magnification.

Poor: A very worn coin but better than a smooth disc. Inscriptions worn off, date illegible, only outline of design visible. Such coins are generally of no value to a collector.

Fair: A heavily worn coin but date and denomination legible, type recognisable. Very little detail visible , worth no more than the metal value

Penny Fair American F2

Good (G): (sometimes Mediocre) Inscriptions and date considerably worn but legible. Generally worth no more than the metal value

Very Good (VG): Considerable wear over the whole coin, and high spots worn through. Coins in this or the previous grades are really only collectable if extremely rare and generally worth no more than the metal value

Fine (F): Worn over whole area, but only the highest spots are worn completely through. Some of the hair volume should be visable but not individual strands (US Grade about VF)

Farthing F (Fine) American F12-14

Very Fine (VF): Detail clear, but obvious evidence of limited circulation. High spots worn but detail remains. More hair detail is evident and also detail of other designs. Traces of mint lustre may linger amongst the letters of the inscription. (US Grade about XF)

Sixpence VF (Very Fine) American VF25-30

Extremely Fine (EF): A coin with little sign of being circulated. Slight wear on high spots on close inspection, and all other detail clear and sharp with minimal scratches and marks. Much mint lustre may remain. (US Grade about AU)

Half Penny EF(Extremly Fine) American XF40 - 44

Almost Uncirculated (AU): Not quite in Uncirculated condition could be down graded because of heavy bag marks, edge knocks or other undesirable feature but without the slight wear that determine it to be EF, would usually contain more than half of its mint luster.

Florin gEF (Good Extremly Fine) American AU About Uncirculated AU55

Uncirculated (UNC): No wear, although it is possible for the design not to be fully struck up in the minting process. Not perfect as there may be bag abrasions and knocks through mass production. The coin should have most of its mint luster present. Older coins may be tarnished or toned.

Shilling UNC ( Uncirculated) American MS60-62

Brilliant Uncirculated (BU): There will be no visible signs of wear or handling and ideally no bag marks.  Usually implies full mint lustre, in other words no toning or tarnish.

Half Penny BU (Brilliant Uncirculated) American MS67-69

FDC: (Fleur de Coin) Perfect mint state, with no abrasions or marks, and full lustre. Usually applied to proof coins only, as coins intended for circulation are in contact with others during production.

Penny FDC (Fleur De Coin) American MS70

Proof: Not a condition, but the coin has been struck using specially prepared dies and polished blanks, and the minting process has been carried out usually twice with extra pressure to ensure the die is filled. A characteristic of proof coins is that they have very sharp edges because of the high pressures used to ensure that the metal flows into all details of the design.

All the above photographs are by courtesy of Wybrit British Coins

The table below attempts to show in detail the Key Grades in bold and grades in between

Maurice Hall

Gold can be found in its purest form on the earth’s surface, mainly in sand found in rivers.  This metal has been known about and used since the early times of mans’ history.  Great ancient civilizations such as the Egyptians, Assyrians and the Etruscans etc. left behind gold treasures, ornaments and jewellery.  The “Monetary Phenomenon” began in part of Asia Minor in the kingdom of Lydia which lay along the edge of the Aegean sea along the coast of what is now Turkey, criss-crossed by rivers whose names have remained famous: the Meander, with many bends and the Pactolus, symbol of wealth.

Lydia

Herodotus, who wrote around 430 BC, talks about the Lydians as “the first people we know of to have struck gold and silver coins.”  We can therefore place the birth of currency in Lydia due to the fact that archaeologists working in the twentieth century on the site of ancient Sardis, capital of the kingdom, found small round ingots of a metal called electrum.  This is not pure gold but a natural alloy of gold and silver.  It could be found in abundance in the mountains of Lydia and especially in alluvial deposits in the Pactolus River, which retained a reputation for being wealthy that its current condition no longer merits.

Lydian gold coin issued under the reign of Croesus (Fifth century BC) - Obverse - Source Sacra-Moneta.com

Historians are generally in agreement that currency first appeared around 650BC during the reign of the King Ardys of Lydia, (652-615).    Metal plates dating back to this period were found with deep recesses in them produced by a hard object such as a punch.  On the other side there were lines like scratches.  It is highly likely that a few drops of molten electrum were poured onto an anvil with a rough surface.  A punch with a design on it would then have been placed on the metal and it would have been struck by a hammer which would have printed the design on one side and stripes from the anvil on the other.  This very simple design was often nothing more than the mark of a broken nail.

Gold and silver had been used for trading for centuries before this, but each nugget or ingot had to be checked and weighed each time it changed hands.  Punched marks used by merchants were only useful for recognizing coins they had previously controlled or accepted.

Lydian gold coin issued under the reign of Croesus (Fifth century BC) - Obverse - Source Sacra-Moneta.com

Under the reign of King Alyattes (610-561) a new form of Lydian money appeared.  The surface of the anvil was replaced by a lower die with an intaglio design engraved in it.  Using a hammer and a punch the metal was pressed into the lower die so well that the design appeared in relief (it was a lion’s head).  The punch itself left a deep mark on the reverse side of the coin.    It was a square or rectangular indentation, usually divided into four compartments, each with a pattern with the relief as a focal point.  Before being struck the blank pieces of metal were adjusted to a standard weight.  The heaviest coins weighed about 10.90g, and were called “staters” which signified balance or standard value.  Fractions of “staters” were also used with various weights and values.  A third of a “stater” only featured the head of a lion; smaller coins only showed the foot.

The lion was the symbol of royal authority.  It served as a guarantee of the weight of the coins doing away with the need to carry out tedious and time consuming checks of coins each time they changed hands through a commercial transaction.  However, in electrum, proportions of silver and gold were not fixed; the intrinsic value of each coin could vary considerably.  Electrum coins would not have been easily accepted outside of the region in which they were produced.  This is why they were soon abandoned in favour of pure gold.

The first issue of pure gold coins on a large scale took place under the reign of King Croesus of Lydia (561-546) whose name remains to this day a symbol of opulence.  So great was the wealth of Lydia that the King gave one gift to the shrine of Apollo at Delphi of ingots and ornaments containing an estimated 4 tons of gold.  Coins issued under the reign of Croesus were oblong coins minted in Sardis and contained about 98% gold.  They were the closest to pure gold it was possible to get with the refining methods available at the time.  They soon led to the end of electrum coins due to the difficulties of determining the proportion of gold and silver content.

The obverse of Croesus’ coins featured the royal symbol: the head of a lion and the head of a bull clashing.  The reverse, as with previous coins, only featured the indented square made by the punch of the money maker.  Aside from these gold coins, Croesus also had silver coins struck which were identical except for the fact they had a larger diameter.  The purchasing power of one gold stater was equal to ten silver coins.  The relative value of equal weights of gold to silver was in fact 13 1/3 to 1 at the time.  The king strictly controlled the sources of precious metals (mines and rivers) in his kingdom, because a fixed relationship between the value of gold and silver could only be maintained if there was a regular supply of metal.

Lydia’s wealth could not save Croesus.  In 546 the Lydian army lost to the Persians of Cyrus.  Minting of Lydian money ended.

Every winter, an ice road is laid across 400 km (250 miles) of tundra to carry supplies to one of the world’s most isolated gold mines.

Kupol Russian Arctic Mine

There is no other way for heavy machinery to reach Kupol, the $700 million Arctic mine behind a resurgence in Russian gold production after five straight years of decline.”It’s one of the harshest climates I’ve worked in, and I’ve worked in the Atacama desert in Chile and at 15,000 feet in Indonesia,” said Patrick Dougherty, general manager at Kupol. “But I don’t get to pick where the gold is.”

Only South Africa holds more gold than Russia, but Moscow’s fragmented industry has struggled to access vast reserves in its inhospitable Far East. The region was first mined in the 1930s by prisoners of the Gulags set up by Soviet leader Josef Stalin.Russia is the world’s biggest energy supplier, but falling prices and reduced demand have cut income from natural resources to about 8 percent of its gross domestic product in the first quarter of 2009, from nearly 11 percent a year ago.

Gold, on the other hand, has been helped by recession. Its safe-haven appeal has shielded it from a demand slump that shredded other commodity prices, lifting it to over $1200 an ounce in December 2009

Chukotka, a region revived in the last eight years by the $2.5 billion investment of Chelsea soccer club owner Roman Abramovich, produced a fifth of Russia’s gold in the first half of this year. Gold is the region’s passport to growth after Abramovich quit as governor last July.Russia ranked fifth among the world’s gold miners last year, between Australia and Peru, with an 8 percent share of output. Production rose 13 percent in 2008, the first increase in six years, and jumped another 25 percent in the first half of 2009. “This was solely due to the commissioning of Kupol,” said Olga Okuneva, mining analyst at Deutsche Bank in Moscow. “If other large projects in the Far East start producing gold, this will be a major growth driver for the Russian gold industry.”

Kupol — meaning dome in Russian — is named after a rounded outcrop of rock that juts skyward from the tundra in central Chukotka, over 200 km (125 miles) from the nearest settlement. The mine took five years to build. It is the largest tax payer in Chukotka, a land twice the size of Germany where reindeer outnumber people four to one. “With a deposit as large as Kupol, mining’s contribution to the regional economy is expected almost to double to 37 percent this year,” said Roman Kopin, the 35-year-old who took over as governor when Abramovich resigned.

Kinross Gold Corp, the Canadian miner which owns 75 percent of Kupol, is unusual among foreign investors for holding a majority share in a major Russian mineral deposit. The government of Chukotka owns the other 25 percent. Untangling the red tape that stifles some foreign investors in other parts of Russia was one of the main achievements of Abramovich’s more than seven years as governor, Kopin said. “The investment climate here, perhaps, is a little bit different, because we understand that it’s very difficult to work in Chukotka,” he added.Kinross has been the top performing gold stock on the New York Stock Exchange for the last three years, when the company’s value rose more than 160 percent. Kupol will supply about a third of its total output this year and 15 of 24 equity analysts polled by Reuters retain a bullish rating on the stock

ARCTIC CORRIDOR

About 1,400 jobs are related directly to Kupol, and Chukotka’s population totals around 50,000. Miners and catering staff spend four weeks on site and four weeks off, earning an average monthly wage of 50,000 roubles, 25 percent above the regional average. “We have equipment that works here,” said Alexander Puzovets, 48, a drill rig operator who works 10-hour shifts at the pit face. “I’ve been in mines where we’ve used hammers.”The mine’s in-house electricity plant could generate enough to power the regional capital, Anadyr.In winter, miners walk the purpose-built Arctic Corridor — an enclosed, 900-meter tunnel from camp to mine — to avoid temperatures that drop more than 50 degrees Celsius below zero (minus 58 degrees Fahrenheit).

About 60 percent of Kupol’s gold is mined underground. Zurab Samteladze, a 55-year-old Georgian more than 7,000 km from home, hauls 45-tonne rock loads to the surface in a Caterpillar truck.In deeper parts of the mine, skilled operators maneuver drill rigs by remote control. This avoids the need for miners to work long hours beneath areas vulnerable to rock falls.

“With all the video games they play, the younger generation has a better chance of operating these units,” said Dougherty, a native of Arizona. Alcohol is banned. Miners pass their time playing pool, in the gym or watching television. Popcorn is a popular snack, while eight tons of reindeer meat was served up last year. “I play guitar — they have a music room. I like basketball — they have a sports hall,” said Andrei Aksanov, 34, a mechanic in the truck shop.Like 80 percent of the miners at Kupol, Aksanov comes from Magadan, the port city 1,500 km (940 miles) to the southwest.

A worker cast an ingot at the Koylma refinery Magada

This is where mining began in Russia’s Far East. Stalin, needing bodies to unearth new-found gold reserves, sent hundreds of thousands of prisoners to slave in the region’s labor camps over two decades from the early 1930s.From such grisly beginnings, Magadan has developed into the hub of gold processing in the Russian Far East. Kupol flies its dore  (bullion bars)  to be processed into almost pure metal to be refined at the Kolyma Refinery to the north of the city. Vladislav Feoktistov, the refinery’s 71-year-old director, raised a glass of vodka to visiting officials from Kinross Gold. Supplies from Kupol will guarantee the plant’s biggest turnover in its 11-year history, he said.”This a business that’s only as good as its suppliers,” he said. From here, 15 kg (33 pound) gold bars worth more than $450,000 each at current prices are delivered to Russian banks.

Kinross report – The production at Kupol mine was started during the second half of 2008. During the second half of 2009, Kupol mine reported production of 234,265 gold equivalent ounces. Out of this, Kinross has produced 75% or 175,699 gold equivalent ounces. The production includes 151,327 ounces of gold and 1,633,673 ounces of silver. Kinross says that, with a cost of sales of about $205 per ounce on a co-product basis using a gold price of $400/oz and a silver price of $6/oz, Kupol will become one of the lowest-cost gold and silver mines in the world.

Processing – The Kupol mill is a conventional gold/silver cyanidation plant that incorporates a CCD thickener washing circuit and Merrill-Crowe zinc precipitation because of the high silver ore grade. Cyanide destruction is accomplished with calcium hypochlorite. The Kupol mill is designed to process about 3,000t of ore per day (1,100,000t per year). Run-of-mine ore is crushed in a jaw crusher and conveyed to a crushed ore storage bin. The crushed ore is ground in a SAG grinding mill followed by a ball mill. Gravity separation of free gold and silver will be carried out with a Knelson concentrator in the grinding circuit.

MORE GOLD TO MINE

There should be more to come. Polyus Gold, owned by billionaires Mikhail Prokhorov and Suleiman Kerimov, plans to launch Natalka, the world’s third-largest gold deposit, in 2013. Annual production of between 25 and 30 tonnes will put Natalka on the same scale as Kupol. Beyond 2017, Polyus plans to raise output to more than 40 tonnes a year. “It’s a deposit with reserves of more than 1,000 tonnes that will create jobs, infrastructure and become a major center for Magadan region,” said German Pikhoya, Polyus Gold’s deputy chief executive for strategy and corporate development. If Chukotka is to retain its leading position, it must do more. Current reserves at Kupol will last only until 2016. To extend the mine’s life beyond this date, more reserves must be found, mapped and registered with Russian authorities. Kinross and others are already exploring. “Chukotka is definitely a key gold-producing region, particularly in the long term,” said Vitaly Nesis, chief executive of St Petersburg-based miner Polymetal. His company plans to launch the Mayskoye gold deposit in Chukotka by 2011.

Maurice Hall from Sources Reuters, Kinross and mining-technology.com

Prior to 1860 the Germinal system was adopted to create a monetary community between Belgium, France, Italy and Switzerland.  In 1803, the “germinal franc” (named after the month Germinal in the (revolutionary calendar) was established, creating a gold franc containing 290.32 mg of fine gold. From this point, gold and silver-based units circulated interchangeably on the basis of a 1:15.5 ratio between the values of the two metals (Bimetallism). This system continued until 1864, when all silver coins except the 5 franc piece were debased from 90% to 83.5% silver without the weights changing. It, however failed because these countries had to lower the fineness of their coins to curb the disappearance of silver coins.  There was no harmony between the countries.  The Swiss reduced their 2 franc coins and higher value coins to 800 thousandths.  Italy reduced their coins to 835 thousandths.  Due to the need for small coins, France overruled the Legislative Body and tentatively decided to reduce the fineness of 50 and 20 centime coins to 0.835 thousandths (law passed on the 25^th May 1864).

Belgium gold coin from Latin Monatary Union - Leopold II

The story began when Belgium adopted the French franc in 1830. Switzerland harmonized its currency to the franc in 1848 and Italy joined in 1861, both retaining the names of their national currencies but adjusting their values to match the franc. In 1865, this arrangement was formalized as the Latin Monetary Union. Greece and Bulgaria joined in 1867, and a number of states (Spain, Romania, Austria, Finland, Venezuela, Serbia, Montenegro, San Marino and the Vatican) issued currency following the conventions without officially joining the Union.

The basic idea was that each member country would have identical coinage made from gold and silver. While the names of the individual currencies were kept, the weights were identical, so 5 French francs were worth exactly the same as 5 Italian lire and could be used through the Union like national currency (minus a 1.25% handling charge). Each country could mint as many coins as it wanted, there being no risk of inflation due to the intrinsic worth of the metal. The following coins were issued throughout the Union:

Belgium used French gold for all its dealings and therefore made it legal tender in 1861.  The Belgian delegate remarked that because his country was situated between France, England, Holland and Germany it formed the perfect natural link for payments to these States.  Some were using gold and others silver.  The balance of the National Bank was suffering from the aftershocks of these actions which disrupted credit and trade.  Belgium, Italy and Switzerland therefore demanded adoption of the gold standard.  The agreement was signed reducing the fineness of coins worth less than 5 francs to 835 thousands.  The money supply was voluntarily limited.  Individuals could only make maximum payments of 50 francs.  Each country was also forbidden from printing more than 6 francs per capita.  A very simple system that Greece joined in 1868.

However, there were problems that eventually lead to failure. The exchange rate of gold to silver was fixed at 1:15.5, which soon turned out to over value silver significantly. The Union countries tried to unload their silver coins into other countries, so they could profit by turning them into gold. Speculators could buy 16 francs of silver, go to the Mint and strike four 5 franc coins which enabled them to go and buy a beautiful Napoleon. France’s gold was disappearing.

Germany shamelessly profited and benefited greatly from the situation.  German agents came to Paris and Brussels with silver ingots from the recent demonetisation of thalers and transformed them into 5 franc coins which were then converted into notes and then gold.  To put an end to these practices Belgium, France, Italy and Switzerland limited (1874) and then soon after suspended (1876) the striking of écus. A larger problem was that there was also a second set of subsidiary silver coins for smaller amounts, issued by each country on its own and not fully convertible elsewhere. Even though these coins had a lower silver content than the primary coins, Union members were by law required to accept up to 100 units of them at face value per transaction, very much a loss-making proposition for the receiving side. Also, while the ending of silver convertibility stopped the minting of new silver coins, outstanding ones remained legal tender. With the advent of World War I and the massive financing strains involved, not to mention war between members of the Union, the system collapsed totally, although it remained in legal fiction until the end of the 1920s.

The United Kingdom entered discussions of  Britain joining the Latin Monetary Union. The proposal involved reducing the amount of gold in one pound sterling by less than 1% to make one pound equivalent to 25 Francs and also decimalising the currency. During the period of the Latin Monetary Union, the United Kingdom was already in a monetary union with territories now commonly known as the “Commonwealth” The gold standard of the British gold sovereign existed in these territories until the outbreak  World War I.

Maurice Hall