Usually, the value of a gold coin is determined by its grade and rarity, so it is very important that the rare coins you buy are graded correctly. The grade of a rare coin is a shorthand method of describing its condition. Because grading includes such factors as "overall appearance" and "eye appeal," it necessarily involves some degree of subjectivity. As a result, the grade assigned to a particular coin may vary even among legitimate dealers, especially in the higher, investment- quality grades where distinctions in condition are more subtle. Because the fine distinctions between grades often mean large differences in the value or price of a coin, the subjectivity in grading means that there is some inherent risk in coin investing. Fraudulent sellers, however, often intentionally inflate the grades of the coins they sell, charging prices many times the coins actual value. For example, you might pay $450 for an 1882-S Morgan dollar, that was described to you as having a high grade because of its excellent condition. Later, however, you may find that the accurate grade for the coin is two or more grades lower, and that the coin is actually worth only $50. Prior to the advent of independant certification services, false grading was the most common form of rare coin fraud.

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