An Introduction to Coin Grading
Coin grading has evolved over the years to a system of finer and finer grade distinctions. In the beginning, people collected ancients and there were two grades, new and used. Currently, particularly when talking about US coins, a more diverse scale of grades is used including: PO-1, FR-2, AG-3, G-4, G-6, VG-8, VG-10, F-12, F-15, VF-20, VF-25, VF-30, VF-35, XF-40, XF-45, AU-50, AU-53, AU-55, AU-58, MS-60, MS-61, MS-62, MS-63, MS-64, MS-65, MS-66, MS-67, MS-68, MS-69 and MS-70. It is difficult to imagine that there will be yet finer distinctions in grading in the future, yet it's already happening. Series-specific strike distinctions such as FSB (Fully Split Bands) for Mercury and Roosevelt Dimes, FBL (Full Bell Lines) for Franklin Half Dollars, FH (Full Head) for Standing Liberty Quarters, 5 and 6 step Jefferson Nickels and so forth are creating condition rarities out of coins formerly thought of as common.
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Coin Grading Services
Coin grading, or slabbing, is a fee-based service in which a coin or medal is sent to an independent third-party company to provide an opinion on its condition (grade) as well as it's authenticity. Slabbed (sometimes also referred to as 'Graded') coins are then encapsulated in a plastic holder (slab). A label insert identifies the coin and provides a grade on the 70-point Sheldon coin grading scale. Coins that are not genuine or have been altered in some way are not graded, referred to as "body-bagged" and returned to the owner without a slab. Photos from Flickr
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Read the Book!
Photograde: Official Photographic Grading Guide for United States Coins, 19th Edition
Amazon Price: $10.17 (as of 12/02/2008) 
The Official Guide to Coin Grading and Counterfeit Detection Edition, Edition #2 (Official Guide to Coin Grading and Counterfeit Detection)
Amazon Price: $13.57 (as of 12/02/2008)
A Guide Book of United States Coins 2006: The Official Red Book (Guide Book of United States Coins (Spiral))
Amazon Price: (as of 12/02/2008)
How to Grade U.S. Coins
Amazon Price: (as of 12/02/2008)
Photograde: A Photographic Grading Encyclopedia for United States Coins
Amazon Price: (as of 12/02/2008)
