How can you tell if a 1997 Silver American Eagle Coin is worth $20 or $500 dollars? A new collector will want to know and understand this valuable information before investing in such a treasure. Coin grading is an important part of determining how valuable the coin is, especially if it's a rare or unusual coin. There are different factors that play a role in value determination, such as:

• Quality of freshly minted coins: The striking process at the mint can leave some imperfections in the coins. Any particle that is present between the coin and the die will create an imperfection.

• Coin weight and quantity of silver: A silver coin should contain about 99.99 percent silver and the coin specifications should be available.

• Original seal: A coin in its original seal means that it is less exposed to air and any accidental human touch compared to a coin in a bubble.

Coin grading is a process where investors determine the value of a numismatic coin, and the better the grade, the better the value. In most cases, coins are graded on a scale of 0-70. This scale was developed by Dr. William Shelby many years ago. The numerical grade is combined with a letter code to create a grade. Here are some grade examples:

• Numismatic coin gradingMS - MS or Mint State means the coin is perfect and un-circulated. This is graded from MS-60 to MS-70. It is very unlikely that you will see an MS-70 coin. They are extremely rare. Even MS-68 coins are extremely rare. Most MS coins are around MS-65.

• AU - AU or Almost Uncirculated means these coins have very light signs of wear. This grade comes in AU-50, AU-55 and AU-58. It can be very hard for to determine an AU coin as signs of wear are almost unnoticeable.

• EF or XF - Extremely Fine coins are a step below AU and have slightly more signs of wear. These coins are graded from EF-40 or EF45, XF-40 or XF-45.

• VF - VF or Very Fine coins are still very beautiful coins. They usually have light wear and still sharp features. These coins are graded in VF-20, VF-25, VF-30 and VF-35.

• F - F of course means a Fine Coin. These coins are usually graded F-12. Fine coins will usually show all the features of the coins but the minor details may be worn.

• VG - VG or Very Good means the entire coin is showing wear but the rims are still completely visible. This is usually graded at VG-8.

• G - G or Good coins are more worn that VG coins but the mint mark and date are still completely visible.

• AG - AG or Almost Good coins show huge signs of wear but dates may still be partially seen.

• Fair - Fair coins are extremely worn coins. These coins may even exhibit holes or bending. Features and dates may no longer be visible.

• Basal State - Basal State is the grade for coins that are almost not distinguishable as coins. These coins are pretty much worthless.

Upon receiving a coin from the mint, one should examine it carefully to make sure that it is perfect on both sides. This should be done without removing the silver coin from its holder or bubble, and the coin should always remain in its protective casing. The silver proof coins can develop hairline cracks just from the handling and this will result in a downgrade. Hairline cracks can develop from anything that touches the surface of the silver coins. Also, the coins should probably never be cleaned, as cleaning itself may have an effect on the grading.

Many investors prefer focusing on numismatic silver coins rather than silver bullion coins, because there is a big difference between the values of the two. While bullion is worth whatever the price of silver is at that time, numismatic coins are rarer and, as such, more valuable. For instance, a plain American Eagle silver bullion coin minted last year is worth only $20. But a numismatic silver coin reviewed by experts, and graded as perfect coin with a score of MS70 is worth $125. Another example: an MS70 Silver American Eagle numismatic silver coin minted in 1997 is worth about $500 in retail, but a bullion coin of the same year has a value of only about $20.

Numismatic silver coins provide a great opportunity to you to make a big profit from your monetary investment. When looking to invest in silver coins, always do business with experienced and reputable companies, because they can provide you the right product, and you won't have to worry about getting involved in a scam.

About the Author: Tom Bukacek is a numismatic coin collector in the Austin, TX area. For more information on Numismatic Coins, please visit http://www.TomsGoldenRules.com