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The term "uncirculated coin" refers to the condition of a coin that indicates that it has never circulated in the regular money supply in the economy. In other words, the coin shows no signs of wear on any of its surfaces.
Remember, all coins enter the economy through the federal reserve bank. Except for special collector coins and sets that are available directly from the mint for a premium, the only way to obtain uncirculated specimens at face value is to directly purchase them from your bank.
Since most modern coins are mass-produced in large quantities, it is common that the coin may have small nicks and scrapes on its surface from the production process and being transported in bags and bins.
These minor imperfections are not from the coin circulating in commerce, and hence the coin is still considered an uncirculated coin.
Numismatists grade uncirculated coins by taking into account the concentration and quantity of these minor imperfections. Coin collectors grade uncirculated coins using a scale that ranges from MS-60 which indicates there’s a lot of marks and imperfections to MS-70 which means it’s a perfect coin with no marks.
Numismatists grade world coins using adjectives to describe the grade, such as Uncirculated (a considerable amount of marks on the coin’s surface), Brilliant Uncirculated (just a few minor marks), and Gem Brilliant Uncirculated (no marks are visible to the naked eye).
The luster of an Uncirculated Coin can only be produced by the minting process.
If you hold a coin under a single light source and tilt from side to side and top to bottom, you will notice that the light will dance around the surface of the coin. This movement of light on the surface of the coin is known as the cartwheel effect. All uncirculated coins exhibit this phenomenon. However, it is easily seen on larger coins such as silver dollars and much more difficult to see on smaller coins such as the dime.
If the coin does not exhibit the "cartwheel effect," it has been circulated and cannot be classified as uncirculated.
Next, look at the highest points of the design. If the cartwheel effect is evident in the fields of the coin but not on the highest points of the design, numismatists would consider it an Uncirculated coin.
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