For most collectors, the goal is to buy coins in the highest grade available—or the highest affordable grades. However there is actually an active market for coins in the very lowest grades, also known as “lowballs.” In fact, some coins are worth more with extreme levels of wear versus an average amount of circulation. Why? The basic answer is rarity.
Most United States coins circulated extensively. Items like Morgan dollars, Walking Liberty halves and Indian Cents were made in vast quantities—and used in everyday commerce. Therefore these coins are extremely easy to find in well-worn condition. Coins from these series are very commonly encountered in low grades like Poor 1, Fair 2 and About Good 3.
Other coins, however, are actually quite difficult to find in low grades. $2.50 Indian Quarter Eagles, for instance, did not circulate much and were often kept as keepsakes. The average $2.50 Indian is likely to grade between Very Fine 20 and About Uncirculated 50—and be worth in the $225-$275 range. By comparison, a piece in single-digit grades is likely to command well over $300. Ironically, a coin in inferior condition is actually worth a premium price.
Another example is commemorative coinage. These were issued to celebrate important events in America; they were not intended for circulation. Since these were usually not spent, heavily worn specimens are highly unusual. Even if a commemorative coin entered circulation, it was more likely to be plucked from change and kept as a souvenir. Most commemorative coins are extremely rare - below XF 40 - and, as such, are quite valuable.
Given how much certain heavily circulated coins are worth, one might wonder if numismatists ever try to “create” lowballs by wearing them down. This is actually quite difficult, as it takes years and years of constant circulation to bring a coin down to this level. To bring a silver coin down from Very Fine 20 to Good 4, it might require at least 10-20 years of everyday use. Therefore a lowball coin cannot be created.
While lowball coins are expected to be heavily worn, damage or cleaning is still frowned upon. In order for a lowball to command a substantial premium, the coin should display smooth surfaces and even coloration. Gouges, heavy marks, unattractive discoloration or any other signs of mishandling are still considered detrimental. The most valuable lowballs show extensive “honest wear” but no other flaws.