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Determining the Value and Price of Coins
There are many factors that go into determining the price and value of a particular coin. First of all you must understand the difference between “price” and “value”. To most people these two terms are used interchangeably. To coin collectors they mean different things. The “price” of a coin is what you pay for that coin when you purchase it from a dealer. The “value” of a coin is what a dealer would pay to you for the coin. The coin market is intricate and complex and there are many factors that influence coin prices and values. The following are the major factors that determine values and prices of coins.
The major influence on the value or price of a coin is the supply of that particular coin in a particular grade that is available for people to buy. The total possible supply available to the market is determined by the initial mintage of that coin. For most countries, at the end of a year, the coin dies with that year on it are destroyed and never used again. Hence, once a year is done the supply of that coin for that date is fixed (note: this does not take into account restrikes).
Many factors influence the demand for a particular type and/or date of coin. In the early 1900s coin boards became popular which greatly grew the coin collecting hobby in the United States. Additionally, marketing campaigns by coin dealers have also increased the demand for certain types of coins. For example, during the depression coin dealer B. Max Mehl advertised all over the country that he would pay $50 for any example of a 1913 Liberty Head Nickel. As a result, many people started collecting coins while they were looking for this valuable coin. In recent history, the 50 State Quarters Series by the U.S. Mint started all whole new generation of coin collectors. In 2009, the Lincoln cent was redesigned and many people became interested in collecting Lincoln cents again. All of these factors were in part responsible for increasing demand and driving up prices and values.
3. Melt Value
If a coin is made from a precious metal such as gold or silver, the intrinsic value of the metal contained within the coin can be a major factor in determining the value and price of it. In 1965 the United States began switching the composition of its dime, nickel, and half dollar from 90% silver to a base metal that consisted of copper and nickel. Therefore, well-worn U.S. coins dated 1964 and before are worth more for their silver content than they would be to a collector. Therefore, as the price of gold and silver rises and falls, so to can the prices and values of gold and silver coins rise and fall accordingly.
It goes without saying that coin collectors would like their coins to be in the finest condition possible: uncirculated. In order to obtain coins that look like they just came off the coining press at the mint, somebody must remove them from circulation and store them safely. In the early and mid-1800s, very few people collected coins in the United States and uncirculated examples are rare and more expensive. However, in the 1930s and 1950s coin collecting was popular and many people saved mint state specimens.
Conditions of Coins
The condition of a coin is the key to its value. As location is to the real estate market, quality is paramount in the coin collecting market. Each step on the grading scale means a more perfect coin.
When attempting to differentiate between Mint State (Uncirculated) and Proof coins, it’s important to note that Proofs are specially-made specimens. They are struck with polished dies several times under great pressure. In addition, they are produced on specially-made planchets (blanks). These steps give Proof coins a deep, mirrored surface with razor-sharp edges and imagery. More importantly, Proof coins are not intended for circulation. They are coins struck and packaged specifically for consumers as collectibles.
Coins struck for general circulation are not usually struck using special dies or planchets. While a freshly-minted coin may have the initial appearance of being a Proof issue, closer scrutiny will show that the surfaces lack the mirrored background and sharp strike that Proofs enjoy. And, while general circulation coins are meant to be handled, Proofs should only be handled while wearing gloves to avoid damaging the coin with the oils from your skin.
Professional, Third-Party Grading Companies
There are two primary independent services for grading U.S. coins, The Numismatic Guaranty Corporation of America (NGC) and Professional Coin Grading Service (PCGS). These two services are the most widely accepted in the marketplace. They offer an independent and unbiased judgment as to the condition or grade of each coin. This puts collectors at ease and increases the liquidity of the individual item.
Once a coin is determined to be authentic, an accurate grade must be given in order to value the piece properly. What’s so important about an accurate determination of a coin’s grade? Simple. Depending on the type of coin, minute differences in grade can sometimes mean thousands of dollars difference in a coin’s market value. The following are the essential elements of the American Numismatic Association (ANA) grading system:
PROOF – (PF) A specially made coin distinguished by sharpness of detail and usually with a mirror-like surface. Proof refers to the method of manufacture and is not a condition. Proof coins are struck on specially-made planchets using polished dies. Proof coins are minted primarily for collectors and are not released for general circulation.
MINT STATE – The terms Mint State (MS) and Uncirculated (UNC) are interchangeably used to describe coins showing no trace of wear. Such coins may vary to some degree because of blemishes, toning or slight imperfections as described below.
PERFECT UNCIRCULATED (MS-70) – Perfectly new condition showing no trace of wear. The finest quality possible with no evidence of scratches, handling or contact with other coins. Very few regular-issue coins are ever found in this condition.
GEM UNCIRCULATED (MS-65 to MS69) – An Uncirculated coin with high eye appeal. It may still display light toning and a few contact marks on the surface or rim.
CHOICE UNCIRCULATED (MS-63 to MS64) – An above average Uncirculated coin which may be brilliant or lightly toned and has very few contact marks on the surface or rim.
UNCIRCULATED (MS-60 to MS62) – Has no trace of wear but may show contact marks, and the surface may be spotted or lack some luster.
CHOICE ABOUT UNCIRCULATED (AU-55 TO AU58) – Barest of evidence of light wear on only the highest points of the design. Most of the mint luster remains.
ABOUT UNCIRCULATED (AU-50 TO AU53) – Has trace of light wear on many of the high points. At least half of the mint luster is still present.
CHOICE EXTREMELY FINE (XF-45 or EF-45) – Light overall wear shows on highest points. All design details are still clear. Minor mint luster is evident.
EXTREMELY FINE (XF-40 or EF-40) – Design is lightly worn throughout, but all features are clear and well-defined. Traces of luster may show.
CHOICE VERY FINE (VF-30 to VF-35) – Light, even wear on the surface and highest parts of the design. All lettering and major features are visible though not sharp.
VERY FINE (VF-20 top VF-25) – Shows moderate wear on high points of design. All major details are visible but not sharp.
FINE (F-12 to F-15) – Moderate to considerable even wear. Entire design is still visible, but quite worn.
VERY GOOD (VG-8 to VG-10) – Well worn with main features clear although rare.
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Gold Star Jewelry & Coin Co is open Monday through Saturday 10:00 AM until 6:00 PM. We’re located at 7048 N. Clark Street, Chicago IL 60626; Phone: 773.942.6556.