Numismatists around the world are obsessed with the value of their collections. With sales of rare coins reaching into the millions, it is no wonder that some of them would like to know what makes a coin valuable.
Most coins are not worth more than their face value, but others can be worth much more than you think. Some numismatists are willing to pay through their noses just to add these coins to their collections. However, as time passes, different coins will have different values depending on a number of factors. Some of these factors are listed below.
Coins, just like every other tradable commodity, follow the classic economic model of supply and demand, that is, the higher the demand for a coin, the more expensive it will be. Collectors drive the demand for a coin, and this demand can be so high it adversely affects the price of the coin.
This demand helps to explain why some old and rare coins are incredibly valuable in comparison to their more common new counterparts. For example, more numismatists value the 1944 Lincoln steel wheat penny more than they do the 2007 Lincoln cent.
Just as the demand for a commodity, changes over time, the same is true in the numismatic market. These changes also affect the value of a coin, as more collectors seek out coins that were initially thought to be worthless. The example would be the increased interest in double die coins such as the 1955 perfect Lincoln penny. This coin used to be just a little more valuable than its face value. As more collectors started looking for ways to make their collections unique, its price soared to its current average four-figure value that promises to keep rising with time.
The grade of a coin is the condition that the coin is in and is, therefore, another essential determining factor in the value of a coin. Coins are graded on a scale of 1-70, with coins that are in better condition getting a grade closer to 70. Mint condition coins or uncirculated coins are usually graded between 65 and 70 and are considered very desirable to most collectors.
The main aspects that are taken into account when a coin is being graded include:
The strike of a coin: This is the term used to describe the process of stamping a coin with a design. A well-struck coin is one whose design elements have been brought out entirely without any errors or defects. Well-struck coins are usually more valuable than poorly struck coins though as mentioned earlier, certain strike errors may help increase the value of a coin.
Some coins are more valuable than others purely because of their composition. Many coins minted before the great depression were minted from silver and gold, and these coins have proven to be much more valuable than their copper, bronze and steel counterparts.
This is partly due to the fact that silver and gold values have increased dramatically in the last 150 years, affecting the value of coins that were minted in these precious metals. A good example would be the 1794 silver dollar, which sold for more than US $10 million at auction in 2013.
The age of a coin also holds some significance when determining the value of a coin, though it is not always as important as some of the other factors on this list. Some older coins are more valuable than examples that are more recent. Case in point being the Draped Bust quarter from 1804, which is more valuable than any of the 50 state quarters that were minted between 1999 and 2008.
However, this is not always the case, as some newer coins sell for much higher prices than older coins of the same series. This is evident when you look at the prices of pennies. The 1943 wheat head penny is a lot more valuable than the 1873 Indian head penny though this is mainly due to the consideration of other factors such as strike quality and rarity.
The design of a coin plays a significant role in the value of a coin. This is because when many numismatists are considering the aesthetic value of a coin, the design is usually going to play the biggest role in deciding how valuable the coin is. For example, the Liberty Head “V” nickel and the Saint-Gaudens Double Eagle are both coins that are valuable not only because of their rarity and age, but also because of the beauty of their designs. Examples of both coins have sold for over $1 million in the last ten years.
The rarity of a coin is perhaps the most important factor taken into consideration when determining the value of a coin. Rare coins are always in high demand, and therefore they sell at higher prices compared to coins that are more frequently encountered.
For example, one of the rarest coins in existence is the 1933 Saint-Gaudens Double Eagle 20 Dollar coin. This coin was almost completely destroyed after President Theodore Roosevelt signed an executive order in 1933 banning the minting and ownership of gold coins. Of the 445, 500 coins minted, only 11 exist, and only one is in private hands as the government seized the other 10.
The most important thing to remember is that numismatists value quality, aesthetics and rarity more than anything else. Coins that have all these characteristics are going to be more valuable than those that do not.