What Makes a Coin Valuable & How is Demand Set?

coin valueYou are probably aware of sites like PCGS and APMEX and understand that you can look up the value of your coins. But do you know what the characteristics of a valuable coin are and what to look for if you are selling your coins or building your collection?

In today’s post we seek to help you understand a little bit about coin values and where they come from, how they ebb and flow, and what you can do to get top dollar for your coin collection.

“A Coin is Worth what Someone will Pay for it”

Are you tired of hearing this from your old man? Numismatics can be far more complicated than simple economics of supply and demand, and understanding that something may be worth little today and a lot tomorrow is important to any coin dealer.

Coin Rarity and Demand

coin valueAs you get more involved in the buying and selling of coins you’ll often be startled to see coins that once fetched face value begin to fetch hundreds, if not thousands, from collectors. Collectors who seek unique collections or complete sets can make the value of certain coins rise as their interest no longer becomes solely based on the value of one coin, but the value of that one coin to their collection.

Generally, what is valuable to one collector is valuable to another, making certain coins more sought after at certain stages. When this happens, the simple economics of supply and demand do come into play, as coins with higher demand will certainly fetch higher dollar amounts. This explains why coins that were essentially worthless can become something far greater.

Often, the mint has a lot to do with demand as the original amount of coins made can play into their demand. The less coins that were created at the mint, the more rare they are. This often leads to a coin that can fetch four figures versus a coin that begs face value.

Classic Cars not Classic Coins

Contrary to logic, the age of the coin does not always merit worth in the same way a mint condition classic car would. In fact, it is probably one of the least important factors to consider when evaluating what makes a coin valuable or gives it its worth.

This can be due to the fact that some older coins of the same series, for example, might have been created in volume whereas newer coins of the same series may be much more rare.

This is not to say that you should dismiss age as a valuation factor altogether, this is just to say that it is not often as important as other factors like rarity and condition.

Condition and Grade = Get Paid

The grade of your coins, as opposed to age, is actually a very important factor for a coins value. This will reveal the amount of dents, scratches, corrosion, carbon spots, poor cleaning, or other forms of damage that have accumulated on the coin.

Additionally, grade, which uses a scale from 1 to 70 (with 70 being mint condition), also takes into account strike of the coin, the aesthetics, the coins coloration, and luster. Coins that were never circulated or are mint condition — as in straight from the mint — are usually graded 65 and up and are generally the most desirable to collectors.

A well-struck coin is desirable because it means that the aesthetic design elements of the coin really come through. However, a poorly struck coin can fetch a pretty penny as well. In fact, a rare error coin sold for $5,462.50 in 2010.

Intrinsic Metal Value

One of the most obvious points of valuation, the intrinsic value of the metal is also an important factor. Apples to apples, a gold or silver coin would be worth more than a copper or steel coin.

The values of gold and silver have increased a lot since the early 1900s, greatly influencing the value and desirability of coins that were minted during this era. If you go back even farther, you’d find record of a 1974 silver dollar that sold for more than $10 million at a 2013 auction.

Of course, this coin was believed to be the first silver dollar struck by the U.S. Mint, making it rare, historic, the finest known of its kind, and of a special collection (the Cardinal Collection).

What Sets Coin Demand?

A rare coin is certainly one of the most important aspects that can drive its price. In addition to rarity, quality and aesthetics play a vital role to numismatists who want something attractive and well-preserved. Keeping all these things in mind will help you understand why coins can hit the $10 million mark or why a shiny coin might never get past the $10 mark.

If you are in the West Palm Beach area and have some interesting coins you want to have looked at, contact the coin buyers at Twery’s to get them appraised and for a potential cash transaction.