How Coins are Valued

A coin collection can be a fascinating hobby or an investment the can increase in value over time. If you have a sizable collection or want to become a serious collector, it may be wise to get a professional assessment of the value of your collection. Here is how coins are valued:

1. Scarcity or rarity – If a coin if very rare the value will generally be higher. For example, 1913 Liberty Head nickels may demand a price of $1 million or more because there are only five in existence. Antique coins are limited so when they are found, they tend to have a high value. An exception could be old coins that are in great supply. A one thousand year old Chinese coin may only be worth a few dollars because there are a great number of them in existence.

2. Condition or grade – Coins can range from newly minted, never circulated to very low quality, damaged coins that are hardly recognizable. Until recently, coin grading was done on a subjective basis. Ratings depended on the opinion and expertise of the grader. Recently a number of scales have emerged in the U.S. and Europe grading attributes like rarity and coin quality.

3. Bullion value – Coins made of gold, silver or platinum precious metals may be valued not only on appearance but on the value of the metal they contain. When the price of gold is high, the value of gold coins will rise accordingly.

4. Demand – The price of coins is subject to the laws of supply and demand. When a coin is in great supply, its price will be relatively low. Some coins are in high demand because they are attractive or because they were issued at some significant period in history like the moon landing or the inauguration of President John F. Kennedy. High demand for a coin will cause an increase in the price of some coins even though they may not be in mint condition.

History of Coin Grading

Prior to the development of the worldwide market for coins, coins were described as “uncirculated” — the highest grade, “fine” or “good” — the lowest quality. By the mid 20th century, the American Numismatic Association and most professional coin dealers in America adopted a numerical system called the Sheldon scale. This system uses a scale of 1 – 70 with 70 representing the perfect specimen and 1 the lowest quality coin.

Factors in Evaluating a Coin

1. Eye appeal or aesthetic interest
2. Dents on the rim
3. Scratches or blemishes on the coin surface
4. Luster
5. Tone
6. Detail
7. Damage

Coin Grading Services

Two of the most popular coin grading services are the Numismatic Guaranty Corporation and the Professional Coin Grading Service. Coin grading services certify that coins are authentic and give a rating to each coin. After coin is graded it is sealed in an air-tight case to prevent deterioration.

Even though coin grading is used to establish the value of a coin, the process of coin grading still involves a degree of subjectivity. For example two coins may have the same rating but one coin may be more aesthetically pleasing to the public commanding a higher price. In general the higher the quality, the greater the value of any particular coin.

Apart from professional grading or market prices, the greatest value of coin collecting may be the joy that collectors get from this popular and fascinating hobby.

How to Value a Coin

Visiting coin collector websites can be a good start to your research, but the best way to value a coin is to physically meet someone who can help you out. Someone with a practiced eye should be able to physically see and value the coin in front of you. Coin collector clubs, a curator in a museum and even coin shops can all help you in understanding the process of valuing your old coin. If you’re interested in reading this article, you’ll surely be delighted to learn how to clean old coins.