Determining Coin Values
Collecting and investing in coins can be profitable if you have a general estimate of how much the coins are worth. To make basic estimates on your own, you should keep in mind the various factors that influence a coin’s value. This will enable you to make important judgments and avoid bad deals where you wind up buying a coin that would not recoup the amount of money you paid for it.
Supply Influences Coin Values
The law of supply and demand applies to all commodities and it has a major influence on coin collecting. For example, consider what happens when there is already a high supply of a given coin. The coin’s value would drop, because there are plenty to go around. But when the coin is rare, meaning that not very many were minted or few are currently available, then the value of the coin will rise. Supply and demand explains why a coin’s value is not determined solely by its age. Coins from ancient Rome might not be worth very much, but a gold South African Krugerrand from the Twentieth Century could be much more valuable. That’s because scarce commodities are more valuable.
Demand’s Effect on Coin Values
Demand also plays a role in the valuation of coins. If there is high demand for a particular coin, then the value of the coin may be quite high, even if there is already good supply. Once you begin coin collecting, you will notice other ways demand factors into the valuation. Some coins, for instance, become popular for aesthetic reasons, some because they commemorate a significant historical event, and some because they are part of a set that is difficult for collectors to complete.
Precious Metals and Coin Values
Coins which are minted from precious metals like platinum or gold are highly prized. These coins derive their value from their material, which tends to guarantee their value. The best example of this is a gold coin minted from gold bullion, like the American Gold Eagle, which is minted from 22-karat gold. These coins are almost always worth more than their melted weight. This gives investors more confidence that their collections are guaranteed.
Coin Values Are Tempered by Grade or Classification
Nicks, cuts, wear and tear, fading – all of these imperfections decrease the value of a coin. This is why you want to carefully inspect coins to determine their condition. A coin’s grade is also important. There are three grades: circulated coins, about uncirculated coins, and uncirculated coins. Uncirculated coins are in mint condition because they have not been placed in circulation and as a result haven’t accumulated any wear and tear. For this reason, uncirculated coins receive the highest value and can even be worth hundreds of times more than a circulated version of the same coin.
The best way to start estimating the value of your coins is to review a published list of guidelines, such as “The Standard Catalog of World Coins.” The published guidelines allow you to read about the classification and grades for specific coins and then compare your coins to the guidelines. There are other good resources, like coin collecting magazines, websites and books, which are usually available at bookstores and libraries. It is always a good idea to take your coins to a coin dealer and ask him or her to evaluate it for you. You can learn a lot by watching how an expert inspects and values a coin.
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