Ever wondered why sometimes a small collectable coin is sold for thousands of dollars? If so, then here’s the answer. It’s because of its worth and not the face value.
There’s a difference between a coin’s face value and its actual worth. The face value of a coin is the denomination stamped on it. For example, the face value of a dime is 10 cents. However, when talking about the actual worth of a coin (collectible and precious metal bullion) there are several factors responsible for increasing the worth more than the face value.
Let’s find out what are those factors and how to determine the value of a coin.
It’s obvious that the value of an item will be high if it’s rare. Rare coins are always in demand because they are hard to get. The coins minted today are not rare because many of them are produced and circulated in the economy. But, if only one coin is minted for a particular occasion, it becomes rare. The fewer the coins, the more the value. For example, the 1913 Liberty Head nickel is a rare American 5 cent coin produced in a limited number unauthorized by the U.S. Mint. It has a higher value due to its rarity.
A coin’s condition or coin grade is an important factor in determining its worth. Damage such as scratches or dings depreciates the value of a coin. There are several things to look for while grading a coin such as coin marks (tiny line or scratches), coin luster (reflecting qualities produced during the minting process), coin strike (particular minting process used to strike a planchet) and overall appeal.
3) Melt Value
Melt value refers to the commercial price of the metal in the coin (based on the current market price). The metal used for making a coin plays a vital role in determining its value. For example, a coin minted from precious metals such as gold and silver will be more valuable than its copper or bronze counterpart.
4) Historical Significance
Coins with a rich background are more valuable compared to the ones without any historical significance. For instance, if a coin has a lot of stories attached to it, then it automatically becomes a collectable piece. For instance, the United States $20 1933 Saint-Gaudens Gold Double Eagle was never officially released in circulation due to the changes in the currency laws during the Great Depression. This historical significance of being the last gold coin minted but not officially issued at the time of Great Depression made this piece one of the most expensive coins in the world.
There are many factors responsible for determining the actual worth of a coin such as condition, age, rarity, demand, historical significance and melt value. If you’re a newbie in the world of coin collection, then consider these points before making an investment. All the best!