Understanding Rare Coins
The greatest misconception concerning rarity relates to mintage. In most cases, the mintage date of a coin has very little bearing on its level of rarity. There are a number of factors which make a coin more common or rare than its mintage indicates.
Factors which make a coin more common than its mintage indicates:
- Coins are saved by collectors. When new issues are introduced, they are novelties, and many people save them in top condition. An example of this was the Kennedy half dollar issued in 1964. An issue does not widely circulate. Certain coins go directly from the mint to the banks where they sit in bags for many years. Silver dollars were used as reserve backing for silver certificates until 1964 and were never widely circulated.
- Hoards of non-collector sources. Every few years, significant hoards from non-collectors sources skew the level or rarity for certain issues. Saint Gaudens Double Eagles were used by the central banks of Europe for years as gold deposits. When a deposit is released, it could contain thousands of one issue.
Factors which make a coin rarer than its mintage indicates:
- The production of gold coins in the United States ended in 1986, as a result of the Act of March 1933. Nearly all the 2,938,250 Double Eagles produced in 1931 were melted. Today fewer than 100 pieces are known. Economics influence collectors. During prosperous eras, people can afford to save coins. During hard times, coins get spent. For this reason, many coins struck during the depression of 1929-1933 are much rarer in high grades than their mintage indicates.
- Coins are exported. During various times in the history of the United States, our currency was not taken at its face value outside the country. During the Civil War, the only way that we could buy arms from Europe was to buy them with gold coins. These coins were exported to Europe and other places and many went down in ships at sea and others were retained in their various countries.
How do I begin to collect and invest in rare coins?
The education process has three components. You must read and understand the best books and other sources of information on coins, have a knowledgeable teacher and, most importantly, commit yourself to making some mistakes. The most expensive components of the three areas of education is making mistakes, but with proper books and research and a good teacher, the cost should be kept to a minimum. Basic books on coin collecting and investing:
- “The Red Book” – “The Red Book” lists every denomination and type of coin minted by the colonial United States and private mints since the 1700s. $6.95 per year.
- Coin World – Coin World is a weekly newspaper on the coin market. It has articles, information and ads by numerous dealers that wish to sell coins. $26 per year.
- Coin Dealer Newsletter – This weekly publication gives an indication of current wholesale prices on most U.S. rare coins. $99 per year.
- “Adventures with Rare Coins” – This book, written by a long-time coin historian, talks about rare coins and the art, history, romance and investment aspects of owning coins. LOCCC # 78-71615.
Things to be wary of when buying rare coins!
- Make sure that all rare coins that you buy have been graded by an independent third party grading service and sealed in a permanent holder. PCCS is by far the largest and, generally, the most well respected by dealers in the market. Be wary of ads which are “too good to be true.” Adjectival grading by dealers will get you in trouble. Some dealers use adjectives more loosely than others. Use up-to-date independent pricing information.
- Stay away from high margins. You should have a good relationship with a dealer that allows you to buy coins at no more than 20 percent above his cost.
The great thing about coins is that you can begin with a modest amount of money. You can buy coins beginning at $100 and spend as much as $5 million on one coin. Is now a good time to invest? The answer is a resounding yes! There has never been a better time to buy collectable coins. Two years ago, The Wall Street Journal Year End Report indicated an increase in gold by 17 percent and silver by nearly 40 percent. A rise in metals almost always follows a rise in rare coin prices, as most coins are made of precious metals. As many wise men have said “It wasn’t raining when Noah build the ark.” Therefore, it may be wise to speed up your education.
If you would like further information on coins, you may write the Georgia Numismatic Association, an educational and nonprofit organization, at P.O. Box 550309, Atlanta, GA 30355.