Coins are among the most popular choices for avid collectors worldwide. If you’ve recently been interested in starting a new hobby, you may have come across the idea of collecting coins and wondered if it’s worth it.
Starting a coin collection is worth it because it gives you an alternative investment. Coins are also excellent symbols of the evolution of various civilizations and global economic growth spanning centuries. In addition, the value of certain coins increases over time due to increasing demand.
In this article, I’ll discuss the factors that affect the value of coins and how to decide if coin collection is for you. I’ll also share some tips for beginner collectors so that you can make sound decisions when starting this venture. Let’s get started!
Factors That Affect the Value of Coins
If you’ve stumbled upon an old chest of coins from your grandparents, you may be excited to think that some could help you rake in some good profit. However, even for non-collectors, it’s easy to understand that not all coins are worth much more than their face value.
And although it takes an expert to determine which coins are worth a fortune, there are some ways to tell if your pile contains some valuable pieces. Below are several important factors that contribute to the overall value of each coin.
Age
Contrary to popular belief, many old coins don’t hold much value, and only a few coins are prized for their age. For instance, the oldest one in the world is the Lydian Lion from Turkey, estimated to be around 2700 years old.
An authentic Lydian Lion can easily earn several thousand dollars. Still, this price isn’t nearly impressive enough, considering how old these coins are.
In the US, two coins minted in 1787, the Brasher Doubloon and the Fugio cent, have a vast difference in value despite being produced in the same year. The former can earn you several million dollars, while the latter can fetch at most ten grand.
Therefore, although age can help increase the worth of a coin, expert collectors and appraisers still consider additional factors in addition to the coin’s age.
Material
Old coins were made with large percentages of precious metals like gold and silver. Over time, the values of these metals appreciated, surpassing the coins’ face values. For example, coins minted before 1964 in the US had up to 90% silver. As the price of silver increased, the worth of these coins also increased.
Although the rise in the value of metals in pre-1964 coins isn’t as sharp and quick as the price of certain coins with historical significance, you can still store them as a long-term investment or a hobby, at the very least.
When you finally decide to sell your silver or gold coins later on, there will still be a huge market for them. Interestingly, collectors buy the coins for the value of the precious metals, but they’re unlikely to melt them to extract the pure metals.
One logic behind this is that, over time, the coin’s age and the metal’s appreciation will increase the coin’s overall value. It may be slower compared to rare coins, but it’ll surely rise as long as you keep your old coins in good shape.
Fun fact: Since 1970, most coins in the US have been made with a mix of copper, nickel, and zinc. These metals are relatively common and cheaper, making late 20th-century coins generally less valuable.
Condition
It may come as no surprise that two coins minted in the same year from the same mint will fetch different rates depending on their condition. Coins that are in mint condition are likely to rake in a significantly larger amount than those that have tarnished.
It is in this situation that proper storage and handling play an important role. Many avid coin collectors invest money in appropriate storage materials and environments to preserve their collection’s condition.
Proper maintenance is crucial for the whole process, whether you’re after the profit or simply enjoying collecting precious coins. It requires thorough research and dedication to understand the type of care each coin needs.
Remember that coins are made from different materials and may require various means of storage, cleaning, or care. As such, knowing how to handle them properly is one of the most important things to consider before starting your coin collection journey.
Rarity
Age, material, and condition indeed play a special role in the value of a coin. However, rarity is probably the most important factor that can astronomically increase a coin’s worth. Add this to the three factors previously mentioned, and you’ll definitely make a fortune.
However, as the name suggests, rare coins are extremely hard to come by. And if you’re a collector — not a seller — you must be ready to shell out a huge amount of money to acquire one.
One example is the 1794 silver dollar, believed to be the first dollar coin minted in the US. What’s even more interesting is that there were only 1700 pieces minted, and roughly over a hundred still exist. This rarity is one of the reasons the current owner paid $12 million for the coin.
Another example is the 1849 Double Eagle Gold Coin, one of the most expensive coins in the world. It consists of 30 grams (1 troy oz) of gold, but its value — estimated to be around $20 million — primarily comes from its rarity. Only two trial coins were minted, one of which is currently in the Smithsonian Institution.
Similar double eagle gold coins designed by Saint-Gaudens in 1933 are also highly valued, with the most expensive one fetching over $18 million.
However, it’s also worth noting that not all rare coins will fetch millions of dollars. Some coins, including the British 1344 Edward III Gold Florin coin, are so much rarer than the 1794 silver dollar but relatively much cheaper.
Only three gold florin coins still exist, two of which are in the British museum. The piece owned by a private collector is about 25 times cheaper than the most expensive 1794 silver dollar.
Historical Significance
In addition to its rarity, the 1794 silver dollar also had a historical significance. It was the first one-dollar coin released in circulation in the US. This aspect of the coin undoubtedly also contributed to its value.
Globally, the most historically valuable coins are the Eid Mar denarius by Brutus to commemorate the assassination of Julius Caesar and the nation’s liberation from the dictator.
However, despite their historical significance, these silver coins hardly rake in half a million dollars at auctions. In contrast, the Eid Mar aureus, or gold coins, easily sell for around $3 million.
The bottom line is that although these factors individually affect the value of coins, it often takes two or more of them to definitively determine the coin’s worth.
How To Decide Whether or Not To Start Collecting Coins
Like any form of collection, coin collection has pros and cons. But more importantly, there are a few questions that you need to answer to help you come up with a sound decision, including the following:
- Are you collecting coins as a hobby or for potential profit?
- How many alternative investments do you have?
- How much time and resources are you willing to allot for this collection?
To help you better understand coin collection and your purpose for this venture, you can refer to some facts below.
1. It Is An Exciting Hobby
Coin collection can be exciting, especially if you value history. Coins and banknotes pack a lot of interesting information about a country’s history and economic growth. Their intricate designs and details can tell a story that collectors find fascinating.
If you want to collect coins as a hobby, you can start with whatever you currently own. The good thing about this purpose is that you don’t have to spend too much money finding coins while starting your collection.
It won’t be easy, but many coins were distributed in millions, so you’ll be more likely to find collectors who are willing to exchange them for a few bucks. You can also take your time finding coins because you’re not after profit.
In addition, you don’t have to spend too much on storage space and materials. Although you’ll still need special coin pockets or customized storage boxes, they don’t have to be as expensive and elaborate as those used for rare and more valuable coins.
2. It Has A Potential for Profit
On the other hand, time is of the essence when collecting coins for potential profit. Although most coins take decades or centuries to appreciate, special coins can earn almost a quarter more than their initial price in only a few years.
You have to be aggressive in finding rare coins and willing to spend a large amount of money for a bigger return in the future. In addition, you need an eye for valuable coins and the resources to preserve them under the best conditions for many years to come.
It also requires skill and dedication to keep track of the trends and pique the interests of fellow collectors regarding certain coins.
Moreover, you’ll need help from experts to help predict your collection’s profitability. These experts often charge a professional fee that can vary depending on where you’re from or the valuation of your collection.
3. It Can Be an Alternative Investment
Coin collection can be an excellent alternative investment. However, it shouldn’t be your only alternative. Note that although a few unique coins increase in value rapidly, most coins take a long time, sometimes even several generations, before reaching satisfactory results.
And even if you have a valuable coin in your collection, you’ll need to keep the public’s interest high because demand can impact a coin’s value. Rare coins will often have steadily increasing demand, but the public’s interest in special but relatively common coins can fluctuate.
When keeping rare coins as an alternative investment, you’ll also need to occasionally make them available for public viewing and gauge the crowd’s interest for when you need to liquidate your collection.
Precious coins worth millions of dollars are best sold through auction houses. However, remember that auction houses typically charge commissions to sellers that can take a large portion of your profits.
In addition, you also have to research the potential taxes and fees involved in keeping your coins and selling them as an alternative investment.
4. It Requires Time and Resources
Highly valuable coin collections require ample time and dedication to preserve them in optimal conditions. For instance, when storing your coins at home, you must check them regularly for routine maintenance.
You must also install high-quality safety vaults and security devices to keep your coins safe. The vault should be fireproof and water-resistant; such products can be pretty expensive.
Alternatively, you can store them in a local bank’s safety deposit box. Depending on the bank’s rules and your state’s regulations, you may need to pay a fee to keep your coins there long-term.
Tips for Beginner Coin Collectors
If you decide to start coin collection after carefully considering the factors discussed above, you may find the following tips helpful.
1. Beware of Fake Coins
Coin collection is one of the most popular and profitable options in the world of collecting. Because of this, many counterfeiters took the opportunity to manufacture fake coins.
Many expert counterfeiters create high-quality fake coins using special techniques, including casting and striking, that even professional valuators couldn’t tell the counterfeit coins apart from authentic ones.
In addition, although there are many reliable coin valuation experts, you’ll find some who work with these counterfeiters. Therefore, it’s relatively easy to fool newbie collectors into thinking they got valuable coins.
So if you want to have your coin appraised, look for a valuator who belongs to the American Numismatic Association (ANA). Another dedicated group is the Professional Numismatists Guild (PNG).
Experts who belong to such groups may charge a higher fee for their service, but their valuation is reasonable and reliable.
2. Don’t Clean or Polish the Coin
When you find a coin you suspect could be worth a fortune, fight the urge to clean or polish it. Using cleaning agents or even soaking the coin in water can alter the chemical composition of the metal, possibly resulting in rust or discoloration.
If the coin is moist, you can dry it with a soft piece of cotton fabric. You may also need to use cotton gloves to handle the coins. Plastic and latex gloves may contain substances that can damage the metal’s surface.
And even when using cotton gloves, it’s best to hold the coin along the edges for minimal potential damage.
If you come across a coin that has been buried, you’ll need to handle it with care. On that note, have you ever wondered why you sometimes find old coins in the dirt? For more information, check out my post on how deep coins can be buried underground: How Deep Are Old Coins Buried in the Ground?
3. Conduct Your Research
If you’re unsure of the coin’s metal composition and value, you can search for relevant information about it online. There’s a large population of coin collectors in the world, and you’ll find plenty of helpful information online.
If you chance upon a rare and valuable coin, you must also study the proper ways of storage and the taxes and fees you may incur from selling it.
4. Consult an Experienced Collector or a Numismatist
Coin collection can be overwhelming for beginners, whether you’re doing it as a hobby or an investment. Reading and a lot of research can be beneficial, but there may be many things that are beyond your understanding, especially regarding finances.
You may ask experienced collectors and numismatists for tips on managing your coin collection. Joining non-profit organizations like the ANA will give you access to several resources you’ll find helpful in your new venture.
Interestingly, the membership fee for such organizations is often reasonable and worth the money, considering how much information you can get in exchange.
Through these organizations, you can also get in touch with fellow hobbyists who may be more knowledgeable than you and are willing to share their experiences with you for free.
5. Purchase Appropriate Storage Materials
For ordinary coin collections, you can use cardboard storage containers with clear covers. Ensure that the cardboard is acid-free and the cover is PVC-free. Otherwise, your coins might become discolored later on.
More valuable coins may require safety vaults in your home to ensure they’re well-protected. However, you must ensure that the items inside the vault are totally free of moisture to prevent condensation and damage from long-term storage.
You may also need to aerate your collection every month to reduce the risk of moisture damage.
Final Thoughts
Coin collection is worth it if you have the time, dedication, and resources to keep up with the demands of the activity. As a hobby, coin collection doesn’t demand as much commitment as when doing it for potential profit.
Refer to the factors and facts discussed in the article and conduct thorough research to determine whether or not coin collection is for you. You can start small and gradually build your collection as you gauge your determination to proceed and how far you want to go in this venture.
