What Makes a Coin Valuable?
One of the common misconceptions regarding the value of
coins is that the older it is the more it is worth. Nothing
can be further from the truth. Coin and paper money values
are based on a combination of rarity, grade and collector
demand. Let’s explore each of these in detail
Rarity/Scarcity
Simply put, this is
the number of coins that are available in a certain year, mint and grade. If a
coin has a total mintage of 1 billion pieces, much like many Lincoln Cents, and
99% of them have survived circulation, it is unlikely that that coin will ever
be worth more than face value unless there is a sharp increase in metal prices.
This is true no matter how old the coin is. There are simply more coins of this
date available than collectors need.
Collector Demand or Popularity
There are some coins
that collectors can never seem to get enough of. For example, some coins with
higher mintages are worth more than other coins with lower mintages because more
people may collect that series. Demand and scarcity/rarity go hand-in-hand. Many
times the coins that are the most scarce are the ones in demand, thereby driving
the price up even higher. Many people hope that their collections contain that
ultra rare coin. The fact is, it is unlikely that your collection contains that
coin. That is why the coin is rare. Still, there is always a chance.
Grade/Condition
Grade can also
determine the value of a coin. A coin that is worn and beat up will not generate
desire as much as a coin that is in “Mint State Condition” This can be thought
of the state of preservation or condition. In other words, the better condition
he coin, the more it may be worth. Cleaned coins though are always worth less
than original uncleaned coins. Do not clean coins.
Summary
While any one of the
three items can drive a price, it is more often the combination of all three
that will determine price with, in my opinion, the demand as the biggest factor
in value determination. If there is no demand, meaning no one is willing to buy
the coin, it does not matter what grade, how old or how scarce the coin is.
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