Have you come across an old coin or paper money at a local antique shop and when you ask how much it is the price is usually much more than the denominated value? Coins and paper money that has not been in circulation for some time can increase in value over the years. This is why there are a lot of collectors of such items all over the world. Let’s find out why.
Demand and Supply
Coins, especially those that are in circulation anymore, are treated as a commodity and basically follow the basic economic model of supply and demand. As long as the demand will be higher then it will be expensive. Collectors are mostly responsible for dictating how in-demand a particular coin can be. This frenzy can greatly affect the value of the coin. We can compare this to artwork: someone like Van Gogh, whose masterpieces demand high prices, is mainly due to the clamor his work gets from art collectors. If you were to sell an ordinary artist’s work, it would only fetch a fraction of the cost of an original Van Gogh.
Coin grade refers to the condition of the coin. Coins are graded between 1 – 70, with coins that are in much better condition, graded closer to 70. Uncirculated or coins in the mint condition usually get a grade between 65-70 and these are very sought-after by collectors.
Some of the things that are observed before a coin is graded includes the strike of the coin,
the aesthetics or eye appeal of the coin, coloration of the coin, luster of the coin, and damage the coin may have due to exposure to the elements or use.
The strike of the coin refers to the design stamped and how well it was done. When the design can be clearly seen and all the details show, the coin may be given a high grade. Poorly stamped coins may or may not be valuable; sometimes a deformity will help make the coin stand out, both in design and price point.
The Metallic Content
A lot of times coins are more valuable only because of what it is made of. Coins minted before the Great Depression were made of gold and silver and these two metals have proven to be more sought-after than bronze or steel. Over the last 150 years, the value of gold and silver increased tremendously. One example would be a 1794 dollar coin that fetched more than $10 million dollars at an auction in 2010.
The Age of the Coin
Just like antiques, sometimes the older the coin is the higher its value will be. However, its age isn’t really a determining factor unlike those mentioned in this article. Sometimes a newer coin will be valued much more than one that is hundreds of years old.
Its Design Matters
Its design matters a great deal to collectors as this is the aesthetic value they are all going for. For example, the Liberty Head “V” nickel and the Saint-Gaudens Double Eagle were both at $1 million each not only because both are rare and quite old, but because of its beautiful design.
How Rare the Coin Is
Perhaps out of all the factors listed, the coin’s rarity plays the biggest role in determining how valuable it is. Rare coins are in high demand and this is what drives their prices to go up. One great example would be the 1933 Saint-Gaudens Double Eagle 20 Dollar coin. Only 11 are in existence; 10 belongs to the US government while one is in the hands of a private collectors.