Like nearly every other commodity, the value of a coin is determined by supply and demand. The number of coins minted in a given year at a specific mint is the best indicator of supply, and production data is readily available. However, when the quality control process at a mint breaks down and defective coins get into circulation, this can create an explosive market of its own due to the very small supply of these unique pieces.
On the demand side, coin buyers want coins that are in good shape. When grading a coin’s condition, Numismax follows the guidelines of the most reputable grading organizations.
The historical context of the coin also can affect demand and its price. For example, the alloys used to make many U.S. coins during World War II were visibly different from those that were used in the preceding and subsequent years. This type of oddity typically drives demand by casual coin collectors and those who collect for historical significance.
In the past, coins were graded within just a few categories—for example, “Fine” and “Good.” As coin collecting became more popular, additional gradations were added. The Sheldon Scale is a widely-accepted ranking system in the numismatic industry that grades coins from 1 to 70. A “1” indicates a coin with barely discernible engraved features, while a coin in mint condition may be assigned a “70.”
Coin collectors can refer to online and printed price lists, based on more simplistic standards and ranges, to get an approximate value for a rare coin. However, a numismatic professional will provide a much more precise grading and valuation—one that the market is more likely to honor. A difference of one or two points on the Sheldon Scale can mean hundreds or thousands of dollars in the value of a rare coin. The American Numismatic Association offers seminars and classes on grading based on the Sheldon Scale. Numismax’s senior numismatists attend these sessions regularly.
Many investors choose to make rare coins a component of their overall investment portfolio, and we encourage these individuals to purchase coins with both intrinsic commodity value (such as gold and silver coins) and rarity value.