Factors that Determine a Coin's Value

By | May 31, 2017

Figuring out a coin’s value can be a complicated and baffling process. There are coin grading services with expert staffs that exist just for that purpose. But even if you don’t have a Ph.D. and a microscope, you can learn what the experts look for and become a more informed buyer.

Here’s a quick overview:

How Many Were Made

Coin production varies considerably from year to year and coin to coin. Fewer dollars are made than pennies, for instance, and the numbers produced in a given year are subject to demand, availability of materials, and even politics.

When there was an abundance of domestic silver production in the mid-1800s, special interests pressured Congress to pass the Bland–Allison Act, requiring the Treasury to purchase between two and four million dollars' worth of silver per month to be made into dollar coins. This resulted in a glut of silver dollars, and the production of the coins was suspended in 1904. Silver dollar production wasn’t resumed until 1921.

On the other hand, during the Civil War and World War II, precious metals like gold and silver were needed for the war effort, so coin production was limited. And in some years certain coins weren’t minted because they weren’t needed.

Coin catalogs and online resources exist that list mintage numbers for specific coins and years.

How Many Have Survived

This can be a moving number. Hordes of previously rare coins have been discovered in forgotten places (including the U.S. Mint) or released by collectors, and sometimes that has dramatically lowered their value. Fortunately, this doesn’t happen often.

More likely, a coin’s survival rate is affected by its age, its mintage quantity, and how many were deliberately destroyed, either by the Treasury or by private citizens.

While it’s usually impossible to know the precise number of survivors, accurate estimates are readily available.

Supply and Demand

Very rare coins are always in demand and can be quite expensive, but rarity isn’t the only factor affecting demand. Market whims can affect a coin’s popularity, regardless of its rarity. Even abundant coins like the State Quarters can be worth more than face value to a collector. And limited production coins like the Mint’s commemorative series or proof sets can gain value over time even if millions were made.

Plus, dealer prices may be affected by their inventory. Maybe they bought a lot of a particular high-demand coin and are willing to discount them to move. Or maybe they need more inventory, so are willing to pay a premium. Don’t count on either, but it does happen, so shop around.

A Coin’s Metal Value

This is called the coin’s “melt value,” and represents the value of its ingredients. This can be significantly more than the coin’s face value. For instance, prior to 1965, U.S. dimes, quarters, and half dollars contained 90% silver. That makes them worth a lot more than their face value.

Millions of coins have been melted down for their bullion value when the price of silver or gold reached well beyond the coin’s face value. Most recently, this happened in the 1980s and in 2011 when the price of silver approached $50 per ounce, reducing the number of surviving coins.

This is also true of gold coins, of course, but even copper and nickel prices could rise to the point that pennies and nickels could be worth more than face value.

Many dealers offer rolls or bags of low-quality circulated silver coins that aren’t attractive to most collectors, but have high melt values.

The Coin’s Condition

Entire volumes have been written on grading a coin’s condition, and even minor differences can result in huge changes in value. Or a coin can be so common that even top-graded coins aren’t worth that much. There are two primary grades of coins—circulated and uncirculated—but within those broad classifications there are dozens of other grades.

Most collectors live by the Sheldon Coin Grading Scale. You should be familiar with it, but only rely on certified grading from reputable grading services. Here are four of the better known:

One note of caution: While these services are trustworthy, all sellers aren’t. There are crooks who counterfeit grading certificates, and some are pretty good at it. Only buy from dealers you know and trust.

Buyers vs. Sellers

Coin dealers and collectors like to make money. That means they need to pay less for coins than they sell them for. It means that with very few exceptions, they won’t buy coins at market prices, so be prepared unless you’re selling to a private party. But you’re a dealer, too, then.

Good deals can be had at estate sales, for instance, especially if you buy a whole collection. Just be sure you know what you’re buying…and give yourself plenty of wiggle room just in case.

Whether you’re a seasoned collector or just getting started, The Great American Coin Company^® has a wide selection of coins and banknotes available online. We guarantee the authenticity of all our products and keep adding items as they become available, so be sure to visit us frequently. And while you’re there, be sure to visit our blog for interesting and timely articles about coins, currency and precious metals.