Coin Collecting 101: How to Determine the Value of a Coin

There are many factors that determine the value of a coin, but he most important ones are metallic content, age, rarity and condition (by grade).

Metallic Content

How much silver or gold by weight and purity often determines the value of a coin. Metallic content is really the most important thing when dealing with bullion coins, which are more intended for investing purposes.

Bullion coins are widely issued for a long period of time by a government Mint and usually contain metal in its purest form. For example, the Canadian Maple Leaf coin (as pictured) is .999 silver.

Older coins almost always contain 2-10% copper (or perhaps another industrial metal). No the Mints weren't being cheap, they simply wanted to harden the coins because gold and silver are rather soft at room temperature. This non-precious metal content doesn't necessarily devalue the coin, as you'll find that age and rarity are even more important determinants of price.

Age

Generally speaking, with age comes value. This is especially the case with pre-1933 coins. Experts suggest that such coins have twice as much investor demand, but a more limited supply. As a result they carry a premium over the market prices and bullion coins as well.

Why is 1933 so important? For one, this was the last year before 1986 that the US Mint issued precious metals coins (except for a few other years such as 1934-35, 1946, etc.). Secondly, many of the circulated coins minted prior to 1933 had been melted down, confiscated, or both.

Rarity

Often, a limited number of coins are produced at specific periods of time for various reasons. Thus, we often have wide price ranges for what essentially looks like the same coin. It's extremely crucial that upon buying or selling a coin that you know the date (year) and city of mintage (a capital letter). For example, if your Peace silver dollar coin reads "1922-D," it means that it was produced in Denver in 1922. The amount of coins minted in that year and at that place determines the rarity of your coin.

Coin values increase if a limited amount were minted in a single year, at a single Mint. When such a limited number of a specific coin is produced, age becomes less important.

Grade

Physical condition is the last important factor in determining a coin's value. Grading coins helps collectors more easily verify the condition of a coin. The better the grade, the more valuable the coin.

Uncirculated coins are the most valuable as they have never been used as currency and retain their impeccability. If purchased from a dealer, these coins will usually be encased and professionally graded, but circulated coins can be graded too, using the Sheldon Scale:

The Sheldon scale measures a coin's impeccability from 1, meaning poor quality to 70, meaning perfect condition. Almost all uncirculated coins are in "Mint State" or "MS" condition which can only be between 60 and 70. You'll find that the average uncirculated coin you encounter would be about an MS-65.

When determining the grade, look for the emblem of one of the 3 trusted and established graders only: PCGS, NGC, ICG. Similarly, when having your coins graded, you should make sure it's performed by one of the aforementioned graders as well.

Continue: How to Determine the Specific Price of a Coin >>

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