Understanding your coin's value
The value of gold coins is determined primarily by four criteria: rarity, grade, quality, and popularity. For investors, of course, a fifth criterion of value comes into play: price. Ideally, price is a function of the other four criteria of a coin's worth, but not always. Unfortunately, many coin dealers charge prices that far exceed the values of the coins they sell, and they pay much less than what your coins are worth when they buy.
At AGE, we pay among the very highest prices when we buy coins from collectors, and we sell coins for among among the lowest prices. Why? Because that's the fairest way to do business!
Truly rare coins typically have the highest values, and have produced by far the greatest overall returns for investors. A coin's rarity is a function both of the limited quantity of the original minting and the survival numbers of examples in any given grade rating.
Coins with high numbers of survivors, like common date $20 Saint-Gaudens “Double Eagles,” Morgan silver dollars, and Peace silver dollars, usually have lower market values than rarer coins, and do not perform as well as investments. Gold and silver coins with lower survivor rates often perform wonderfully as investments, trade at substantially higher values than common ones.
In almost every case, scarce and rare gold coins perform better as hard asset investments than do ordinary gold bullion coins, and represent a better value for your money. One ounce American Gold Eagles, gold Krugerrands, Canadian Maple Leafs, British Gold Sovereigns, and 1 oz. Platinum Eagles are excellent for investing in precious metals, but often do not appreciate in value as much as or as quickly as rare coins do.
2. Grade or Condition
A coin's value is largely determined by the amount of circulation wear it exhibits, or in the case of uncirculated Mint State coins (MS60 through MS65), by how closely it resembles its “perfect” condition when newly struck. Proof gold and proof silver coins are special limited strikes, made on polished dies, and intended primarily for sale to collectors and as gifts to dignitaries.
Rarity and certified grade do not tell the whole story in a coin's value. The “quality” of coins is a huge factor in determining their value and price when you decide to sell. But it is also the most difficult to determine properly, and requires a practiced eye.
Obviously, all coins are not all the same aesthetically. Some coin designs — the high relief Saint-Gaudens Double Eagle, for example — are widely considered to be more beautiful than others. The public's taste for these designs has a significant influence on the value of the coins that bear them.
But when we speak of a coin's “quality,” we are talking about characteristics of minting, execution, survival condition, and overall eye appeal that set it apart from other coins of the same design and certified grade. Individual coins that are above average in appearance for strike, luster, evenness and/or color of toning, and eye appeal are considered to be higher in quality, and simply in greater demand, than those that do not look as nice-even at the same PCGS or NGC rating. The higher the quality, the greater the value of any particular issue.
Furthermore, some coins grade at the top of their rating while others grade at the bottom, even though they are identical on paper. These differences within grade are usually small but nonetheless observable to the expert eye, and are an important factor in quality and value. Coins that are higher in quality always sell faster and usually command higher prices than other coins at each grade rating. The quality of your rare coins is therefore is quite important, not merely for your own aesthetic enjoyment but also for the value and liquidity of your investment.
In most cases, collectors should look for coins in the highest grades they can afford. However, many of the sharpest collectors and investors will seek out the key rare dates of a series, which can be astronomically expensive in Mint State, in one of the lower grades — provided that they can find a coin with exceptionally high quality for-the-grade and excellent eye appeal. These high quality, lower grade coins are often a better value and far more affordable than the higher grades. In the more common issues of a series, it is far more important to buy the higher grades; but key dates in lower grades, if they exhibit outstanding eye appeal, can be fantastic investments. At American Gold Exchange, we've always urged our clients to this pursue this kind of strategy, knowing that rarity and quality will drive a coin's market price and value farther and faster than grade alone.
Popularity is also a determining factor in coins' values. Some coins are simply more popular than others. The St. Gaudens double eagle, for example, is an extremely popular design and holds its value well. Conversely, some very rare coins, like U.S. “pattern” coins, three-cent silver pieces, and half-dimes (or dismes), are gorgeous but have little demand, and therefore, tend to have lower market values.
To ensure the greatest liquidity and monetary value, we advise our customers to invest in those kinds of US coins that trade most frequently and enjoy the highest demand and popularity. Our twenty years of experience have shown us that the most popular areas of numismatics are U.S. gold coins minted from 1795 to 1933, and the larger high-quality U.S. silver coins minted from 1793 to 1892. These coins remain in high demand and provide excellent value.
All of the above crtieria come into consideration when a price is set for your coin. At AGE we pay the full bid price of whatever coins we buy from collectors. You should keep in mind that the “bid” price is different from the “ask” price of any coin. The “bid” price is what dealers pay on the wholesale market. The “ask” price is what dealers charge on the retial market. The difference between bid and ask prices, known as the “spread,” is a necessary part of the coin business. Otherwise, we'd all go broke! At AGE we pay highest prices for coins we buy from collectors, and when we sell coins, we sell for among the lowest prices. Why? Because it's the fairest way to do business!