Is Coin Collecting a Good Investment?

Posted on February 15, 2021

Coin collecting as an investment continues to be popular today. A coin's investment value depends on a number of factors.

How Popular Is Coin Collecting?

People have collected coins since ancient times, often as a means of preserving wealth. Today, coin collecting remains popular in the United States as both a hobby and as a serious investment. There are even organizations dedicated to numismatics (or the study of currency) in the United States such as the American Numismatic Society and the American Numismatic Association [1] [2].

How Can People Use Coin Collecting as an Investment?

If you are considering coin collecting as an investment, you will need to know what gives a coin its value. A few factors come together to determine a coin's value:

  • Physical metal: The metal contained in a coin gives a coin its bullion value. Many collectible coins are made from precious metals like silver or gold. As a result, the coins have a certain amount of intrinsic value just as stores of the metal they are struck from.
  • Numismatic/Collector value: This value is harder to calculate than bullion value, as it depends in large part on buyer sentiment. However, there are some guidelines used to determine a coin's numismatic or collector value. For example, the fewer coins minted of a given type of coin, the higher its numismatic value will likely be thanks to the supply scarcity. Numismatic or collector value mostly applies to rare or antique coins.
  • Condition: The condition a given coin is in will have a major role in determining its collector value. Buyers who value coins for their collectible appeal generally pay more for coins that are in better condition. The closer to uncirculated condition a coin is, the more likely it is to command a higher price than the same kind of a coin that shows obvious signs of regular use. Using the Sheldon coin grading scale, a coin is assigned an adjective to define its state. Coins might be described as poor, very fine or even mint, or it might be described with a number between 1 and 70 [3].

What Should People Look for in Investable Coins?

By looking at a coin's bullion value and numismatic value, you can determine if a coin is worthwhile as a coin collecting investment.

Bullion Value

gold maple leaf coin 2020 obverse imageWhen you're starting out with collecting coins for investment, your best bet is to start with a focus on bullion value. You can easily calculate the bullion value of a coin by multiplying the number of ounces of metal of that coin by the spot price per ounce of the metal at any specific time.

While investing in rare coins can bring huge profits, it's harder to determine the collector market for a given coin in the future. However, if you invest in modern bullion coins, you can get started investing with coins that are both great precious metal investments and attractive products ” an important consideration for anyone collecting coins.

Look for modern bullion coins with high-grade silver or gold. Examples include:

Older Coins With Bullion Value

Certain older coins offer good stores of bullion value, although in certain cases numismatic value will influence the price of these coins as well. American quarters and dimes minted before 1965 offer one example. These coins were produced with 90% silver content, so coin investors often purchase them for the metal content. You can even order a mixed bag of junk silver coins to fill in dates that are missing from your collection while you invest in silver.

Certain coins fall in between being numismatic and bullion investments. These coins, like American silver dollars and gold coins from before 1933, don't have a huge amount of collector value, but they do sell for prices higher than their raw bullion value. While these coins don't offer great investment possibilities in terms of growth, they hold value fairly well. They are also fun to collect from a historical perspective.

Numismatic Investments

You can invest in a variety of coins predominantly as numismatic investments. While bullion value is still factored into the price of these coins, their rarity leads to collector value making up the majority of their final cost. You should research which coins are most in demand for collectors if you want to invest in coins for numismatic value.

Factors to consider when investing in coins with numismatic value include the following:

  • Date: Rare dates are one of the biggest factors that contribute to the numismatic value of a coin.
  • Mint mark: Likewise, rare mint marks play a huge role in determining a coin's collector value. Mint marks on coins from the United States include [4]:
    • Carson City (NV): CC, used 1870-1893
    • Charlotte (NC): C, used 1870-1893
    • Dahlonega (GA): D, used 1838-1861
    • Denver (CO): D, used 1906-Present
    • New Orleans (LA): O, used 1838-1861 and 1879-1909
    • Philadelphia (PA): P, used 1942-45 and 1979-Present
    • San Francisco (CA): S, used 1854-1955 and 1968-Present
    • West Point (NY): W, used 1984-Present
    • Certain coins have no mint mark.
  • Minting errors: Rare minting errors also can add to a coin's value. Examples of minting errors include [3]:
    • Clipped planchets
    • Defective dies
    • Multiple strikes
    • Off-center strikes
    • Overstrikes
  • Certified coins: If you are investing in coins solely for their collector value, you will want to deal only in certified coins. These coins have been graded and inspected by a recognized organization before being placed in a protective container.

A coin does not need to cost you thousands to make a good investment for numismatic value. There are plenty of coins that offer interesting possibilities for collectors working within a budget. For example, the 1950-D Jefferson nickel can sell for over $70 in uncirculated grades because it is thought of as a key mint mark and date pairing. That amount is very high compared to both the bullion and face value of the coin, but it can still offer a reasonable price for collectors on a limited budget.

By considering a coin's bullion and numismatic value, as well as the condition it is in, you can determine if a coin makes a good investment.

Article Sources:

1. The American Numismatic Society. 'About,' http://numismatics.org/about/. Accessed September 20, 2020.

2. The American Numismatic Association. 'Our Mission,' https://www.money.org/our-mission. Accessed September 20, 2020.

3. United States Mint. 'Get Started Collecting Coins,' https://www.usmint.gov/learn/collecting-basics/get-started-collecting-coins. Accessed September 20, 2020.

4. United States Mint. 'Mint Marks,' https://www.usmint.gov/learn/collecting-basics/mint-marks. Accessed September 20, 2020.