Numismatics. Who thought up that name? Why not call coin collecting, uh, coin collecting? Numismatic coins are coins that have achieved value due to their rarity. Bullion coins are primarily acquired for their metal content. For numismatic coins, you need to consider (or be aware of) the following:
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The grades of MS-1 to MS-59 could really be called the collectible grades. For collectors who are simply seeking to add to or complete their coin collections, these grades are okay. Because the grades are low, the prices are also generally low, so coins at these levels are affordable.
- Metal content: The major types of precious metals are silver and gold. Other metals exist (base metals such as copper and nickel), but they’re not a factor in the value as is the case with precious metals.
- Rarity: The fewer there are of a particular coin, the greater the potential value. Many old coins are valuable because of their rarity.
- Grade (or condition): The better the condition, the higher the value. The grade is a crucial factor in the coin’s value.
- Age: This is a relatively minor issue, but it’s worth listing. All things being equal, a 100-year-old coin has greater value than a 1-year-old coin.
- Popularity: Some coin series are more popular than others. The coin’s popularity may be attributed to its beauty or historical significance.
- Mint mark: Coins were minted at a variety of minting facilities throughout U.S. history. A coin in the same year but from a different mint could be more scarce, hence more valuable.
© Terelyuk / Shutterstock.comAim for profitable coin investing
If you’re going to be successful in coin investing (certainly financially successful), some golden rules will enhance your efforts:- Stick to precious metals. Because of other factors (such as inflation), it will enhance your long-term profitability to stick to gold and silver coins due to the metals’ appeal for a variety of reasons. As contemporary coinage becomes more debased (the government is using cheaper metals to keep coin mintage costs low), that means that more valuable coins will keep rising in price.
- Specialize. It’s hard to keep track of all the coin series. It’s advisable to stick to a single popular series (certainly in the beginning anyway) such as Mercury dimes or Morgan dollars. Get to know the key dates and grades.
- Focus on quality. Buy the higher grades because they’ll fetch a higher price. Investors will generally look at the uncirculated and proof grades first (grading explanations are in the next section). Depending on the year and mint, an uncirculated Morgan silver dollar, for example, could easily be worth thousands of dollars more than the same coin in good or fine condition.
Making the grade
Grading is a reference to a coin’s physical condition. The grading system, referred to as the Sheldon Scale (named after William Sheldon, who standardized coin grading in 1948), is an industry standard that helps dealers, collectors, and investors find an easier way to determine the coin’s condition. The Sheldon Scale (see the following table) works on a numeric system ranging from 1 to 70, with 70 being the highest and most flawless level.| Level | Grade | Comments |
| AG-3 | About Good | Lowest grade. You can barely make out the features on the coin. This is fine if you’re seeking coins for their metal content but the worst (and cheapest) choice for numismatic investors. |
| G-4 | Good | This isn’t good in the true sense. It’s a notch above the worst. This is a poor condition. |
| VG-8 | Very Good | In this condition, you see all the basic features of the coin, but they’re very worn. |
| F-12 | Fine | The fine grades are still low grade. Much better condition than the good grades but not investment grade. |
| VF-20 | Very Fine | This and the next two grades have strong definition of major features, but the intricate details are worn out. |
| VF-30 | Choice Very Fine | |
| EF-40 | Extra Fine | |
| EF-45 | Choice Extra Fine | Choice Extra Fine is okay if you’re talking steak, but in the world of coins, it isn’t investment grade; it’s fine if you’re just a collector. |
| AU-50 | About Uncirculated | Now you’re talking. Uncirculated means that the coins are in excellent condition. All the features are strong with very little wear and some nicks. |
| AU-55 | Choice About Uncirculated | This is a level better than AU-50. Some minor wear and nicks keep it below investment grade. |
| AU-58 | Very Choice About Uncirculated | This level is almost indistinguishable with higher grades, but there are noticeable nicks and very slight wear. |
| MS-60 to 70 | Uncirculated or Mint State (MS) | This should be the lowest level for investors seeking coins with high desirability. The better the grade, the higher the price at sale time. |
| MS-70 | Proof | This is the top grade. The coin has a mirrorlike look and is in superb condition with no blemishes, nicks, or other signs of wear or contact. |
Those seeking coins with the best potential for investment gain need to concern themselves with the higher grades of MS-60 to MS-70. To get a truly good idea about these investment grades, it’s best to get it from the source, of course. You can find full descriptions straight from the Fifth Edition of Official ANA Grading Standards for United States Coins, published by the American Numismatic Association.
Information sources
As with most things in life, the more information you have, the better off you’re going to be. The top sources of information on numismatic coins are:
- Krause publications. Krause publishes World Coin News, Numismatic News, and Coins Magazine
- Coin World
- CoinWeek
- Daily Numismatic & Gold Investment News
- Numisma-Link
