Numismatic Coins

The US Coin Market Is the World's Largest By Far

The value of numismatic coins is based on their collector value, rather than the intrinsic value of the weight of the precious metal it contains. Supply and demand rules in all areas of investment. Ask yourself... how much gold is there in the Mona Lisa, the world's most valuable painting?

These coins were minted for the use as a currency. Due to the fact that many of these coins were used as spending money, the remaining supply of coins that exist in a virtually pristine condition (uncirculated or proof) is very small. This supply of coins is sought by many millions of collectors worldwide, which establishes a classic supply and demand scenario.

Another aspect of numismatic coinage is condition or "grade". Coins are graded on a numerical scale with 1 being the lowest grade and 70 designated as the "perfect" coin. Mint State/uncirculated or Proof coins fall into the range of 60 to 70. Unlike bullion coins, numismatic coins are not valued based on the amount of the precious metal contained, but solely on the price that a willing buyer will pay for the coin in an open competitive bid/ask system. This is much like the art market where paintings sell to the highest bidder. However, the rare coin market is more highly organized with established prices for coins that are independently published on a weekly basis. In addition, rare coins have a worldwide computerized bidding network called the Certified Coin Exchange (CCE). The coins are based on their individual characteristics, such as date, mint mark (the city where it was minted), type (such as one cent pieces, nickels, dimes, quarters, etc.,) metal (copper, nickel, silver, or gold), rarity and condition. Numismatic coins can be sold by auction, or through the wholesale dealer network. The table below provides a vivid example of value differences for a one ounce American Eagle bullion coin (based on spot price of gold of $280). A 1913 $20 Saint Gaudens (also containing approximately one ounce of gold).

*For rare coins, this is the number of coins graded to date by the top grading labs. For the Eagles, this is how many have been produced by the U.S. Mint. Always remember that about 95% of rare US gold coins were seized and melted back down into bars of gold during the Great Gold Confiscation, put into effect by FDR in 1933. Rarity is determined by how many coins have survived in a certain grade, not by how many were minted. The vast majority of U.S. coins have been melted down into bars of silver and gold.

Semi-Numismatic Coins

This category of coins consists of numismatic gold and silver coins that are relatively common, and priced with an emphasis on the metal value of the coin, plus that of the collectors value. These coins are either very common, or in low quality, or both. For example, using the 1913 $20 St. Gaudens in a poor condition of "Fine-12", this coin only sells for $350. That it not all that much more than the price of an American Eagle. Common examples of these coins are low quality $20 US gold pieces, the common foreign gold coins (British Sovereigns, French Roosters, etc). Also, common silver coins, usually traded in low quality, such as our older silver dollars circa 1878 to 1935.

The semi-numismatic coins would profit from the potentially dramatic price increase due to the demand placed on these coins. The premium paid for this added security can be considered as insurance against another government confiscation, and there have been several in the US, and nearly all governments remain confiscatory by nature. Semi-numismatic coins are only sold via dealers, since there isn't enough collector demand to make an auction worthwhile.