In such a case, the value of the coin makes a huge jump in price as it moves from a lower grade to a higher grade.
Age: Good for wine, good for coins?
Age has little or no effect on the value of a coin. Many coins from the past 20 years are much more valuable than coins from 2,000 years ago. Certainly, time allows coins to become better dispersed throughout the collecting community and the world, making them a little more difficult to find. But just because a coin is old doesn’t mean that it’s rare or valuable.
Condition: Pumping them up
The condition of a coin is a hugely important factor in determining its price. The difference in a single point on the grading scale can equate to a difference of thousands of dollars in value. Because of the intense competition to own the finest known example of a given date, a large premium can be attached to the very best coins.
Take the 1953-S Franklin half dollar as an example. This coin is very common in low grades, worth perhaps only the value of the silver it contains. Even in Uncirculated condition, you can buy a nice-looking example for around $100. But well-struck, high-grade examples are extremely rare and more valuable. How valuable? In January 2001, the finest certified 1953-S Franklin half dollar came on the market and sold at auction for a whopping $69,000! If you think that price is crazy, you may very well be right, but remember that at least one underbidder wanted the coin almost as badly as the winner did.
When Dr. William Sheldon devised his 70-point pricing scale with numismatist Walter Breen in the 1940s, he noticed that price and condition followed each other rather closely (at least, in the large cents he collected and studied). Sheldon saw that collectors considered the finest example of any date to be worth 70 times the value of the worst example. A Very Fine example may be worth 20 to 30 times the value of the worst example, and an About Uncirculated coin may be worth 50 to 55 times as much. Using this information, Sheldon and Breen created a scale to show the relationship between the grades and prices of large cents. Later, the coin market morphed this pricing scale into a grading system that was applied to other series of U.S. coins, even though inflation had already destroyed the relationship between price and condition. Today, the Sheldon-Breen grading scale is the bedrock of U.S. numismatics, and the number 70 is universally recognized as the pinnacle of quality.
THE HOARD FACTOR
A hoard is a large group of coins, usually discovered many years after they were made, coming onto the market at the same time.
In the 1960s, the 1903-O silver dollar (struck at the New Orleans mint) was considered to be one of the great rarities of the Morgan dollar series despite a mintage of 4,450,000 pieces. For some reason, there simply weren’t enough coins to supply collector demand. Then, one day, the U.S. Treasury Department discovered a hoard of 1903-O silver dollars while cleaning out its vaults. Overnight, the price of a 1903-O silver dollar plunged as the supply increased to satisfy the existing collector demand.
The 1996 recovery of gold coins from the S.S. Brother Jonathan and the S.S. Central America shipwrecks dramatically affected the prices of certain dates in the Double Eagle denomination. Once considered to be a rarity in high grade, the 1857-S $20 is now one of the most common early gold coins, thanks to the hoard found on the Central America. Hoards account for the low prices of many ancient Greek and ancient Roman coins, as metal detectors and construction projects continue to turn up clay jars filled with old coins.
The size of a hoard and the way the coins are sold into the coin market determine the effect on prices. In the 1970s, a vast hoard of more than 600,000 U.S. silver dollars, once owned by the eccentric LaVere Redfield, began filtering into the market. The sheer size of the hoard threatened to kill prices because there wasn’t enough money in the coin market to absorb all the coins at the same time. But shrewd control of the pricing and distribution of the hoard kept prices from falling. In fact, some experts argue that interest in silver-dollar collecting actually increased because of the intelligent way that the hoard was distributed.
Demand: Demanding high dollar
Demand is an important factor in determining the value of a coin. High demand increases values, and low demand hurts values. Two coins of identical rarity may enjoy wildly different values, depending on the demand for each coin. A common coin in a series with many active collectors (such as silver dollars) is always more valuable than a common coin in a series that collectors largely ignore (such as Jefferson-head nickels).
HOARDING WASHINGTON CARVER
A favorite coin is the 1951 Washington Carver commemorative half dollar (see figure). As an example, in MS-65 condition, the Professional Coin Grading Service (PCGS) and Numismatic Guarantee Corporation (NGC) has certified only 473 examples combined, yet the current bid price is only $65. Theoretically, I could buy up every certified MS-65 example for $30,745, but I know from experience how hard it is to find this coin at coin shows and in other dealers’ inventories. If I bought only 10 or 20 pieces, the price would start going up. Just a small increase in the demand for this coin would translate into a big jump in price. Should I do it? Would you?
Rarity: Hunting for treasures
The rarity of a coin relates to the number of examples that have survived. A high mintage figure (meaning that lots of copies of a coin were made) doesn’t necessarily mean low rarity — or vice versa. The reported mintage figure for a 1927-D $20 gold piece, for example, is 180,000 pieces, which is fairly high, but this coin ranks as one of the all-time-great rarities in the series. Why? Experts suspect that most examples of this date were destroyed before they were released into circulation. On the other hand, a 1913-S $20 has a small reported mintage of only 34,000 pieces, yet there’s little or no premium attached to this coin in circulated condition. Why? Almost the entire mintage survived. In some cases, mintage figures may be incorrect or may include coins from an earlier or later year.
Supply: Giving them what they want
If too many coins are made each year, and not enough people want them, prices remain low. On the other hand, if a coin’s supply falls short of demand, prices rise.
Back in 1986, when the PCGS began certifying U.S. coins, demand for their product was huge, and the supply was low, even though PCGS did its best to grade as efficiently as possible. I remember seeing my first PCGS-certified MS-65 common date Morgan silver dollar. It was a thing of beauty, all bright, shiny, and nearly perfect. It was also priced at $600.
