Comments on: Four Factors That Determine the Value of a Coin http://www.consumerismcommentary.com/four-factors-that-determine-the-value-of-a-coin/ A premier personal finance blog, established 2003. Within, Flexo discusses his own experiences with money, and he and other authors comment on a wide range of personal finance topics. Mon, 13 Feb 2012 03:52:06 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Mike http://www.consumerismcommentary.com/four-factors-that-determine-the-value-of-a-coin/comment-page-1/#comment-136033 Mike Tue, 05 Feb 2008 20:13:10 +0000 http://www.consumerismcommentary.com/2008/01/05/four-factors-that-determine-the-value-of-a-coin/#comment-136033 Either of you have a 1995-W PF 70 American Silver Eagle (SAE), you'd be willing to let me have at face value (1 USD), or bullion price (1 oz .999 fine silver)? Rarity in the coin world is actually on the supply side of economics. What the mint provided (in the case of 1995-W SAE, only 30,125 were minted. Relatively rare in light of millions minted in other years of the SAE series). Subtract from that the number returned to the mint and melted down. (None that I'm aware of in the 1995-W SAE) = Rarity. Demand stems from those collectors that would like one in a given condition. Since only ONE has been graded at what is perfect condition, PF70 (by a reputable company), several thousand collectors would like to own it. And it is valued at $5,000. (A Guide Book Of United States Coins, 2008 edition) So, Flexo accurately represented condition and rarity in the first 2 positions. (Although I think they should be reversed.) To Jeremy and "Two Nickels" I would say collect whatever coins appeal to you. Get them straight from the mint, where they're typically cheaper. (www.usmint.gov) That's how I started my modest collection. An investment of about $3,000 over 6 years and my collection is now worth over $9,000. Not a great return on my investment. BUT I have fun with it; and I can always sell them for bullion. :) -- Mike Either of you have a 1995-W PF 70 American Silver Eagle (SAE), you’d be willing to let me have at face value (1 USD), or bullion price (1 oz .999 fine silver)?
Rarity in the coin world is actually on the supply side of economics. What the mint provided (in the case of 1995-W SAE, only 30,125 were minted. Relatively rare in light of millions minted in other years of the SAE series). Subtract from that the number returned to the mint and melted down. (None that I’m aware of in the 1995-W SAE) = Rarity.
Demand stems from those collectors that would like one in a given condition. Since only ONE has been graded at what is perfect condition, PF70 (by a reputable company), several thousand collectors would like to own it. And it is valued at $5,000. (A Guide Book Of United States Coins, 2008 edition)

So, Flexo accurately represented condition and rarity in the first 2 positions. (Although I think they should be reversed.)

To Jeremy and “Two Nickels” I would say collect whatever coins appeal to you. Get them straight from the mint, where they’re typically cheaper. (www.usmint.gov) That’s how I started my modest collection. An investment of about $3,000 over 6 years and my collection is now worth over $9,000. Not a great return on my investment. BUT I have fun with it; and I can always sell them for bullion. :) — Mike

]]> By: Flexo http://www.consumerismcommentary.com/four-factors-that-determine-the-value-of-a-coin/comment-page-1/#comment-132278 Flexo Wed, 09 Jan 2008 18:13:07 +0000 http://www.consumerismcommentary.com/2008/01/05/four-factors-that-determine-the-value-of-a-coin/#comment-132278 Don K: Thanks for that catch. I've adjusted the article above. Don K: Thanks for that catch. I’ve adjusted the article above.

]]> By: Don K http://www.consumerismcommentary.com/four-factors-that-determine-the-value-of-a-coin/comment-page-1/#comment-132275 Don K Wed, 09 Jan 2008 17:13:34 +0000 http://www.consumerismcommentary.com/2008/01/05/four-factors-that-determine-the-value-of-a-coin/#comment-132275 The Spot Price of copper, referenced above, should be per POUND not ounce. The Spot Price of copper, referenced above, should be per POUND not ounce.

]]> By: Dan http://www.consumerismcommentary.com/four-factors-that-determine-the-value-of-a-coin/comment-page-1/#comment-132009 Dan Tue, 08 Jan 2008 00:27:00 +0000 http://www.consumerismcommentary.com/2008/01/05/four-factors-that-determine-the-value-of-a-coin/#comment-132009 It's just like a stock, the most important factor is demand. Sure, if you ask a stockbroker, they will give you reasons for a security's price that include its EPS, dividend growth, P/E ratio, and book value, among many other valuation tools. In the end, though, the stock's value is merely what the next buyer is willing to pay for it. Think of the Dutch Tulip Bulb Mania of the 1600s. In one month, the price of tulip bulbs went up twenty-fold to over $76,000. Then in six weeks, prices fell to below $1. Before, after, and all along, tulip bulbs were rare, and in various conditions ranging from poor to perfect. Demand is what determined the tulips value, and demand is what determines the values of stocks and coins today. It’s just like a stock, the most important factor is demand. Sure, if you ask a stockbroker, they will give you reasons for a security’s price that include its EPS, dividend growth, P/E ratio, and book value, among many other valuation tools. In the end, though, the stock’s value is merely what the next buyer is willing to pay for it. Think of the Dutch Tulip Bulb Mania of the 1600s. In one month, the price of tulip bulbs went up twenty-fold to over $76,000. Then in six weeks, prices fell to below $1. Before, after, and all along, tulip bulbs were rare, and in various conditions ranging from poor to perfect. Demand is what determined the tulips value, and demand is what determines the values of stocks and coins today.

]]> By: Tim http://www.consumerismcommentary.com/four-factors-that-determine-the-value-of-a-coin/comment-page-1/#comment-131957 Tim Mon, 07 Jan 2008 19:02:25 +0000 http://www.consumerismcommentary.com/2008/01/05/four-factors-that-determine-the-value-of-a-coin/#comment-131957 Dan, I did mention that if the coin is legal tender that it is then only worth its denomination. It should be noted that bullion value is not the same value as melting down the coin. bullion value considers 100% (well nothing is 100%, it's more like 9's), of which most coins are not. If you melted the coin down, then you would get scrap value (and still would have to include the cost of separating metals), which is far below bullion and below the coin's denomination value. so you are correct, I omitted the scrap value. Flexo: all four factors affect the demand for the coin. If there is no demand (i.e. no body wants to buy it), then the coin is only worth its face value. the rarity and condition and bullion value increases the demand for a finite item, which increases the "value" or amount someone is willing to buy the coin (i.e. demand). I think it is more tomato and tomato, but i see the other variables affecting demand driving the price, rather than all as independent variables. Dan,
I did mention that if the coin is legal tender that it is then only worth its denomination. It should be noted that bullion value is not the same value as melting down the coin. bullion value considers 100% (well nothing is 100%, it’s more like 9′s), of which most coins are not. If you melted the coin down, then you would get scrap value (and still would have to include the cost of separating metals), which is far below bullion and below the coin’s denomination value. so you are correct, I omitted the scrap value.

Flexo: all four factors affect the demand for the coin. If there is no demand (i.e. no body wants to buy it), then the coin is only worth its face value. the rarity and condition and bullion value increases the demand for a finite item, which increases the “value” or amount someone is willing to buy the coin (i.e. demand). I think it is more tomato and tomato, but i see the other variables affecting demand driving the price, rather than all as independent variables.

]]> By: Flexo http://www.consumerismcommentary.com/four-factors-that-determine-the-value-of-a-coin/comment-page-1/#comment-131867 Flexo Mon, 07 Jan 2008 03:37:50 +0000 http://www.consumerismcommentary.com/2008/01/05/four-factors-that-determine-the-value-of-a-coin/#comment-131867 It can certainly be argued that the four factors listed above (where demand above refers to the popularity of a certain series or to coin collecting in general) influence demand (the broader economic concept), but if you ask someone why a coin fetches a certain price rather than a certain other price, it's not enough to say, "demand." All four aspects are factors because a change in any one factor could affect the price the market is willing to pay. Dan: thanks for mentioning the currency/face value. Even the most undesirable collector's item, as long as it's a coin meant for circulation, can be used in transactions at its face value. It can certainly be argued that the four factors listed above (where demand above refers to the popularity of a certain series or to coin collecting in general) influence demand (the broader economic concept), but if you ask someone why a coin fetches a certain price rather than a certain other price, it’s not enough to say, “demand.” All four aspects are factors because a change in any one factor could affect the price the market is willing to pay.

Dan: thanks for mentioning the currency/face value. Even the most undesirable collector’s item, as long as it’s a coin meant for circulation, can be used in transactions at its face value.

]]> By: Dan http://www.consumerismcommentary.com/four-factors-that-determine-the-value-of-a-coin/comment-page-1/#comment-131538 Dan Sat, 05 Jan 2008 22:48:53 +0000 http://www.consumerismcommentary.com/2008/01/05/four-factors-that-determine-the-value-of-a-coin/#comment-131538 There are only 3 factors: 1. Currency value 2. Bullion value 3. Demand (condition and rarity impact demand) I almost agree with Tim, but he missed an important point. Even with absolutely no demand, the coin can be used as currency or melted and sold as a metal. Therefore, demand cannot be the only factor. As to condition and rarity, even a mint condition, one of a kind coin that is only worth its currency or bullion value without demand. There are only 3 factors:

1. Currency value
2. Bullion value
3. Demand (condition and rarity impact demand)

I almost agree with Tim, but he missed an important point. Even with absolutely no demand, the coin can be used as currency or melted and sold as a metal. Therefore, demand cannot be the only factor.

As to condition and rarity, even a mint condition, one of a kind coin that is only worth its currency or bullion value without demand.

]]> By: Tim http://www.consumerismcommentary.com/four-factors-that-determine-the-value-of-a-coin/comment-page-1/#comment-131527 Tim Sat, 05 Jan 2008 20:48:22 +0000 http://www.consumerismcommentary.com/2008/01/05/four-factors-that-determine-the-value-of-a-coin/#comment-131527 I disagree here. The only thing that matters is demand, because if it is legal tender then it is simply only worth its denomination. The other variables go into its demand desirability. I disagree here. The only thing that matters is demand, because if it is legal tender then it is simply only worth its denomination. The other variables go into its demand desirability.

]]> By: Jeremy http://www.consumerismcommentary.com/four-factors-that-determine-the-value-of-a-coin/comment-page-1/#comment-131526 Jeremy Sat, 05 Jan 2008 20:46:22 +0000 http://www.consumerismcommentary.com/2008/01/05/four-factors-that-determine-the-value-of-a-coin/#comment-131526 Thanks for answering my question in greater detail. Collecting coins is something I've considered getting into, and maybe these coins I received as a gift will be a good start. Thanks for answering my question in greater detail. Collecting coins is something I’ve considered getting into, and maybe these coins I received as a gift will be a good start.

]]> By: Two Nickels http://www.consumerismcommentary.com/four-factors-that-determine-the-value-of-a-coin/comment-page-1/#comment-131512 Two Nickels Sat, 05 Jan 2008 18:58:12 +0000 http://www.consumerismcommentary.com/2008/01/05/four-factors-that-determine-the-value-of-a-coin/#comment-131512 I started off trying to collect various older coins through auctions (real auctions, not ebay), but some of the more 'experienced' collectors always outbid me and it wasn't worth the time (to me). So, I just started ordering proof sets directly through the U.S. Mint - I get them when they're released, stick them in a safe, and check their value once a year or so just to see if they've gone up any. I like it. I started off trying to collect various older coins through auctions (real auctions, not ebay), but some of the more ‘experienced’ collectors always outbid me and it wasn’t worth the time (to me). So, I just started ordering proof sets directly through the U.S. Mint – I get them when they’re released, stick them in a safe, and check their value once a year or so just to see if they’ve gone up any. I like it.

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