I’m a fan of paper money less than I am of coins, but I still like to take notice whenever any currency is redesigned. The $5 bill is the latest to get a make-over to thwart counterfeiters and to keep things interesting. Apparently counterfeiters prefer to bleach current $5 and reprint images of $100 bills on the paper for a tidy profit. The new watermarks on the $5 bill should prevent this.

Here is the new design.

These colorful bills entered circulation last Thursday, but I have not seen one just yet. Personally, I’d like to see more artistic designs—on bills as well as coins. I’d also like to see elimination of the one-cent piece and the one dollar bill. I’ll go out on a limb and even consider revaluation of the US dollar in such a way that today’s $1 becomes the “new $0.10” and today’s $10 becomes the “new $1” and so forth. It sounds crazy, but I’d like to see this before it costs $100 to see a movie in a theater.

U.S. unveils new $5 bill to thwart counterfeiters [Reuters]

I recently wrote about some changes coming to the presidential dollar series released into circulation by the U.S. Mint. Jeremy asked:

My wife and I received two fancy rolls of uncirculated coins of a 2007 series in a plastic display case as a gift this Christmas. For now they are just going to sit in the safe deposit box at the bank, but I wonder if they will ever have some sort of added value. Flexo, do you think these will ever have any sort of collector’s value (baring mistakes, die errors, etc)?

Collecting coins is fun, if you’re into that sort of thing, as I am once in a while. I don’t do it for the money, though. In most cases, trying to make money with a coin collection is speculation worse than day trading. Think about when you used to collect baseball cards. Chances are that if you did, you were doing so at the same time I was, in the late 1980s. Everyone was collecting cards at that point, or so it seemed. Supply was through the roof, and then when baseball started losing favor with Americans, demand dropped. So much for the value of late 1980s baseball cards.

Coins are similar. To answer Jeremy’s question, you’d have to take into account four main considerations that go into the “value” of a coin at any moment. If you want to see what the market is supporting, check recent successful eBay sales. But why is a 1955 cent worth more than $47,000 while an 1815 quarter dollar only $95?

Factor 1: Condition

There are two major components of condition, and the first is pre-circulation. Everything that happens to the coin while at the mint, including the way the design is struck on the planchet and marks left by other coins during transportation, plays a part in determining the condition of the coin. If the coin is circulated, then wear and tear plays a roll.

Several companies take the guesswork out of rating the condition of the coin, for a fee. They will grade the coin on a scale of 1 to 70, with 70 being practically perfect, and place the graded coin in a display holder that will hopefully prevent any future damage. The better the condition, the higher the value.

Factor 2: Rarity

Most modern coins will never be rare. These days, there are many collectors and the mint produces many items of each type of coin being produced every year. If you’re collecting coins for investment potential, modern coins are not good bets, unless you have a true rarity such as an error coin. That being said, a coin’s old age doesn’t correlate to rarity. Some older coins are more common that recent pieces. The higher a coin’s rarity, the higher the value.

Factor 3: Bullion value

Coins are generally composed of at least one type of metal, and that metal has a market value. For example, silver is currently $15.35 an ounce and copper is currently $3.1608 a pound as I write this article. A 1960 quarter dollar was composed of 90% silver and 10% copper. Multiply the price by the weight of each metal in the quarter, and you’ll find that the bullion or melt value of a 1960 quarter is $2.7804. For the most part, you should be able to sell a coin for at least the bullion value. Coinflation will tell you the metal content of U.S. coins and give you bullion values based on the latest market prices for the composition metals.

Factor 4: Demand

Ah, demand. Without demand, coins would fetch only their face value. That same 1960 quarter could only be used in financial transactions and would be worth no more than $0.25. Demand for various coins ebbs and flows as tastes change.

I can’t predict whether any particular coin will be in demand in the future. It’s likely that most modern coins won’t be hot among collectors thanks to their overabundance. But the coming changes to the edge of the coin may make the earlier series more desirable. Unfortunately, many of the early presidential dollar coins didn’t leave the Mint without unattractive damage. (See the first consideration of “condition.”)

The coins that Jeremy has are uncirculated, which means they may be in better condition than average. The best bet might be proof coins, which go through a special process to ensure that they remain in excellent condition throughout the minting and packaging process. Proof coins look much different—shinier and stronger—than circulated (“business strike”) and other uncirculated coins. If any coins have the ability to increase in value, it’s the rarer proof versions of these coins.

On the other hand, proof coins are hoarded among collectors. Secondary demand (after the initial demand during production, when collectors can buy directly from the Mint) will remain low for a while.

Rather than worrying about these factors, it’s much more enjoyable to collect for fun. If you want to put a value on your collection, check out from a library the 2008 Guide Book of United States Coins, also known as the “Red Book.” Another good source of coin values for those who prefer to do their research online rather than the library is the PCGS Price Guide.

There’s some news about the relatively unpopular “presidential” golden dollar coins. I’ve been using these coins almost every day, but I have not run into anyone else doing so. Most people I know haven’t even seen the coins. If you want to pick them up from the bank, pay attention to the release schedule:

February 14: James Monroe
May 15: John Quincy Adams
August 14: Andrew Jackson
November 13: Martin Van Buren

Here’s a chance to look at the four obverse designs representing U.S. presidents five through eight.

Currently, the “In God We Trust” motto appears on the edge of the dollar coins. This is an interesting idea, but I can’t say I am a fan. The edge lettering just doesn’t seem as solid as lettering on the obverse or reverse. Other people apparently had their own problems with the relocation of the motto. I’ve received forwarded junk email stating incorrectly that the “In God We Trust” motto was missing from all dollar coins as the result of some (non-existent) political God-elimination scheme. That rumor as we know is completely untrue, but a small amount of error coins struck without the lettering surfaced. Some individuals have vandalized coins to make “fake errors,” as well, but there was no underground governmental desire to remove “In God We Trust” from the coins.

Now, here is the news. The motto will be moving to the obverse of the dollar coins in 2009, while the date and mint mark will remain on the edge. This change could possibly increase the demand for earlier dollar coins from 2007 and 2008, at least among collectors, due to what will eventually be the “rarer” configuration with the motto on the edge.

Speaking of design changes, I hope that at the conclusion of the presidential dollar series, all presidential portraiture designs are retired. When designing the original American coinage, the founders wanted to stay away from honoring political leaders—it reminded them too much of the kingdom from which they were trying to separate. Let’s get back to having attractive and artistic representations of Liberty on our coinage rather than dead people.