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I have been collecting, buying and selling United States coins for more than 50 years. I am not a dealer. The purpose of this guide is to provide information to novice and intermediate collectors, or anyone who intends to spend their hard-earned money to buy a collectible coin. The best advice that I have ever read was written by Q. David Bowers and probably by others before him who said "read the book first."
Buy something you love/like. Purchase with the intent to hold and treasure your coins. Obviously the market is intent on telling you that you SHOULD buy because the coin is a "bargain for the grade" or because the price/value can only go UP. We all KNOW how nonsensical those statements are, but every collector can tell you about a bad purchase.
Coin values are determined by three criteria, rarity, demand and condition. The rarity of a coin in many cases can be determined by published figures, i.e. U.S. mint production figures. Gold and silver melting and copper coin redemptions in years past can alter these figures significantly. In the case of U.S. copper coinage, after 1857 a number of large cents were undoubtedly melted for their copper value upon the mint switching to small cent coinage. Another problem U.S. mint issue with production figures, which were stated in yearly production, was that in some years, like 1799, it is thought the reported production include those coins minted in 1799, but many carried 1798 dates. (Dies were used until they were unusable).
The demand for most coins produced in the US seems to be driven by true collectors, dealers and hoarders. Determination of demand is a difficult issue to unravel except in the case of true collector coins such as 1793, 1799 and 1804 US Large Cents, 1877 Indian Heads Cents and 1909-S VDB Lincoln Cents.
Some Newcomb variety Large Cents are in great "relative demand" within Large Cent collecting circles, but if you tried to sell an 1822 N-14 to a local dealer and get a premium, it's not likely to happen. So, be aware that a relative rarity issue coin, such as one based on "die variety" may be a wonderful collectible, you might have to put in hundreds of dollars worth of time to get your money back.
Buy something you love/like. Purchase with the intent to hold and treasure your coins. Obviously the market is intent on telling you that you SHOULD buy because the coin is a "bargain for the grade" or because the price/value can only go UP. We all KNOW how nonsensical those statements are, but every collector can tell you about a bad purchase.
Coin Value
Coin values are determined by three criteria, rarity, demand and condition. The rarity of a coin in many cases can be determined by published figures, i.e. U.S. mint production figures. Gold and silver melting and copper coin redemptions in years past can alter these figures significantly. In the case of U.S. copper coinage, after 1857 a number of large cents were undoubtedly melted for their copper value upon the mint switching to small cent coinage. Another problem U.S. mint issue with production figures, which were stated in yearly production, was that in some years, like 1799, it is thought the reported production include those coins minted in 1799, but many carried 1798 dates. (Dies were used until they were unusable).
The demand for most coins produced in the US seems to be driven by true collectors, dealers and hoarders. Determination of demand is a difficult issue to unravel except in the case of true collector coins such as 1793, 1799 and 1804 US Large Cents, 1877 Indian Heads Cents and 1909-S VDB Lincoln Cents.
Some Newcomb variety Large Cents are in great "relative demand" within Large Cent collecting circles, but if you tried to sell an 1822 N-14 to a local dealer and get a premium, it's not likely to happen. So, be aware that a relative rarity issue coin, such as one based on "die variety" may be a wonderful collectible, you might have to put in hundreds of dollars worth of time to get your money back.
Coin Grading
Coin grading is the process by which one attempts to evaluate, objectively the condition of a coin. Now we come to the real reason that I am writing this guide. The "grade" or condition of a coin tremendously impacts the value (generally meaning the price you should pay) of a coin. The objectivity of the source of the "grade" applied to the coin is MOST important.
The grade of a coin is determined by many factors. The condition of the planchet or blank coin in many early coins was a significant issue. Many early US Large Cents, notably the Classic Heads of 1808-1814 were often struck on corroded planchets. The die condition also affected the quality of the coin that was produced. Some worn dies, as some of those used to strike some 1829 Large Cents were notably worn, resulting in a very "flat" strike, with many of the coin details, such as the hair braids, very weak even in an uncirculated coin. The general reason that coin grades diminished was that they were spent, carried and rubbed over for many years. This is the main element in first putting a grade name or number to a coin. However, over the years many other things happened to our coins. Holes were punched and they were used as buttons, whirlygigs or decoration. They were lost, buried and dug up or found, with corroded surfaces. Someone decided to polish his copper penny with sandpaper or shine it with acid. Other damage occurred from dropping, hammering or sawing.
To determine the fair-market value of any coin, the grade MUST be determined, NET of these many possibly insults to the surface of the coin.
Over the years an alphanumeric grading scale has emerged for transactions involving US coins. This system, I believe, was the result of Large Cent collecting author William Sheldon, who tried to more accurately describe his large cents. The scale runs from 1 to 70, with 70. All numbers of 60 and over apply to coins that are consider to be in "uncirculated" condition. Here is the breakdown:
Poor-1
Fair-2
AG-3 (about good)
Good number run G-4, G-5, G-6 and G-7
Very Good numbers are VG-8 thorough VG-11
Fine condition numbers are F-12 and F-15
Very Fine numbers are VF-20, VF-25, VF-30 and VF-35
Extremely fine (or XF) numbers are XF-40 and XF-45
About Uncirculated numbers are AU-50 AU-55 and AU-58
Uncirculated coins are referred to as Mint State or MS coins. The numbers are MS-60, MS-61, 62,63,64,65,66,67,68,69 and the perfect coin, MS-70.
It should be apparent that just putting a number grade on a coin based solely on the details of the surface that are visible (net of the amount of wear) doesn't take into account the miriad of problems that the coin might have, such as corrosion, pitting, scratches and on and on.
You may trust the word of the seller that the grade that he applies to his coin is generally correct, but such an approach has not been shown to produce a fair-market deal, unless the purchaser has read the book and pays a "Good-4" price for a "Good-4" coin that the dealer is selling with a grade of XF-40.
A coin that has XF-40 details but corrosion and scratches IS NOT an XF-40 coin. It is not worth that price. Many corroded or pitted coins that show up on eBay probably are worth Good to VG prices at best. But you must decided the value for yourself. Would you be happy to pay $100 for a coin that you should have paid $15 for??? Don't ever pay the book value for the grade that a seller puts on his coin, unless it has details that qualify for the grade AND there are NO detractions, bends, scratches, corrosions, pits, etc.
Many books have been written about coin grading. Start there. The ANA guide is a good one. Two older guides are Brown and Dunn and Photograde. These guides have written descriptions for nearly all US coin issues. THEY DO NOT HOWEVER TELL YOU HOW TO GRADE A COIN THAT HAS ANY PROBLEMS EXEPT WEAR.
IF you don't want to do the work and read about, learn about grading, the safe approach is to buy only coins that have been graded by a 3rd party grading service. I think there are only three that you should trust, PCGS, ANACS and NGC. Those three have traditionally provided honest, independent grades, that have stood the test of time. That being said however, I personally think only PCGS graded coins warrant putting any significant amount of money into an unseen coin.
The grade of a coin is determined by many factors. The condition of the planchet or blank coin in many early coins was a significant issue. Many early US Large Cents, notably the Classic Heads of 1808-1814 were often struck on corroded planchets. The die condition also affected the quality of the coin that was produced. Some worn dies, as some of those used to strike some 1829 Large Cents were notably worn, resulting in a very "flat" strike, with many of the coin details, such as the hair braids, very weak even in an uncirculated coin. The general reason that coin grades diminished was that they were spent, carried and rubbed over for many years. This is the main element in first putting a grade name or number to a coin. However, over the years many other things happened to our coins. Holes were punched and they were used as buttons, whirlygigs or decoration. They were lost, buried and dug up or found, with corroded surfaces. Someone decided to polish his copper penny with sandpaper or shine it with acid. Other damage occurred from dropping, hammering or sawing.
To determine the fair-market value of any coin, the grade MUST be determined, NET of these many possibly insults to the surface of the coin.
Over the years an alphanumeric grading scale has emerged for transactions involving US coins. This system, I believe, was the result of Large Cent collecting author William Sheldon, who tried to more accurately describe his large cents. The scale runs from 1 to 70, with 70. All numbers of 60 and over apply to coins that are consider to be in "uncirculated" condition. Here is the breakdown:
Poor-1
Fair-2
AG-3 (about good)
Good number run G-4, G-5, G-6 and G-7
Very Good numbers are VG-8 thorough VG-11
Fine condition numbers are F-12 and F-15
Very Fine numbers are VF-20, VF-25, VF-30 and VF-35
Extremely fine (or XF) numbers are XF-40 and XF-45
About Uncirculated numbers are AU-50 AU-55 and AU-58
Uncirculated coins are referred to as Mint State or MS coins. The numbers are MS-60, MS-61, 62,63,64,65,66,67,68,69 and the perfect coin, MS-70.
It should be apparent that just putting a number grade on a coin based solely on the details of the surface that are visible (net of the amount of wear) doesn't take into account the miriad of problems that the coin might have, such as corrosion, pitting, scratches and on and on.
You may trust the word of the seller that the grade that he applies to his coin is generally correct, but such an approach has not been shown to produce a fair-market deal, unless the purchaser has read the book and pays a "Good-4" price for a "Good-4" coin that the dealer is selling with a grade of XF-40.
A coin that has XF-40 details but corrosion and scratches IS NOT an XF-40 coin. It is not worth that price. Many corroded or pitted coins that show up on eBay probably are worth Good to VG prices at best. But you must decided the value for yourself. Would you be happy to pay $100 for a coin that you should have paid $15 for??? Don't ever pay the book value for the grade that a seller puts on his coin, unless it has details that qualify for the grade AND there are NO detractions, bends, scratches, corrosions, pits, etc.
Many books have been written about coin grading. Start there. The ANA guide is a good one. Two older guides are Brown and Dunn and Photograde. These guides have written descriptions for nearly all US coin issues. THEY DO NOT HOWEVER TELL YOU HOW TO GRADE A COIN THAT HAS ANY PROBLEMS EXEPT WEAR.
IF you don't want to do the work and read about, learn about grading, the safe approach is to buy only coins that have been graded by a 3rd party grading service. I think there are only three that you should trust, PCGS, ANACS and NGC. Those three have traditionally provided honest, independent grades, that have stood the test of time. That being said however, I personally think only PCGS graded coins warrant putting any significant amount of money into an unseen coin.
Guide created: 07/10/07 (updated 10/02/08)
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