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Beginners' Questions about Coin Collecting Coin collecting is an extremely popular hobby with people of all ages. Children tend to gravitate towards pretty or unusual looking coins, while adults are generally concerned with the financial value of their collections.
Some people build strictly a grassroots coin collection, acquiring those coins that they happen to stumble across, while others buy in bulk and eagerly anticipate new limited edition minting. However you choose to build your collection, you may have many questions about the hobby.
What is numismatics?
Strictly speaking, numismatics is the study and collection of money and related financial objects or documentation. Examples include not only coins but also paper money, checks and stock certificates.
In practice, however, the word numismatics is commonly used to mean simply coin collecting. Those who practice numismatics are numismatists.
How should I handle my coins?
The short answer is as little as possible. Even the smallest fingerprints on an un-circulated coin can cut the value dramatically. If you must handle a collectible coin, do so only from the edge.
If you need to lay the coin down, use a velvet pad if available. Minimally, use a soft, clean cloth. Handle extremely high value coins only with surgical gloves and a protective facemask.
How should I clean my coins?
You really should have no need to clean the coins. Collectors look for authenticity, not shiny newness. Even damp wiping with a clean, lint-free rag can leave hairline scratches on the coin, lowering its value dramatically.
If it is strictly necessary to remove dirt and debris, ask other coin collectors to recommend a commercial coin cleaner that removes the dirt without scratching the coin or losing the luster. Ask to see coins that they have cleaned before using their advice.
How should I store my coins?
The goal for coin storage is protection from temperature extremes and humidity. You also want to protect your coins from fingerprints, dust, dirt, and chemicals. Some form of dehumidifying equipment is recommended, even if it is just silicone gel packets.
Low value coins can be kept in almost any container. However, higher value coins require special protection. Your goal for high value coin preservation is a container that is as airtight as possible, which also displays the coin so that there no need to remove it from the container.
Many commercial storage options are available. Ask for recommendations from your coin dealer or others in the hobby.
How are coins graded?
Grading coins is an extremely complicated process. Only trained professionals can do specific grading. However, it is a good idea for any coin collector to have a basic understanding of how grading works.
There are 13 standard grades for circulated coins, ranging from the AG-3 "About Good" to AU-58, or "Very Choice about Un-circulated). Uncirculated coins are graded from MS-60 to MS-70, depending on quality and flawlessness.
In practicality, MS-70 is more of an ideal than a realistic grade. A good book on grading will teach you the basics on recognizing the differences.
Some experts utilize different or additional systems, so it is always vital to make sure that you are speaking the same language as the expert with whom you are dealing.
If you are a coin collector who wants to sell or buy coins, one good way to do it is through coin auctions or bidding.
Coin auctions provide the best ways to obtain coins that have remarkable values. Coin auctions are the primary source of rare coins because most rare coin collectors want to sell their treasures to the highest bidder.
Unlike the typical way of selling and buying coins, coin auctions entail some rules and regulations for both the bidder and the seller that they must adhere to. Ten steps to grading a coin 1. Hold and view the coin correctly. This is a common mistake, one made even by seasoned numismatists. Always hold the coin by its edges, between your index finger and thumb. I use the middle finger on my right hand as a safety net should the coin slip out of my grip. Next, and equally important, is to rock the coin back and forth while at the same time turning it in a circular motion that gives the coin a full 45-degree angle. In combination with superior lighting conditions, this technique will enable you to see hairlines and light cleaning that might otherwise go unnoticed.
2. Choose your lighting carefully. Some may disagree, but I say avoid fluorescent light altogether. I prefer a standard desktop or table mounted lamp with a 100-watt bulb, though others on our grading team use a 75-watt bulb. Do not try to save money by purchasing inexpensive bulbs... I've found they give off a more yellow light. Less than 75-watts is not adequate unless you are using a special high intensity lamp. Looking at a coin with a halogen light is, to me, like staring into the sun. Generally, keep 12" to 16" between the light source and the coin you're grading. Look at proof coins twice. Once from a distance of 12" to 16", and again from 20" to 22" to see hairlines with greater ease. Most important, when you find a light source that works for you and delivers a "true" look at the coin, stick with it.
3. Use a quality magnifier, sparingly. Use a glass only when you really need it, unless your vision requires continual magnification to avoid eyestrain. I have three glasses, a Bausch & Lomb 5x slide, a 16x loupe and a Zeiss 24/12. I only pick up a glass if I see something that warrants closer inspection or if it's a frequently counterfeited or altered coin type. Continual use of a glass can cause one to micro-grade, focusing on minute imperfections that could lead to consistent under-grading. Microscopes are great for authenticating or confirming hidden defects, but I can't imagine grading with one.
4. Wipe the slate clean with each coin you grade. One of the first lessons you learn as a professional grader is not to let the coin just graded influence the grade you assign to the next. I have no problem assigning a coin an MS68 grade when it was preceded by a lightly cleaned VF35. Likewise, I would not be influenced into grading an MS64 coin MS65 if the coin before it was a fabulous MS67. At NGC, I would frequently find gems among a group of lower quality coins. If you should come upon an exceptional, all-original group of similar coins, I believe it's OK to do comparative grading to the extent needed to grade the coins consistently. As an NGC Finalizer, I had access to other grader opinions before I would formulate my own, but I almost always chose to come up with my own grade first, then consider the other grades.
5. Your first impression is usually right. In most cases, within 10 seconds of picking up a coin I have an initial opinion. If you are a beginner numismatist you will need to take more time, perhaps as much as a minute to formulate your initial opinion. I'd say my final opinion matches my initial opinion 80% of the time. The initial opinion is the starting point in determining the final grade. If you grade too quickly, you can easily miss something. Spend too much time, and you'll out-think yourself into an incorrect grade. If this happens, I suggest you put the coin down, then return to it a minute or two later. You'll be amazed how easily the grade can come to you after doing this and how it can differ from your previous grade! 6. Counterfeit U.S. gold coins never have copper spots. Did I say never? Well, let's just say almost never. After viewing approximately 2,000,000 U.S. gold coins, I have seen thousands of fakes and exactly one that had a single copper spot. I can't explain why this is the case, and it doesn't mean that the fakes will not develop spots, it is simply an observation of mine that hopefully could be of use to you in the future. Even though this is an authentication tip, not a grading tip, I decided to include it here anyway.
7. Always grade the rims and the edges first. I've been told that in the past Europeans would actually grade the entire coin based on the condition of the rims and edges (perhaps some still do). While I would never recommend this, I point it out because many modern day numismatists here in the U.S. have consciously or unconsciously opted to omit this part of the grading process completely! While rocking the coin and rotating it, examine the edges for damage to the reeding, corrosion, evidence of mounting, etc. In order to detect rim filing or repair look at the way the light reflects off of the rims for areas that are uneven or have a different color or appearance. I always inspect rims and edges before going on to grade the rest of the coin, and I urge others who do not practice this to start making it a habit. Rim filing and rim repairs can be very deceptive and, unless the light hits the rim at exactly the right angle, you will almost surely not see them. Sometimes rims are deliberately dulled or toned down to conceal problems, so be careful!
8. Factor in various considerations. Eye appeal (or lack thereof) is a big consideration in arriving at a final grade. The problem here is that few can agree on what constitutes positive eye appeal, other than in the case of a magnificently toned or full blazing white coin. Some might even argue over those. I do not believe it is a grading service's job to screen out (omit) coins for certification solely on the basis of "negative eye appeal". That said, I do believe an "ugly" but otherwise problem free coin should get what it deserves in the form of a lower grade. Coins with spectacular original toning are highly preserved, miniature works of art that in some cases should be rewarded with a higher grade. Likewise, a blazing white gem with "pop" could be rewarded. NGC and other major grading services do not consider "properly dipped" coins to be "improperly cleaned", but any type of conservation effort at all is best left to the professionals as value can easily be destroyed rather than enhanced if improper techniques are employed. Next, and equally important, remember to always ask yourself the question: "How is it made?" (Or, "How do they come?"). I think most professionals would agree that one of the things to come out of the evolution of grading is acceptance that you simply cannot grade coins from different time periods and of different mints the same way, even though they may be the same coin type. If you submitted an 1896 "O" Morgan dollar that looked like an MS65 1903 "O", I'll bet you would be very disappointed if it came back in an MS65 holder! You would probably also expect an "O" mint $2.50 Liberty to be graded taking the typical weak striking into consideration. Most choice AU Charlotte and Dahlonega gold might only be XF40 if compared to most choice AU "P" or "S" mint gold. So you can see that one simply cannot apply the same grading standard uniformly to all coins without taking these and other factors into consideration.
9. Arrive at a final grade by combining the results of a "hard look" and a "soft look". If you go back to tip number five you will see where I suggest mentally recording a quick initial opinion and then going on to look more carefully. During the time between determining your initial opinion and arriving at a final grade I recommend first looking at the coin "hard," that is to closely scrutinize every aspect applying a precise viewing method consistently. At that point, you should have your "technical grade". Repeat the process without scrutinizing as intensely, perhaps even looking at the coin through the plastic flip to determine what grade the coin will look like in the holder without ultra close scrutiny or magnification. Now, you are able to determine the "soft look" grade of the coin. The concluding step is to combine these two assessments to arrive at a final grade that is accurate without being overly technical. How often does your final grade compare to your initial opinion?
10. You are your own best teacher, and the absolute best resource for learning is right under your nose! I believe the best way to get a grading education is also the simplest way, and it's free! First, choose the grading service that you believe grades the most consistently day-in and day-out, the one that represents a fair and reasonable market standard. Now, whenever you have the opportunity to view these certified coins, whether at coin shows, auctions, or from your local dealers inventory, ignore the label completely and grade the coin. Resist the temptation to peek at the grade until you have graded the coin yourself. How often does your grade match the certified grade? This can be a fun and challenging game that will definitely sharpen your skills over time. In order to further your grading abilities you must be willing to accept the fact that, in most cases, if you disagree with the grade assigned, it isn't necessarily that it was misgraded, but more likely that you are unfamiliar with how the grading service grades that particular coin. Sometimes a coin may appear to have an "obvious grade," and the label may say something different. Believe me, more often than not, there is a reason for it being graded the way it is graded. If your obvious grade is higher, check for hidden minor problems. Does it have a very light wipe that would not exclude it from being certified but that would affect the grade? Does it have a bit too many carbon flecks? Do you get the idea? If your obvious grade is lower than the certified grade, ask yourself why the coin couldn't be the higher grade. If you're still convinced it's graded too high or too low, there is a great probability that you are unfamiliar with the grading services' standard for that particular coin. You are certainly allowed to disagree, but keep in mind that the grading service may just grade them differently than you would.
How to Buy Proof Sets of the 50's & 60's First, a little history. The 1954 Proof Set came in a square box and the coins were in individual cellophane holders wrapped in tissue. Starting in mid 1955, the sets came in a cellophane holder, inside a brown envelope. In 1965, 66, and 67, no proof sets were minted. Instead, Special Mint Sets were substituted, of 40% silver. The 1965 was in a white envelope, the '66 and '67 were in plastic holders in a box. It's important to note that the envelopes of the 1965 sets were not sealed. So, if you see an offer for a Never Opened 65, avoid it. Proof Sets resumed in 1968 and are also in plastic holders inside a box.
The sets from 1955 to 1964 are where buyers need to be knowledgeable, or they will get burned. The first problem is the envelopes. If you look at the auctions of these items on eBay you must reach one of two conclusions: 1). Of most of the sets minted during those years, hardly anyone bothered to open any or, 2). There is a widespread scam being perpetrated on eBay bidders. It seems there are literally thousands of "Unopened" sets out there. Okay, picture this. It's 1959. Your new Proof Set arrives in the mail. You say to yourself, "Hmmm, I don't think I'll ever open this for the rest of my life. I bought the coins, but I choose to never look at them." Either you or your heirs eventually sell the set to a dealer, still unopened. The dealer thinks, "Hmmm, there could be coins in here worth thousands of dollars, but I'm not going to bother to find out. I'll just sell it on eBay unopened, because I'm a real charitable guy and I want someone else to get lucky." So he advertises it on eBay that YOU are likely to get these fabulous rarities. Now multiply that thinking by thousands of collectors, and thousands of dealers, over a period of 40-50 years, all thinking the same way. No one ever had the curiousity or numismatic interest to open any of them. Give me a break. On eBay you can buy dozens, if not hundreds, of what appear to be reproduction proof set envelopes in "new" condition. It's easy for any dishonest person to set up shop stuffing reproduction envelopes with junk proof sets, sealing them, and advertising them as potentially "worth thousands of dollars".
Having established that you should buy what you can see, what should you look for? There are basically two ways opened sets are most frequently offered. The first is in the original cellophane, with or without the original brown envelope. The other is in a secondary market plastic holder, such as a Whitman holder.Your first thought might be that the original packaging is the best choice. Not necessarily. The quality of the condition of storage is a factor, as is the cellophane. I've seen many original sets where the coins while problem free, (no spots or cloudiness), have more of a matte finish than the mirror finish we expect. I believe chemical compounds in the cellophane are responsible, and that is why the Mint eventually went to hard plastic which is chemically more inert. I've seen many sets in hard plastic that are pristine. However, there is a caveat. It depends on how carefully the person transferring the coins from the cellophane to the plastic holder handled them. If he/she touched the surfaces with fingertips, the coins may have fingerprints. If the handler breathed on them, they may have carbon spots. If the handler was smoking, they may be discolored.
So, what should you do? Look for auctions that have coins you can see, and quality scans. Study them carefully for carbon spots, cloudiness, or other imperfections. Pay particular attention to the cent, which is often the first coin to be effected by poor storage conditions. If in doubt, ask before you bid. An honest seller will always be glad to answer your questions. Look for coins that have Cameo devices. This is standard on today's proof sets, but in the 50's and early 60's it was rare and those coins command a premium (the fabulous rarities you are promised in the "unopened" sets).
The Proof Sets of the 1950's and early 1960's are undervalued by today's prices. Many sets were broken up for singles, and many were damaged. They are beautiful coins at a great price, but study them carefully to avoid disappointment. Know what you are looking for, buy what you can see, and you will get what you pay for!
Basically, there are three types of coin collecting auctions. These are:
1. Auctions through mail bidding
In this type of coin auction, the seller will advertise and publish coin auctions through the mail. This is highly beneficial for people who want to participate in the activity but cannot attend the event personally.
Usually, the seller has a mailing list available and it is used to send catalogs that contain the descriptions and pictures of the item(s) to be sold. At times it may contain the starting bid amount and other pertinent information.
The seller's mailing list, the catalogs, or brochures are sent out to the potential bidders. These lists may also be sent to those who have purchased from them in the past.
2. Phone auctions
These auctions are conducted by phone. Just like the mail bidding, phone auctions must observe the rules and regulations that are to be followed.
Once the highest bid is identified, the item goes to the winner. However, there are some instances when people may ask the seller for an approximate selling price but the rules still remain the same, no disclosure of previous bids.
3. Online coin auctions
This type of auction is popular because when bidding on a particular coin the bidder is able to see what the coin looks like. Greater interaction between the seller and the buyer may also be achieved as the seller can instantly contact the bidder for important information.
The only drawback to this kind of coin auction is that through the Internet, others can deceive a coin collector into believing that what they see on the screen is exactly the same item that they are bidding on.
Determining Rare Coin Value
If you've taken up coin collecting, coin value is probably going to be one of the things you want to know about the rarities (and maybe not so rare items) that you've found. Determining the value is something that many people enjoy looking into, and there are a few ways to find out whether the one you've found is an old rare coin or just something a little more unique than others.
The first place to start looking into coin value and prices for collectible coins is a coin collecting guide. There are so many of them in the world that there isn't one general book to cover all the old rare ones, the silver coin sets, and all sorts of other types of coins out there.
However, there is a collecting price guide geared to a specific type of coin, such as those for us collectors or those interested in old rare coins.
A way of tracking down which collecting price guide might be good for you is as easy as plugging in the type of coin that you want to determine for it's and add "coin collecting price guide".
The searches that returned to you will most likely direct you to the exact collecting price guide you need for coin value of that rarity you have in hand.
Auction sites and other websites are an ideal way of determining coin value. You can find many sellers who sell and buy coins on sites like Ebay. If you notice the prices that people are asking for coins or selling their coins, you can get a better idea about their value and rarity.
Before you try to determine your particular coin value, though, find out its actual value so you can be sure to set it at a reasonable price for both you and the buyer.
Determining coin value through reputable collectors or rare coin dealers is probably the best idea of all, if you believe that you've got some old rare coins in hand or have come across some Celtic ones you think might be valuable.
Reputable dealers should show interest in evaluating coin value more than trying to buy it from you. If you have the sense the dealers are trying to help you offload your old rare coins, you can bet that you have some valuable ones. Visit a few of the dealers available to see whether you're getting a similar value from each.
Professional and beginner collectors alike need to stay informed about the coin value of each piece in their collection. As times change, there is a chance that the value of some of your coins might go up or down in price.
With updated collecting price guides and the advice of knowledgeable dealers, you can continue to keep a record of how well your collection has retained its value.
How to Detect Counterfeit Coins
A special machine does the stamping of coins to make them genuine. People who counterfeit coins are well trained and have the capacity to manipulate their duplication - especially those rare coins which have high value among collectors. The most common procedure used in counterfeiting is that they pour a liquid metal into molds that will leave die marks with cracking on the counterfeit coin.
Those who are experts in determining counterfeit coins have observed that the changes seen in the coins have added, removed, or even altered the coin's date markings. If a person thinks that he is in possession of a counterfeit collectible coin, he can compare it with another coin - one like the suspect coin - which is known be genuine and have the same markings.
If the coin's value is more than 5 cents, look for corrugations in the outer edges of the coin. These are very thin railings (also know as "reeding") on the edges of the coins. Genuine coins have very thin edges and the railings are even and distinct if one is very observant. Those coins that are counterfeit can be distinguished if the edges are not thin enough and the railing is uneven or missing in some areas.
Should there be an instance when a person perceives that he has received a counterfeit coin, he must not return the counterfeit coin to the person that handed him. He must try to delay the person - should he try to escape - or try to keep that person in sight and follow him to his destination if possible. It is important to remember the person's clothes and physical appearance and if the person has any companion during the exchange: if they have a vehicle, get the car's license plate number and immediately call the nearest police department or the United States Secret Service for help.
There are many things that can be considered to determine whether the coin is counterfeit or not. There are terms that are used to describe a counterfeit coin's characteristics and they are as follows:
1. A restrike of a coin can be considered to be genuinely authenticated. These coins are actually dated earlier than those originally issued by the country that released them but have the same or exact features as the original coins.
2. Coins of a specific country in the ancient times are sometimes copied by another country. A person may think that it is forgery, but it is not because they had been legally approved in the country where they originated.
3. Forgery can be associated with the making of an illegal profit. It would be the main objective of the counterfeiting syndicate. The government sometimes uses forgery for political propaganda, as in the Second World War when Germans produced millions of American and British banknotes with the intention of profiting from them and destabilizing their enemy's economic situation.
4. Another known type of counterfeit coins is replica coins. Replica simply means that the original coins are copied with the same features and markings. The usual counterfeit coins have differences that are noticeable when examined by coin experts. Some coins have the word "copy" intentionally put on the sides of the coins and these replicas are used for educational purposes and museum displays.
5. A Lebanese connection is said to have a huge production of counterfeit coins. These coins were found to be used in an attempt to fool many museums, collectors, business leaders and other countries that are searching for their ancient lost coins before the discovery of this syndicate.
6. The collector intended forgery and the circulated intended forgery are types of forgeries where the coins are intended to be tokens yet the face values are accepted, despite of their illegality and irrelevant intrusive values.
It is important to consult an expert to determine if the coin is counterfeit or fake. An ordinary person can easily detect if the wrong metal was used for the counterfeiting. If the person is a collector of such items, he should be more aware of these coins. A collector needs to be more concerned with the collectible rare coins because this is where counterfeiters benefit frequently - their aim is to profit from the exclusive market for valuable coins.
Gold bullion coins Other than collectors' gold coins, gold bullion coins are popular amongst people who desire a "hedge" against inflation or a store of value. South Africa introduced the Krugerrand in 1967 to cater to this market; this was the reason for its convenient and memorable gold content—exactly one troy ounce. It was the first modern, low premium bullion gold coin. Bullion coins are also produced in fractions of an ounce – typically half ounce, quarter ounce, and one-tenth ounce. Bullion coins do not carry a meaningful face value, as their value is mainly dictated by their troy weight and the current market price of the precious metal. (If a face value is minted on the coin, it is done for legal or other reasons and it is nearly always significantly less than the actual value of the coin.) Gold has an international currency code of XAU under ISO 4217.
Gold bullion coins usually come in 1 oz, 1/2 oz, 1/4 oz, 1/10 and 1/20 oz. sizes. Most countries have one design that remains constant each year; others have variations each year, and in most cases each coin is dated. A 1/10th oz bullion coin is about the same size as a U.S. dime. A 1 oz. gold bullion coin is about the size of a U.S. half dollar.
Risk of investing in coins
All investments entail risks. While coin collecting is a rewarding hobby and is sometimes financially profitable, anyone purchasing coins with the expectation that they may be a good investment should understand and be prepared for the risks inherent in such investments.
Counterfeit and altered coins are not uncommon. Various techniques have been used to produce counterfeits. Some are deceptively realistic. Common coins have been altered to appear to be valuable collector coins, e.g. by adding a mintmark. Coins certified by one of the major grading and authentication services (see Slabs) offer a high degree of certainty for authenticity. In the absence of reliable independent authentication, the purchaser should know the diagnostics of genuine specimens of the coin and counterfeits.
Coin values often vary markedly with grade. The buyer must know if the coin is reasonably graded or has any problems, such as cleaning, to determine if the seller's price is fair. The risk of overgraded and problem coins is reduced with certified coins and bullion coins (see topics below). However, the grade assigned by the certification service is only an opinion, and it is not uncommon to find certified coins which, in the opinions of other experts, are overgraded.
While markets for all commodities rise and fall, precious metal and coin prices can be particularly volatile. This volatility creates both opportunities for sizable returns and for dramatic losses. For example, in 1980 the price of gold peaked at more than $800 per ounce and the price of silver at more than $50 per ounce, approximately double and eight times, respectively, what they are today.
Also to be considered are buy/sell spreads and liquidity. Higher value rare coins are often sold at auction. It may take several weeks or months from contacting the auctioneer to receiving payment (less auctioneer's commission). Coins can be purchased from or sold to a dealer much faster. The difference between dealer buy and sell prices can be substantially higher than the commissions charged by brokers for other types of investments. Therefore, a larger appreciation often must occur before coins can be sold at a profit.
Yet another risk is the possibility of material loss, such as by theft or fire. Storage in a bank vault or home safe may reduce (but not eliminate) this risk, but the added expense of such storage again increases the appreciation necessary before the coin(s) can be sold at a profit.
Because the risks of investing in coins are higher than for many other types of investments, they are not suitable at all for many investors. Even for those investors willing to accept higher risks in exchange for possibly greater returns, at most only a modest fraction of the portfolio (perhaps 5 to 15%) would be recommended by many investment advisors.
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