This past week we had a gentleman show up at our office looking for a SunTrust Bank ATM. He was looking down on his smart phone and said that our office was the address that was listed online for SunTrust Bank. I jokingly responded that I guess “not everything online is true.” This got me to thinking that we frequently receive phone calls from prospective customers that come across inaccurate information online, or they mistakenly assume that the value of one type of coin is indicative of the value of all similar type coins. There are many nuances in the field of numismatics that must be taken into consideration to properly value rare coins. In this article, we’re going to discuss the difference between retail, market and wholesale prices and debunk some of the common misconceptions regarding the perceived value of rare coins. Additionally, we’ll share with you the four factors that determine the value of rare coins and provide some helpful resources on the topic of coin grading.
Two frequently used resources by individuals interested in selling their rare coins are Cointrackers and “A Guide Book of United States Coins: The Official Redbook;” more commonly referred to as “The Redbook.” Cointrackers is an online resource that provides the estimated retail value of various types of coins. The prices listed on Cointrackers are typically well above market and aren’t an accurate indication of the current market value of most coins. We would be thrilled to be able to sell our coins at the prices listed on this site, but the fact of the matter is that the market value is typically about 80% or less of the posted values. However, Cointrackers shouldn’t be completely disregarded, as it does help to identify potentially more valuable coins. We have a similar resource available on the home page of our website entitled “Rare Coin Guide” for individuals who are interested in identifying lower mintage and potentially more valuable coins. The Redbook is also a helpful resource for identifying lower mintage coins that typically sell at a premium, but the issues with this resource are two-fold. The book is a snapshot in time and is typically published 6 – 9 months prior to the year noted on the guide. Therefore, the price guide may be 18 – 21 months old by the end of the year specified on the book. In the rare coin industry, prices can change on a weekly basis, so it’s important to keep your finger on the pulse of the market. Additionally, most coin collectors don’t pay retail value for their coins; instead they pay market value, which is typically substantially less. Again, these are helpful resources to identify better date and key date coins that should sell at a premium, but don’t rely on these resources when estimating the price(s) that you should expect for your rare coins.
In contrast to retail prices, market prices are those prices that most coin collectors pay when purchasing coins from coin dealers. These values can be found by searching for completed auction prices on eBay, Heritage Auctions and Stacks & Bowers, among others. The “greysheet” from Coin Dealer Newsletter (CDN) is also a commonly utilized resource, but not all of the published prices in this guide are always accurate. A good example at the time of this article is the 2008 proof quarter set, which is valued higher than the entire 2008 proof set. It’s impossible to maintain completely accurate information when you’re covering thousands of coins, but for the most part, CDN does an adequate job. Contrary to popular belief, most coin dealers don’t pay greysheet prices for coins. Rather, coin collectors have been using the greysheet to determine the price that they should pay for rare coins, so it has become more of a market price guide as opposed to a wholesale price resource. For example, in the dealer-to-dealer networks, coin dealers who occasionally offer to pay greysheet “bid” prices are quickly overwhelmed with product from their fellow dealers. Coin dealers pay what is commonly referred to as wholesale prices, which we’ll discuss in further detail below.
As mentioned above, coin dealers pay wholesale prices when purchasing rare coins from other coin dealers or from coin collectors. For a coin dealer to be able to operate at a profit, they must purchase rare coins at wholesale prices and sell at market prices. As we previously discussed, very rarely do coin dealers receive published retail prices when selling rare coins. With respect to determining wholesale rates, all coin dealers take a slightly different approach, which is why it’s a good idea to do your due diligence to find a reputable coin dealer that will clearly explain their rationale. Typically speaking, a coin dealer will pay a percentage of recent auctions or greysheet values. Whole prices are typically 70% – 90% of these prices, but as we discussed above, not all published greysheet prices are accurate, so your actual offer may differ. Another good resource is “A Handbook of United States Coins: The Official Blue Book.” The prices listed in this guide are wholesale prices, but this guide suffers from the same limitations as the “Red Book,” in that it provides a snapshot in time, which may be up to nearly two years out of date. Again, this resource should be used to help determine which of your coins may be more valuable, but it may or may not reflect accurate values by the time you’re ready to sell your rare coins. Now that we’ve discussed the difference between retail, market and wholesale values, we’ll discuss the four factors that determine the value of a coin and explore the topic of coin grading in further detail.
How Coin Values are Derived
As we mentioned above, there are four primary factors that determine the value of a coin, which includes the coin’s age, where it was produced, the mintage and the coin’s condition. As an example, nearly any U.S. or colonial coin produced in the 18th century is going to be fairly valuable simply due to its age. Where coins were produced is also important. Some of the more valuable Morgan silver dollars were produced at the Carson City Mint. Even though the mint produced some coins in excess of one million, all of the Carson City Morgan silver dollars sell at a premium. More important than the mint location is the total number of coins produced. As a general rule of thumb, most coins produced in quantities of a million or less sell at a premium over common date coins. Some mints were known to produce a limited number of coins in certain years. For example, the Philadelphia mint only produced 12,000 Morgan silver dollars in 1895, all of which are proof coins. Many of these coins are unaccounted for, which has bolstered the price of these coins. You would be hard pressed to find an 1895-P Morgan silver dollar for less than $20,000. The way to determine where your rare coin was produced is to inspect it for a mint mark. All mints, with the exception of the Philadelphia mint, stamped a letter or letters on the coin to indicate where it was produced. Common mint marks include “D,” “S,” “O,” and “CC,” which denote the Denver, San Francisco, New Orleans and Carson City Mints. The mint mark may be located on the front or back, so be sure to thoroughly inspect your coin for a stamp. If you’re unable to locate one, it’s safe to assume that the coin was produced at the Philadelphia mint. Lastly, the condition of a coin is a primary factor in determining its value. Because the condition of a coin is such an important factor, we’re going to dedicate a separate section to this topic.
How to Identify Your Coin’s Grade
Earlier this week we spoke with a prospective customer that had an 1844 Seated Liberty dime in her possession. I was asked to provide a quote over the phone, which is difficult to do without examining the coin in person. When pressed for an answer, I told the customer that they’re likely looking at a value of at least $200 for a low grade coin. Before I was hung up on, I was told that the value of the coin was $15,000 because this is what she saw on the internet. While it’s quite possible that the individual did in fact have an 1844 Seated Liberty dime in her possession, she assumed that the highest price that she was able to find online applied to her coin. It’s important to note that the condition of a coin; especially a rare coin, is the key factor in determining the coin’s value. All coins are graded on a 70 point scale. A “1” is indicative of a poor condition coin, while a “70” is a perfect score. In other words, a coin that receives a “70” grade has no apparent flaws under 10x magnification. For those individuals interested in learning more about coin grading, we recommend that you come familiar with the 70 point Sheldon Grading Scale. This grading scale was developed by Dr. William Sheldon in 1949 and has been adopted as the standard in the industry. It’s important to keep in mind that various factors can come into play with respect to the grade and value of a coin, such as if it rim issues, surface damage, or has otherwise been altered from its original condition. For example, a cleaned coin is typically sold at a discount (sometimes substantially so) to a coin that has not been cleaned. The emergence of third party grading companies over the years has helped to eliminate much of the subjectivity associated with grading coins. These companies not only provide the grade of the coin, but also authenticate it and provide qualifiers if the coin has been altered from its original condition. PCGS and NGC are known in the industry as the two top third party grading companies in the U.S. Second tier companies include ANACS and ICG. Beyond that, grades assigned by most other third party grading companies are typically unreliable and require a thorough examination of the coin to determine the proper grade.
In summary, we’ve discussed the difference between retail, market and wholesale coin prices. Published retail prices are rarely realized; rather, most coins are sold at market rates. For a coin dealer to realize a profit, they must purchase rare coins for less than market prices, which are referred to as wholesale prices. There’s no exact science to determining fair wholesale prices for your coins, but a good rule of thumb is to expect 70% – 90% of current greysheet or recently completed auction prices, depending on the current demand in the marketplace for your coin. The Blue Book is also a good resource, but as we discussed above, it does have its limitations. We also discussed the four factors that determine the value of rare coins, delved into the topic of coin grading, how grades affect the value of coins, and also touched on certified or professionally graded coins. We hope that you found this article to be helpful, and welcome you to contact us if we can provide any further assistance.