What is the Difference Between a Coin’s Price and its Value?

Price and Value are Not the Same Thing

There is a big difference between the price of a coin, and the value of a coin. Although you often see these words used interchangeably, it is important that you understand the different concepts represented by each.

The “Price” of a Coin is How Much it Would Cost You to Buy it From a Dealer

This is pretty straightforward. The “price” of a coin is merely the amount that it would sell for on the open market, otherwise known as its “retail price.” Coin prices are set by many different factors, including the type and grade of the coin, its rarity and desirability, and to some extent its availability in the marketplace. The most frequently used price guide to U.S. coins is the Red Book.

The “Value” of a Coin is How Much You Can Sell it for Today

Here’s where it gets a little complicated.

When you want to establish what your coin collection is worth today if you wanted to sell it, you are establishing its value. The amount you can sell your coins for (its “value”) is considerably less than its “price” if you had to replace them. Dealers need to make a profit to stay in business, so when you go to sell your collection, you’re not going to get those nice, high Red Book prices. The Red Book prices are retail amounts.

Consider the Blue Book

There is another book, known as the Blue Book, (formally titled “Handbook of United States Coins”), which is the most widely used guide to wholesale coin values. These are the values a coin dealer will offer to pay you for your collection. They typically run about half of what the coins retail for. Coins which derive most of their value from bullion (such as common-date American Eagles and Double Eagles) will get you more (75% to 85% or so) because most of their value is based on the gold itself, rather than the rarity of the coin.

Appraising Your Collection for Insurance Purposes

The one time when it is correct to use the “Price” metric to determine what your collection is worth, is when you are establishing its value for insurance purposes. In this case, you want to insure the replacement cost of your coins. Since you’d have to pay the Red Book (retail) price to replace them, this is the metric you should use.

Always be Realistic About Prices and Values

There is nothing more satisfying to a collector than to pluck a coin worth $100 in the Red Book out a dealer’s $10 pick bin. And in this case, you’ve probably done very well, because it’s likely the dealer overlooked something here. But the more typical case is finding lots of $20 Red Book priced coins the $10 bin. This is because the dealer is probably overstocked in this material, and would be happy to get his cash back to make more marketable purchases. Be careful that you don’t get carried away thinking you’re getting bargains in cases like this, because the amount you can sell the coin for, its value to you, is about what you paid for it. In other words, don’t deceive yourself into thinking that the value of a given coin is equivalent to the price you paid for it.

Determining the Values of Your Coins

Factors that Influence the Value of Collectible Coins

If you are interested in collecting coins, it’s important to be able to have a rough idea of how much coins are worth. Knowing how coin values are determined will enable you to find good deals, and ensure that you don’t get cheated into paying too much money for a coin with a low worth.

Supply Influences Coin Values

One major factor in determining coin values is the law of supply and demand. If there are many coins of a particular type available, that coin will not be worth much. On the other hand, if only a very few coins of that type are produced, the coin values will rise. This is why a completely normal-looking copper penny minted in 1943 is worth about $200,000, whereas a 2,000 year old Roman coin may be worth less than $100 – because thousands upon thousands of Roman coins were minted, but only 40 pennies produced during war-time 1943 were made out of copper.

Demand’s Effect on Coin Values

Even among coins with a similar number of copies in existence, some have a higher worth than others. This is because some coins are in higher demand, driving up the coin values. Coins may become popular because they are particularly lovely to look at, because they are part of a topical set that is often chosen by collectors, or because they have a certain historical significance.

Precious Metals and Coin Values

Some coins are made out of precious materials like gold bullion or platinum. These coin values are less volatile because the worth is guaranteed in part by the material. A gold bullion coin, for example, is usually worth more than its melted weight, but it is never going to be worth less.

Coin Values are Tempered by Grade or Classification

The final major factor in determining coin values is the grade or classification of the coin. The more wear and tear that a coin has undergone, the less value it is going to have. This is why uncirculated coins are usually more valuable than coins that have been passed from hand to hand. Uncirculated coins have always been kept in the very best of conditions, making their value much higher. A coin in flawless condition may be worth hundreds of times more than a low-grade version of the exact same coin.

Now that you understand the basic factors that influence coin values, you have a better grasp of which coins may have real value and which will be worthless. In order to get a ballpark estimate of the value of any coins you might have, you will first need to determine its grade or classification. You can do this by comparing your coin’s condition to a published list of guidelines. Then look up the value of a coin in that condition in a book such as “The Standard Catalog of World Coins,” which should be available in most public libraries. If you need to know the exact amount that your coin is worth, you should take it to a coin dealer and let him or her evaluate it for you.

Coin Values – How Much Is Your Coin Worth?

One of the most enjoyable parts of coin collecting is learning about coin values. After all, as enjoyable as coin collecting is on its own, seeing the investment potential of a coin collection is also enjoyable. Besides, when you can see your coins increase in value, it makes your hobby feel functional. And, when you can see how many coins your current coins are worth, it is a self-expanding hobby. However, to enjoy this aspect of coin collecting, you are going to need a way to look up coin values.

One of the best places to go for coin values is to a coin dealer. These people are experts in their field and they are likely to stay abreast of prices, auctions, information and news related to coin collecting. And, because they are probably coin collectors themselves, you can sit down with them and discuss coins and how you can improve your collection. And, because dealers buy and sell coins, they can help you sell your coins if and when you want to sell portions of your collection; by either buying the coins directly or connecting you to other buyers they are familiar with.

Another method for determining coin values is through coin blue books. There are several books out there that contain complete lists of almost every coin ever struck and their current values. These books come out every year and they list the market value of coins by year, minting location and condition, as well as any other pertinent information that may affect market value. However, their information is fixed once they are published and, in some cases, the information is already out of date by the time the book hits the stands. But they will, at the very least, give a good idea of how much your coins are worth.

The Internet is also a very good source of information, thanks to several sites that offer lists of coin values. Many of the sites are very up-to-date and stay close to new developments, though it depends on the particular site. Unfortunately, since many things on the Internet are not always reliable, it is best to check a few sites in order to ensure that the information is correct. By looking at a few different sites, you can get averages of several sources and avoid getting bad information from one site that is neglecting to update.

Of course, coin values are not just arbitrary numbers. In fact, the value of a coin is actually the amount that someone would expect to receive upon selling a coin. Which means that it is, essentially, how much someone should be willing to pay for a given coin. So, if you want to figure out what a coin is worth, you should see what people are paying for it. With all the auction sites and coin sale sites out there, you can find the information you need just by researching what other people are asking or paying for a particular coin.

Finding coin values takes a little effort and diligence, but it is certainly worthwhile. It allows you to find out what your collection has been doing for you and it lets you determine how well you have chosen the coins that have gone into your collection. And that has a lot to do with the fact that coin values also determine how many other people want exactly what you have sitting in front of you.