How to Correctly Calculate the Value of a Coin

When collecting silver or gold coins, it’s often interesting to find out if they’ve gone up in value. Because coin collecting is such an interesting hobby, there is a demand for the raw melt value of a coin. When dealing with precious metals, however, other considerations outside melt value take on a mitigating factor in the value of your coins.

Here are three major factors in determining the value of your coins:

Melt Value

The first and most obvious factor of value when it comes to any precious metal coinage is melt value. Because most government-issued coins for commerce use base metal alloys which have little value, this is more important with government-issued bullion and collectible coins. Melt value relates solely to the value of metal by weight (also referred to as the spot, or market, price) and not the type of coin nor its historical value. In the case of some historical coins, however, the historical value is even higher than the melt value.

Historical Value and Rarity

The historical value of a coin can be worth even more than the melt value when the coin is both historically influential and valuable. A good example is the 1913 Liberty Head nickel, ranging in value from $3.5 – 4.5 million. It has little actual precious metal melt value to speak of, but because of the fact that only five in the world still exist (and one is at the U.S. Mint) the price is astonishingly high. Historical value and rarity can make a very big difference in the value of a coin.

That said, sometimes collectors with knowledge of a limited run will purchase a large number of such coins in bulk. This virtually guarantees a depreciation in the value of the coin, as mint condition articles abound.

Coin Grade (Condition) and Other Details

Any discussion of coin values must involve coin grade, particularly with collectibles. Mint grade coins are those which are preserved immediately after their minting. Since coin collecting didn’t start in earnest until the 20th century, it’s rare to find coins of mint grade before then. The next level would be fine grade – for coins in moderately good condition (minimal scratching, mint marks are visible, etcetera). Another mitigating factor is the mint mark, which helps collectors determine the origin of the coin. Since some coinage is produced in greater volumes than others, mint marks can be used to establish a coin’s rarity.

Next time you are shopping for a new precious metal coin to add to your collection, be sure to consider these three factors together.

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