Should You Buy a Coin That's a Bad Investment?

Coins and Growing Investments

I had an intriguing interaction with a reader who complained that this site had an ad for a coin that was a bad investment. They wanted me to remove the ad and I considered doing so at first, then reconsidered. There wasn’t anything misleading about the coin or the advertising, and that’s my usual metric for blocking ads.

You see, collecting isn’t just about making money (though it can be a nice benefit). Collecting is fun, even if you lose money. The joy of putting together a complete set can be intoxicating. And it’s not just for coins. Just because an object isn’t likely to increase in value doesn’t mean you shouldn’t buy it. A new car is an awful investment, but I’ve seen the excitement some people have after buying their first brand new car. If they have the money and are being responsible with their finances, what’s the harm?

I think the main issue we need to be careful about is education. If you are buying something as an investment but it has almost no chance of increasing in value, that’s a problem. The key is you need to be aware of whether you’re buying a coin to make money or to add an item to your collection.

I have several readers who like artificially colored coins. They know the color is fake, they’re overpriced and will likely not increase in value, but they love how the coins look. Who’s to say they aren’t allowed to buy knick knacks?

Next time you’re going to buy a coin or other collectible for an investment, do your homework and make sure it’s a wise move. Otherwise, enjoy the feeling of adding a new item to your collection and let the naysayers say nay.

Category - Coin collecting

An Illustrated History of United States Currency

This Gizmodo article shows how US Currency looked from the beginning:

An old $5 bill

All the way to the present day:

A modern $50 bill

Category - Currency

The Life of a Penny

One of the favorite things to do when holding an old coin in my hand is to imagine the number of people and historical events that little metal disc had witnessed and experienced.

The Life of a Penny

Chris Ware shares his take on the life of an ordinary penny, and of the thread weaved through several lives.

Category - Informative

The Best Places to Sell Silver Coins

Before attempting to sell silver coins, you’ll need to organize your collection into collectible and rare coins; commonly referred to as “numismatic coins,” and those that will sell primarily for their silver value. You can learn more about this step in a previous article, How to Determine Value When You Sell Silver Coins. We’ll expand on what we covered in our previous article to discuss where to sell your coins after you’ve determined what you have.

Options for Selling Silver Coins Thanks to the rise of the internet, you now have more options than ever when you want to sell silver coins. However, not all options will bring you the highest value, and you may be left trying to strike a balance between a fast, easy transaction and the most profitable option.

Coin dealers are still a popular choice among investors and collectors ready to sell a collection. However, the truth is, not all coin dealers are equal – we’ve seen this first-hand. While you’ll have no trouble locating plenty of coin dealers, finding one who is qualified and honest is a bit harder. You may wish to make several smaller sales with the dealer prior to selling a larger collection or more valuable silver coins to confirm that the dealer is knowledgeable, transparent, and offers competitive rates for your silver coins.

Reputable coin dealers also provide appraisals and evaluations of your coins, an important service if you have valuable coins. Be sure to look for dealers that are members of reputable organizations, such as the American Numismatic Association and Better Business Bureau, to give you some recourse and ensure that they are following a strict code of ethics in the transaction. In general, selling to a dealer is much safer than selling to an individual; especially when selling a valuable collection. You can research coin dealers through the Better Business Bureau, trade associations, online review sites and more. Keep in mind that dealers will buy at wholesale prices, not retail.

Turning to coin dealers is not your only option, however. Additional options you may consider include:

  • Online brokers, who can make it easy to sell coins online. Proceed with caution, however, and only complete a transaction with a reputable online broker. Also be sure that all fees are agreed to in advance, as you don’t want any surprises after the fact.
  • Coin collectors, if you have rare, collectible coins. There are always collectors searching for a specific coin or distinct type of silver coins, and many create listings in forums, social networking websites, coin collector communities online and elsewhere. While you may get a high price, the process can take a while and you will be taking the risk of doing business with someone you don’t know.
  • Scrap dealers, if you have “junk” silver coins. This may be a good option once you’ve removed the rare coins from your collection and are content with receiving the melt value of your coins. However, stay away from “we buy gold” stores and pawn shops, as you’ll likely only receive a fraction of the coin’s value.
  • Auctions, both live and online, work well for large and diverse collections as well as individual rare coins. However, auctions can occasionally be cost prohibitive and there’s no guarantee that you’ll realize your targeted price for the items.

Is a Coin Appraisal Necessary? Finally, a coin appraisal isn’t just something used merely for insurance purposes – it can also be used to negotiate a deal when you sell silver coins. Reputable coin dealers should be willing to provide a free appraisal; assuming that they are being provided with an opportunity to purchase the collection. Additionally, there are several coin appraisal websites that will give you a rough idea of the value of your silver coins, but you may want to turn to a professional appraisal from a coin dealer to give you the most accurate value for your coins. Having coins professionally graded by one of the top tier third party grading services, such as PCGS and NGC can help to remove a good bit of the subjectivity with respect to the grade and value of your coins. However, keep in mind that having coins professionally graded involves an upfront fee to join the organization, mailing the coins in to have them certified, and waiting for the coins to be returned, which can be a lengthy process. Paying for an unbiased coin appraisal from a professional that is not involved in the business of buying or selling coins is another potential option to explore if you’re not satisfied with the appraisal conducted by your coin dealer.

Category - Coin collecting

How to Determine Value When You Sell Silver Coins

Various silver coins

When it’s time to sell a portion or your entire collection of silver coins, you undoubtedly want to get the best price possible. The coin collecting community as a whole uses a series of time-tested methods, but the first and most important step is knowing what you have and what it’s worth. Unfortunately, too many people overvalue the majority of their collection and undervalue the truly rare coins. When you know the value of your coins, you’re in a much better position to recognize a reasonable offer when you sell silver coins to a dealer.

Separating Your Collection The first step is sorting your collection to separate the numismatic or collectible coins, which should be valued individually and separately from your bullion coins. This includes silver coins with valuable mint marks, rare dates and those in high end condition. Evaluate each coin to determine which have collectible value and be sure that special care and attention are paid to these coins during the coin appraisal process.

US dimes, quarters and half dollars minted prior to 1916, if not degraded or heavily worn, oftentimes carry a premium over their silver value; even in circulated condition. Silver coins minted between 1916 and 1940 have a good mix of common and rare dates, so you will need to check the mintmark, date and condition of each. A good example is the Standing Liberty quarter minted from 1916 to 1930; many of which are valued at prices above their silver content.

With the exception of a few examples, Washington quarters, Franklin halves and silver Roosevelt dimes are considered common date coins, which are occasionally referred to as junk silver coins in the industry. However, even common date coins in uncirculated condition can sell at a slight premium over their silver value.

Any coin types that are known to contain key date coins should be closely scrutinized. Because it’s easy to overlook a rare coin, refer to leading coin resources and price guides for each series.

Calculating Value Once the collectible coins are separated, you can research the value of each coin individually, but keep in mind when selling silver coins to a coin dealer that you will likely be paid wholesale prices, which can differ substantially from prices in popular price guides, such as “The Red Book.”

The following factors can help you to determine the value of your collectible or numismatic coins:

  • Demand. Even fairly high mintage coins can demand a premium if they’re popular among coin collectors or numismatists.
  • Condition. Sometimes very small differences in the coin’s grade can make a huge difference in value, but not always. For example, a 1926-s Standing Liberty quarter may sell for $3 in good condition but $650 in uncirculated condition, and possibly even more in choice uncirculated condition.
  • Scarcity. Typically speaking, the rarer the coin, the higher its value.

To determine a coin’s value before you sell silver coins, start by identifying the coin. Then estimate its grade, check for a mint mark and research the value of the coin. Be sure to have realistic expectations, as retail prices are rarely paid by coin dealers.

Once the collectible coins are individually valued, you can determine the value of the rest of your collection primarily by calculating its silver value. You can use a silver coin value calculator for this by selecting the U.S. coin, entering the quantity and receiving the current silver price.

If the calculator doesn’t have the coin available, or you’re unable to find a reliable calculator, you can look up the coin’s weight and purity to determine its silver value. For example, a Barber Dime 1892-1916) is 90% silver and weighs 2.5 grams. This means that its actual silver weight (ASW) is 0.07238 ounces.

To determine the coin’s actual silver value, multiply the ASW by the spot price for silver. If you need to calculate the ASW of a coin, take the weight in grams, multiply by the fineness of the coin (e.g. 90%) and divide this figure by the total number of grams in a troy ounce (31.1034768).

With this information, you should have no trouble sorting through your collection to spot rare or collectible coins. You can then calculate the silver value of the remainder of your coins. While it’s a time-consuming process, following these steps will prevent you from overlooking a rare coin that may be worth substantially more than the coin’s silver value.

Category - Coin collecting
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