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How Much is a Gold Coin Worth? (Factors that Determine Value)

One question that newbie coin collectors and even veteran numismatists often wonder is, “how much is a gold coin worth?” It’s an honest question that deserves an honest answer, which is “it’s all relative.” One common assumption that new coin collectors make is that if a coin is old, it has to be valuable. This is not necessarily true. In truth, the value of gold coins isn’t solely determined by a single factor, but by a number of of the coin’s attributes. Depending on how the particular coin fits the criteria of each attribute, the value of a gold coin can be determined.

These attributes are:

  • Design
  • Demand
  • Strike
  • Age
  • Face Value
  • Purity
  • Rarity
  • Grading
  • Dealer’s fee

Let’s take a look at each of these to see how the affect a coin’s value.

Design

Coins are designed to be works of art. The aesthetic value of a coin can be one of the most significant factors when deciding how valuable a coin is to collectors. As an example, the Saint-Gaudens Double Eagle (designed by famed sculptor Augustus Saint-Gaudens) is coveted for its intricate design and overwhelming beauty. More common designs or imitations of popular designs tend to not have the same appeal as unique and aesthetically-pleasing designs.

Demand

As a collector’s item, gold coins are a tradable commodity that adheres to the classic laws of supply and demand. Simply put, the higher the demand for a particular coin, the greater the implied value—thus, the price will rise accordingly.

What causes this demand can be the rarity (see below), but also the perceived demand for a gold coin among numismatic collectors. Coins that were previously thought to be worthless may suddenly pique the interest of collectors who want to make their collections unique (and also take advantage of being the vanguard). A good example would be the 1955 perfect Lincoln penny, which was worth little more than its face value and its historical curiosity. However, as many collectors were looking for novel ways to set their collections apart from others, the price of this coin skyrocketed to its current value in the thousands.

Strike

Just as a beautifully executed design may increase the value of a coin, the strike—the process of stamping a coin with a design—may add value to a coin. It should be noted that the strike works both ways: well-struck coins are typically worth more than poorly-struck versions, however, certain defects in the striking process may add value to an otherwise worthless coin.

Age

One common assumption about a coin’s value is that age is one of the most important factors in determining a coin’s worth. The truth is that while it certainly plays a part, it is not the end-all-be-all determinant of value. As an example, the 1804 Draped Bust quarter is more valuable than any of the 50 state quarters that have been minted between 1999 up to the present. On the other hand, newer coins—especially pennies—may sometimes sell for higher prices than older coins of the same series/denomination. For instance, a 1943 wheat head penny is a lot more valuable than the 1873 Indian head penny because of other factors that are not age-dependent (i.e. strike, rarity, etc.).

Face value

For numismatic coins, face value is the legal value that is stated on the coin. Face value can be thought of as the minimum value that a coin is traded at. For instance, the face value of a 1943 wheat head penny is only one-cent despite it being worth far more to collectors.

Purity

The more gold, the higher the value. The metallic content of a coin is directly related to a how much gold coins are actually worth. In fact, some coins (i.e. gold rounds) are more valuable than other simply by how much gold is trading on the daily markets.

Rarity

The less particular coins out there, the higher the value. The rarity of a gold coin can be considered to be one of the most important factors to take into consideration when judging the value and how much collectors would be willing to pay for an item. For instance, a mistake at a mint, the location of a mint, or a government recall of a particular type of tradable currency may create a value, as there are a finite number of coins that affect how available a coin is to traders.

Scarcity of a coin, while related to supply and demand, makes these gold coins more a solid investment that aren’t subject to the trends of collectors or other folks.

Grading

The physical condition of your coin is known as its “grading”. Typically, coins are graded on a scale from 1 – 70, which 70 being the best grade. Mint condition, or coins that are retained as close to when they were first struck at the mint, tends to yield scores between 65 – 70. The better the state of preservation, the better the value.

Grade is depending on the following factors:

  • Strike
  • The eye appeal (i.e. artwork, techniques of manufacture)
  • Coloration
  • Luster
  • Damage, including dents, corrosion, carbon spot, dents, etc.
  • Dealer’s Fee

Collecting coins isn’t a cheap hobby. Beyond just the value of gold coins, collectors must factor in the various markups, services, and fees that come with being a numismatic hobbyist or investor. Those that regularly trade coins must factor in the margins that they are paying for.

Some of these include:

  • Storage and security for high-value gold coins
  • Insurance for shipping expensive items through the mail
  • The cost of fabrication and distribution to dealers
  • The overheads that a dealer/broker has charge for to keep his business afloat and profitable (i.e. charging a fee for credit card vs. wire transfers)

And so forth. You may be tempted to not factor this into your purchases and your business model, but collectors should be aware that every transaction that they are involved with costs money—unless there’s a no-strings- attached arrangement from receiving a gold coin collection, from a deceased family member as an example, one must factor in commerce to adequately assess how much a gold coin really is worth.

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