What Makes a Coin Valuable?

Many beginners erroneously assume an “old” coin must have some premium value attached to it just because it appears aged. To a 19-year-old, stumbling upon a coin minted more than 40 years ago may seem like an archeological discovery on par with uncovering the tomb of King Tut.  Uh, not quite...

Beginners sometimes view coins older than themselves as ancient as King Tut. Actually, age is one of the least important drivers of coin value.
Young coin collectors just starting out often confuse age with value. To them, a 1982 Lincoln cent seems as ancient as King Tut and therefore, valuable. Actually, age is one of least significant factors in determining coin value. Images by Dreamstine and CoinPage.

Truthfully, age is one of the least important influences on coin value, but I get queries like this frequently from youngsters and feel like a heel for deflating their spirits. I always try to break the bad news gently, while encouraging them to continue their interest in coins.

This “What Makes a Coin Valuable?” section explains why collectible coins are worth more than their face or melt value.  Sometimes a WHOLE LOT more.

It is the Law of Supply & Demand that creates underlying, inherent value in rare coins.  We’ll get into the specifics of supply and demand in coin collecting, and how all this all translates into market value.  Without these circumstances, the 1893-S Morgan dollar, a true rarity valued in the thousands, could be worth little more than a sand dollar.

Silver dollars and sand dollars. What's the difference? Well, one is demanded by a large group of collectors with limited supply. The other has a near infinite supply but is purchased by few.
Both objects above are round and commonly called dollars. That’s where the similarities end. Specifically, the one on the left is an 1893-S Morgan dollar. The one the right is a sand dollar (this individual is deceased). Sand dollars are flat, burrowing sea urchins. After they die, their skeletons can be found washed up on the seashore. There are an estimated 10,000 Morgan dollars of this date in existence(1) and are in huge demand by collectors. This example sold for $2880.(2) On the other hand, there are millions of sand dollars, sought by only a few beachcombers. A beautiful sand dollar specimen can be yours on eBay for less than $5. The Law of Supply & Demand holds true once again. Images by Stack's Bowers Galleries and by Shutterstock.

Taking it a step further, there are people who interpret dynamic market conditions (i.e., supply and demand fluctuations) and regularly report out a ballpark range on what individual collectible coins are selling for.  In a way, they are "setting" the current prices of coins based on the latest data.  Who does this?  How do they do it?  You’ll find out.

Will coin collecting thrive in the years ahead?  There is some concern the demographics of the collector base does not bode well for the hobby a couple of decades down the road.  Why is this conversation about coins being valuable relevant today if nobody is going to care about it someday soon?

At first glance, this may appear to be a valid question.  But when all the positive happenings right now in the world of coin collecting are analyzed, it seems more likely we are poised for growth.  Perhaps better than ever before.  There is much to be optimistic about!

Use the links directly below to navigate the "What Makes a Coin Valuable?" section.  Enough talk.  Let’s get going…

All the chapters referenced above are accessible from any other chapter in this section.  Thus, no need to return to this Introductory page to link to other chapters.

Sources

1. PCGS Coin Facts.  1893-S Morgan dollar.

2.  Stack's Bowers Galleries.  1893-S Morgan Silver Dollar. VG-8 (PCGS).  Costa Mesa, CA.  2015.