|Frequently Asked Questions about Coin Collection
This FAQ addresses a few of the most commonly asked questions about coin collecting. It is intended only as an introduction to the hobby. Years of research and even entire careers have been devoted to in depth study of specialized topics, and many detailed reference works have been published. While some of the material is applicable to other numismatic collectibles, the emphasis here is on coins. In some cases, more complete information is provided for coins.
What is numismatics?
A simple definition of numismatics is the the collection and study of coins, paper money, tokens and medals, and indeed these are the most widely collected and studied numismatic materials. Other items representing current or past financial assets or liabilities are also included under the numismatic umbrella. These include other objects used as money, as well as stock certificates, checks and notes of financial obligations.
Numismatic items are collected and studied for many reasons, including their historical significance and artistic merits, as well as their role in commerce. When significant demand exists, they may obtain numismatic value beyond their current monetary value (if any).
Coin collecting is perhaps the most popular part of the hobby and is sometimes used to refer to the entire numismatic spectrum (e.g. the newsgroup rec.collecting.coins is a forum for all numismatic topics). There are several specializations in coins and other branches of numismatics. With such breadth of material, numismatics offers virtually inexhaustible opportunities for exploration, learning and enjoyment.
What coins should I collect?
It's often easiest to start with the coins of your own country but it can be fun to collect world coins, either in general or from a specific country. Either way, you learn about the history and culture of the country through its currency.
Blue ball By time period or date:
Some people like ancient coins, or Revolutionary coins, or coins from any other time in history. Also, others try collecting series of coins (all of one kind of coin from a decade, or all the years it was minted). A lot of people start with trying to build up decades of a coin in mint condition.
Blue ball By metal (gold, silver, etc) :
The more expensive collections include gold and silver coins. These are very challenging to collect, and generally aren't attempted by beginners.
Blue ball Exonumia :
This is the term used in coin collecting for anything that's made of metal, usually round, but not legal tender. Elongated (or "squished") souvenir pennies, medallions, tokens, and commemorative coins fall into this category.
My advice- Start with any interesting thing that comes across your path. In time you'll become more selective as you develop some areas and don't find much in others, or as you discover your interests.
Once you know what type(s) of coins you want to collect, you'll want to keep a few things in mind when buying an addition to your collection:
Oftentimes in coin shops or antique shops there will be bins or boxes of the same kind of coin. If they're all the same price, that doesn't necessarily mean they're all of equal value. For example, many antique shops that don't specialize in coins will throw all of one type of a coin in a pile and let you pick one, thinking they're all the same. Sometimes there will be several nice examples of the same coin on display. Here are some qualities to look for that will help you pick the better example out of the crowd:
Blue arrow Details, Details, Details...
Check to make sure that the all the writing that should be on the coin is present and clear. Avoid coins where the lettering is faint or completely worn away. Look closely at the designs on the coins- can you see fine details like the feathers of an eagle or the folds of a robe?
Blue arrow Wear n' Tear
The reason these coins are in the bargain bin is most likely because they've been circulated. Since they've been passed on from hand to hand, jingled in pockets with other coins, dropped, etc. all of them will have dings, scratches, maybe even some chemical scarring from bad storage. Look for coins that have no chemical scarring (pits, corrosion, etc). Some nicks and scratches may be acceptable, especially on the parts of the design that are raised. Deep gouges or distracting marks are to be avoided. Try to find one with as few obvious marks on it as possible. If you really want to examine it you could use a magnifying glass but if the coin's in the bargain bin then whatever is acceptable after examining it with the naked eye should be enough.
Blue arrow Toning
Toning is the term for tarnishing or discoloration. Believe it or not, some kinds of toning will actually increase a coin's value. A blue tone on silver coins is considered desirable, and an even tone on copper coins is acceptable as long as it isn't so dark that you can't make out the details. Sometimes toning helps to accent the details and make them easier to see. As long as the toning isn't uneven, so dark that it obscures the design, or just plain ugly, then it's not a reason to reject a coin. For example, a shiny coin can be weakly struck, meaning the press didn't bear down hard enough so there isn't much detail. On the other hand, you could have a toned coin that was nicely struck so the toning brings out the details more than usual. A lot of this one boils down to personal preference.
What's the best way to get started?
Coins can be rewarding for the collector who makes the effort to study the hobby and the market. Someone who does not make that effort is more likely to waste money on overgraded, problem or counterfeit coins. Before spending a lot of money on coins, invest in your knowledge of the hobby. This FAQ is a start, but for your own protection you should have at least one reference book covering your area(s) of interest. Reading a few issues of periodicals is another good idea.
Collecting coins from circulation is a great place to start. The risk is negligible (you can always spend the coins), and you can learn a lot examining your coins carefully and seeing what your reference book says about them.
Join a club! Local coin clubs are usually great for learning more about the hobby, getting material for your collection, and you just might make some good friends, too.
Where to find collectable coins?
When the coins you're interested in collecting are not available in circulation, it's time to look for other sources (see previous topic). That almost always means purchasing coins. Among places to buy coins are
* Coin shops
Dealers with their own stores can be good resources for information as well as coins.
* Coin shows
Here you can shop from several dealers at once. The selection will obviously be better than at most shops, and you may be able to get better prices due to the presence of competition.
* Mail Order
Coins can be purchased from many dealers through the mail. Check any of the periodicals listed below for advertisements. Unfortunately, it is all too common to receive overgraded and/or problem coins from some mail order sources. Make sure the source has a reasonable return policy before ordering, examine the coins carefully on receipt to ensure they're satisfactory (get an opinion from a more experienced collector/dealer if you're unsure), and return them if they're not.
* On the Web
Hundreds of dealers offer coins on the Internet, including many of the conventional mail order advertisers. Again, make sure the source has a reasonable return policy before ordering, examine the coins carefully on receipt to ensure they're satisfactory (get an opinion from a more experienced collector/dealer if in doubt), and return them if they're not. Also, watch out for the occasional scam artist who may pocket your money and not send anything in return.
- The rarest and most expensive coins are often available only at auctions promoted by major specialty auction firms, such as Stack's, Heritage and Bowers & Merena.
- Numerous auctions are conducted online. In some of them anybody can offer coins to the highest bidder. Before bidding, check feedback on the seller, if the auction service makes it available. Make sure the seller has a reasonable return policy, examine coins carefully on receipt to ensure they're satisfactory (get an opinion from a more experienced collector/dealer if you're unsure), and return them if they're not. It is not uncommon for bids in these auctions to go considerably higher than prices for comparable coins from other sources. Check prices in shops, mail order ads and/or web sites and limit your bids to those prices to avoid paying too much.
- Relatively common collector coins are sometimes included in auctions of antiques, other collectibles, etc. The collector is forewarned that material in these auctions is more likely than usual to be overgraded, have problems not mentioned (if even known) by the auctioneer, and/or to garner inflated prices. Better material at lower prices can often be readily obtained from other sources.
* Other collectors
It's not often easy to locate another collector selling what you want, but when it happens, you may get a better price. Post what you're looking for in rec.collecting.coins or attend some local coin club meetings.
* Flea markets, bazaars, etc.
Coins are sometimes available at flea markets, antique shows, craft fairs and other events where they are not the primary focal point. Because there is little if any competition for the seller and many potential buyers are not well informed about the hobby, these venues can be used to move problem coins and prices may be inflated. While the collector always needs to be able to evaluate the quality of potential purchases and fairness of their prices, extra caution is warranted in these situations.
How to handle coins?
In general, collectable coins should be handled carefully to avoid the possibility of causing wear or introducing substances that may lead to spots or color changes. Many holders will provide adequate protection for ordinary handling. Before removing a coin from its holder, consider whether it's really necessary.
Never touch an uncirculated or Proof coin anywhere but the edge. Fingerprints alone may reduce the coin's grade and consequently its value. Handling on the edge only is mandatory when examining another person's coins, regardless of grade. Get in the habit of picking up collectible coins by their edges, and it will soon become routine.
Avoid holding numismatic items in front of your mouth. Small particles of moisture may eventually cause spots.
When setting a coin down outside of a holder is necessary, place it on a clean, soft surface. A velvet pad is an ideal surface and essential for regular handling of valuable material. A clean soft cloth or clean piece of blank paper may be sufficient for less valuable items. Do not drag coins across any surfaces.
If you will be handling very valuable coins or lots of uncirculated and/or higher grade circulated coins, wearing clean white cloth or surgical gloves and a mask may be advisable.
What's the best way to clean my coins?
In most cases, the best answer is DO NOT CLEAN COINS. While you might think they'll look nicer if shiny, collectors prefer coins with an original appearance. Cleaning a coin may reduce its collector value by half or more.
Cleaning coins is similar to restoring works of art - they're both jobs best left to professionals who have the knowledge and experience to know when it's advisable, what techniques will work best and how to use them properly.
Never abrasively clean coins. Even wiping with a soft cloth will cause small but undesirable scratches, which will reduce the coin's value.
If the surface of a coin appears to be tarnished, it is best left alone. The color change is the result of a natural process, which collectors call toning. Atoms on the surface of the coin have reacted chemically, often with sulfur compounds. The reaction cannot be reversed. "Dips" which strip molecules from the surface are available. Dipping is the quintessential example of a technique that should be used only by professionals, if at all. Additionally, natural toning sometimes increases the value of a coin (i.e. when it's considered attractive).
Dirt and other foreign substances adhering to a coin can sometimes be safely removed. Try soaking the coin for a few days either in olive oil or soapy water, followed by a thorough rinse with tap water. Dry the coin with compressed air or allow it to air dry. Do not rub the coin. Commercial coin cleaners may also be carefully used to more quickly loosen foreign substances.
Risks of investing in coins
All investments entail risks. While coin collecting is a rewarding hobby and is sometimes financially profitable, anyone purchasing coins with the expectation that they may be a good investment should understand and be prepared for the risks inherent in such investments.
Counterfeit and altered coins are not uncommon. Various techniques have been used to produce counterfeits. Some are deceptively realistic. Common coins have been altered to appear to be valuable collector coins, e.g. by adding a mintmark. Coins certified by one of the major grading and authentication services (see Slabs) offer a high degree of certainty for authenticity. In the absence of reliable independent authentication, the purchaser should know the diagnostics of genuine specimens of the coin and counterfeits.
Coin values often vary markedly with grade. The buyer must know if the coin is reasonably graded or has any problems, such as cleaning, to determine if the seller's price is fair. The risk of overgraded and problem coins is reduced with certified coins and bullion coins (see topics below). However, the grade assigned by the certification service is only an opinion, and it is not uncommon to find certified coins which, in the opinions of other experts, are overgraded.
While markets for all commodities rise and fall, precious metal and coin prices can be particularly volatile. This volatility creates both opportunities for sizable returns and for dramatic losses. For example, in 1980 the price of gold peaked at more than $800 per ounce and the price of silver at more than $50 per ounce, approximately double and eight times, respectively, what they are today.
Also to be considered are buy/sell spreads and liquidity. Higher value rare coins are often sold at auction. It may take several weeks or months from contacting the auctioneer to receiving payment (less auctioneer's commission). Coins can be purchased from or sold to a dealer much faster. The difference between dealer buy and sell prices can be substantially higher than the commissions charged by brokers for other types of investments. Therefore, a larger appreciation often must occur before coins can be sold at a profit.
Yet another risk is the possibility of material loss, such as by theft or fire. Storage in a bank vault or home safe may reduce (but not eliminate) this risk, but the added expense of such storage again increases the appreciation necessary before the coin(s) can be sold at a profit.
Because the risks of investing in coins are higher than for many other types of investments, they are not suitable at all for many investors. Even for those investors willing to accept higher risks in exchange for possibly greater returns, at most only a modest fraction of the portfolio (perhaps 5 to 15%) would be recommended by many investment advisors.