What Is Numismatics and Why Is It Important?
Numismatics (new miss MA ticks) was the hobby of kings. It is the collecting of rare or limited coins from all over the world similar to an Art Collector’s activities. A coin collector or coin specialist is called a Numismatist (new MIZ ma tist) and the study of coins is Numismatology (new MIZ ma TOL o jee).
The Value of Gold and Silver
Everywhere you look these days there are signs and ads for buying gold and silver. Some say it is a sign of a shaky world economy. Some say it is simply that the value of gold and silver are on a constant rise over a long period of time. To an entrepreneur, the smell of profit lingers in the air. People who buy gold and silver depend on the seller’s ignorance of the market or the seller’s need for immediate cash. He then gambles on the continued rise of the metal’s value. This has worked out in the first decade of 2000 with gold and silver on a steep rise and people needing immediate cash due to a shaky economy. Little did they know they had traded something with increasing value for something (paper money) with decreasing value.
If You Had Been Collecting Gold and Silver Coins Monthly For the Last Ten Years
Many people will tell you that they had a collection of coins when they were a kid or have a few coins stashed away that they think are rare but they don’t know what they are worth. There is a much higher interest in coins than statistics can record. A logical view of this would entail looking back over the last decade. If you had started collecting coins in the year 2000, one silver dollar a month let’s say, 120 coins by the year 2010, would you be better off today?
What does this have to do with Numismatics? In all honesty, there is little relationship between the value of the metal and the value of a coin. There exists a great deal of confusion about collecting bullion and the value of rare and limited coins. A collector’s coin might be compared to a silver tray crafted by a famous person in the 1700’s. The tray may have had little value when it was made and only the value of silver when melted down at any time; but, as a silver tray, it can have extreme value to a collector.
Why would this be important to know?
Bullion coins are an investment in the metal itself. The value of the bullion is completely dependent on the value of the metal. COMPARISON: Let’s say it is a 2000 American Eagle silver dollar. You go to the store, hand the cashier that coin and she values it at one dollar. You go to a pawn shop or a coin shop and they will give you the going price for a troy ounce of silver = $18 (see chart). Take it to a reputable auction house for rare and valuable coins and they will look at their request list from their buyers. Sell it yourself on eBay or other internet auction services and you will find your collector.
I’ll tell you a story about a very smart dad who bought two of every toy he bought his son. The toys came in special packaging and were going to be part of a series. This man put the second toy away, kept it safely stored and may had no logical explanation for anyone who asked other than “It may be worth something some day.” When his boy was all grown, the toys came out and were put on display. One day a man visited who did not have the complete collection of those toys. He was willing to pay $18 million dollars for it. That man was from the company that made the toy in the first place. They had not kept the molds and could not make that particular line of toys again.
Another reason you should be very educated on this subject is because there are counterfeits. One concerned eBay member issued a warning naming the two best coin graders as (NGC and ANACS). The warning was due to eBay buyers getting scammed into paying for “slab” coins as if they were collector coins. Buying from a reputable company is key.
Can that same coin be worth even more?
Bullion is sold in rolls straight from the mint. The seller will tell you that this ensures they are “mint coins” never been touched. They arrive in a stiff clear plastic so you can see them. You may as well have purchased silver bars. The cost is slightly above the current value in silver. So how does that SAME coin get a higher value? Just like the old silver tray or the work of art, you need an expert to determine the value of the coin. This is called grading and the report above tells you that NGC and ANACS are the most reliable.
The highest grade is MS70 and the difference in value between bullion, MS69 and MS70 is drastic. Examples of that are later in this article. And, this applies to their increase in value as the coins get older or more rare based on what older coins sell for (see report).
A Numismatist will ensure he gets MS70 coins, graded by NGC or ANACS and encapsulated in a plastic case for protection. He only deals with the most reputable dealers. Yes, there have been counterfeit labels printed in a garage and slapped on a plastic case in which sits a “slab” coin. If you want something that has value now and is likely to increase in value, then you need to know where the reputable dealers are and the difference between bullion and a coin that has the highest rating.
The Drastic Difference In Value
Let’s take an example of a 2010 American Eagle silver dollar. We’ll use a random dealer I found through an internet search who sells bullion as well as graded coins. As of July 11, 2010, this dealer was selling a roll of non-circulated American Eagle silver dollars for $459 which is $22.95 per coin. On that page, there is a link to the certified coins. Same coin, same year, but these have been graded. Their cost for a certified MS-69 coin was $29.95, graded by NGC and encapsulated with an NGC grading label. They give a guarantee and they are a member of the BBB.
Now really pay attention here. They were selling the MS-70, same coin, same year, for $125. Why? The answer is Numismatology. Just like fine 
art, you are going to get a value based on what the consumer wants. The mint punches out these coins all day. An expert is going to GRADE the coin with a magnifying glass and expertise. He’s the one that is going to estimate the value of your coin right now with a grading system that tops off at 70. MS 70 is “MINT” not the “never been touched coin roll.” Then he encapsulates it so it is never going to decrease in that grade. See the picture for how government minted, graded and certified, properly encapsulated coins look.
What About Older Coins?
Alright, since I’ve mentioned several times now the difference in values as time passes, let’s take that up now. There is no guarantee that your MS70 coin is going to increase in value. Numismatics is NOT a precious metal investment activity — it’s better. For example, let’s say you love the art of a locally popular artist who is already old and you are quite young. You figure that’s a great investment to buy his art and hold onto it. But after that artist is dead and gone, no one is interested. Market value is bullion, collector value is supply and demand.
If one wants to know the value increase in the coins over time, we can only look to the past. For an example of what same coin from 1997, check out these two charts:
To read these charts more clearly, hold down ”Ctrl” then the “+” sign on the number line of your keyboard. This will magnify your screen.
Valuable coins sell at auctions, not pawn shops. Years from now when you pull out the collection and decide to auction them off, they are going to sell to the highest bidder. See how that’s done. Watch this video.
The moral of this story is “Be smart, be safe and fill your days with gold and silver.”
{ 5 comments… read them below or add one }
Cheryl you hit the nail right on the head with this post, Keep up the great work.
Thanks, Eric. Hope you checked out the later ones, too, regarding gold and silver coin misconceptions.
Good dispatch and this fill someone in on helped me alot in my college assignement. Thanks you for your information.
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Thanks for letting me know! I\’ll fix it.
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