Learn About : Coin Collecting

Coin collecting is the collecting or trading of coins or other forms of minted legal tender.  Coins of interest to collectors often include those that circulated for only a brief time, coins with mint errors and especially beautiful or historically significant pieces. Coin collecting can be differentiated from numismatics in that the latter is the systematic study of currency. Though closely related, the two disciplines are not necessarily the same. A numismatist may or may not be a coin collector and vice versa.  People have hoarded coins for their bullion value for as long as coins have been minted. However, the collection of coins for their artistic value was a later development. There is evidence from the archaeological and historical record of Ancient Rome and Mesopotamia that coins were collected and catalogued by scholars and state treasuries. It also seems probable that individual citizens collected old, exotic or commemorative coins as an affordable, portable form of art. According to Suetonius in his De vita Caesarum (The Lives of the Twelve Caesars), written in the first century CE, the emperor Augustus would sometimes present old and exotic coins to friends and courtiers during festivals and other special occasions. 

Contemporary coin collecting and appreciation began around the 14th century. During the Renaissance coin collecting became a fad among some members of the privileged classes. The Italian scholar and poet Petrarch is credited with being the pursuit's first and most famous aficionado. Following his lead, many European kings, princes, and other nobility kept collections of ancient coins. Some of notable collectors were Pope Boniface VIII, Emperor Maximilian of the Holy Roman Empire, Louis XIV of France, Ferdinand I, Henry IV of France and Elector Joachim II of Brandenburg, who started the Berlin Coin Cabinet (German: Münzkabinett der Berlin). Perhaps because only the very wealthy could afford the pursuit, in Renaissance times coin collecting became known as the "Hobby of Kings."

During the 17th and 18th centuries, coin collecting remained a pursuit of the well-to-do. But rational, Enlightenment thinking led to a more systematic approach to accumulation and study. Numismatics as an academic discipline emerged in these centuries, at the same time as coin collecting became a leisure pursuit of a growing middle class, eager to prove their wealth and sophistication. During the 19th and 20th centuries, coin collecting increased further in popularity. The market for coins expanded to include, not only antique coins, but foreign or otherwise exotic currency. Coins shows, trade associations and regulatory bodies emerged during these decades. The first international convention for coin collectors was held August 15–18, 1962, in Detroit, Michigan, and was sponsored by the American Numismatic Association and the Royal Canadian Numismatic Association. Attendance was estimated at 40,000. As one of the oldest and most popular world pastimes, coin collecting is now often referred to as the "King of Hobbies.”

Collector Types

Casual coin collectors often begin the hobby by saving notable coins found by chance. These coins may be pocket change left from an international trip or an old coin found in circulation.  Usually, if the enthusiasm of the novice increases over time, random coins found in circulation are not enough to satisfy his interest. He might then begin to trade coins in a coin club or buy coins from dealers or mints. His collection will then begin to take on a more specific focus.

Some enthusiasts become generalists and accumulate a few examples from a broad variety of historical or geographically significant coins. Given enough resources, this can result in a vast collection. King Farouk of Egypt was a generalist with a collection famous for its scope and variety.

Most collectors decide to focus their financial resources on a narrower, specialist interest. Some collectors focus on coins of a certain nation or historic period. Others will seek error coins. Still others might focus on exonumia such as currency, tokens or challenge coins. For example, John Yarwood of Melbourne is the first person to take a serious interest in British military money (especially tokens).  Challenge coins are small coins or medallions (usually military), that bear an organization’s insignia or emblem and are carried by the organization’s members. They are given to prove membership when challenged and to enhance morale.

Some collectors are completists and seek an example of every type of coin within a certain category. Perhaps the most famous of these is Louis Eliasberg, the only collector thus far to assemble a complete set of known coins of the United States.

Coin collecting can become a competitive activity, as prompted by the recent emergence of PCGS (Professional Coin Grading Service) and NGC (Numismatic Guarantee Corporation) Registry Sets. Registry Sets are private collections of coins verified for ownership and quality by numismatic grading services. The grading services assess collections, seal the coins in clear plastic holders, then register and publish the results. This can lead to very high prices as dedicated collectors compete for the very best specimens of, for example, each date and mint mark combination.

Collection Themes

A few common themes are often combined into a goal for a collection:

•           Country collections: Many enthusiasts focus their collection on only a single country—often their own. In contrast, some collectors attempt to obtain a sample from every country that has issued a coin.

•           Year collections: Rather than being satisfied with a single specimen of a type, a great many collectors collect type by year; for example, one Lincoln Cent for every year from 1959 (the year it was first minted) to present. This is perhaps one of the most practical ways to collect a national currency since the majority of coin reference books and coin albums catalogue it in the same manner.

•           Mint mark collections: Many collectors consider different mint marks significant enough to justify representation in their collection. When collecting coins by year, this multiplies the number of specimens needed to complete a collection. Some mint marks are more common than others.  Mint marks are the inscriptions on a coin indicating the mint location where the coin was produced.

•           Variety collections: Because mints generally issue thousands or millions of any given coin, they use multiple sets of coin dies to produce the same coin. Occasionally these dies have slight differences. This was more common on older coins because the coin dies were hand carved. But differences (intentional or accidental) still exist on coins today. Generally this is in a very small detail, such as the number of leaves on the ear of corn on the recent US Wisconsin state quarter File:2004 WI Proof.png.

•           Type collections: Often a collection consists of examples of major design variants for a period of time in one country or region. For example, Euro coins carry a "common side" that shows the denomination and a "national side" that varies in design from state to state within the Eurozone. Likewise, a type collection might focus on an unusual design feature such as coins with a hole in the middle, coins that are not circular in shape or coins with brockage.  Brockage refers to a type of error coin in which one side of the coin has both the normal image and a mirror image of the opposite side impressed upon it.  Brockage errors are caused when an already minted coin sticks to the coin die and impresses onto another coin. Brockages are relatively rare among modern coins of industrialized countries were mints exercise a strict production control, and somewhat less rare among the modern coins of some developing countries which operate an own mint (e.g. Nepal).  In good condition, coins with clear brockage are a collector's item and can sell for substantial amounts of money.

•           Composition collections: For some, the metallurgical composition of the coin itself is of interest. For example, a collector might collect only bimetallic coins. Precious metals like gold, silver, copper and platinum are of frequent interest to collectors, but enthusiasts also pursue historically significant pieces like the 1943 steel cent or the 1974 aluminum cent.

•           Subject collections: Collectors with an interest in a certain subject (such as, ships or eagles) may collect only coins depicting that interest.

•           Period collections: Collectors may restrict themselves to coins of the 18th or 19th century, while others collect ancient and medieval coins. Coins of Roman, Byzantine, Greek origin are among the more popular ancient coins collected. Some collect coins minted during a particular ruler's reign or a representative coin from each ruler. Collectors may also take interest in money issued during the administration of a historically significant bureaucrat, such as a central bank governor, treasurer or finance secretary. For example, Reserve Bank of India governor James Braid Taylor presided over the country's move from silver currency to fiat money, which is basically any currency declared by a government to be legal tender and is not legally convertible to any other thing.   Coins reflect the events of the time in which they are produced, so coins issued during historically important periods are especially interesting to collectors.

•           Printed value collections: A currency collection might be modeled around the theme of a specific printed value, for example, the number “1.” This collection might include specimens of the US 1 dollar coin, the Canadian Loonie, the Euro, 1 Indian Rupee and 1 Singapore dollar.

•           Volume collections (Hoards): Collectors may have an interest in acquiring large volumes of a particular coins (e.g., as many pennies as they can store). These usually are not high-value coins, but the interest is in collecting a large volume of them either for the sake of the challenge, as a store of value, or in the hope that the intrinsic metal value will increase.

•           Copy collections: Some collectors enjoy acquiring copies of coins, sometimes to complement the authentic coins in their collections. Copies might be:

o          Contemporaneous ancient copies minted as official coins by other cities or rulers

o          Contemporaneous ancient copies minted as counterfeits (often gold- or silver-plated) to fool merchants and consumers

o          Contemporaneous modern copies minted as counterfeits to fool merchants and consumers

o          Modern copies of older coins minted as forgeries to fool collectors

o          Modern copies sold as replicas (often, but not always, marked as such)

o          Modern copies minted for museums to be displayed instead of the originals

o          Modern copies made to be used in jewelry

o          Modern copies as official circulating coins that pay tribute to the original coin

o          Modern copies as bullion collectable coins that pay tribute to the original coin

o          Modern copies as medals or tokens that pay tribute to the original coin

Collecting counterfeits and forgeries is a controversial area because of the possibility that counterfeits might someday reenter the coin market as authentic coins, but U.S. statutory and case law do not explicitly prohibit possession of counterfeit coins.

Coin Collection and Value

In coin collecting, the condition of a coin is paramount to its value; a high-quality example is often worth many times more than a poor example. Collectors have created systems to describe the overall condition of coins. In the early days of coin collecting (before the development of a large international coin market) extremely precise grades were not needed. Coins were described using only three adjectives: "good," "fine" or "uncirculated." By the mid 20th century, with the growing market for rare coins, the Sheldon system was adopted by the American Numismatic Association and most coin professionals in the North America. It uses a 1–70 numbering scale, where 70 represents a perfect specimen and 1 represents a barely identifiable coin. The Sheldon Scale uses descriptions and numeric grades for coins (from highest to lowest) as follows:

•           Mint State (MS) 60–70: Uncirculated

•           About/Almost Uncirculated (AU) 50, 53, 55, 58

•           Extremely Fine (XF or EF) 40, 45

•           Very Fine (VF) 20, 25, 30, 35

•           Fine (F) 12, 15

•           Very Good (VG) 8, 10

•           Good (G) 4, 6

•           About Good (AG) 3

•           Fair (FA, FR) 2

•           Poor (PR, PO) 1

While the Sheldon Scale is universally acknowledged, coin experts in Europe and elsewhere often shun the numerical system, preferring to rate specimens on a purely descriptive, or adjectival, scale. Nevertheless, most grading systems use similar terminology and values and remain mutually intelligible.

When evaluating a coin, the following, often subjective, factors may be considered: 1) "eye appeal" or the aesthetic interest of the coin, 2) dents on the rim, 3) unsightly scratches or other blemishes on the surface of the coin, 4) luster, 5) toning, 6) level of detail retained, where a coin with full details obviously is valued higher than one with worn details. If the coin is judged favorably in all of these criteria, it will generally be awarded a higher grade.

Damage of any sort (e.g., holes, edge dents, repairs, cleaning, re-engraving or gouges) can substantially reduce the value of a coin. Specimens are occasionally cleaned or polished in an attempt to pass them off as higher grades or as uncirculated strikes. Because of the substantially lower prices for cleaned or damaged coins, some enthusiasts specialize in collections of untreated coins.

Where to Find Coins

Where you find your coins will pretty much be determined on how sophisticated you want your collection to be.  If you are looking to find a U.S. penny from each year going back to 1940, there is a good chance you will discover the past twenty years’ worth migrating through your pocket in a year’s time.  Add to this the various mint mark origins throughout those years, and you will find the search much more interesting.  And if you add all the accompanying nickels and dimes, quarters and fifty-cent pieces, your search will become quite the challenge.  Though dollar coins were originally minted in 1794 in the U.S., it wasn’t until 1971 that the government made any attempt to replace dollar bills with coinage.  (This contrasts with currencies of most other developed countries, where denominations of similar value exist only in coin.) These coins have largely succeeded because of a removal (or lack) of their corresponding paper issues, whereas the United States government has taken no action to remove the one-dollar bill.  The Eisenhower, Susan B. Anthony, Sacagawea, and Presidential Collection dollars have been issued since them but have either been swallowed up by collectors or set aside as too inconvenient for practical pocket change because of their awkward sizes.  If you prefer newer or uncirculated coins, it is best to go to the bank, coin shows, collector stores (including those on the internet), and places like eBay.  Depending on the seller’s interpretation of Sheldon Scale, you might find yourself paying quite a bit to fill out those final spots in your collection. 

If you choose to collect foreign coins, a fun (but rather expensive) way to collect them is to actually visit the countries where they were minted.  If you can’t do this, your options are pretty much limited; as with the national coins —prices will vary, depending on your source and relative grade rating of the coin.

 If you are collecting ancient coins, you will be faced with the challenge of being more creative with your searches.  There is a wealth of history to behind these coins, and you will learn a lot about the history surrounding the time the coin was minted.  If you decide to collect all coinage around the time of Louis the XIV, for example, you will find that several coins bearing his profile were minted during the more than 72 years of his reign.  Depending on the number minted (and again, the present quality of the coin), these coins can vary in cost from a few dollars to a recent sale of a pair of gold coins (depicting the bust of Louis XIV) at around €24,000 (almost $30,000), for example.  Many coins, however, are very common and can be bought in lots from various coin sellers.  Old English pence, basic French francs, and old Chinese coins (dating back as far as the Song Dynasty, 960 A.D.) can cost as little as 99 cents, depending on how picky you are about the clarity of the markings.

The type of storage for your collection will depend on the type of coin you are collecting.  Hoarders of pennies or pocket change are known to use things as basic as gallon jars.  Special issue dollar coins often end up the same place, and no particular display is intended.  But for coins that are found as a result of much research and meticulous standards, a more special storage is used.  There are coin albums, folders, holders, books, trays, showcases, and specialized boxes.  The most popular way for trading coins, while keeping them at their optimal status, is in cardboard holders with vinyl-covered centers that contain a single coin.  These allow the collector to study both sides of the coin without the added risk of further contaminating the coin with finger oils and dirt.      

If you are not particular about body oils coming in contact with your favorite coin(s), and if you don’t mind the possibility of ruining the continuity of your collection, you might want to consider wearing or displaying your coins as jewelry.  This is especially easy with certain coins from China that already have a hole in the center.  Another way to mount the coin without ruining its integrity is to bezel it.  Bezeling is the long-time art of encasing an object with a wire ring or wire holders to display a stone or object without harming it (such as drilling a hole might).  There are many creative ways of doing this, and certain traditional jewelers will use this style exclusively.