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The Joy of Collecting Gold Coins
Learn the basics of collecting gold coins
This article is from Gold Rush,
by Arlyn Sieber & Mitchell A. Battino
Each denomination and series of coins – be they British sovereigns,
Japanese yen, U.S. silver dollars, or any of the other thousands of
available issues – present unique considerations and characteristics
for collectors and investors. Gold coins are no exception. But there are
universal tips that apply to coin collecting in general and set the foundation
for a rewarding hobby and investing experience.
Collect Gold Coins That You Like
Collectors should pursue a particular issue, type, design, or denomination
because they like it. They should not pursue particular
coins solely because they seem to be popular among others or because
others have said that is what they should collect.
A particular coin type may have sentimental value to a collector.
The collector may recall spending coins with a certain design
as a youth and now wants to collect that design to fulfill a nostalgic
yearning. Or the collector may have been given an old coin
by a grandparent or other relative and now wants to collect other
coins of the same design and denomination.
A collector may be interested in genealogy, and that may spark an
interest in coins from the collector’s ancestral homeland. Or the collector
may simply be interested in the history of a particular country or
era and pursue a collection that reflects that interest. A U.S. collector,
for example, may be interested in Native American history and may
pursue the many issues that carry Native American images.
Or a collector may simply like a particular denomination or
coin design and not be able to explain why. Whatever may spark
the interest in a particular coin, collecting what the collector likes
increases the enjoyment whenever a new piece is added or the
collection is admired.
Have a Road Map for Collecting Gold Coins
A coin collection can be whatever an individual collector
wants it to be. A collector may long to own just a single gold coin,
for example, and a piece with a design and price the collector
likes may fulfill that longing. Pursuing a set, however, provides a
focus and direction for collecting and can be more valuable than
just a haphazard accumulation of coins.
Again, a set can be whatever a collector wants it to be, but the
two most common methods for forming sets are (1) to collect one
example of each date and mint mark in a particular series and (2)
to collect one example of each “type” within a particular series,
denomination, or composition.
The first method – by date and mint mark – is the more traditional of the two and was the focus of many collectors in the emerging numismatic
hobby of the early 20th century. In the 1930s, the Whitman
Publishing Company of Racine, Wisconsin, introduced its “penny
board,” which was a large cardboard holder that contained a slot for
each date and mint mark of Lincoln cents, from 1909 to the current
year. Collectors attempted to fill each slot in the board by searching
circulating coins for an example of each date and mint mark.
Most coin series, however, have one or two “key dates” that make
forming a complete date and mint mark collection of a particular
series challenging. The key dates have lower mintages than other
dates and mint marks in the series and are difficult to find. Few collectors
filling in Whitman penny boards, for example, actually found
a 1909-S example with designer Victor David Brenner’s initials
(“VDB”) on the reverse. In today’s coin market, asking prices for key
dates reflect their rarity.
That is why many collectors turn to “type sets” for an achievable
goal to their hobby pursuits. The goal of a type set is to acquire one
example of each design within either a denomination, composition,
time period, or some combination of the three. A type set of 20thcentury
U.S. half dollars, for example, would consist of a Barber
type (1892-1915), Walking Liberty type (1916-1947), Franklin type
(1948-1963), and Kennedy type (1965-present).
The advantage to collecting by type is that it gives collectors
more flexibility in forming a set and finding examples that
fi t their individual hobby budgets. A collector pursuing a 20thcentury
U.S. half-dollar type set, for example, does not have to
purchase the key-date 1921-S to fulfill the set’s Walking Liberty
requirement. A more affordable 1945-S in a top grade will do.
Mexico, 8 escudos, 1825-1870
Buy the Best Gold Coins You Can Afford
A coin’s “grade,” or state of preservation, is another key component
to its value. The higher the grade, the higher the value.
There is nothing wrong with a set of well-worn Buffalo nickels
if it is the best a collector can afford and brings the collector enjoyment.
But the higher the grade and rarity of a particular coin, the
greater the chances it will increase in value over time.
Also, collectors should strive for some uniformity in grade
among individual pieces in a set. A type set that ranges from a
well-worn VG-8 to a pristine MS-65 will not be as pleasing to the
eye as one with consistently nice XF-40 to AU-50 pieces.
Handle Gold Coins Properly
The less a coin is handled the better, but sometimes it is necessary to pick it up when it is not in a holder and examine
it. During those times, a coin should be held by its edges and
between the handler’s thumb and forefinger. Handlers should not
touch the coin’s obverse or reverse surfaces.
Coins should also be handled over some type of soft padding
so they will not be damaged if dropped accidentally.
Do Not Clean Gold Coins
Cleaning a coin can greatly reduce its value. Most cleaners
and any type of rubbing action are abrasive and will damage the
coin’s obverse and reverse surfaces. If some type of substance on
a coin really bothers a collector, the collector should consult an
expert to see what, if anything, can be done about it.
A coin’s grade is not based on how shiny it is. Grading refers
to the amount of wear on a coin.
Store Gold Coins Securely & Properly
Long-term storage of collectible coins requires a sturdy, inert
holder made specifically for coins. There are many types of holders
available. Some are inexpensive and are fine for inexpensive coins
in circulated grades and for short-term storage.
Dealers often sell coins in inexpensive 2-inch by 2-inch cardboard
holders with Mylar windows. The holders consist of two pieces
of cardboard, and the coin is sandwiched in between so it shows
through the window. The pieces are held together with staples. The
holders are fine for short-term storage but are not airtight. Also, collectors
should be careful when removing the staples from a cardboard
holder so the sharp edges do not scratch the coin inside.
Dealers may also sell coins in 2-inch by 2-inch plastic “flips.”
The flips consist of a plastic pouch that holds the coin and another
plastic section that folds down over the pouch. Flips, too, should
be considered only for short-term storage. The older ones contain
polyvinylchloride, which can break down over time and leave a
green slime on a coin’s surface. Newer ones are made from the
safer Mylar but are brittle and prone to splitting.
Hard-plastic holders – particularly those that are airtight and
watertight – are the best for long-term storage of more valuable
coins. They consist of two or three parts that screw together with
the coin sandwiched in between but visible through a window.
Dealers today oftentimes sell gold coins in “slabs,” hobby slang
for hard-plastic holders issued by third-party grading services.
For a fee, dealers and collectors can submit coins to the grading
services to obtain a professional, unbiased opinion on the coins' grades. The service then encapsulates the coins in the holders and
labels them with the coin’s date, mint mark, denomination, grade,
and a unique serial number. The grading-service holders are also
suitable for long-term storage.
Collectors should also consider security. At the least, a fireproof
home safe in a low-humidity environment should be used to store
coins of any value. Secure home storage allows collectors to look
at their coins whenever they want to, but a bank safety-deposit box
provides added protection from theft and flood or fire damage.
Either way, stored coins should be checked several times a year
for signs of spotting or discoloration. The holders should also be
checked for signs of deterioration, rust, mildew, or other problems.
Insure Your Gold Coins
Collectors should contact their agents to see if their standard
homeowners’ policies provide more than just a nominal amount of
coverage for loss of collectible coins. Agents may be able to provide
specifi c coverage for coins. Also, the American Numismatic Association
offers collection insurance to its members at group rates.
Learn As Much As You Can About Your Gold Coins
Coin collecting and investing should include an ongoing but
enjoyable and rewarding quest for knowledge on the subject. Collectors
and investors should read books, magazines, and value
guides on coins. They should visit coin shops and museums with
coin displays. They should consider joining a local, state, or regional
coin club or the national American Numismatic Association
to meet fellow collectors and learn from them.
Value guides – such as the ones appearing in this and other
books and periodicals published by Krause Publications – provide
independent information on the current retail prices for
coins. Studying them familiarizes collectors and investors with
what is rare, what is common, and the approximate prices they
can expect to pay when acquiring coins.
Learn to Grade Gold Coins
Slabs have added some stability to the subjective practice of
grading coins, or quantifying the amount of wear on a coin and
its overall condition. But even an expert, third-party opinion remains
just that – an opinion.
Collectors should study one or more books on grading, such as
The Official American Numismatic Association Grading Standards
for United States Coins, and learn to make their own judgments on a coin’s condition, its relationship to its value, and what they are
willing to pay for that coin. Collectors should take advantage of
opportunities to examine lots of coins at shows, shops, museums,
displays, and club meetings. They should learn the key points
of grading one or more individual series and then compare those
key points among the coins they see in real life.
Where to Buy Gold Coins
Just about every city of any size has one or more local coin
shops, usually owned and staffed by a dealer who started as a
collector. Larger shops and collectible-coin businesses may have
a large staff of employees who are also knowledgeable and experienced
in buying and selling collectible gold coins.
The aforementioned shows, held in cities large and small, give
collectors and investors the chance to shop the offerings of many
dealers at one location. Shows sponsored by local, state, and regional
coin-collecting clubs also feature non-commercial exhibits and seminars,
which provide important educational opportunities for collectors
and investors. Coin-collecting periodicals – such as Coins magazine,
Numismatic News, and World Coin News – list upcoming coin shows
throughout the country. The events listings in local newspapers may
also include coin shows. Among the nation’s largest shows are the
twice-annual conventions of the American Numismatic Association,
which are held in various cities throughout the United States.
Mail order is also a time-tested method for purchasing coins.
The coin-collecting periodicals mentioned above are also marketplaces
for coins through advertisements from dealers across
the country. The advertising dealers offer a return policy so collectors
and investors can examine coins firsthand before committing
to the purchase.
Auctions are another time-tested and fun way to acquire
coins. Large and small auction houses nationwide stage sales
regularly, oftentimes in conjunction with a major show. Several
weeks before the auction, they usually offer catalogs picturing
and describing each coin in the sale. The catalogs themselves are
educational tools for collectors and investors.
Attending a coin auction is exciting and educational, too, but it
is not necessary to attend the sale in person to bid on coins. Larger
auction companies usually allow collectors and investors to also bid
by mail, fax, telephone, or on-line. Potential buyers should check
the sale terms before bidding. Most auction companies today charge
a buyer’s premium of 15 percent of the selling price – an additional
expense for buyers that must be considered when they bid on coins.
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