Historic Bullion Coin Value
The value of contemporary bullion coins mostly depends on their melt value which is determined by multiplying the current spot price of the precious metal with the weight of the coin. On top of the melt value, online coin dealers will typically charge a premium of about 4 percent to 10 percent (or sometimes even more than that) which covers the additional costs related to coin production, marketing, packaging . . . and leaves the dealer with a small profit. On the other hand, the value of a historic bullion coin is determined by a plethora of other factors as well which this article will attempt to explore.
First of all, it is important to note that contemporary bullion coins are primarily bought by investors whereas historic bullion coins are primarily bought by collectors. These two groups of people have very different objectives. The primary and in some cases the only objective of an investor, whether he/she is buying stocks, mutual funds, precious metals or any other type of asset, is to make a profit, ideally the maximum profit that is possible to achieve. A coin collector on the other hand would buy a historic bullion coin for the pleasure and pride of owning something rare and/or beautiful. Coin collecting is primarily a hobby and many coin collectors do not aim to make a profit from the buying and selling of certain coins.
Just like for any other collectibles, the value of a historic bullion coin is primarily determined by how rare it is. The rarity of any item depends on how many such items were originally made and how many of those survived the times. To get an idea about the number of coins of any particular type that were originally produced, we can look up the mintage numbers. Most websites that inform readers about the world of precious metal coins such as Buy-Gold.Link list the mintage numbers per year for any type of precious metal coin, whether historic or contemporary.
In some cases however, these numbers may not be 100 percent accurate though. Official mint records may have been lost or destroyed for example. When coins were still minted by hand, it would also occasionally happen that coins for a given year would be minted with the die bearing the previous year’s date.
However, it is not only the mintage numbers that determine the value of a certain historic bullion coin. Just because a certain number of coins were minted in a certain year doesn’t mean that these coins will remain in existence. After all, the average lifespan of a coin is only around 30 years and damaged coins as well as coins that are too worn are constantly taken out of the circulation. All these coins would eventually be returned to the mint in order to be melted down.
There were also instances when even though a large number of coins were minted in a certain year, most never entered into circulation. Most of these excess coins would later also be melted down. Finally, some coins would also simply get lost over time. Perhaps someone buried them or they were lost at sea when a ship sank during war or turbulent weather. The smaller the number of historic bullion coins that survived the times, the higher their value on the collector’s market.
Another factor that should not be underestimated when determining the value of historic bullion coins is the current market demand. Coin collecting is a hobby after all and not a necessity like food and energy. At times of economic recession like the times we currently live in, demand for collectibles like coins will naturally be much lower than during economic boom times. These days, more and more people struggle to fulfill even their basic needs. Few coin collectors these days strive to add new specimens to their collection. Some might even try to sell excess coins in order to earn some cash to pay for necessities. The current lower demand for collectibles will of course result in much lower prices for those coins that are currently on the market.
You can generally expect to find signs of usage on historic bullion coins. These can be scratches, dents and a reduction of the sharpness of the coin’s design due to wearing. Oxidation is another factor that can occur, especially on 22 karat gold coins that have been alloyed with copper. You should never try to remove the red oxidation spots that can occur on such coins. Neither should you try to remove any type of patina that has accumulated on a historic bullion coin. These signs of age are valued by collectors and generally don’t diminish the value of a historic coin.
Nevertheless, coins in uncirculated condition, that is coins that were never in circulation, generally fetch the highest prices on the collector’s market. The owner of such a historic uncirculated coin can enhance its value even further by having it graded by a coin grading institution like the NGC or PCGS. However, having a coin graded costs a fee and there is never an advance guarantee that these fees can later be recuperated through a higher sales price.
The number of coins of a particular type and year that a dealer has in stock also influence the price. Some dealers will generally only have a few specimens in stock of a particular historic bullion coin. These coins will be available for purchase with a substantial premium above the spot price of the metal. Large online coin dealers like APMEX however might have hundreds of coins from a particular type and year in stock. Often it is possible to find good deals on these coins then with quantity discounts being offered to buyers of multiple coins.
Pre-1933 American gold and silver coins might be the most readily available historic bullion coins online. Coins like the Saint-Gaudens Gold Double Eagles were fabricated in the millions during their long mintage run. Most of these coins were in circulation and these circulated coins with their evident signs of use and wear can nowadays be obtained for low premiums. Some coin buyers however wisely put some coin specimens aside and stored them protectively, perhaps with the intention of some day passing them on to their children or grandchildren in near pristine condition. When you see such a rare uncirculated historic bullion coin listed for sale online, you will notice that these coins sometimes sell for very high prices.