What Makes a Coin Numismatic?

 

What Makes a Coin Numismatic?

If you regularly shop for rare coins, you’ll hear the term numismatic thrown around a lot. In fact, you might even see non-precious metal coins, such as U.S. pennies, described as numismatic coins. What’s the deal? Numismatics refers to the study of mediums of exchange, primarily coins and paper notes used as currency. Numismatic coins often sell at an added premium over their metal content, and this premium can vary based on several factors, including a coin’s rarity and condition.

Not all coins are numismatic, though. Coins like the American Silver Eagle are traded primarily for their precious metal content and are not typically considered numismatically valuable.

What makes a coin numismatic? A coin is usually considered numismatically valuable if it meets three main requirements:

1. The coin either is or was used as a medium of exchange, or currency.
2. The coin is rare.
3. The coin’s condition can significantly impact its market value.

Whether you’re a lifelong coin collector or a new investor, you’ll need to understand what makes a coin numismatic if you want to avoid overpaying for a rare coin. On this page, learn more about the field and market of numismatics, how to buy and trade numismatic coins, and what ultimately makes a coin numismatic.

Understanding Numismatics

Put simply, numismatics is the study of mediums of exchange, commonly referred to as money. Numismatics doesn’t only refer to coins. Throughout human history, a wide range of different items have been used as mediums of exchange, including paper notes, plastic tokens, and even seashells. Coins tend to be the most popular numismatic items, and this field will be the focus of our article today. 

Numismatists are experts who specialize in the study of currencies and mediums of exchange, especially coins and paper money. If you’ve ever purchased an old coin that has been graded, chances are that a numismatist determined your coin’s condition. 

Not all coins are created equal. Modern silver coins are often sold for little more than a small premium over melt value, the market worth of the precious metal content a coin contains. Numismatic coins are usually sold at large premiums, which can vary depending on each coin’s rarity, age, condition, and other factors.

Here’s What Gives Numismatic Coins Value

Valuating numismatic coins can be tricky. Unlike bullion coins, which are usually worth only a small premium over the melt value of the metals they contain, numismatic coins can vary in market value depending on a variety of different factors. This makes sense, too, given that numismatic coins are traded for their rarity and historical value, while bullion coins are typically only valuable for the metals they contain. 

Three main factors usually give numismatic coins value:

1. Use and role as currency.
2. Rarity.
3. Condition (grade).
4. Errors (if any).

Use as Currency

Being used as a currency is a core requirement for numismatic coins. Since numismatics is the study of mediums of exchange, coins are typically only considered numismatic if they either are or have at some point been used as currency. Even modern silver coins can sometimes be numismatically valuable, especially if they are minted in limited numbers or feature rare errors. 

What does it mean for a coin to have been used as a currency? This question is a bit trickier than you may initially assume. Usually, this requirement means that a coin had to have been, at the very least, intended to be used as a currency. That’s why some coins that were never officially released as currency are considered numismatically valuable. 

Long story short, a coin’s role in the currency system of a country plays a role in its value. Certain coins, such as the first year of a popular coin series, may sell for an added premium because of their importance to the history of a country’s coinage. But at the bare minimum, most numismatic coins either are or were at some point used as a medium of exchange.

Rarity

Alongside condition, rarity is often the most important factor in the numismatic value of a coin. As you probably already know, some coins are rarer than others. Take the United States cent as an example. During some years, the U.S. Mint produces hundreds of millions of pennies. In certain years, however, far fewer pennies are minted at some of the U.S. Mint’s locations. 

The number of a given coin minted during a given year is known as its mintage, and a coin’s mintage can have a major impact on its market value. The lower the mintage, the more valuable the coin, with a few notable exceptions. 

Date and Mint Mark

The year a coin was produced isn’t the only evidence we need to determine its mintage and rarity. In the United States, a coin can be produced at one of several mints. Especially during the earlier years of the U.S. minting system, certain mints tended to produce fewer coins annually than others. The result? A silver dollar minted at the Philadelphia Mint could be significantly more common than the same coin produced at the Carson City Mint during the same year. 

To help figure out how valuable a numismatic coin is, collectors look for a small letter known as a mint mark. For U.S. coins, you can find your piece’s mint mark on either the obverse (front) or reverse (back). This small letter will denote which mint location minted this particular coin. 

U.S. mints are represented by the following mint marks:

• D (Before 1861): Dahlonega Mint
• C: Charlotte Mint
• O: New Orleans Mint
• S: San Francisco Mint
• CC: Carson City Mint
• D (1906 and Later): Denver
• W: West Point Mint
• P or no mint mark: Philadelphia Mint

To determine a coin’s mintage and rarity, you’ll need both the coin’s year of production and the mint that produced it. A numismatic coin will usually be denoted by their year, followed by a dash and its mint mark (e.g., 1956-D). 

Condition 

Aside from rarity, condition is usually the most important factor in the numismatic value of a coin. Two coins from the same year and mint can be separated by thousands of dollars in value if one coin is in significantly better condition than the other. In other words, your numismatic coin’s value depends heavily on its condition.

In the field of numismatics, condition is often described as grade. A coin’s grade represents how well-preserved the coin is. Most coin grading is done on the Sheldon Scale, a grading scale that assesses coins on a numerical scale of 1-70, with 1 representing a coin that is heavily worn down and 70 representing a truly perfect coin that looks like it could be fresh out of the mint. 

While it is possible to grade coins at home, many numismatic coin collectors defer to professional coin graders. Especially rare or valuable numismatic coins are often bought and sold in certified slabs, which are secure plastic storage cases that include a coin’s certified grade and all other applicable details about it. 

Mint-Made Errors (If Applicable)

There’s one more factor that can impact the numismatic value of a coin, although it’s much rarer to see than the ones we discussed above. Despite how meticulous the United States is at producing coins for circulation, mint officials sometimes make mistakes. The results of these mistakes are mint-made errors, imperfections that occur during the minting process.

Depending on their rarity and the spectacularness of the error, coins with mint-made errors can be vary greatly in value. Like other valuable coins, mint-made error coins are frequently sold after being certified by a reputable coin grading company, especially when coins are rare or especially valuable.

Common and popular types of mint-made errors include:

• Clipped planchets.
• Lamination flaws.
• Blank planchets.
• Split planchets. 
• Cladding flaws.
• Doubled dies.
• Overdates.
• Misaligned dies.
• Die caps.
• Brockages.
• Off-center strikes.

That’s just the beginning, too. Many things can go wrong during the minting process, and mintage errors are so versatile that an entire field of numismatics is dedicated to the study of mint-made errors. 

Numismatic vs. Bullion Coins

Most coins fall into two main categories: numismatic and bullion coinage. Bullion coins are highly pure coins typically valued primarily for their precious metal content. While some bullion coins are sold at higher premiums than others because of their popularity of limited mintages, most bullion coins are traded for little more than melt value.

Choosing between numismatic and bullion coins can be tricky. As a general rule for investors looking to profit from their coin purchases, numismatic coins offer a steeper learning curve but a higher potential reward. If you learn how to quickly and reliably assess the market value of a numismatic coin, you can make quite a lot of money trading rare coins. 

Bullion coins, on the other hand, require less research for investors to buy and sell. A Canadian Silver Maple Leaf Coin, for example, is usually bought and sold primarily based on the current spot price of silver. While this makes for a simpler trading process, bullion coins are seldom considered as collectible as numismatic coins. Ultimately, the best type of coin to buy depends on your own investing preferences, goals, and budget.

What is a Numismatic Premium?

Numismatic coins very rarely sell for melt value. A numismatic premium refers to the value added to a coin based on its historical value, rarity, condition, and other factors. Numismatic premiums for collectible coins can vary from relatively small to very large, depending on the factors we just mentioned. Some collectible coins are worth only a few dollars more than face value, while others sell for tens or hundreds of thousands of dollars.

Wondering how much of a numismatic premium you’re being asked to pay for a rare coin? To figure out the premium you’re paying for a silver, gold, or other precious metal coin, subtract its melt value from the total cost of the coin. For coins that are made with base values, subtract your coin’s face value (denomination) from its total listing price.

Since values for numismatic coins are more subjective than the value of a bullion coin, coin collectors should always try to negotiate. After all, you may be able to save hundreds of dollars on a coin, especially if you’re willing to trade other coins or spend some time haggling.

Final Thoughts: What Makes a Coin Numismatic?

Numismatics refers to the study of mediums of exchange, particularly coins and paper money. At a very basic level, a coin is considered numismatic if it has a degree of rarity and either is or has been used as currency. Collecting numismatic coins can be a rewarding experience, but this industry may involve a larger learning curve than the bullion coin market. 

What makes a coin numismatic? A coin is considered numismatically valuable if its condition, rarity, and role in coinage contribute to its total value. 

You might also be interested in:

• What is a Numismatist? | Numismatics and Rare Coins Explained
• How to Grade Coins at Home
• Comparing Numismatic vs. Bullion Coins: What’s the Better Investment?