When Does Numismatic Value Outweigh Intrinsic Metal Content?

For most new coins we use every day, the numismatic price is the same as the face number on the coin, and the metal price is even smaller.

But for coins being old, rare, or special, the situation changes. 

Understanding the reasons that make the numismatic coin value go up, and knowing how these reasons work, helps us find the moment when the coin's price stops linking to the market price of the good metal and starts being fixed only by what collectors want.

The Metal Price of a Coin

The metal price is the basic and the most simple price of a coin, easily found.

The metal price is the cost of the metal used to make the coin, being the price if the coin was melted down. For coins made of gold, silver, or platinum, this price is calculated using the world market prices for these metals.

Metal Price equals multiplied by The market price of the metal for that weight.

It acts as the lowest point for the coin's selling price.

No seller will sell a coin for less than the price of the good metal inside it, because in the worst situation, having no buyer, the coin can simply be sold for melting.

For special coins called bullion coins, made in big numbers for people wanting to invest in the metal itself, their price is always very near their metal price, having only a little extra cost for making them.

The numismatic price of such coins is low, there being many of them in the world.

The metal price is a fixed, simple factor, depending only on the market. It does not change based on how well the coin is saved or how old it is.

The Numismatic Price

The numismatic price is a changing price, being hard to calculate. It shows the interest of collectors, being fixed by many things not connected to the coin's metal.

It is an extra cost added to the face price or metal price of the coin because of its history, how rare it is, its condition, its popularity among collectors, and other special ways it was made.

Also it changes based on three main factors, having no link to the metal: rarity, condition, and demand.

Rarity

Rarity is the first and clearest factor, having the power to make the numismatic price much bigger than the metal price.

1. Mintage: This is the first number of coins made by the mint. The smaller this number, the bigger the potential rarity. 

Coins made as test pieces, or in times of economic problems, or having mistakes, often have the smallest total made number, and a high price.

2. Still Exists: More important than the first total made number is how many coins are still here today. Coins made from metals not being good, were often worn out from use or melted down during wars. 

For these coins, even if there were many at first, the coins still existing can be very rare.

For example, a copper penny from the 1800s has a very low metal price, but if we know only 100 such coins still exist, its numismatic price will be many thousands.

Grading

In coin collecting, we use a fixed scale called the Sheldon Scale, giving coins scores from 1 to 70.

• G (Good) / F (Fine) / VF (Very Fine)  were used in trade, having much wear. Their numismatic price is very small and often just a little more than the metal price.

• AU (About Uncirculated) was almost not used in trade, but showed signs of light wear. At this point, the numismatic price starts clearly getting bigger than the metal price.

• MS (Mint State) / PL (Proof-Like) is in perfect state, never used in trade.

The score MS-70 means a perfect coin without any mistake, being visible even with a glass. This is the highest score.

If a gold coin weighing one ounce in MS-60 state costs 10% more than the metal, the same coin in MS-70 state can cost 500% or 1000% more than the metal, only because of its perfect condition.

Coins put in special plastic slabs by expert grading companies have a higher numismatic price.

This happens because collectors trust the score given by these independent experts. A coin not having this paper, being in the same condition, will cost less.

History and Demand

Coins linked to important past events, immediately have a bigger numismatic price. An example can be the "sad" coins, made in small numbers right after a ruler's death.

Test Coins are coins made to check the design, but never put into normal trade. They exist as only one or a few examples, and even though their metal price is low (if they are copper or nickel), their numismatic price will be extremely high.

"Proof" are coins specially made for collectors, using polished metal and special tools, giving them a mirror surface. 

Even new "proof" coins, made from the same metal and in the same weight as normal investment coins, cost much more because of the high quality of making and the smaller number made, being again a numismatic reason.

The price changes based on how many people collect this coin series. For example, millions of people collect the American Lincoln Penny.

This means that even a little rarity or a slightly better condition of the coin can cause big demand, and so a high numismatic price, not linked to the copper price.

Coin series having many collectors always show a much bigger overweight of numismatic price over metal price.

Minting Mistakes and Types

A minting mistake is a sudden, wrong stop in the making process, for example, the coin's body not being hit in the middle.

A variety or type is a planned, but later changed, difference in the design, for example, a small change in the shape of the year number or a letter on the coin, being corrected later, but a small number was already released.

Mistake Examples

Double Die: The tool hitting the design moved, making the text or picture look "double".

Off-Center Strike: The coin was hit not in the middle of the metal piece, making part of the picture not there.

And there are many other variations of errors that can be difficult to identify on your own, so if you think your coin looks "somehow wrong", then it's better to check it through the coin scanner app to know its features for sure.

These coins, even having their low or normal metal price, sell for very big amounts of money. This happens because every mistake is special or found very rarely. The numismatic price of such a coin is zero for a normal person, but for a collector focusing on mistakes, it is priceless. 

In this case, a coin, having a metal price of almost nothing, can cost thousands because of making a mistake.

Conclusion

The numismatic price starts being bigger than the inner metal price of a coin at the time when its special features become rare and wanted by collectors. 

This happens not because of the metal itself, but because of the following non-metal factors:

1. The small number of coins still existing

2. The perfect or almost perfect state of preservation

3. The existence of a mistake or a special making type

4. The link to an important historical event or the wide popularity of the coin series

So, the metal price only shows the smallest possible price of the coin, while its numismatic price, fixed by people's interest, history, and rarity, sets its real market price. The stronger these non-metal factors are, the more the numismatic price moves away from the metal price.