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An Introduction & Guide to Coin Collecting

A Guide to Coin Collecting
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About Coin Collector's University

Coin Collector's University was created by the Numismatists & coin enthusiasts at American Coin & Stamp Brokerage. Our goal is to help answer the most commonly asked questions about coin collecting. We understand the more you know about coin collecting the more rewarding & enjoyable it will be. We understand because coin collecting is not only our business, it's our passion.

-- Rich, Allen, Mark
& the staff at ACSB

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A Guide to Coin Collecting

What coins do people collect?

What's the best way to get started?

How can I get my child started?

Where to find collectible coins

How to handle coins

Grading

Pricing

Tools of the trade

Insurance policies

Protecting your investment from fire & theft

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What coins do people collect?

What to collect is entirely up to the collector - usually something that holds some special interest for the collector and is within his or her budget.

Some of the most popular types of general collections are world coins (coins from several countries), ancient coins, and coins of a particular country. Specializing in a sub-catagory within these categories is also popular. If collecting from a particular country, you can work on one or more series, a type set, commemoratives, errors, die varieties, paper money, etc. You may also want to set guidelines on the grades of coins you collect (all G-VG, VF or better, or Uncirculated). Some people do this not only because they need to work within a budget, but because they'd like their collection to be consistent in quality of both monetary worth & eye appeal.

Series

The goal of a series collector is to acquire one of each date and mint mark made of a particular denomination & type of coin, usually including any major design differences (varieties). For example, the U.S. Standing Liberty quarter was produced from 1916 to 1930 at the Philadelphia, Denver and San Francisco mints (coins were not made at all three mints every year, and none were produced at any mint in 1922); a major change to the obverse was made in 1917, and the full set is generally considered to include both designs for that year from each mint.

Type

A collector building a type set seeks to have one of each series including major design variations within each series. Examples would be 20th century coinage, gold coins or commemorative type sets of a particular country.

Ancients

From the invention of coinage in Ionia about 650 BC to the last Roman emperor of 450 AD, the gold, silver and bronze of ancient world are surprisingly available. A common silver drachma issued by Alexander the Great might cost about $60. A common silver denarius from one of the early Roman emperors might cost $30. Gold costs more. Bronze -- being more common -- costs less. For $10 or $20, you can own a bronze coin that circulated during the time of Archimedes or St. Paul. Most collectors of ancients work on themes: the Twelve Caesars, the town of Carthage, the goddess Diana, etc.

Tokens, Tickets, Tallies and Checks.

When the government ignored the needs of the people and refused to issue sufficient low value coins the traders took matters into their own hands and issued tokens. In Great Britain this took place in the mid 1600's, the 1790's and the 1810's. These formed a local currency and it took several acts of Parliament to ban them. The bans were never completely successful and 'advertising tickets' continued to be issued through the mid 1800's. These were conveniently the same size as farthings, the coin still in very short supply, and undoubtedly circulated as such. By the end of Queen Victoria's reign the need for tokens had gone but there were all sorts of other similar pieces being used. Pubs issued checks but because they were such an everyday occurrence nobody thought the record how they were used! The co-operative societies used checks to record the value of purchases made so that the correct amount of dividends could be paid. Fruit pickers received tallies to depending on the quantity of fruit picked. The most recent use of tokens are the ones used in gaming and vending machines, even car wash facilities, as well as those used for transportation (buses, subways, toll-boths, etc.).

Although generally less valuable than coins, tokens are nevertheless quite interesting if you're into local history and like to do research.

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What's the best way to get started?

First, buy a reference book or two and be sure to read weekly & monthly publications which cover your area of interest. Although coins can be rewarding for the collector who makes the effort to study the hobby and the market, someone who doesn't make that effort is more likely to waste money on over-graded, problem or counterfeit coins and ultimately ends up feeling cheated and/or disappointed. Before spending a lot of money on coins, invest in learning about the hobby. You may also want to join a club. Local coin clubs are a good place to start. Coin clubs are a great place to meet people with similar interests, learn more about the hobby and network.

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How can I get my child started?

First let us say that we feel a child should never be forced to start collecting coins, or forced into any other hobby for that matter. Not only might you earn the wrath and resentment of the child but if he or she isn't interested you'll just be wasting your money & time. This in turn may have you resenting the child. Approach collecting for children slowly, simply & most definitely apply a budget. A child might seem interested at first (out of sheer curiosity or they might "fake it" to please you) but can loose interest quickly. For children (and even for some adults) collecting coins from circulation is a great place to start. The risk is negligible (you can always spend the coins), and they can learn a lot examining the coins carefully, seeing what reference books says about them. Coin collecting is also a great tool to help a child learn about history, geography and even politics for the older child.

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Where to find collectible coins:

When the coins you're interested in collecting are not available in circulation, it's time to look for other sources (see previous topic). That almost always means purchasing coins. Among places to buy coins are

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How to handle coins:

The are many types of holders that provide adequate protection for ordinary handling. Before removing a coin from its holder, consider whether it's really necessary.

Collectible coins should always be handled carefully to avoid the possibility of causing wear to uncirculated coins or additional wear to better circulated pieces.

Never touch an uncirculated or Proof coin anywhere but the edge. Fingerprints alone may reduce the coin's grade and consequently its value.

When examining another person's coins, always handle by the edges, regardless of grade. Be sure your hands are squeaky clean. Get in the habit of picking up all collectible coins by their edges, and it will soon become routine.

Be careful not to introduce substances that may lead to spots or color changes. Don't handle collectable coins around food, drinks, or anything that can spill.

When setting a coin down outside of a holder is necessary, place it on a clean, soft surface. A velvet pad is an ideal surface and essential for regular handling of valuable material. A clean soft cloth or clean piece of blank paper may be sufficient for less valuable items. Do not drag coins across any surfaces.

Avoid holding numismatic items in front of your mouth. Small particles of moisture may eventually cause spots.

If you will be handling very valuable coins or lots of uncirculated and/or higher grade circulated coins, wearing clean white cotton gloves or surgical gloves and a mask may be advisable.

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Grading:

The condition of a coin is commonly summarized by a grade. We say "summarized" because grade is judged by more than one aspect of a coin's appearance. Because the value of collectible coins often varies dramatically with grade and overly generous grading is not uncommon, learning how to grade (or at the very least learning how coins are graded) is an important part of the hobby for coin collectors. Market values for many coins vary dramatically from one grade to the next. Keep in mind that grade is only someone's opinion. Until you are comfortable with your ability to grade coins, make liberal use of other opinions, such as those available with slabbed coins or from experienced collectors and dealers you trust.

The information presented here is intended only as an introduction to the subject. Grading is a skill that can only be developed over time through referrals to grading guides, consultation with experienced collectors and dealers, and lots of practice.

Grading is also considered by many to be somewhat of an Art. Published standards have set objective criteria for grading, but some amount of subjectivity is inevitable -- even expert graders will often assign slightly different grades to the same coin. While you can always rely on an experienced grader for their opinion, being able to make your own reasonable assessment of grade is your best protection against buying a mis-graded coin or an intentionally over-graded piece.

An overview of American Numismatic Association standards follows. For more a more extensive explanation you should consider reading the Official A.N.A. Grading Standards for United States Coins which is published by the ANA. ANA standards are widely used in the U.S. but are not the only system used. Numerals used in coin grades have been taken from the Sheldon scale.

Uncirculated Coins

Coins with no wear at all ("contact marks" or "bag marks" are not considered as "wear") are referred to as uncirculated or in mint state (MS) coins. Grades from MS-60 to MS-70 in one point increments are used for mint state coins. Criteria include; luster, the number, size and location of contact marks, the number, size and location of any hairlines, and the quality of the strike as well as overall eye appeal.

An MS-60 coin may have dull luster and numerous contact marks in prime focal areas, as long as there is no wear.

Grades from MS-61 to MS-64 cover intermediate parts of the range between MS-60 & MS-65.

To merit MS-65, a coin should have brilliant cartwheel luster (when you tilt the coin the light reflects on the coin's surface in a cart-wheel-like shape), at most a few inconspicuous contact marks, no hairlines, and nearly complete striking details. Attractive toning is permissible.

Truly exceptional coins may be graded MS-66, MS-67 or, if absolutely flawless, MS-70. Many numismatists consider MS-70 to be an unobtainable ideal although there have in fact been coins certified as MS-70.

Terms such as brilliant uncirculated (BU), choice BU, gem BU, select BU and premium BU are sometimes used in lieu of numerical grades.

Circulated Coins

For circulated coins the grade is primarily an indication of how much wear has occurred and generally does not take into account the presence or absence of dings, scratches, toning, dirt and other foreign substances. Such information may also be noted and you most certainly can take these things into account when you are deciding on whether or not to purchase a coin. Remember, even if the coin deserves a high grade, if you don't find it attractive perhaps you shouldn't buy it.

ANA grading standards recognize 11 grades for circulated coins For more a more extensive explanation you should consider reading the Official A.N.A. Grading Standards for United States Coins which is published by the ANA.

While coins more worn than AG are rarely collected, two additional grades are nevertheless used to characterize them:

While not included in the ANA standards, intermediate grades like AU-53, VF-35, F-15 and G-6 are used by some dealers and grading services. When a grader believes a coin is better than the minimum requirements but not nice enough for the next higher grade "+" or "PQ" may be included (e.g. MS64PQ or VG+) or a range may be given (e.g. F-VF).

Split Grades

When there are significant differences between the obverse and reverse sides, a split grade may be assigned. Split grades are denoted with a "/". For example, "F/VF" means that the obverse is F and the reverse is VF.

The overall grade is often determined by the obverse. However, an intermediate value may be appropriate when the difference between the obverse & reverse is significant, especially if the reverse is lower. A coin graded MS-60/61 would be considered to have an overall grade of MS-60, and another at MS-65/63 could be considered to have an overall grade of MS-63.

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Pricing:

Coin prices are a function of supply and demand. Market prices decline when inventories cannot be moved at current levels and eventually rise when insufficient quantities are available to meet current demand. Of course, if the buyer or seller is unaware of current trends, the effects on their little corner of the market may be altered.

Demand is established by collectors, investors, and by dealers. Keep in mind dealers must sell coins for more than they pay for them to cover expenses and make a profit (that's the American way, you've got to allow them to make a living). Consequently, there are multiple tiers of prices for any particular collectible coin.

Retail refers to prices dealers charge most collectors and investors.

Wholesale means prices they charge each other.

Collectors with a substantial market presence (spending considerable amounts, especially on a regular basis with the same dealer) may be able to buy at or near wholesale levels. Published price guides list typical prices for retail and wholesale transactions -- actual prices may be somewhat higher or lower. Another way for collectors to buy at or near wholesale is through traditional auction houses & Mail Bid Sales. For more information on auctions & Mail Bid Sales see Where to find Collectable Coins.

Some dealers will pay less than wholesale when buying coins from the public. The reason for this generally is so they can still make a profit when re-selling to another dealer at wholesale prices. But if the material is expected to be sold at retail price, the dealer may be willing to pay more.

Collectors should be aware that it is sometimes difficult to "get their money back" if they attempt to sell immediately after purchasing a coin or coins. The reason is simple, if you buy a coin worth $100 and try to sell it the next week or the next month, it's worth may be the same (or slightly higher) but a dealer must buy it for less so he can sell it again and make a profit. This may seem obvious to some but to others wishful thinking and the dire need for cash may keep them from understanding. The lesson is simple too, if you're a collector, buy coins because you like them & wish to keep them. They eventually may go up in value but if this is your only reason for buying them you are not really a collector, you are an investor. While no one can predict what a coin will be worth tomorrow or two years from now, a sizable profit will most likely never be turned immediately (weeks or months). That kind of turnover is rare. If you want to collect, then collect. If you want to invest, well, that's a whole other game.

When pricing & buying one should try always to work with a reputable dealer, one who will guarantee the authenticity of the merchandise and one who will be willing to buy it back if for some reason you need emergency cash. While the dealer may not be able to buy back your recent purchase at the same price you originally purchased it (remember, dealers have to be able to re-sell the coin), you'll want a dealer who you can trust to not take advantage of your situation.

A reputable dealer will be knowledgeable enough to form reasonable & conservative opinions on grades, to detect problems that may be missed by less experienced persons and will usually be willing to share knowledge with the public, especially customers.

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Tools of the trade:

What tools and other resources does a coin collector need? The answer depends on the material being collected and its value. At a minimum, especially if you are collecting any uncirculated coins, you should have a magnifier (a.ka. loupe or glass) & a good reference book which applies to the area you are collecting in. You should keep a box of surgical gloves handy (you can now get these at most home supply stores, a box of 100 for about five to eight dollars), a soft cloth or velvet pad, and a comfortable location with a suitable light source for examining coins is also advisable.

All sorts of magnifiers are available. For grading, 4-10x (x = times) magnification is sufficient, with 7x magnification considered by many to be ideal. Collectors of die varieties need 10x magnification or more. Generally speaking the higher the magnification the smaller the glass or field of vision. You may want to keep this in consideration if you decide to buy a really powerful magnifier to read a book. Trying to read a book with a 10x or higher will most likely make your squint even more than you did without the aid of a glass. Keep in mind a collector's magnifier is a very personal tool. What works for one person my be quite uncomfortable for another. If you're think of buying a glass for someone else as a gift you may want to go another way, perhaps get them a gift certificate so they can pick out their own. However, if you must buy for someone else and have been given no preferences to go by, you may want to go with a 7x self-focusing, for the average collector it usually does the job without complaints.

Anyone purchasing coins should own at least one general reference book with information on dates and mint marks, major varieties, grading guidelines and prices. Additional reference books that examine topics in more detail (e.g. grading, errors, counterfeit detection or die varieties) are often useful. Periodicals will have more recent pricing information and news. Good reference works can pay for themselves several times over by helping you avoid bad decisions.

Recommended lighting for examining coins is an incandescent source of about 75 watts (higher, if other light sources are in the room - yes, you read it right we said higher). Some people prefer halogen lamps, but fluorescent lights should be avoided. Your light source should be located within about 18-20 inches (half a meter or so) of where you'll hold the coins.

Find a comfortable location in your home where you won't be frequently distracted. Don't bring food or drink to the same location as where & when you examine your coins. Keep the area clean and free of items that may spill on or damage your coins. Keep a soft cloth or pad available to lay coins on.

Depending on the collector's interests and value of the collectibles, other useful tools sometimes include a microscope, mask (dust masks are pretty cheap & can be purchased at home supply stores), additional reference books, a metal detector if you're the adventurous type, a scale and/or photographic equipment.

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Insurance policies:

If you plan on investing in your coin collecting hobby, you should give some serious consideration to investing in insuring your collection.

First you should know that most homeowner insurance policies specifically exclude coins and other numismatic items from coverage. A rider can usually be obtained for an additional premium, or a separate policy may be obtained. The ANA offers optional insurance for collections to its members.

Beware - Your Insurance May Not Cover Flood & Water Damage, Even If You Have NFIP Flood Insurance!

While it's best you never store your collectibles in a basement (see How Should I Store My Coins? - Environment), we realize that many people live in basement apartments, daylight basement apartments (partially below ground level) or in homes where the first floor may be partially below ground level, and may have no choice but to store their collectibles in a "basement" environment. If you store your collectibles in any room which is even partially below ground level, please read the following:

Insurance policies can be misleading. If you store your collectibles in any room that is even partially below ground level your collectibles may not be covered for flood or water damage, even if you have a rider or special flood insurance through the National Flood Insurance Program (NFIP). The element of doubt revolves around insurance companies' definition of "basement" and "below ground level". The following information was taken directly from the FEMA (Federal Emergency Management Agency) website:

The NFIP defines a basement as any area of a building with a floor that is below ground level on all sides. While flood insurance does not cover basement improvements, such as finished walls, floors or ceilings, or personal belongings that may be kept in a basement , such as furniture and other contents, it does cover structural elements, essential equipment and other basic items normally located in a basement. Many of these items are covered under building coverage, and some are covered under contents coverage. The NFIP encourages people to purchase both building and contents coverage for the broadest protection.

The following items are covered under building coverage, as long as they are connected to a power source and installed in their functioning location:
* Sump pumps.
* Well water tanks and pumps, cisterns and the water in them.
* Oil tanks and the oil in them, natural gas tanks and the gas in them.
* Pumps and/or tanks used in conjunction with solar energy.
* Furnaces, hot water heaters, air conditioners, and heat pumps.
* Electrical junction and circuit breaker boxes, and required utility connections.
* Foundation elements.
* Stairways, staircases, elevators and dumbwaiters.
* Unpainted drywall and sheet rock walls and ceilings, including fiberglass insulation.
* Cleanup.

The Following items are covered under contents coverage:
* Clothes washers.
* Clothes dryers.
* Food Freezers and the food in them.

While the NFIP defines a "basement" as "any area of a building with a floor that is below ground level on all sides", it does not specify how far below ground level. In other words, if the floor of a room is only a few inches or a few feet (partially) below ground level is the room classified as a "basement" and therefore any & all contents not mentioned in the list above are not covered? The answer to this question is unclear. If the definition is taken literally then even if the floor to the room is one inch below ground level, it would still be considered a basement & many items are therefore not covered. When one of our associates contacted FEMA and asked that this issue be clarified, no further information was available.

So what does this all mean? Very simply, never assume your collection or any other valuable is covered by any insurance policy. When in doubt, get the details in writing!

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Protecting Your Investment From Fire & Theft:

The following information should be useful to help you decide how to keep your collection safe & protected:

Never keep your collection in a basement. This is important for due to both, insurance & environmental reasons.

Maintain records (inventory list, receipts, written appraisals) about your collection and store a copy separately from the coins, preferably in a fire-proof box.

Most safes providing protection from fires do not provide very good protection from theft, and vice-versa.

A fire can damage or destroy numismatic collectibles. Even if the flames don't touch your coins, the heat may be sufficient to melt them. One option is to keep your collection in a home safe providing protection from fires. Another option is to keep the collection (or at least the most valuable parts) in a bank safe deposit box.

Top priority for preventing theft should be measures to prevent or dissuade a burglar from entering your home, such as lighting and locks. More extensive tips are available from law enforcement agencies. Consider storing your collection (or at least the most valuable parts) in a safe deposit box.

Be discrete about being a coin collector. Avoid telling anyone you don't know well and trust, and when the subject does come up, be sure to mention that you keep the coins in a safe deposit box or the collection isn't worth much (even if this is not true). The more people you tell about your collection, the more likely that information will eventually reach the wrong person. If you regularly receive coins and/or promotional materials in the mail, consider getting a post office box and having all numismatically related mail sent there. (A PO box offers little additional security in the UK, where anyone can write to the PO to obtain the real address behind it.)

For more information on how to protect your collection see Insurance Policies & How Should I Store My Coins?

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Disclaimer

Coin Collector's University attempts to address the most commonly asked questions about coin collecting. It is intended only as a general guide to the hobby. The information found in this website should not be misconstrued as an actual course in Numismatics and is in no way intended for use as investment advice. Inclusion or mention of a product, dealer or company in this FAQ does not constitute an endorsement or recommendation.

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