Numismatics is one of the most interesting hobbies out there, but there is one lingering problem that gnaws on all collectors – how do you assess the worth of coins and bills? Unfortunately, there is no perfect answer, as this topic has been discussed and debated (quite intensely) for decades.
However, appraising collectible notes and coins is relatively standardized, so it is possible, even though some experts might disagree between themselves. In this article, we will explain how you can assess collectible coins and bills and the factors you need to consider.
Go to a Professional Appraiser
The simplest way to assess the value of old coins and bills is to go to a professional appraiser. But they charge for their services, don’t necessarily have the expertise to appraise any and all currencies, and are relatively few and far between. So, while going to a professional appraiser may be the simplest way, it’s often not the most practical solution.
Where does that leave you? Learning how to become an amateur appraiser yourself. It will take you a bit of time and effort, but you can learn how to appraise old coins and bills yourself. Even if you can’t do it perfectly at first, you’ll quickly understand how to make a rough estimate.
Appraising Coins and Bills Yourself
The value of old coins and bills is primarily determined by 3 factors: the rarity, the condition, and the demand.
How Does Rarity Affect the Value?
The math here is simple – the rarer a banknote or coin, the more valuable it is. And this is where many newer collectors make a mistake – they assume an old coin or bill must be rare. While it’s not illogical to assume something old is going to be rarer than something new, it’s often not the case with currency.
Many old currencies and banknotes were minted and printed in large quantities, which makes them easy to find even today. So, the rarer a coin or banknote, the more it’s worth, but don’t assume that something is rare just because it’s old.
The Condition Is Paramount
Then, we get to the condition of the bill or coin. And here, the principle is also simple – the better the condition, the more it’s worth. The best condition is generally called ‘mint’ condition while the worst is referred to as ‘poor’.
And determining the condition is where most debates stem from. For one, there are multiple scales that are used to give a grade. Then, because a person needs to judge the grade, two appraisers may judge the same coin or bill differently even when using the same scale.
But disregarding the minute details, the fewer blemishes a coin or bill has, the more the signs and imprints are visible, the fewer the folds or creases, etc., the more value it has. The Bank Note Society provides a good guide on grading banknotes, while American Numismatic Association has a good guide on grading coins.
The Demand for Coins or Bills
The final factor that determines the value of coins and bills is the demand. So, it’s a type of popularity contest. The rarity and condition will affect the demand for certain coins or bills, but those aren’t the only factors. The market changes from location to location and season to season, so the value will fluctuate accordingly.
The Basal Value
One more thing needs to be mentioned – most coins have a basal value depending on the material they are minted from. So, a gold or silver coin will always have some value, even if it is very common, in bad condition, and there is no demand for it. In such cases, you are essentially assessing the value of the precious metal and nothing more.
The Different Definitions of Value
The rarity, condition, and demand are the factors that determine the value of collectible coins and bills, but it’s also important to understand what collectors mean by value. In short, there are 4 types of value: the catalog value, the buy price, the retail, and the wholesale value. This part essentially functions as for any other item on the market.
The catalog value is the value a coin or bill has in a standard numismatic catalog. This is how much most dealers would sell a coin or bill for. It’s as close as you will get to an average value in numismatics.
The buying price is how much a dealer would buy an old coin or bill for and is not the same as catalog value. In most cases, it will be lower.
The retail value is the price a specific dealer sets when selling old coins or bills, while the wholesale value is the price they set when trading among themselves.
Finding the True Worth of Old Coins and Bills
To summarize, you need to consider the rarity, condition, and demand of old coins and bills to assess the value. But you also need to know whether you are buying or selling and not only look at the catalog value. And, finally, people collect old coins and bills out of love and no value can be placed on having a piece you love in your collection.
