The Everything Coin Collecting Book: All You Need to Start Your Collection And Trade for Profit

Introduction

COIN COLLECTING HAS been around likely since someone invented the first coin. Collecting is one of the most popular pastimes people enjoy with their discretionary money. Coin collecting is a natural choice of hobby, since we see coins and bank notes virtually every day.

Among the spoils of war inventoried by Pompey the Great when he dragged the unfortunate Mithradates VI of Pontus through the streets of ancient Rome was a coin collection. Julius Caesar’s nephew the Emperor Augustus was known to give what contemporary chroniclers call ancient coins to some of his colleagues. Since that time there have been the sophisticated and the unsophisticated, the rich and the poor, the elite of society and the commoner—all with one interest in common: the pleasure of collecting coins they value.

Coin collecting took root early in the history of the United States. By 1816, a major coin collection was in the makings, and the first acknowledged auction specializing in collectible coins took place in 1828. Nobody really knows just how many people collect coins today, in part due to a lack of reliable studies and in part due to a lack of an acceptable definition of where accumulating coins stops and true collecting coins begins. We know one thing for certain: There are innumerable people who have old coins they found, inherited, or simply accumulated and are keeping the coins either for their collecting pleasure or because they hope those holdings may have significant value.

Coin collecting is a very organized hobby. There are local, regional, and national organizations open to anyone with such an interest. There are hobby and trade publications, some of which are published weekly. The Internet has more numismatic-related sites than anyone could possibly read. There are a significant number of books on aspects of the subject published every year.

The nice thing about coin collecting is that it is for everyone. You can collect modestly by going through your change, or you can spend significant sums to own some of the almost legendary rarities of the hobby. There is an entry level for everyone.

The most important thing is to learn as much about what you are collecting as possible. By learning, you will avoid the many potential pitfalls and mistakes. Collecting should be a fun pursuit. By reading this book, I hope you, too, will enjoy coin collecting.

chapter 1

Welcome to Coin Collecting

Money in the form of coins has been around almost as long as there has been civilization, and almost as long as there have been coins there have been coin collectors. Coin collecting can be a solitary pastime, or it can be a social activity involving family and friends. It can also be an educational and a profitable undertaking. Coin collecting has been called the hobby of kings, but it is also the hobby of virtually anyone who takes an interest in studying and accumulating what we use as currency.

Defining Coin Collecting

Coin collecting is sometimes referred to as numanistics, which originates from the Greek word nummi, or money. Coin collecting actually has three aspects. There are collectors seeking fun. There are coin dealers with profit as their sole motivation. Then there are scholars who find coins to be useful artifacts for studying human sociology and archaeology.

Julius Caesar was a coin collector. So was the Sun King, Louis XIV of France. Coins and people who collect them have been around for a long time. It is possibly one of the oldest hobbies in existence.

Coin collecting is more than just collecting coins. Considering the length of time that coins have been produced and the breadth of what has been issued to drive local economies, there is an almost unimaginable number of coin- and currency-related objects to collect. Most collectors begin with what is most available to them—their pocket change. Many collectors, for this reason, like to begin with the U.S. 1-cent coin.

What to Collect?

Along with coins, U.S. paper money is also a well-recognized part of the U.S. coin collecting hobby. U.S. paper money begins with colonial issues prior to the American Revolution, followed by a plethora of private bank issues, then with federal issues produced by various government agencies. The federal issues include Federal Reserve notes, U.S. or legal tender notes, compound interest treasury notes, interest bearing notes, refunding certificates, silver certificates, treasury notes, national bank notes, gold certificates, and military payment certificates.

Aside from U.S. coin and currency collectibles, there is an entire world out there to be considered. Today there are more than 300 coin and currency-issuing entities producing money around the world. This, of course, ignores all the earlier coin and currency-issuing entities that have existed during the past 2,600 years.

Some collectors choose a theme for their collection. However, not everyone wants to develop a theme by which they will collect. Some collectors like an eclectic collection—a collection of whatever piques their interest. There is no right way or wrong way to collect.

Where does a collector begin? Many people who collect foreign coins or bank notes select a country with which they can identify, such as the ancestral home of their family. Others may decide they like a particular theme appearing on coins, such as animals or buildings. Still others may decide they will collect a sample coin from every coin-issuing entity on earth. Medieval coins are yet another option. So are ancient coins. All it takes is imagination to develop a collecting theme.

A coin group.

Starting Your Collection

The most logical place to begin your coin collection is in your pockets. You will likely find the beginnings of a great coin collection—all sorts of coin denominations, designs, and dates. Perhaps you want to develop a type set (collecting an example of each coin currently used in circulation), a date set (for example collecting a nickel for each year they were produced), or a personal collection (such as coins of the years in which your children were born).

As you search through your pocket change each day, you may be fortunate to find some older coins that happen to be still in circulation. Building your collection in this way, from your pocket change, is the best way to begin. Later you can gradually advance to coins you purchase.

Get your feet wet at a modest price first. If you want to become a more ambitious collector, you should have an education base from which to cautiously move forward. It would be unwise to spend a lot of money on coins before you understand very much about the hobby.

The denomination side of a coin.

As you collect, learn as much as you can about coins. Determine if the hobby is for you, then choose a level of sophistication and expense. Coin collecting can be complicated, and there is a learning curve. Keep your accumulation habits modest until you are comfortable that you know in what direction and at what financial cost you want to become involved. Take your time to develop a collection, not an accumulation.

One important thing to learn as you begin collecting is the meaning of the word rare. It equates to simple economics: If there are fewer of a particular coin (supply) than are there people who want to buy that coin (demand), the likelihood of the coin selling for a favorable price is good. The opposite is also true: If there are more of a particular coin available than there are buyers, its value will likely remain unfavorable. In circumstances like these, the value of a coin may be in its precious metal content rather than due to its date.

Committing to Your Hobby

Anything you do in life includes an investment of your time, effort, and money. Don’t be in a rush to spend them until you understand what you are buying. Shop around. Talk to collectors as well as to coin dealers. Buy something inexpensive, then resell it to find out how you really did. Here’s how to conserve each of your precious resources—time, effort, and money.

Your Time

Coin collecting is a hobby, but it can take up as much time as you let it. You can spend very little time on coin collecting by simply accumulating coins from pocket change, then throwing them into a drawer. On the other hand, you can spend significant time studying each coin you collect, then assembling and housing your collection in some meaningful manner.

It’s important to decide how you wish to spend your collecting time as well. You can spend your time in solitude, or you can spend it with others. This hobby can involve fellow collectors or family. (We’ll talk more about the social aspects of coin collecting in Chapter 4.)

Your Effort

As with anything else in this world, the amount of effort you put into your coin collecting hobby will show in the results you reap. A very casual collector will generally assemble a modest collection, while a diligent collector who works to accumulate and study the coins he or she has acquired may assemble a more ambitious collection.

The best way to maximize your effort is to focus your collection, perhaps with a theme. Direction is important. You can try to collect everything, but a focused agenda will likely be more satisfying.

Your Money

There is no free lunch. This statement is just as true in coin collecting as it is in any other endeavor. Regardless of if your coin collection will be assembled entirely from your pocket change or if it will involve the purchase of expensive coins, there will be an outlay of cash involved. Just how much money you put into your hobby is up to you.

Bear in mind that just because you spend money purchasing coins is no guarantee you are buying something that will increase in value. Unless the demand for what you are acquiring outstrips the supply, you won’t get rich quick. Most collectors buy coins with their discretionary money, not with their life savings. (We’ll talk about investing in coins in Chapter 11.)

Here’s one last important note about spending your resources: Regardless if you are a hobbyist or investor, purchase coins for quality, not quantity. Scratches and other detriments don’t go away, and problem coins never realize the same value as problem-free coins do. If you buy, buy wisely. Along the same lines, if you collect coins from circulation, acquire the best examples you can find. In other words—spend your time, effort, and money wisely.

Educating Yourself

There’s much to learn about the fascinating hobby of coin collecting. One thing many beginners find surprising is that the age of a coin has nothing to do with its value. People unfamiliar with the history of coins often think that anything older than themselves is ancient. Nothing could be farther from the truth; an ancient coin is any coin made through A.D. 476, the year of the fall of the Roman Empire. Coins made from A.D. 476 through about 1500 are called medieval coins. Both ancient and medieval coins were made completely by hand.

The obverse side of a coin is commonly known as heads, and the reverse side is commonly called tails.

Early modern coins, those made after about 1500, were struck by machines. However, these coins were made before the introduction of the coin collar—the part that holds the coinage blank when it is struck that ensures the coin remains round. Modern coins commence with the introduction of the collar.

A coin display.

Examining Coins Up Close

As you educate yourself about your new hobby, you’ll need to know how to examine coins properly and to build a library. Even if you can’t see something clearly on a coin, you shouldn’t be surprised if later on you learn it was a problem coin. For this reason both magnification and proper illumination are important factors in coin collecting. Just how much magnification or illumination is necessary when examining a coin is in question, but some is necessary regardless. It is usually recommended that magnification of about ten times be used to examine collectible coins.

There are two reasons to use magnification to examine a coin. The first is to determine the amount of wear on the coin. The second is to determine if there are any surface problems or damage.

You don’t necessarily need a halogen light bulb to view a coin properly, but typical household lighting is not sufficient. Instead, use natural sunlight or a nonfrosted light bulb. Rotate the coin to let all of its surfaces be caught in this lighting so you can see any problems such as scratches, dents, or wear. Only when these are recognized can you truly tell the condition of the coin you are considering collecting.

Building Your Library

You can go to a public library, visit a coin store, or even examine coin books in a museum. But there is still nothing like having a numismatic library of your own. It is at your fingertips, you can tailor it to your interests and needs, and you can add to it as you see fit.

Your own personal library is an extension of your collection. What museum has no research resources coupled to it? You can’t live in a vacuum. Should you choose to ignore learning about what you are collecting, you will likely reap what you sowed when you go to sell your collection. Knowledge is power.

There is a downside to owning a numismatic library that collectors don’t like to speak about: It costs money. Coin collectors like to collect coins. Why spend money on a book or magazine when you can use that same money to add more coins to your collection?

The astute collector understands that by gaining knowledge a collector can save money when buying coins and make money when selling them. This will justify any cost you invest in your personal reference library.

The content of your library is up to you. A person who specializes in U.S. national bank notes likely will need general references to paper money and also specialized books that identify the value and availability of the notes. A collector of ancient coins will likely want both general and specialized books on this field. For example, a collector of ancient Roman coins will likely want to own a copy of some general text covering the Roman Republic and Roman Empire, but he or she may also want a more specialized book on a specific coin denomination, a specific time period, or some specialized iconography appearing on his or her favorite coins. A counterfeit detection book might also be handy.

Especially if you decide to collect in a specialized area of coin collecting, you may find the books, just as your coins, are of value if you resell them.

(See Appendix B: References for Coin Collectors for a suggested list of the books you should have in your library.)

chapter 2

Important Coinage Vernacular

Coin collecting has its own language, like probably every other hobby. After reading this chapter, you, too, will know your pieforts from your proofs, and you’ll know how to recognize green slime, to boot. Without fully understanding many of these words, collectors may make costly mistakes.

What Is a Numismatist?

A numismatist, using the strictest possible definition of the word, is a person who studies coins. This person draws conclusions about a society—including its technological and economic level, trade routes, and other social and political information—through the discovery and study of individual coins and hoards and the context in which they are found.

There are civilizations and rulers that are known today only through their surviving coins. Coins found in an archaeological context serve as index fossils; archaeological dig sites can often be dated by the coins found there. Coins are often the only artifact that can tell a tale since coins often include meaningful iconography, a legend (inscription) naming the local ruler, the issuing entity, and other information. Even the propaganda appearing on our current coinage may be studied thousands of years from now!

Our current coins will likely be studied generations from now. As an example, the Eisenhower dollar coin of 1971 to 1978 and the subsequent Susan B. Anthony dollar coin of 1979 to 1999 have an image of Tranquility Base—the landing of the first man on the moon—on the reverse. What better way to memorialize this event? The coins provide a record of this feat for posterity.

Our modern dollar coins leave a historical economic record. Before 1935, silver dollars contained silver. No dollar denomination coins were issued between 1936 and 1970. But the next silver dollar, the Eisenhower silver dollar coin of 1971 to 1978, does not contain silver. Nor does the Susan B. Anthony dollar coin. Interestingly, the Susan B. Anthony dollar coin is smaller in diameter than earlier dollar coins, but it has the same face value. All this will tell someone in the future about our economy during this period. This is true numismatics.

You don’t have to be a scholar to be a numismatist in addition to being a collector. Even a coin found in your garden may tell something about the history of your property. You’ll often hear stories about hoards of coins or bank notes found in old houses. The study of the whys surrounding these finds is also numismatic.

What Is a Coin?

It may sound silly to dwell on what constitutes a coin, but that understanding is key to collectors, and perhaps more important to investors. What we carry in our pockets and spend over the counter is typically coins, but not all coins are treated equally. In fact, not all coins are money! Here we’ll talk about several types of coins—business strikes, commemoratives, noncirculated legal tender coins, proofs, mint sets, pieforts, bullion coins, medals, and tokens.

Business Strikes

Coins produced for the public to spend—which is known as in circulation—are called business strikes. They are mass produced on machines that typically stamp out (or mint) more than 800 coins per minute. Modern coins bear the year in which they were issued, and many of them carry a mint mark identifying where they were made. The following is a list of mint marks appearing on U.S. coins:

Charlotte, North Carolina, 1838 to 1861 (gold coins only)

CC: Carson City, Nevada, 1870 to 1893

D: Dahlonega, Georgia, 1838 to 1861 (gold coins only)

D: Denver, Colorado, 1906 to date

O: New Orleans, Louisiana, 1838 to 1909

P: Philadelphia, Pennsylvania, 1793 to date

S: San Francisco, California, 1854 to date

W: West Point, New York, 1984 to date

Coins without a mint mark were also struck at Philadelphia. The concept of using an identifying mint mark dates from earlier times when quality control was poor and governments needed to identify where coins that were purposely made lightweight by unscrupulous mint masters were made.

All U.S. coins carry a date—the year that it was struck. Christian dated coins, with few exceptions, first appeared about 1501. The original function of the date, just as with the mint mark, was to identify problem coins being purposely struck too light by dishonest mint masters.

Commemoratives

Commemorative coins are made to honor a person, place, or event. Commemorative coins have been struck almost since coins were first introduced, however until recent history commemorative coins always circulated alongside their noncommemorative counterparts.

The Washington quarter was actually introduced as a circulating commemorative during 1932, on the 200th anniversary of George Washington’s birth. But the design proved to be so popular that it has been continued ever since.

The first commemorative U.S. coins issued to be marketed at above face value were introduced in 1892 for the Columbian Exposition. This began a period of commemorative U.S. coins, known as the classic period, that lasted until 1954. Although the coins were meant to sell for a premium, many of them failed to sell, so they were dumped into circulation by the government and circulated as money.

A good example of a circulating commemorative coin is the U.S. statehood quarter series of 1999 to 2008.

Noncirculated Legal Tender Coins

Noncirculated legal tender coins, or NCLTs, are simply commemorative coins that are not meant to ever circulate. Most NCLTs are produced of precious metal, typically gold or silver, with an intrinsic value far exceeding the face value stamped on the coins. So these are coins, but they are not truly money.

NCLTs are struck strictly for collectors, and none of them will ever circulate unless someone breaks them out of their cases of issue and intentionally spends them. There is no logic to these coins circulating.

NCLTs have become increasingly popular with mints and governments strapped for cash worldwide. Collector interest for such coins is often modest, but the initial offering to the general public may be profitable if the public finds the subject commemorated on the coin to be of interest.

One problem with many of these world NCLT commemoratives is that there may be no secondary market of collectors into which the coins can later be resold. For this reason, they often sell for significantly less in the secondary collector markets than they did when first issued. There are also many world commemorative coins that are not legal tender in the country in whose name they were issued.

When a government-owned or private mint solicits a country that doesn’t have its own mint to produce business strikes or commemorative coins, the mint will pay the government to which it has contracted for the right to choose the subject to be commemorated and market the coins wherever it chooses. As a result, many modern world commemorative coins have never been in the country in whose name they were issued.

Proofs

Proof coins are struck with great care rather than mass produced. They are specially packaged and sold to collectors. Modern proof coins are typically placed into special sets that are sold by the mint to the general public. Proof sets come out annually, offering examples of all the coins for that year in this special package.

The dies and the blanks from which proof coins are struck are superior to those from which business strikes (coins to be used as currency) will be produced. (We’ll talk more about dies and blanks later in this chapter.) The presses from which such coins are made also operate more slowly to ensure a superior strike. The dies and blanks are hand polished, giving each coin a mirrorlike surface.

While some coins are designed to have a mirrorlike finish, other coins appear to be frosted. Frosted proof coins are normal on most modern proofs, however on proofs from before the 1960s they may command a premium value depending on the issue. There are specialized books in which such information is available for individual dates.

Specially packaged sets of coins—called mint sets, specimen sets, and uncirculated sets—are of the same quality as business strike coins. However, these sets of coins are hand selected, specially packaged, and sold to collectors.

Matte proofs are a special finish used on such strikes at the Philadelphia Mint prior to World War I. There is an attractive but grainy surface to such coins. When in doubt if a coin is a proof or not, examine the rims under magnification. The rims should be squared, not gently sloping as they are on business strike coins.

Sandblast proofs were made at the Philadelphia Mint between 1908 and 1915 by blowing sand across the surfaces. This is similar but yet slightly different from the matte proof, which does not use the sand to provide the finish.

Pieforts

Double-thickness coins, which are made for collectors, are called pieforts. Each of these is sold annually by the mint of their origin, with older date proof sets and other specially produced coins available through coin dealers. These are popular collectibles. Their prices vary in secondary collector markets depending on supply and demand.

A French piefort.

Bullion Coins

Bullion coins are true coins in that they have a legal tender minimum value denomination, year of issue, and country of issue on them, and in one sense they are treated as money. These coins became popular in the 1960s with the introduction of the South African gold Krugerrand. There is an advantage of bullion coins over other forms of platinum, gold, or silver bullion. In a coin format, the precious metal can simply be bought and sold, while ingots (a mass of metal cast into a convenient shape for storage) of these precious metals need to be assayed for authenticity and purity, a time-consuming, costly process.

Bullion coins, including the U.S. American Eagle series, typically trade at or near the spot price of their metal content; however they also have a guaranteed