14 Basic Terms to Know Before Coin Collecting
While coin collecting can be one of the most rewarding hobbies in the world, budding numismatists have a lot to learn. The world of coins has its own set of rules, traditions and terms that will seem foreign to those who are just getting started. However, when you set your intentions on learning the meaning of a few words at a time, you will soon discover collecting coins is easier than it seems. Here are 15 basic terms anyone new to buying numismatic coins will find useful.
Pure Gold. The karat system is an older frame of reference for measuring Precious Metals that defined purity in total parts of 24. A coin that was made from 50 percent Gold would be classified as 12 karats, for example. Per U.S. law, any currency that is at least 99.95 percent pure Gold can be described as 24 karats. Karats are used more often to describe jewelry items, while coins and bars will likely be listed as .999 fine Gold, which is the equivalent of 24 karats.
While many numismatic coins on the market are uncirculated, Average Circulated refers to coins that have quite a bit of wear and tear but are not damaged and still have collectible value. These coins cannot be graded on any specific factors, because they have been circulated to a great extent, but still retain value based on other factors such as design or historical significance.
The ask price of a coin is the current amount at which a dealer has established they will allow a coin to be sold. Much like antiques and works of art, the ask price is based on current market trends, expected future value and inherent value of the materials. While the asking price is typically not negotiable, many retailers offer some considerations when entire coin collections are purchased together.
The amount that a coin is worth above-and-beyond face value is called the Collector Value. This term applies to both old and new coin series. Any currency that was struck by a sovereign government with a denomination of money will always be worth at least that amount within the borders of the country. Collector Value can change, depending on market demands and the changing spot prices of Precious Metals.
A coin with an incredibly shiny surface and no visible signs of being circulated can be described as Brilliant Uncirculated. Many investment and numismatic coins on the market today are described as BU because this is the most desirable condition in terms of long-term value. While the distinction does include the word “Uncirculated,” coins that have been used in stores can still be described this way if they have no signs of wear.
The monetary increment that appears within the design of a coin is the Face Value. When collecting coins, the Face Value tends to be lower than the Collector Value. Many types of symbols and characters have been used to indicate Face Value through the years and the amount may appear on the obverse or the reverse of a coin.
Fair Market Value
Particularly useful when estimating the price of rare, historical coins, Fair Market Value refers to an amount that both buyer and seller agree is appropriate for a given piece. If there are only a few known examples of a particular coin available in the world, appraisers will use the Fair Market Value of identical or similar coins to determine worth. For bullion coins produced within the last 30 years or so, a Fair Market price is determined mainly by the going rate of the Precious Metals used.
Coins from a particular series that are known throughout the numismatic community as bearing the standard of quality for that series are known as Key Coins. Setting the bar regarding value for all other available coins of the same mintage, a key coin is highly prized by collectors. On rare occasions when entire groups of key coins are damaged or discovered, the value of all other coins produced in that series can change.
Even coins that were produced as part of the same series in the same year can have slight differences, and this diversity is known as Minting Variety. Sometimes, a design modification is made to a die during production of a series. Natural wear and tear can also occur on dies that are used for long periods of time. Errors can occur during the striking process that create abnormalities as well. Mint Varieties can have drastically different numismatic values and for some series are the primary consideration when determining the selling price.
The front side of a coin is known as the obverse. It can be challenging to know which side of a coin is the obverse, and in fact, some dealers will disagree in the absence of an official assignment by the producing mint. In general, if a coin includes the portrait of a person such as a government official, that will define the obverse. Mint year is also known to be used on the obverse of coins.
A coin that was made specifically for collectors to enjoy, rather than spent in stores, is called a Proof. Proof coinage is designed with aesthetics as the primary concern. They exhibit such features as a mirrorlike background, frosted finish on the portrait and sharply defined details. Coinage that was initially meant for to be used as money, but touts these same beautiful qualities, is known as Prooflike.
If a commemorative coin was authorized by a government to support a particular fund or cause, a surcharge is added that goes directly to that fund. A well-known example is a commemorative series released in honor of George Washington that raised money to preserve his historic home. Once the original surcharge has been paid for by a coin collector, that increment of money is no longer associated with the value of the piece.
The system of measure used by many bullion dealers is Troy Weight. Twelve troy ounces make up one troy pound. The troy weight measurements are slightly different than the avoirdupois system that is common in the U.S. for measuring, for example, a person’s weight. While a troy ounce is equal to 31.1035 grams, the more common avoirdupois ounce is only 28.3495 grams. The market spot price of Gold is calculated using the troy system of weight measurement.
Numismatic coins that have most of their original features intact, but cannot be described as uncirculated, can fall into the classification of Very Good. Most popular coin series have specific requirements established for an example to be graded as VG, and these qualities are commonly outlined in annually published coin books. Coins produced many years ago that still have legible text and design definition can earn the Very Good classification.