The bullion value of a coin is the intrinsic value of the coin’s metal. The numismatic value of a collectible coin is its price on the collector market. Collector supply and demand for coins of similar type and quality of preservation (grade) drive a coin’s numismatic value.
If you’re unsure if your coin should be valued for its numismatic demand or for its bullion content, the Academy of Coins© has created an easy, quick, low-cost grading service alternative at PriceThatCoin.com.
PriceThatCoin.com is a much less expensive way to find out the value of your coin than traditional coin certification. And if you should certify your coin, we’ll tell you!
If you would prefer to learn the to understand the difference yourself, read on!
Coins Treated as Bullion on the Marketplace
Collectors and sellers sometimes consider a coin’s bullion value be it’s minimum value. That’s not always correct, at least for U.S. coins. It is illegal to melt U.S. coins. That doesn’t always stop people from doing it, but it is illegal. Because of this, numismatic industry professionals often call the bullion value of a coin its ‘melt value.’
You must melt a coin to extract the pure metal from it for industrial or other uses. If you don’t do it yourself, you must pay an assayer to refine the metal, and they charge a fee for this service. Therefore, the value of a coin to a bulk buyer is often less than melt value.
The bullion value of a coin is based on the metal market’s current spot price for that metal. From there, dealers calculate their fee, a small percentage, based on demand. If the spot price of silver or gold is going up, they’re more likely to pay closer to (but usually less than) melt for a group of coins. If the spot price is on a downward trend, they will pay much less, or perhaps have no interest. They don’t want to get stuck paying more for something than it will be worth in a week’s time.
So, non-pure U.S. coins (like 90% silver or 90% gold) often sell for less than their melt value. In order to make a small profit, dealers often pay slightly less than melt and sell for slightly more. The total amount made on a one-ounce transaction may be as small as $20 to $100, so when the metal market is volatile, it’s not a good time to buy or sell.
Dealers value non-U.S. bullion coins in the same way. The main difference with non-U.S. bullion coins is that it is legal to melt them (and they are, regularly.)
Metal buyers and sellers often prefer to work in larger transactions because it’s easier to make more money for the same amount of work.
Dealers often calculate fees for gold transactions on a percentage based on spot. For example, dealers may buy 2% below spot or sell 1% over spot. In this example, a dealer would make a total of 3% of spot price for a transaction, were they able to immediately sell what they bought. If gold spot is $1500, a dealer who bought one ounce of gold and immediately sold it would make $45. This is a high risk transaction because bullion prices fluctuate more than 1% throughout the day.
Dealers often calculate fees for 90% silver (U.S. coin silver) on multiples of face value. For example, if you have four quarters and ten dimes, the face value of your lot is two dollars. A dealer may pay ‘seven times face’, or seven dollars, to purchase one dollar face value of 90% silver. That same dealer may hope to sell it to a bullion investor for ten or eleven times face. In the case of your example lot, they will hope to buy two dollars face for $14, and they will hope to sell it for $22. The buy and sell multiples are based on the spot price and market volatility of silver. If spot silver goes up, they may try to buy at nine times face and sell for 13 times face.
Again, metal dealers prefer to deal in larger transactions, so the larger the quantity, the better the rate you’ll be able to get when buying and selling.
Common U.S. Coin Silver Coins Treated as Bullion Value
The U.S. Mint responded to demand for 90% silver in 1963 and 1964 by minting substantially more coins in these years than in previous years. Many collectors and heirs are surprised to find that their mint state coins are traded as bullion. The mintages are very high – some of the highest in history to that point. On top of that, almost everyone in 1964 instantly became a silver speculator. As a result, the general public saved more mint state coins of this year than any other – by a significant margin. Many dealers will crack open rolls of 1964 Roosevelt Dimes, Washington Quarters, and Kennedy Half Dollars just to run them through their coin counters. This bashes and scratches their pristine mint state surfaces. Dealers only do this because these coins are so common. Some dealers treat low-grade 1921 Morgans and problem Peace Dollars the same way.
Common U.S. coins treated as bullion:
– Modern mint state and impaired proof silver and gold coinage,
– Raw 1963 and 1964 half dollars, quarters, and dimes,
– Raw problem or low-grade 1921 Morgan Dollars,
– Raw problem or low grade 1922 – 1925 Philadelphia Mint Peace Dollars,
– Franklin Half Dollars graded Fine and lower,
– 1934+ Walking Liberty Half Dollars graded VF and lower,
– 1940+ common Washington Quarters graded VF and lower,
– No date Standing Liberty Quarters (try to watch out for Type 1s and 1916s),
– All Roosevelt Dimes graded VF and lower,
– 1934+ common Mercury (Winged Liberty) Dimes graded VF and lower,
– Raw problem common Barber Coinage graded AG or lower (be aware of key dates worth much more, even in low grade!)
Collectors and investors are also often surprised to find that coin dealers buy graded bullion coins like American Eagles as bullion, too. Some coins graded 70 by some TPGs (most notably PCGS and NGC) will get a tiny premium from dealers. Unless the coin is a scarce variety or major key date, dealers buy MS-69s as bullion. This is often surprising to collectors because the vendors may have promised their buyers that their 70s would sell for a premium later on.
If you’re looking to maximize your sale price, you may turn to eBay to sell them yourself. Most dealers will not consign bullion coins of any kind. After the shipping and fees, it’s just not worth a dealer’s time to work for a tiny consignment fee. Again, bulk may help here.
Modern Bullion: Many Counterfeits Exist
Watch out for counterfeits of all modern gold and silver coins. There are many excellent counterfeit gold and silver bars. Only purchase from a reputable dealer. In the case of coins, you may wish to purchase only major TPG graded coins. (Watch out for counterfeit TPG slabs, also.)
Coins Treated as Numismatic on the Marketplace
A coin’s numismatic market value is arrived at by comparison of similar, recently-sold coins. For an accurate coin market appraisal, you must be sure your coin is exactly of the same type, variety, and condition as the recently sold examples you use for a comparable reference. Don’t look at what dealers are asking – look at many coins that were sold recently.
This similar condition must include the coin’s exact grade, the same type and severity of problems, and similar quality of eye appeal. If you’re experienced enough to net grade coins, make sure the coins net out exactly the same.
One of the most common problems when grading or comparing coins is the viewer’s tendency to see what they wish to see. It’s just human nature. To be most accurate, view both coins as if you were a buyer, then view both as a seller. If you can honestly say the coins you’re comparing are similar, you may be able to use the reference coin as a guide for value. However, it takes years of picking at details between similar coins to create a trustworthy opinion. Even then, senior graders sometimes (though not often) make mistakes.
One of the most common problems when grading coins is the viewer’s tendency to see what they wish to see.
Coins treated as numismatic on the marketplace tend to have much greater numismatic value than bullion value. But in order to see this price differentiation in the market, it often comes down to having the coin professionally certified. When you do this, you treat the coin as numismatic. Quite often, the cost of certifying the coin will vastly outweigh the difference between a coin’s numismatic value and its bullion value. You must include all certification costs when making this comparison. This includes shipping your coin both ways with insurance, and all grading and variety attribution fees collected, together.
Third-Party Grading Considerations for Bullion Coins
Let’s say for example a 1964 Kennedy Half Dollar may have about $6 of silver bullion value. You calculate this given the market spot price of silver on a certain day. A ’64 Kennedy graded Mint State 63 may have a real numismatic market value of $13.
In this case, the difference between the coin’s bullion value and numismatic values is about $7. It is more valuable as a numismatic coin than as bullion. If the cost of grading and selling were $7, grading the coin would be a break-even proposition. The problem is that getting the coin graded may cost much more than $7. It may cost $20, or as much as $100. If an owner spent $100 to grade a Mint State 63 (Choice Mint State) 1964 Kennedy Half Dollar, even if they received the coin for free, after fees it would cost them $87 to sell their coin. This means the buyer would get, for a cost of $13, $87 of expense invested by the seller. Who wants to be that seller?!
As a result, many owners of these coins choose to simply sell the coins for their bullion value. They get less, but they get an immediate cash infusion.
One alternative is to hold on to the coin long enough for it to become worth grading. When considering this, there is one thing many people don’t remember. If the coin isn’t worth much now, will it really be worth more (including inflation) when you’re ready to sell?
To cite our example, for many, an easy $6 is greater than the time and expense to try to make the next $7. Much of this consideration comes down to the time and cost of grading coins.
So, to recap, the bullion value of a coin is the intrinsic value of the metal in the coin. In the case of our 1964 Kennedy (or any 90% silver U.S. Half Dollar minted in the last century), the bullion value may be around $5 or $6, depending on the current spot price of silver. The numismatic value of a coin is its market price, based on supply and demand for coins similar in type and grade on the numismatic market. In the case of our ’64 Kennedy, if it grades MS-63, that’s about $13.
For reference, there are well over a thousand Kennedy Half Dollars graded Mint State 63. Many millions are still ‘raw’ (ungraded) because their owners decided the time and expense of grading is not worthwhile to them. If the Kennedy grades MS-67+ or finer, it’s numismatic value on the open coin market is easily over $2000. There are fewer than 10 pieces in the world graded as highly. Knowing the difference between MS-63 and MS-67+ takes time and practice grading coins.
The metal markets determine bullion prices. A coin’s grade and conditional rarity greatly determine its numismatic value. Varietal scarcity may also play a significant part.
Bullion value is determined by the global metal supply and demand, while numismatic value is driven by collector market supply and demand.
A coin’s grade, in significant part, determines the coin’s numismatic value. Make sure you get the grade right!
Next: What (Really) Is a Rare Coin?