May 19, 2008

What makes coins sell for millions?

When I was younger I thought coin sold for millions are too good to be true. I never believed that a coin could be sold that much, especially for those worn-out cents. I mean, who would willingly pay thousands of dollars for worn-out cents…that is unbelievable! Then as my knowledge and skill mature, I began joining clubs and attending auctions and there I became witness to some coins sold for millions. Still, those did not easily convince me, since I thought it is just another case of the cliché “Conspiracy Theory”. That is not impossible because any owner could participate in the bidding process and there are probably other accomplices involve therefore, in the end they only made the price of the coin escalated for us to believe that the coin was sold for millions of dollars. It was a mystery for me how a single piece of demonetized cents can be sold for several millions of dollars. So what makes coins sell for millions?

I remember several years ago, when a veteran collector told me that I should save at least 30% of my budget on books before I focus on buying coins. I did try saving money on books but not the prescribe percentage told by the veteran. I was however hesitant on spending more on books since I believe coins were more valuable as investments. Actually, coins are still valuable as investments but later did I realize what makes coin sell for millions is not the coin itself but the information it holds.

When a coin is appraised intrinsically, it is easy to provide an accurate information regarding the coin’s real value since there are only three factors to consider, namely: weight, metal, alloy, and market value. For example, if a coin made of gold has a weight of 7 grams, made of 22-Karat Gold, and is .9999 fine. Then, you could easily come-up with a precise calculation of the coin’s value based on the data provided. As simple as that, so coin made out of silver, gold, platinum, and other rare metals could be easily appraised. However, this does not apply when we talk about rarity. For a coin in order to be considered rare, it has to have the lowest mintage, have been declared lost, or have been melted and re-coined therefore, the few existing specimen are considered rarity because of their population.

Many rare coins such as the 1804 United States Dollar and 1913 V Cent are examples of rare coins that made the Numismatic World tremble since these coins always surprise collectors due to their record-breaking prices in any auctions. However, surprisingly rarity could not be the proven factor why coins sell for millions since there are otherwise hundreds or even thousands of coins which has even or fewer mintages just like these coins that were sold no less than $300. Then, if rarity is not a guarantee then what would make coins sell millions. Others, may suggests that condition is a factor that would escalate the price of a certain coin but proofs and commemorative coins which were issued in pristine conditions often sell less than regular struck coins. Regular issues in excellent conditions may otherwise guarantee that these coins would sell more but that would not make millions unless it belongs to the classification of rarities. Therefore, what really make coins sell millions?

Actually, its common sense but the information that the coin holds makes any coin achieve exceptional price, just like paintings, collectibles, stamps, memorabilia, and antiquities. That is how vital “information” is, since these are actual records of significant human events, people who are aware how vital information is, utilized such principle betting every resource they have just to acquire pieces of historical importance. As a collector, the feeling and pride of owning something that belongs to someone important from the fast and linking yourself with one of the significant material of the history of mankind is becoming part of the history itself, and that is of course priceless.

Aside from that, some of the many monetary rewards you could get from owning rare coins are of course royalties and a good example of that is the 1913 P V cents which made an appearance in the famous TV series “Hawaiian Five-O” way back the 80’s. Publicity is another immeasurable benefit you could acquire just by owning such piece. Imagine your name being drag by your own property anywhere on this planet, and that property appearing anywhere in any form of media from print to television to internet---that is one instant fame.

Yet collecting is a dynamic hobby that has to be planned from the beginning if you want to later transform it into solid investment. Remember that there is always a market that dictates the movement of prices or prices per se, and the economic power of a Nation that has a significant connection with the material has a direct impact with its value. Therefore, we may assume that “Collectors first before Collection.”

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