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A Guide to Collecting Coins

A Guide to Collecting Coins

There are many different approaches to collecting coins whether it be by theme or completing a particular series. There are numerous publications which discuss coin collecting very deeply. This article serves as a brief guide or introduction to collecting coins. 

The two main ways of collecting are by series or by theme. 

Collecting by theme certainly has less restraints and can be as broad as the collector likes. We once handled the collection of an individual who loved elephants and would collect coins depicting these wonderful animals. This collection included ancient Carthagian shekels and Julius Caesar denarii, a wide array of African gold coinage and copper coins of Ceylon (Sri Lanka) and India.  Animals in general, flowers and gods and goddesses are all popular themes and with no definitive amount of coins to determine a collections completeness, that determination is entirely down to the collector. 

Collecting a particular series is by far the most common way of collecting coins and with a finite amount of coins there certainly is an element of “hunting” involved which can be both a bane and pleasure for many collectors. Examples of collecting by series include by denomination such as sovereigns, dollars, pennies etc, or collecting the coins of a particular monarch or regime or period from history. By its nature, series collecting often takes a considerable amount of time, this is due to some coins being considerably rare and not often encountered and a collection cannot be considered complete until it has these coins. Series collecting can be less onerous when one takes the approach of collecting as many coins as possible. 

Which coins are popular?

In the UK, sovereigns, gold and gold proof coins represent the some most popular collectable coins. These are popular coins for a number of reasons. Sovereigns have a very rich history going back to 1817 and the Royal Mint issues at least one sovereign per year which is great for collecting coins by date. Gold coins are popular as they are a good store of wealth, especially as banks look to move to negative interest rates. In the UK gold is VAT free and these coins have nominal values and have a status as legal tender means that they are exempt from capital gains tax which make these coins more attractive to investors than other gold bullion such as bars or ingots. Proof refers to the highest standard of coin manufacture. The blank (a coin before it is struck) is specially treated and polished and the dies (heavy stamps which impart the design onto a coin) are finished by hand and selectively sand blasted. These additional steps lead to coins which have highly reflective fields with frosty design elements such as lettering and busts. Proof coins are produced in cupro-nickel, nickel-brass as well as silver and gold. It is their superior beauty and eye appeal and the limited quantities produced that make these popular amongst collectors. 

What is rarity? 

Rarity refers to the availability of a particular coin. A coin's rarity is usually determined by how many are produced or minted. Demand will also affect availability, a coin can be produced in huge quantities but if the demand is sufficiently high these seldom be seen for sale, an example of this being the 1817 sovereign, a type coveted by collectors, but had a mintage of 3,235,239, so by no means a small production. However in the years since many have since been melted down and its status a key sovereign date means these will be kept in collections for many years and their consistent performance has led to many hoarding this issue. On the opposite side, you can have a coin which is produced in very limited quantities but if there is not sufficient demand these will be frequently available. Conditional rarity is another thing collectors should consider. Take the sovereigns of Edward VII for example, these coins are quite readily available in circulated condition however NGC’s census notes only 3 examples across all dates in MS65, that being the highest grade achieved by a coin of Edward VII. 

Is condition important?

Any book or article on collecting or investing in coins will always say to buy the best example available within your budget. Well-heeled collectors will always pay premiums for coins which are outstanding for their type and this is just one of the reasons why a superb example will outperform a mediocre example. There is often a juggle between rarity and condition, for example a silver decadrachm of Alexander the Great recently sold for $75,000, this coin was generously described as Very Fine and approximately 50% of the design was missing, however there are only 10 known examples and only 5 coins outside of museums. Other coins of Alexander the Great such as silver drachms can be purchased in near mint state for around £150.00. Condition is certainly more important with more recent and modern coinage, especially proof coins where one finger print can devalue a coin to essentially bullion price. The condition of a coin can also determine its rarity, something known as conditional rarity. Edward VII as mentioned above, sovereigns throughout his reign are relatively common and if we look at a 1906 sovereign, NGC’s census tells us they have graded 120 of these coins, the highest grade being MS64 of which there are only 2 coins. In grade MS61 and MS62 there are 21 and 36 coins respectively. The absence of high grade mint state coins means there will be a premium for a coin graded MS64 as opposed to MS62 which will likely not have any premium attached. Where coins are quite readily available, collectors will opt for the better available example. A benefit of collecting today is the availability of graded coins. 

What are graded coins 

Graded coins refers to coins graded by a third-party grading company such as NGC or PCGS. These coins are guaranteed to be not only genuine but also have a grade assigned to them by a professional coin grader who will assess a coin for wear, production marks and post-production marks. Coins are then encapsulated in an inert, tamper evident holder with the coins details annotated for posterity. The advent of grading coins has made it possible for even the uninitiated to collect rare and valuable coins as there can be no doubts about a coins authenticity and condition.

Bath Spa Capital offers a range of graded gold and gold proof coinage. As mentioned above, these coins are incredibly popular due being VAT free and capital gains tax exempt. They are also encapsulated in holders from the world’s leading third-party grading companies so you can be confident that your coins are not only genuine but also have an accurate and guaranteed assessment of their condition by an industry leading professional. Click HERE to view our extensive offering of gold coinage.

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