Low Mintage Not Necessarily High Value|
October 15, 2013
Experienced collectors know that there is a multitude of factors that affect the supply or demand for any coin or piece of paper money, which ultimately determine the value.
Several factors are important such as any intrinsic metal value, the country and year of issue, the denomination, mintmark, state of preservation, historic significance, design and so forth. Some collectors follow mintage figures as being one of the important factors, while others look at surviving populations.
For example, the circulation strike U.S. 2009-W $10 Sarah Polk First Spouse coin may have more than four times the gold content (0.5000 troy ounce versus .1209 troy ounce) and a lower mintage (1,893 versus 6,749) than the U.S. 1915-S Panama-Pacific Exposition $2.50 commemorative. But, the Pan-Pac quarter eagle is worth much more in matching grades because some of the earlier issue entered circulation or were handled less carefully, or were melted by the U.S. government in the 1930s, than the latter coins, almost all of which have survived and exist in near perfect condition.
One popular collecting theme is to look for low mintage world coins that can be acquired for close to intrinsic or face value. The idea is that the downside risk is minimal, while there may be potential for higher premiums in the future.
That has certainly happened with the lower mintage Chinese coins of the past three decades. When many of these coins were issued, the collector market in China was much smaller than it is today in large part because Chinese citizens were not as prosperous as they are today. Instead, these coins were almost all exported, especially to the United States. In fact, the idea for the China Panda coins was conceived by a coin dealer in New York City, not by someone in China.
Today, wholesalers are aggressively seeking earlier issues to ship back to China. Some of the low mintage Chinese rarities from the past 30 years are selling for more than 10 times their issue price.
Another factor to consider is the potential size of a collector market. There are many more people who can afford silver coins priced relatively close to metal value than for gold or platinum coins. So, a classic U.S. silver coin with a mintage of 10,000 pieces could be rare, while a gold coin from the era might need to have a mintage under 5,000 to earn comparable respect. The modern Platinum Eagle coins issued by the U.S. Mint have an even narrower collector base, so mintages of even 5,000 coins get little appreciation as a low mintage coin.
Low mintage coins from the United States, Australia, and China have active collector bases nowadays. However, let me share with you a story to demonstrate that low mintages are not necessarily all that they are cracked up to be.
My company has marketed a number of “deals” over the years. As a result, we periodically are contacted about our potential interest in various hoards. About 20-25 years ago, we were approached by an individual collector who owned 32 specimens of one of the Papua New Guinea 100 kina gold coins struck in the late 1970s in matte condition. The entire mintage was only 100 coins struck in this fashion. Talk about rarity.
However, when we researched the coin, we noted that there was not a strong collector market for coins from this country, that there were also uncirculated and proof versions of the same design and denomination that were struck in larger quantities, and that there was nothing particularly appealing about the design or historic significance of the issue. My company offered the owner 99.5 percent of the intrinsic metal value of the coins to purchase the lot. The owner did tell us that our offer was the highest he had received thus far, but he just could not bring himself to unload the coins for less than the value of the gold content.
We did not hear from that individual again and never noticed any offering by another company of these coins. Perhaps he held onto them and enjoyed the benefit of much higher gold prices today.
Obviously, an American or Chinese coin of comparably low mintage would have enormous collector appeal and trade for at least several times intrinsic value.
So, for the newer collectors who may read this column, keep in mind that there are many more factors to consider in judging the potential appreciation of a low mintage coin that can be acquired at what appears to be a bargain price.
Patrick A. Heller was the American Numismatic Association 2012 Harry Forman Numismatic Dealer of the Year Award winner. He owns Liberty Coin Service in Lansing, Mich., and writes “Liberty’s Outlook,” a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at www.libertycoinservice.com. Other commentaries are available at “Coin Week." He also writes a bi-monthly column on collectibles for The Greater Lansing Business Monthly. His radio show “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 a.m. Wednesday and Friday mornings on 1320-AM WILS in Lansing.
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