It's a Crapshoot
Rare coin prices are like rolling dice. Here's how to buy and sell with confidence.
I have been running the CoinQuest.com web site since 2009. One thing I’ve learned for sue: Coin Pricing is a Crapshoot.
At the CoinQuest web site, people send in pictures of their coins and, without fail, ask the familiar question “What’s it worth?” I do research to identify the coin, assess its authenticity (counterfeits are prevalent today), and gather auction results to estimate value. I do not consult catalogs or price guides to estimate value. Why? Because coin pricing is a crapshoot, that’s why!
The graphic above shows the beloved Red Book, A Guide Book of United States Coins by R. S. Yeoman. Americans use this book as a reliable reference for United States coins. Collectors open it almost daily and have done so for decades. Some collectors even collect Red Books. In fact, the first Red Book in my collection dates back to 1958!
Case Study: 1918S Walker - About one-half of the Red Book is filled with price guides. These are tables with values of coins broken out by date and condition. How much is a 1918S Walking Liberty half dollar worth if it is in VG-8 condition? The Red Book in the picture says $19 US dollars. You can read it in the table. But is that true? Do 1918S Walkers sell for $19 when n VG-8 condition? In a word, no.
But wait. The Red Book in the picture is from 2017, and that’s too old. Instead, we go online and look at the PCGS Price Guide. Ah. Walkers have gone up. Today’s PCGS guide says $35 for a 1918S in VG-8. So, we should be able to buy that coin for $35. That sounds okay, but is $35 what they really cost?
There is a massive collector following on eBay, so auction “sold” prices accurately reflect true market value. A search for 1918S Walking Liberty half dollars returns 633 coins that have been sold at auction over the past 3 months. Just about all of them are very, very worn. But some qualify for VG-8 condition.
Aside: On eBay, you must use ‘advanced search” to find coins that have actually sold. Pricing information is only valid for “sold” coins. Pricing of “listed” coins does not count.
The pretty Walker in our blue photo looks like VG-8 to me. There are no problems like scratches, stains, spots, nicks, or gouges, and the eye appeal is very pleasing. This coin sold for $19.95 on eBay, an astonishing bargain given the $35 price tag of the PCGS guide. The buyer must have been very lucky to get the coin at that low price!
To find out if the buyer was lucky or not, I scanned the 633 coins on eBay and wrote down the “sold” prices for coins that look like VG-8 to me. Most of the Walkers on eBay are heavily worn, grading G-4, AG-3, or lower. They are much more worn than the coin in the blue picture. Of the 633 walkers total, there were only 38 coins that came close to VG-8. Of these 38 coins, prices were as low as $10 and as high as $44.
With prices ranging from $10 to $44 for essentially the same coin, you can see why I call it a “crapshoot.” The prices are all over the place! Next, we’ll outline the reasons behind these wild variations, and then describe the proper way to use price guides.
The Four Dimensions of Crapshootness
Most people think that "coin price guides" are really "coin price lists" which collectors use to buy coins from coin dealers. This is not true.
Further, most people also think that a coin's grade, such as G-4, VG-8, XF-40, and MS-63, determines its desirability. That, also, is not true.
Here are four things to remember:
1. All published price guides show inflated values. Coin sellers are the ones who publish coin price guides, and inflated prices encourage potential customers to think coins are more valuable than they really are. The publishers are not crooks. In fact, published price guides accurately reflect actual market conditions. But only a few publishers tell people how to interpret their guides when buying and selling collectible coins. Collectors gain knowledge from experience, and knowledgeable collectors usually buy coins significantly below the price guides.
2. Price guides show catalog values, not actual buy and sell values. Collectors buy coins at the ask price, which is (very) approximately three-quarters of catalog. Further, coin dealers buy coins from collectors at the bid price, which is about one-half catalog.
When someone poses the question "What's it worth?" they usually mean "What can I sell it for?" The answer is the bid price, not the catalog price, and the bid price is much lower than the catalog price.
3. The numismatic grading scale starts at the bottom with Poor-1 (PO-1) and ascends to the top with Mint State-70 (MS-70). This scale is woefully inadequate for describing a coin's desirability and collector demand. There are at least 5 major evaluation criteria that enter into coin desirability: wear, problems, luster, strike, and eye appeal, and many other minor criteria. Summarizing all these qualities in a single number is foolish, but we do it anyway. Diamonds, for instance, use four numbers to describe desirability: carats, cut, color, and clarity. But with coins, only one number is allowed!
Numismatists have had plenty of opportunity to develop more useful grading scales. Except in a few specific instances (e.g., Early American Coppers), we are stuck with Poor-1 through Mint State-70. This scale was developed by a man named Sheldon in 1949. It has been tweaked from time to time, but still remains essentially unchanged over the past three-quarters of a century.
4. The numeric values used in the numismatic grading scale imply precision and accuracy, but the scale is neither precise nor accurate. There are certainly cases when in-between grades are useful, especially in the grossly non-linear portions of the scale between F-12 and XF-40, but it is ludicrous to think that all collectors would consistently agree, for instance, about the differences between VF-20, VF-25, VF-30, and VF-35.
As a case in point, Marko wrote to us and asked about pricing of his China Empire silver dollar known as “Dragon and Clouds.” According to Marko, he expected his About Uncirculated (AU) specimen to hit PCGS’s $12000 level.
In response to Marko’s request, I consulted the CoinArchivesPro database (subscription required) and found three China Empire coins with wildly different auction prices. The first is PCGS AU-55 which sold at auction to a collector for $8750. The second is NGC AU details with chop marks which sold for $2447. The third is not slabbed and not graded which sold for $13865.
In summary, coin pricing is a crapshoot. Only through years of experience buying and selling coins can one become comfortable with this situation.
How to Use the Price Guides
First, realize that coin pricing is a crapshoot. Therefore:
ALWAYS buy a coin because you like it and want to add it to your collection.
NEVER buy a coin because you think it is a bargain; it probably isn’t.
ALWAYS know the catalog value of any coin you want to sell
Second, use up-to-date price guides. Coin prices change slowly but, sometimes, prices of silver and gold move quickly and affect the value of rare coins.
Third, understand that price guides are valid only for coins without damage. If a coin is damaged, the price guides do not apply. Damaged coins are worth far less than problem-free coins.
Fourth, understand that price guides do not apply to cleaned coins. Cleaned coins are worth about one-tenth (or less) the value of uncleaned coins.
Fifth, proceed thoughtfully when using the following rules of thumb:
Retail “ask” price — what collectors usually pay for coins they buy from dealers — is approximately three-quarters of catalog value
Wholesale “bid” price — what dealers usually offer when buying coins from collectors — is approximately one-half of catalog value
