You’ve undoubtedly heard the phrase “Never judge a book by its cover,” right? Well, in the case of coin collecting, the same rule applies. Or put differently, you can’t assess the worth of a coin by its face value. Here’s why:
Face Value vs. Actual Worth
When determining a coin’s monetary worth, there are several factors to consider. These value factors are broken into two main categories: extrinsic and intrinsic. The face value of a coin, which is the denomination stamped or printed on the coin or currency, is an extrinsic assessment of worth.
Take the 1 oz. American Silver Eagle coin, for instance, which right now is flying off the shelves thanks to low silver prices. The coin has a face value of one dollar which is inscribed on the reverse side, along with its weight and purity.
Of course, American Silver Eagles are much more valuable than just a dollar. This is where extrinsic value, or “actual worth,” comes into play.
While a coin’s face value is usually easy enough to figure out (by looking on the front or back of the coin), adding up its actual worth is a bit more complicated. Determining the real value of a coin is based on a dealer’s knowledge of various qualities, including:
- Melt value – What is the base worth of the metal contained in the coin?
- Historic value – Does the coin have any historic significance?
- Aesthetic features – Is the design of the coin appealing and attractive, or shoddy?
- Mint year – Is the coin new or old?
- Grade or condition of the coin – Are there any scratches or scuffs on the coin?
- Scarcity or rarity – How many other coins like it were ever made?
- Collectability – Is it part of a coin series or a one-time mintage?
Why Intrinsic Value is What Ultimately Matters
For paper currency, extrinsic face value is everything. Intrinsically, paper money is worth nothing. The only thing that gives printed money value is the backing of governments, whereas coin made with rare metals like gold and silver contain intrinsic value as well. This is one of the main reasons why investing in precious metal coins is such an important part of long-term wealth protection.
So the lesson to takeaway is: Never judge a book by its cover. And similarly, never judge a precious metal coin by the number written on it.
Check out our new article to learn more about the differences between a coin’s face value and actual worth. You can also browse our site and shop gold and silver coins to add to your investment portfolio or coin collection today.
What’s your favorite gold or silver coin and why?
Let us know in the comments below or on Facebook, Twitter and Google+
