Informative Section
FAQ
WHAT IS “NUMISMATICS“
A simple definition of numismatics is the collection and study of coins, paper money, tokens and medals, and indeed these are the most widely collected and studied numismatic materials. Other items representing current or past financial assets or liabilities are also included under the numismatic umbrella. These include other objects used as money, as well as stock certificates, checks and notes of financial obligations.
Numismatic items are collected and studied for many reasons, including their historical significance and artistic merits, as well as their role in commerce. When significant demand exists, they may obtain numismatic value beyond their current monetary value (if any).
Coin collecting is perhaps the most popular part of the hobby and is sometimes used to refer to the entire numismatic spectrum. There are a number of specialisation in coins and other branches of numismatics. With such breadth of material, numismatics offers virtually inexhaustible opportunities for exploration, learning and enjoyment.
WHAT’S THE BEST WAY TO GET STARTED
Buy the book before you buy the coin is frequently offered and sage advice.
Coins can be rewarding for the collector who makes the effort to study the hobby and the market. Someone who does not make that effort is more likely to waste money on over graded, problem or counterfeit coins. Before spending a lot of money on coins, invest in your knowledge of the hobby. This FAQ is a start, but for your own protection you should have at least one reference book covering your area(s) of interest. Reading a few issues of periodicals is another good idea.
Collecting coins from circulation is a great place to start. The risk is negligible (you can always spend the coins), and you can learn a lot examining your coins carefully and seeing what your reference book says about them.
HOW TO HANDLE COINS
In general, collectable coins should be handled carefully to avoid the possibility of causing wear or introducing substances that may lead to spots or color changes. Many holders will provide adequate protection for ordinary handling. Before removing a coin from its holder, consider whether it’s really necessary.
Never touch an un-circulated or Proof coin anywhere but the edge. Fingerprints alone may reduce the coin’s grade and consequently its value. Handling on the edge only is mandatory when examining another person’s coins, regardless of grade. Get in the habit of picking up collector coins by their edges, and it will soon become routine.
Avoid holding numismatic items in front of your mouth. Small particles of moisture may eventually cause spots.
When setting a coin down outside of a holder is necessary, place it on a clean, soft surface. A velvet pad is an ideal surface and essential for regular handling of valuable material. A clean soft cloth or clean piece of blank paper may be sufficient for less valuable items. Do not drag coins across any surfaces.
If you will be handling very valuable coins or lots of uncirculated and/or higher grade circulated coins, wearing clean white cloth or surgical gloves and a mask may be advisable.
WHAT COINS DO PEOPLE COLLECT
What to collect is entirely up to the collector. It will normally be a specialization that holds some interest for the collector and is within his or her budget.
Among the most popular types of collections are world coins (coins from several countries), ancient coins, and coins of a particular country. Some specialization within these categories is ordinarily helpful. If collecting from a particular country, you can work on one or more series, a type set, commemoratives, errors, die varieties, paper money, etc.
Some enjoy collecting coins that are different because of a variation or a mistake in the minting process. Die varieties include coins with doubled letters or features, over dates, re-punched mint-marks, and other variations traceable to differences in dies used to strike coins. A striking error occurs when something goes wrong in the coining press, producing an unusual coins
HOW SHOULD I STORE MY COINS
Environment
A relatively constant, moderate temperature and low humidity are preferable for long term storage of numismatic collectibles. Placing packets of silica gel in coin storage areas helps control atmospheric moisture.
Holders
Several types of “containers” for coins are available. Most anything will do for coins with little numismatic value, while nearly airtight holders made of inert materials are a good idea for valuable coins.
Bags, jars and boxes are adequate for pocket change and circulated bullion coins.
Paper envelopes of various sizes are sometimes used for one or more coins. Be sure to use envelopes made explicitly for holding coins, or your coins may change color (tone) over time due to reaction with sulfur or other chemicals present in the paper.
Plastic flips are available in various materials. “Soft” flips are made from polyvinyl chloride (PVC) and contain a plasticizer that decomposes over time with disastrous results for coins. They are therefore not suitable for long term storage. Mylar and acetate flips do not contain the plasticizer that makes PVC flips soft. However, they can be brittle and may scratch coins that are not inserted and removed carefully. While not airtight, they are reasonable choices for moderate value coins that will be “left alone” for multiple years but less so for coins to be shipped or that will be removed and reinserted.
Mylar-lined cardboard, often called “2x2s” but also available in other sizes, are similar to plastic flips. A coin is placed between the two halves, which are then stapled together (some brands contain an adhesive).
Hard plastic holders are preferable for more valuable coins. They are not known to contain any materials that harm coins and offer good protection against scratches and other physical damage. They are available for individual and small sets of coins.
Slabs are sonically sealed hard plastic holders for individual coins. They offer good (though still not perfect) protection. Because of the expense of having a coin slabbed, they are generally suitable only for more valuable coins.
Tubes are plastic containers designed to hold a number of the same size coins. They are fine for bulk storage of circulated coins and can be used for higher grade coins, provided the coins do not move. A disadvantage is that the coins cannot be viewed without being removed from the tube.
Coin folders and maps are cardboard or paper products with holes (often but not always labelled) into which coins are pushed. Only one side of the coin can then be viewed. Over several years coins may tone due to reaction with sulfur or other chemicals present, and they are therefore not a good choice for long term storage of higher grade coins.
Coin albums are book-like products that allow both sides of each coin to be easily viewed with the use of plastic covers that can be slid out for coin insertion and removal. When properly used, albums offer protection from wear and handling.
HOW CAN I PROTECT MY COLLECTION FROM LOSS BY FIRE OR THEFT
A number of precautions can be taken to minimize the possibility of loss by fire or theft. Which ones make sense depend on the value of the collection and the relative risks. Note that most homeowner insurance policies specifically exclude coins and other numismatic items from coverage. A rider can be obtained for an additional premium, or a separate policy can be obtained. ANA offers optional insurance for collections to its members. Maintain records about your collection and store a copy separately from the coins.
Most safes providing protection from fires do not provide very good protection from theft, and vice versa.
A fire can damage or destroy numismatic collectibles. Even if the flames don’t touch your coins, the heat may be sufficient to melt them. One option is to keep your collection in a home safe providing protection from fires. Another option is to keep the collection (or at least the most valuable parts) in a bank safe deposit box.
Top priority for preventing theft should be measures to prevent or dissuade a burglar from entering your home, such as lighting and locks. More extensive tips are available from law enforcement agencies. Consider storing your collection (or at least the most valuable parts) in a safe deposit box.
Be discrete about being a coin collector. Avoid telling anyone you don’t know well and trust, and when the subject does come up, be sure to mention that you keep the coins in a safe deposit box or the collection isn’t worth much (even if not strictly true). The more people you tell about your collection, the more likely that information will eventually reach the wrong person. If you regularly receive coins and/or promotional materials in the mail, consider getting a post office box and having all numismatically related mail sent there.
RISKS OF INVESTING IN COINS
All investments entail risks. While coin collecting is a rewarding hobby and is sometimes financially profitable, anyone purchasing coins with the expectation that they may be a good investment should understand and be prepared for the risks inherent in such investments.
·Counterfeit coins are not uncommon, and some are deceptively realistic. Common coins are sometimes altered to appear to be valuable collector coins, e.g. by adding or removing a mintmark or by altering a date. Coins certified by one of the major grading and authentication services offer a higher degree of certainty for authenticity, but in recent years counterfeit slabs (containing fake, altered or lower grade coins in what appear to be major grading service holders) have been introduced. Because manufacturing of modern counterfeit coins and fake slabs has become widespread in China, never purchase coins from sellers located there or that are identified as having been purchased in or from China. In the absence of reliable independent authentication, the purchaser should be aware of the diagnostics of a particular genuine coin and the characteristics of known counterfeits.
·Coin values often vary markedly with grades. A buyer should know if the coin is reasonably graded or has any problems, such as cleaning, to determine if a seller’s price is fair. The risk of overgraded and problem coins is reduced with certified coins and bullion coins (see topics below). However, the grade assigned by the certification service is only an opinion, and it is not uncommon to find certified coins which, in the opinions of other experts, are overgraded.
Also to be considered are buy/sell spreads and liquidity. Higher value rare coins are often sold at auction. It may take several weeks or months from contacting the auctioneer to receiving payment (less auctioneer’s commission). While coins can be purchased from or sold to a dealer much faster, the difference between dealer buy and sell prices can be substantially higher than the commissions charged by brokers for other types of investments. Therefore, larger price appreciation is generally required before coins can be sold at a profit.
·Yet another risk is the possibility of material loss, such as by theft or fire. Storage in a bank vault or home safe may reduce (but not eliminate) this risk, but the added expense of such storage again increases the appreciation necessary before the coin(s) can be sold at a profit.
Because the risks of investing in coins are higher than for many other types of investments, they are not suitable at all for many investors. Even for those investors willing to accept higher risks in exchange for possibly greater returns, at most only a modest fraction of the portfolio (perhaps 5 to 15%) would be recommended by many investment advisors.