Defining a Rare Coin
The words rare, scarce, and desirable are probably the most abused terms not only in coin collecting, but within antiques and collectibles in general. How can you truly define these rather intangible terms? Each of these terms is relative. Each is a perception. When each of these terms is used in advertising, it is meant to project a sense of urgency to the potential buyer. The message each of these terms is meant to send is that you can't put off that purchase until tomorrow, because either the coin will no longer be available, or it will have increased in value. These are psychological terms. Be watchful for when each of them is overused or abused. And understand that two things that help to make a coin rare are publicity and notoriety.
It might surprise the average collector to learn that there are many coins that are known from only a few examples, either because of low mintages or because of a low survival rate. But why does a silver coin dated 1492 from Brabant in the Low Countries sell for perhaps $100 to $200, while a U.S. Liberty Head or “V” nickel sell for millions of dollars? Both are “rare.”
Does the value of a coin increase with age?No, age has nothing to do with the value of a coin, bank note, antique, or of anything else. If this were true there would be a lot more valuable old things then there actually are.
One coin will become valuable while another will not simply because of the attention drawn to it. This is an emotional rather than a rational response, but because coin collecting is a hobby, all collectible coin purchases are based on spontaneity rather than on logic. If logic was used, and age was truly a factor in the value of a coin, the Brabant coin should logically be more valuable than the U.S. Liberty Head nickel.
As an interesting note, the 1913 Liberty Head nickels were not an official issue of the U.S. Mint. It is generally believed that they were made after hours by a mint employee using unused coinage dies and mint equipment. The only nickels officially made in 1913 are those with an Indian and buffalo on them. All five of the 1913 Liberty Head nickels were clandestinely sold to a local coin dealer and were disbursed from there. Today they are sold for very high prices despite the fact technically the U.S. Secret Service could seize them as being illegal to own. No such attempt has ever been made because there is too much publicity surrounding these famous coins.
During the 1930s, Fort Worth, Texas, coin dealer B. Max Mehl, realizing the whereabouts of all five examples of this nickel were known, advertised nationwide that he would pay a very high price for any the public could offer him. The ad worked. It drew attention both to coins as a collectible, and to Mehl as a merchant.
While the 1913 Liberty Head nickels continue to make headlines every time one of them sells, no one has ever heard of the 1492 coins of Brabant. The publicity, or lack of it, surrounding the two coins makes all the difference in their perceived value. Realistically neither will ever be spent as money. Under such a circumstance the amount someone is willing to pay for either of them is truly based on desire, not on logic.
The notoriety surrounding the 1913 Liberty Head nickels also triggers excitement. The very idea the coins were not legally made, yet the government has never made any effort to confiscate them, adds almost folklore status to the coins, as well as to the desire of those collectors who have deep pockets to covet owning them. Yet the Brabant coins are almost as rare, and they are definitely less often encountered in collector circles! But the Brabant coins are far from notorious.
The bottom line is that you can have the best coin in the world, but if little or no interest is drawn to that coin no knowledgeable collector will pay a premium for it.
In collectible terminology a “sleeper” is an item that is known from only a modest number of examples, yet despite this scarcity the item has not shown any value appreciation. There is little difference between a coin that is considered by some people to be a sleeper and a stock an investor perceives as being undervalued. This perception could be correct, or it could be wrong. There will likely be logic applied to justify that the item, be it an investment stock or a collectible, is truly undervalued. But logic does not drive values. Emotion does. Sleepers should be approached, especially when considering purchasing collectible coins, with caution. It could be an opportunity, but is it an opportunity for you as the purchaser, or for the person selling it to unload a dinosaur?
Supply and demand are the basic fundamentals of economics. Together they determine prices for virtually everything. Supply is a fact. There is simply a specific population of every item. If this is a fixed supply, it means the population will not increase or decrease. If the item is consumable, potentially the supply will eventually diminish. If the supply is able to be replenished then it is not a fixed supply either. Regarding older coins or bank notes, an identifiable fixed supply was produced. If they were produced for circulation, logically some of them eventually wore out and are gone. The surviving supply or population can be further broken down by the condition in which each coin has survived. If only a limited number of the surviving population is in a very high grade, some people may perceive these better examples to be more desirable grade rarities.
Tastes in collectibles change continuously, just as the value of real estate changes based on the community that surrounds it. A coin is perceived as a sleeper when statistics indicate that there are fewer of this coin (in a specific condition) available than the number of collectors who will want to purchase it. Should this statistic later be proved the price will rise.
Publicity is often the key. What is rare today will always be rare, and what is common today will more than likely always remain common. Unless someone draws attention to what is perceived to be the scarce item, and people not only pay attention but also act on that publicity, even a coin known from a single example may not necessarily increase in value.
This is particularly true in what people perceive as grade rarity coins, coins that are difficult to find in especially high conditions. Will anyone at some later date care enough to pay an additional premium for the right to own such a coin? If there is a solid collector base collecting this particular series then perhaps this will happen. If it is an area of collecting that is only mediocre in popularity the awakening of such a sleeper becomes less likely regardless of any statistics to give logic to its greater desirability.