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Coin Rarity

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You hear the term ‘rare coin’ tossed around a lot. But what really is a rare coin? A wheat penny found in pocket change? Maybe a pre-1964 quarter made of 90% silver, or a Buffalo Nickel…?

In terms of pocket change, these coins are rare. In terms of numismatics, they are not.

The US Mint has been producing coins annually in the millions for nearly its entire existence. For the last hundred years, coins have been produced even at the Branch Mints (currently San Francisco, Denver, and most recently West Point) in the tens or even hundreds of millions. In terms of this scale, coins only available in the millions or hundreds of thousands seem rare.

But they are not. To the experienced numismatist, a coin minted in the hundreds of thousands is ‘somewhat scarce’.

A truly rare coin is one of which there are only about a dozen or fewer.

With coins minted in the thousands or millions, the only way to discern numismatic scarcity or real rarity is through Condition or Variety.

Yes, there are some coins that from certain years and depending upon timely demand, their population was largely melted down. But for the most part, collectors love pristine coins, and from the condition of the minting equipment or coin dies, in combination with circulation or handling, very few of a given year and mint of a coin remain in pristine condition.

Conditional Rarity
Different years and different mints produce differing results of the same coin. Just as you most likely don’t notice the more common coins in your pocket change, collectors of days passed rarely notice pristine examples of relatively common coins until a few years had passed revealing somewhat scarcer conditions or varieties. It may take time for the realization to surface that Denver’s dimes from two years ago are seldom found in grades of 66 or better, meaning that dimes grading 67 or 68 will garner significant demand. Pedrhaps Philly mint dimes of the same year can be found routinely in 69, meaning the only real demand is for 69+ examples.

It takes years of dealers and collectors roll hunting and submitting to allow a common pool to divulge trends.

These trends are reported in population reports. Many collectors insist on having the finest available examples in their collection. They search out the reports made by TPGs, which may for example show hundreds of certain types of coins exist grading 66, but may find that only 5 (at the time of the report) grade 68. Perhaps only one coin in the World grades 68+ (for the moment), so the most serious collector will insist on a 68. The most picky collector will insist upon and pay for the finest known, the pop 1, that elusive 68+.

sample pop report

In the above population report, the dark grey lines are for grade. The first light grey line is an estimated cost for a coin in that grade and the second light grey line is the estimated population of coins in that grade, describing conditional rarity.

Here’s where pop reports get muddy. Every collector that owns a 66, which have a value of under $1000 due to their relative scarcity, will most likely crack out their 66 and resubmit if they believe the coin could grade 68 and thus be worth significantly more to the discerning collector. And any of the five 68 owners that believe they have an exceptionally beautiful 68+, so they send it in, hoping for that 68+, making the collector comfortable with paying thousands of dollars.

This can also skew population reports reflecting the number of coins in the collectors’ pool of certain grades. Collectors and dealers re-submitting their pieces in hopes of getting a TPG to come to a different, better conclusion, create sometimes create new entries in pop reports. So at times, there may be two coins grading 68+ in the world, but the pop report reflects those two coins three times. There may be five 68s, yet the pop reports tell of nine coins grading 68. There may be 256 coins grading 67, yet the pop reports reflect 413. And there are certain coins shopped to all of the different TPGs, skewing all of the pop reports.

Obviously, the TPGs do their best to come to the most reliable conclusion they can. But collectors and dealers don’t make it easy for them.

In this example situation, condition creates rarity. Any time a new coin of the exact same type grading 68 or 68+ is discovered, it impacts the value of the pool. This is Conditional Rarity.

Varietal Rarity
The other kind of rarity is varietal rarity.

For many ‘classic’ US coin collectors, there is not only date and mint mark, but also die state and die variety to consider when collecting.

Every coin die is unique. Sometimes, especially in older coins it is possible to determine die varieties, die pairings (multiple obverse and reverse die matings), and die aging through the product they create.

And yes, some collectors not only collect by date but also to some extent all of these other varieties.

New varieties of even older series are being discovered by the new blood in the collecting world. In late 2010, a new Morgan variety (called a VAM) was discovered for the first time in many years. In 2012, a new Large Copper variety was re-discovered by an avid EACer after a cataloger a hundred years ago thought the variety was incorrectly noted.

S-1

Though not in the best condition, this 1793 Chain cent is known to be scarce by its variety, the “AMERI.” abbreviation. In 1793 over 11 varieties of the US Cent were minted, but this is believed to be the first and is designated S-1 (an R-4 variety) by numismatic cataloger William Sheldon. For comparison’s sake, all 1793′s together are R1, while the chain varieties (S-1 – S-4) taken together are R-2.

Some Catalogued Varieties:
Colonials:
Fugio: Newman
New Jersey: Maris
Connecticut: Miller
Boston Tree Coinage: Noe

Early American:
Half Cents: Cohen
Large Cents: Sheldon
Half Dimes: Logan/McCloskey
Dimes: Reich
Quarters: Browning
Halves: Overton
Dollars: Bolender or Bowers/Borckardt
Gold: Bass/Dannreuther

Classic American:
Middle and Late Large Cents: Newcomb
Seated Dollars: Browning
Morgans and Peace: VAM

Modern American:
Cherrypickers Guides

In the same way, varietys’ populations are tracked, and these populations are known to collectors using a rarity scale.

Rarity Scales(s)
Perhaps the most common rarity scale is Sheldon’s, though it has been tweaked over the years.

Here is the one I use:
R1: Over 2000 estimated (common)
R2: 601 – 2000 estimated (somewhat common)
R3: 201 – 600 estimated (somewhat scarce)
R4: 76 – 200 estimated (scarce)
R5: 31 – 75 estimated (quite scarce)
R6: 13 – 30 estimated (somewhat rare)
R7: 4 – 12 estimated (rare)
R8: 2 – 3 estimated (nearly unique)
R9: 1 estimated (unique)

As you can see, the scale refers to estimations. It’s impossible to have a firm grasp. At any time, another coin could surface. Coin Rarity is never an exact science.

This rarity scale is minor tweak of Jack Robinson’s, which is an adjustment of Sheldon’s. Pluses designate more rarity (for example, R4+ means on the end of the scale closer to 76) while minuses designate less (R3- means closer to 600 estimated than 200).

There are other rarity scales that work well. Numismatic brain Q. David Bowers created his URS which is very logical but hasn’t been universally adopted by collectors yet, though it’s growing in popularity. You can read more about rarity scales on Wikipedia.

Varietal and Conditional Rarity
All this means, of course, if you have an ultra-scarce or rare variety in an ultra-scarce or rare condition, you have a rare coin.

So the next time a dealer tries to sell you a ‘rare coin’, ask him if its “R8 rare” or R9. If he doesn’t know what you’re talking about, there’s an excellent chance he doesn’t know what he’s talking about. You may wish to extricate yourself from his dealings quickly!

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updated 7/21/14