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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 rather common. Check out your Red Book, you’ll see what I mean.

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.

Conditional Rarity
For the most part, collectors love pristine coins. (I happen to love worn ones, too, but I know I’m in the minority.) Based on a few factors, the condition of the minting equipment or coin dies, in combination with mint handling or even circulation, very few coins remain in pristine condition. Heck most coins ever made were not in flawless “70” condition.

Different years and different mints produce differing coins. 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 varieties or conditions. Mintage reports weren’t published immediately then, just as they are not now.

It may take time for the realization that (for instance) Denver’s dimes from two years ago are seldom found in grades of 66 or better. As such, they are conditionally more scarce, meaning that Denver dimes grading 67 or 68 will garner significant demand. Perhaps Philly mint dimes of the same year can be found routinely in 68, meaning the only real demand is for examples of 69 or better. On the other hand, Denver’s coins may come more regularly struck Full Torch, whereas Philly’s Dimes are seldom found fully struck.

Population Reports
It takes years of roll hunting by both dealers and collectors to divulge these trends, and even then this is must be discovered through a significant population making it through the rounds of TPG submission.

The result of this phenomena are found 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 grade 68 at the time of the report. Perhaps only one coin in the World grades 68+ (for the moment). The most serious collectors will insist on a 68. The pickiest collector with the right connections and the most money will insist upon and pay for the finest known, the pop 1, that elusive 68+.

Let’s look at a pop report:

sample pop report

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

Now, here’s where pop reports get muddy. Every dealer (or collector) that gets a 66 – which in this example 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 a buyer comfortable paying thousands of dollars more.
This skews population reports. There may not be 321 66s (as shown here). Perhaps there are only 249, but a number of those coins were resubmitted and resubmitted again.
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.

And also, by the way – this is a big reason for CAC. They have their own pop reports which are necessarily better than the TPG pop reports. For now.

Another example of even more scarcity in condition is toning. A collector’s attraction to toning is subjective, so I’ll leave that to you.

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 marriages), and die aging through the coin they create.

And yes, some collectors not only collect by date but also to some extent 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.

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, under 200 known) by numismatic cataloger William Sheldon. For comparison’s sake, all 1793′s together are R1 (over 2000 known), while the chain varieties (S-1 – S-4) taken together are R-2 (over 600 but fewer than 2000 known).

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
Halves: Wily & Bugert
Seated Dollars: Browning
Morgans and Peace: VAM

Modern American:
Cherrypickers Guides

In the same way, varieties’ populations are tracked, and these populations are often broken by condition. There you have a monster Pop Report called a Condition Census.

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.
But you can see the fun of owning a coin of which fewer than 100 others are known to the numismatic community! Forget 1909 S VDB, you can have something fewer than 100 other collectors have!
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 & Conditional Combinations: Real 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.

Pedigree
Another thing to consider is pedigree. While a coin is never guaranteed to be the only coin a certain collector had in their collection – they probably had a few as they upgraded through the years – pedigree certainly can make a coin feel a bit more special. This is especially true if it was the ultimate coin in the collection at the time the collection was broken up and sold off. Many hoard coins are a little overblown, but hey – if that’s what appeals to you, it’s cool by me! Some people can’t understand paying big bucks for a 64 that belonged to Eliasberg when there are plenty of 67s out there. Again, that’s all up to you.

 

So the next time someone tries to sell you a ‘rare coin’, ask him whether it’s “R6 rare” or R8. If he doesn’t know what you’re talking about, there’s an excellent chance he’s not a seller you want to buy from!

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