Why Do Some Coins Increase In Value?

A lot of beginners to coin collecting may assume that the older a coins is the more it is worth. In truth, the age of the coin really has no direct affect on its value. Rather than the age of a coin it is its relative rarity and level of demand that determines its value. As with any other commodity the value of a coin boils down to supply and demand.
Generally speaking the older a coin is the more potentially rare it may be. However, mintage numbers of coins through various years, and mintmarks varied widely. That, along with the occurrence of numerous varieties or errors means that it is possible for many older coins to be more common than more recent ones.
As an example, the Indian Head Cent was struck from 1859 to 1885. The two most valuable Indian Head Cents are the 1877, at over $400, and the 1909-S, at over $200. The oldest Indian Head, the 1859, can be obtained for around $10. (Note that prices given here are for coins in VG condition. Better graded coins will bring much higher prices).

1860 "Indian Head" Cent

To give you an idea of how something like the mintmark can impact the value of a coin a VG 1909 Indian Head Cent that was struck at Philadelphia (no mintmark) can be obtained for only a few dollars while the San Francisco strike (1909-S) will cost you more than $400! The reason for this is that there were over 14 million Indian Head Cents struck at the Philadelphia mint while only 309,000 were produced at the San Francisco mint.
When you are deciding which coins to buy always consider their relative rarity and opt for the least common dates and mintmarks you can in your budget. Naturally, the condition of a particular coin has a tremendous impact upon its value. Unless you are collecting coins primarily for their metal content always go for the highest grades you can afford.
To determine the value of any particular coin you should compare a current price guide with what that coin is actually being sold for by coin dealers. If you are in the market to sell a coin keep in mind that its final worth will depend upon what someone is actually willing to pay. Remember that price guides are only guidelines.
"Standing Liberty" Quarter
"Standing Liberty" Quarter

Up until now I have discussed how the supply affects the value of coins. However, it is the actual demand that pushes the prices either up or down. The higher the demand in relation to the supply the more valuable a coin (or any commodity for that matter) will be. Major factors that affect the demand can be the spot value of gold or silver, new collectors entering the ‘arena’. As silver and gold prices rise so does the value of coins containing these metals. As time goes by and the population increases more people will get into coin collecting thereby raising the demand for older coins.
As with any other commodity the value of a coin is in the “eyes of the beholder”. A friend of mine once showed me a Walking Liberty half-dollar he had. It was a common date and was in G to VG condition. I told him that it was worth about $7. He was very disappointed as he had thought that it was worth a lot of money. Ironically he sold the coin to a co-worker later that same day for $25! So, in the end, the true value of a coin depends upon what a buyer is willing to pay.
Written by David Slone for CoinCollectorGuide.com Copyright 2008