Getting started in numismatics

Young or old, affluent or not, all sorts of people find coin collecting an accessible hobby. Many famous collectors started as children or young adults, and this is also the kind of hobby and vocation that gets passed to generations within families and shared with friends. Because studying numismatics also involves learning about history, politics, art and much more, this hobby has educational value. Of course, coin collectors also find this hobby exciting and sometimes, profitable. The first step for novice coin collectors usually includes learning the language of coin collecting. Special terms describe a coin's condition, type and appearance. Mastery of basic terms opens the door to gaining more knowledge.


collectionStart Your Collection

Learning coin terminology and acquiring basic collecting knowledge are important first steps for those entering the numismatic hobby.




historyCoin History

From the U.S. Mint’s first facilities, to the discovery of the Saddle Ridge Hoard, read about the historical places, people and events that have shaped numismatics.




metalsPrecious Metals

Bullion investing and coin collecting go hand in hand. Learn all about the basics of investing and the many different bullion coins available.




coinsKnow Your U.S. Coins

What’s so special about the Morgan dollar? How many different types of Lincoln cents have there been? Get familiar with all U.S. coins, past and present.



Making coins come alive

The very first American colonists had little need for coins in the wilderness. They bartered with trade goods, Native American wampumand tobacco. As civilization grew, the British did not always give the Americans permission to mint their own coins, but the colonists found alternative sources of coins and on occasion, struck coins without royal authority. For example, the Massachusetts Bay Colony set up its own mint in Boston in 1652 during a period when England lacked a king and continued striking 1652-dated silver coins for decades. Thus, early examples of U.S. Colonial coins were born. In April of 1792, the U.S. Mint was established in Philadelphia, the nation's capital at the time.

Numismatics, the studying of coins, and the collecting of coins both stand apart from investing in coins for their bullion value. Still, the bullion value of most collectible coins still needs to get considered. Even today, the U.S. Mint and mints of other nations’ produce bullion coins that are different from regular coins intended for currency. Through much of history, coins derived most of their value from their metal content. While people used coins as currency for thousands of years, the practice might have been closer to trading small bits of copper, silver, gold and other precious metals. However, as gold and silver rose in value, the intrinsic worth of the precious metals in the coins began to exceed their face value. In the U.S., for example, the replacement of 90 percent silver coins with base metal coins began in 1965.

Learning about U.S. coins means learning about the history of the country. Very often, decisions about a coin's content, value and design were made because of political, economic or social events of the time that they were minted. In some cases, political figures or mint executives even made decisions because of favoritism, nepotism or personal competitions — and learning these details makes old coins come alive.


Two-tier gold value system starts in 1968: Precious metals basics

Required reading for this post: 

In the five months preceding March 1968, speculation absorbed nearly $3 billion in gold, almost all of which was lost by the International Monetary Fund gold pool countries, primarily the United States. Unwilling to suffer such losses in the future, the gold pool members instituted the two-tier system.

The system, outlined in a Washington meeting of the gold pool nations on March 16 and 17, 1968, set up new guidelines governing the future of gold. On one level, the price of gold was maintained at $35 an ounce. At this price, transnational governmental authorities agreed to the unlimited exchange of gold among themselves. On the second level, a free market in gold was established that could fluctuate to reflect whatever the value of gold really was. Three conditions effectively achieved this segregation:

1.?An agreement among monetary authorities to trade gold among themselves at an official price of $35 an ounce.

2.?Agreement to supply no more gold to private markets from official stocks.

3.?Agreement to buy little or no gold from private sellers.

The concept of Special Drawing Rights (SDRs) was introduced at the March meeting and adopted later in 1969 and 1970. SDRs are a form of “paper gold” to be used in the same manner as gold, dollars or other currencies to settle debts between nations. The SDRs were distributed to members of the IMF in proportion to their economic importance in the world economy. De­signed to protect gold reserves, SDRs could be used to settle international payment deficits that would have otherwise drawn on these reserves. SDRs were given the value in gold of one U.S. dollar, which, at the official price of $35 an ounce, would buy 0.888671 gram of fine gold.

MORE:'s precious metals basics

U.S. domestic policy changed to conform to the new system. The Treasury announced it would no longer purchase gold in the private market, nor would it sell gold for industrial, professional or artistic uses. Domestic producers were permitted to sell and export freely to foreign buyers as well as to authorized domestic users. Domestic consumers regularly engaged in an industry, profession or art in which gold is required were permitted to continue to import gold or to purchase gold from domestic producers.

The U.S. government also removed the remaining 25 percent gold backing from paper money in circulation, freeing another $750 million to stabilize the gold market.

The price of gold on the free-market tier began to rise. On May 17, 1968, it touched $40 an ounce on the London market. In July, however, the price fell again when the French government tried to bolster the franc and rumors spread that South Africa would be selling some of its newly mined gold on the free market. In October, the United States and other major nations in the IMF agreed to provide a mechanism for sales of newly mined gold to monetary authorities, but only when the free market price reached or fell below the official price of $35 an ounce.

The above is an excerpt from the eighth edition of the Coin World Almanac, published by Amos Media Company in 2011.

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