In my 30+ years in the rare coin industry, I’m often asked the same questions by coin enthusiasts just beginning their journey into the fascinating world of numismatics. Yes, I know I said fascinating; for if you love the origins of something tangible or history or just love money, there is many a tall tale to be told around some coins. Understanding how some coins become valuable and why some do not is simply a question of Economics 101: The Law of Supply and Demand. In other markets, such as food and energy, demand is relatively constant, and therefore price changes are driven mainly by the quantity of available supply. If supply is plentiful, producers will drop the price to drive sales. Conversely, if supply is scarce, producers raise prices to insure the ability to obtain new supplies. What makes gold and silver different is that supply is limited compared with most other elements. If demand increases beyond supply capabilities, prices will rise because producing additional supply is much more difficult and time consuming than it is for most other products. Eventually, prices increase sufficiently to discourage demand, and encourage the creation of more supply, either from production or from people selling gold and silver back into the market (often taking profit on the price increase) causing the price to drop until supply and demand are equalized. Price is the measure and the regulator of the balance between supply and demand. In the case of a rare coin, what you see is what you can get. Supply is limited, so prices are driven by demand. So whether you need one more coin for a collection or love the story behind a particular coin, do your economics homework and pick a coin that has a future in the marketplace.
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