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The Price of Gold and the Relationship to Coins
by D. L. Crane

Coin collecting is a hobby that dates back centuries. There are literally millions of coins that can be collected from all over the world; a person could spend 50 years collecting and still come across only a fraction of the coins available. That is part of the allure of collecting coins. You are always on the lookout for that rare piece, or that coin that is worth a fortune.

What determines the value of a coin? Is it the age? Vintage? Gold and silver prices? Actually, itís all of the above and more. The price of gold and the relationship to coins is an intricate one, and should not be taken lightly. Gold prices have a lot to do with how much your coins may be worth, both today and in the future.

In 1965, the U.S. began the process of switching the composition of nickels, dimes and half-dollars from silver to a metal composition of nickel and copper. If you have coins in your collection that are dated before 1964, they are going to be worth more than post-1964. The price of silver will have a direct effect on the price you can get for these older coins.

The same principle can be said for gold. With the fluctuation in gold prices, a coin can be worth one hundred dollars today and eighty dollars tomorrow; alternatively they could be worth one hundred dollars today and one hundred and twenty dollars tomorrow. As you can see, the price of gold and the relationship to coins is a very close one.

Knowing how much gold your coins have will also affect the overall price of them. Some coins are 100% gold, while others are a composition of gold and other metals. Obviously, the more gold it contains, the more it will be worth. Value and price, however, is not always the same thing. A coin can hold much value in a collectorís case, but not be worth much money. Perhaps it holds sentimental value, and no matter what itís worth, a collector will never give it up.

There are other definitions as well. The price is what a collector paid for the coin; the value is what a dealer or other collector is willing to pay for that same coin. If it is a sought-after or rare coin, the value can increase exponentially over time. The price of gold and the relationship to coins is not the only factor in determining a coinís value, as you can see.

The grade and condition of the coins will also be used to determine a coinís price and value. The best type of coin is one that is uncirculated, and in pristine condition, preferably in a protective case. Coins from the U.S. and Canadian Mint are among the highest valued coins, because of the quality of the commemorative coins they produce. They are among the highest quality in the world.

The price of gold and the relationship to coins can be described as almost synonymous. When the price of gold goes up, so does the value of the gold coins in your collection (each dependent on the amount and quality of the gold.) When the price of gold goes down, so does the value of your coins. A serious coin collector will keep meticulous records as to how much was paid for each coin, and the certificates and grades of each. They will monitor the price of gold on a daily basis and estimate the value of their collection periodically.

The price of gold is determined by trading in the derivatives market, and is valued through its troy weight, as well as the number of carats. The higher the carats and weight, the more valuable it becomes. The weak U.S. dollar has created an increased demand for gold the past few years, and prices have jumped accordingly.

The price of gold and the relationship to coins can be complex and there are many other factors involved in determining a coinís value, other than the market value of gold. Always buy your coins from a reputable dealer, and if possible, get a certificate of authenticity so you know you are buying quality coins that will increase in value.

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