Guide to Collecting Coins: Can You Spend Collector Coins?

Collectors often inquire about the value and potential use of their cherished coins. Whether they are looking to sell or simply curious about the legalities of spending such coins, it is important to understand the distinction between legal tender and numismatic value.

Understanding Legal Tender and Numismatic Value

For many of us, our primary concern when it comes to coins is their practical value as legal tender. However, for serious collectors, the journey beyond the face value is where true riches lie. Coins minted for circulation, while useful for their face value, retain a significant numismatic value due to their rarity, historical significance, and collectibility.

For example, a $20 gold piece, despite its face value of $20, has a considerable bullion value. Due to its weight, it can be worth about $1200 as a precious metal. But to a collector, its value can soar to $2500 or more, depending on factors such as the year of minting and the minting location. Similarly, fractional currency coins like pennies, nickels, dimes, quarters, and "silver" dollars, though minted at their face value, can appreciate hundreds or even thousands of times their nominal value.

The Risks of Spending Your Collectors' Coins

Selling or spending your rare coins can be a risky proposition. Many collectors invest in coins as part of their portfolio, and if they are sold or spent, that value is lost. An alarming example of this risk is a young boy who, in a moment of lust for cigarettes, stole a significant portion of his father's coin collection. The coins, which were uncirculated early Lincoln cents, silver dimes, and quarters, were worth hundreds if not thousands of dollars in collector's value.

While the father may have hoped that the coins would have been picked up by some coin enthusiast, turning them into everyday currency meant a permanent loss of their special value. This underscores the critical importance of safeguarding your collection, especially if it includes valuable numismatic pieces.

Distinguishing Between Legal Tender and Private Mintage

Not all coins are legal tender in the same way. This is crucial to understand, especially when considering the currency of private mints like the Franklin Mint. While coins from the US Mint, such as the American Silver Eagle, are indeed legal tender and can be used as such, many private mints produce coins that are not legal tender and cannot be used as such.

A coin is legal tender if it is issued by a government and designated as valid for the payment of debts. However, this does not mean that a coin is necessarily spent in everyday transactions. For collectors, the true worth of coins lies in their numismatic value, which is deeply influenced by the market and the specific coin's historical and physical attributes.

Understanding the legal status of your coins can help you make informed decisions about how to manage and protect your collection. Whether it’s securing valuable coins in a safe or selling them for their market value, knowing the difference between legal tender and numismatic value can ensure that your investment remains intact and continues to appreciate over time.