In the diverse world of coin investing, it can be challenging to keep up with all the differentiating factors. One of the most recurring and influential distinctions is between circulated and uncirculated coins. What might appear to be a simple variation can influence the value and demand of a coin. A clear understanding of circulated vs uncirculated coins makes it easier to make smart investment decisions.
Circulated Coins
Coins that have circulated in the economy for everyday payments are known as circulated coins. Due to their widespread use, this coinage displays common signs of wear and tear. However, circulated coins can fall anywhere within a wide spectrum of conditions ranging from imperceptible details from heavy use to nearly mint condition.
This coinage undergoes a standard production process before being released by the US Mint directly into the money supply via boxes, bags, or rolls. Despite their functional use, circulated coins with high precious metal contents don’t outnumber uncirculated coins in terms of raw numbers.
Uncirculated Coins
Uncirculated coins have never entered the money supply. As a result, these coins don’t bear the usual damage associated with coins used for day-to-day transactions. Generally, these coins are produced using a special minting process that yields a brilliant finish. Known as a mint luster, this distinctive sheen quickly diminishes once the coin is handled.
Although there’s a tremendously high standard of quality for uncirculated coins, some coinage that falls into this category might exhibit some contact marks. It takes a trained eye to distinguish between wear associated with minimal handling following mintage and light wear from careful or short-lived circulation.
How can you tell if a coin is circulated or uncirculated?
Wear and Tear
The easiest way to distinguish between circulated and uncirculated coins is to look for signs of wear and tear. Any scratches, scrapes, dents, blemishes, or other imperfections noticeable to the naked eye would most likely disqualify a coin from being considered uncirculated.
Certificate of Authenticity
Some US Mint coins made exclusively for collecting will come with a Certificate of Authenticity detailing the uncirculated quality of the coin. If the coin matches up with the certificate, it’s a dead giveaway of the specimen’s condition. Keep in mind that not every uncirculated coin will come with an official certificate, however.
Luster
As mentioned before, uncirculated coins maintain an undeniable luster – an industry-specific word for shininess. If you place a coin under direct light and see streaks of light emanating from the center as you move it from side to side, known as the cartwheel effect, the coin is probably uncirculated. Coinage that doesn’t reflect a lot of light and appears rather dull is most certainly circulated.
Grading
If you’re dealing with a graded coin, simply looking at the grade is enough to distinguish between a circulated and uncirculated piece. Coin grading is the process of examining a coin’s condition and assigning a specific grade. On the standard 70-point Sheldon Scale, any coin with a grade ranging from MS60 through MS70 is considered uncirculated. Any other grade would designate a circulated coin.
There’s a small percentage of circulated coins that have maintained such a high standard of condition that they’re virtually imperceptible from uncirculated coins, at least to the untrained eye. That’s why it’s best to work with a professional coin grader or precious metals dealer to make sure a coin is accurately assessed before making a sale or purchase.
Determining the Value of Circulated vs Uncirculated Coins
There’s a common misconception that uncirculated coins are automatically worth more compared to their circulated counterparts because of their superior condition. The fault in that logic is assuming that condition is the only factor considered when determining a coin’s value.
In reality, there is a range of variables that can influence the price of coinage including:
- Metal Purity – The vast majority of both circulated and uncirculated coins boast a 90% to 99% purity rating, rendering this metric a virtual toss-up.
- Scarcity – Government and private mints produce uncirculated coins to the tune of billions which means circulated coins are typically rarer.
- Demand – The relative scarcity of circulated coins often leads to a higher demand among investors.
- Historical Appeal – Coins that never enter the money supply don’t really have a chance to develop historic significance, so this factor doesn’t apply to most uncirculated coins.
- Condition – Most uncirculated coins maintain pristine condition, although circulated coins that reach this high standard are inevitably worth more.
- Buyer Beware: Some misleading coin dealers try to sell overpriced modern, graded bullion coins by convincing sellers their high grade translates to a higher evaluation despite the coins only being worth their metal contents.
👉 Related read: Buyer Beware: The Truth about Modern, Graded Bullion Coins as Investments
Bullion vs Numismatic Coins: An Investing Distinction
While talk of circulated vs uncirculated coins focuses solely on condition, a more appropriate differentiation for investing would be between bullion and numismatic coins. Bullion coins are only worth their weight in gold or silver and hold little to no inherent value beyond precious metal contents. Alternatively, numismatic coins have extrinsic worth beyond their melt value based on scarcity, demand, or historical significance.
The majority of bullion coins are in uncirculated condition because they’re often packaged right after minting. That means most uncirculated coins hold no value above their precious metal contents. On the other hand, most numismatic coins have been through the money supply, putting them in circulated condition. The high inherent value possessed by these precious metal coins due to historical appeal, rarity, and high demand can overshadow a lack of condition.
For instance, a 1-ounce American Eagle gold coin is most likely only worth its weight in gold regardless of the mint year. On the other hand, a Saint-Gauden’s Double Eagle would fetch a much higher price even with a similar purity rating given its inherent historical value and scarcity.
👉 Related read: Bullion vs. Numismatic Coins: What You Should Know Before Investing
Circulated vs Uncirculated Coins: Which is the Better Investment?
Contrary to popular belief, circulated coins are typically more valuable investments than uncirculated coins of equal purity. That’s because circulated coinage tends to boast more inherent value from factors other than conditions such as high demand, low supply, and historical value.
However, the best investment is most accurately determined by your unique investment goals, budget, and time horizon. That’s why it’s advisable to speak with a dedicated expert to determine the best precious metals investment strategy. You can get in touch with a personal Precious Metals Advisor at SBC Gold by calling toll-free at 1-888-812-9892 or using our live chat function.