When investing in or collecting coins, understanding the difference between circulated and uncirculated coins is crucial. These terms refer to a coin's condition, history, and value, which can significantly impact its desirability among collectors and investors.
Circulated coins have been used in everyday transactions, showing wear and tear from handling. In contrast, uncirculated coins are in mint condition, having never been released for public use, often retaining their original luster and sharp details.
This guide will explore the key differences between circulated and uncirculated coins, how their value is determined, and which type may be best for your collection or investment portfolio.
What Are Circulated Coins?
Circulated coins get their name from being released or circulated to the public as everyday currency. Mints produce these coins as a medium of exchange in daily transactions. Circulated coins are an important cog in the commerce machine as physical currency.
Central banks, like the Federal Reserve, control the national money supply under a monetary policy designed to stabilize prices and encourage economic growth. While this supply can be related to gross domestic product (GDP) and other economic variables, it’s just one of many pieces of data that inform monetary policy.
What Are Uncirculated Coins?
By contrast, uncirculated coins have not been released for transacting business. Mints typically produce them as sets for collectors. As such, uncirculated coins are usually pristine or very close to them, often in cases that help protect them.
The lack of wear and flawless surface quality make uncirculated coins more expensive than circulated coins, along with the fact that they tend to appreciate. When purchasing uncirculated coins, you can buy denominations from the penny through the dollar and focus on a particular year.
Difference Between Circulated and Uncirculated Coins
The key differences between circulated and uncirculated coins are their physical condition, how or whether they’ve been used as currency, and the value they hold for collectors.
Circulated coins will inevitably show scratches and nicks and have a dull finish from being used as currency in daily transactions. Uncirculated coins that are properly cared for retain their mint condition and should have a high luster with a flawless finish, even when examined closely. They should show no signs of being handled.
Uncirculated coins cost more than circulated coins because of their mint condition.
Identifying Circulated and Uncirculated Coins
You may be able to distinguish a circulated coin from an uncirculated coin visually. However, there are other ways to evaluate the two types of coins to ascertain that a coin is what it should be.
Certificate of Authenticity
A certificate of authenticity (CoA) can help verify a coin's uncirculated condition. Confirming the legitimacy and grade of an uncirculated coin gives buyers and sellers confidence that it’s authentic and of high quality.
While not all uncirculated coins come with a CoA, you can request one from a dealer to confirm the coin’s authenticity. For example, you can seek a CoA to verify the authenticity of the U.S. Mint commemorative 2024 American Silver Eagle MS70.
If you have an uncirculated coin without a CoA, you can use a magnifying glass to check whether its surface has any imperfections.
Luster, Scratches and Imperfections
Examining your coins can help you distinguish those that have been circulated from those that haven’t.
As mentioned, uncirculated coins should retain the luster from their original production. Striking or stamping a coin blank creates grooves that shine brightly when light hits the coin. When the coin is tilted, you should see what’s known as the “cartwheel effect.”
You shouldn’t see scratches or imperfections on an uncirculated coin. A dull surface that shows signs of wear might indicate that you have a circulated coin on your hands.
Grading
Coin grading tells you the coin's physical condition, which can provide a clue to its value. As an art and a science, grading involves evaluating a coin’s strike, contact marks, wear and tear, and eye appeal.
Coins receive a grade from one to 70, with one being poor (nearly worn out) and 70 being mint condition (no wear and no flaws). The numbers are preceded by letters that indicate a coin’s strike type: mint state (MS), proof (PF), or specimen (SP).
Dr. William Sheldon developed the grading system in 1949, which is therefore known as the Sheldon Scale. Two numismatic experts grade a coin. They authenticate the coin, identify its strike type, and assign a grade from one to 70.
Uncirculated coins are graded from MS/PF60 to MS/PF70. Circulated coins receive a grade between PO1 (enough detail to determine the date and strike type) and AU58 (full visible details with slight wear).
The Numismatic Guaranty Corporation (NGC) and the Professional Coin Grading Service (PCGS) use the Sheldon Scale. The American Numismatic Association (ANA) uses the same scale but adds descriptions for each numeric grade. Consider consulting a professional from one of these groups to assess your coins accurately.
Circulated vs. Uncirculated Coins: Which One to Invest In?
Unsurprisingly, uncirculated coins will cost you more on average than circulated coins. However, the rarity of a circulated coin can create high demand that drives up its value as a collectible coin. Uncirculated coins tend to appreciate and can be easier to sell at a premium.
Deciding between circulated and uncirculated coins as an investment option comes down to your individual goals. Are you interested in collecting coins for their historical or cultural value or are you more interested in your coins appreciating and providing a financial return?
Whichever strategy you choose, consulting a coin expert could go a long way toward helping you find success.
Find the Type of Coin Investing That Works for You
In the debate over investing in circulated vs. uncirculated coins, the only definitive answer of which is the best investment can come from you.
Determining your purpose for purchasing coins can guide you in investing in either type (or both). Understanding the subtle differences between circulated and uncirculated coins can help determine the value – numismatic or intrinsic – you derive from your collection. And talking to a certified expert from one of the popular coin associations can help you succeed no matter your path.
Frequently Asked Questions
Should I buy circulated or uncirculated coins?
Whether you should buy circulated or uncirculated coins depends on your goals. Uncirculated coins generally hold higher resale value, but circulated coins can be a cost-effective way to invest in precious metals.
Is it worth buying uncirculated coins?
Yes, buying uncirculated coins can be worth it. If you’re investing in numismatics, uncirculated coins can be a great choice, but for precious metal value, circulated bullion coins may be more cost-effective.
Is it worth collecting circulated coins?
Yes, collecting circulated coins can be worth it, especially for those interested in history, affordability, and bullion value. If you’re collecting for history or metal value, circulated coins are a great choice. But for investment-grade coins, uncirculated may be better.