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Collecting NCLT Coins

By Dan Lewis | Mon, 11 Sep 2006

The following editorial by Dan Lewis is featured in the September 2006 issue of Numismatist Magazine the official publication of the America Numismatic Association:

Production of and interest in non-circulating legal-tender coins has increased as new collectors enter the hobby.

By definition, a non-circulating legal-tender (NCLT) coin is one that has been released by a recognized monetary authority, but is not intended for general use as a medium of exchange. Widely recognized examples of NCLTs include U.S. mint and proof sets; silver, gold and platinum American Eagle bullion coins; and commemorative coins issued by the U.S. Mint. Although anyone can break up a U.S. proof set and legally spend the coins at the local grocery store, not many people are apt to do so.

Generally speaking, NCLTs are coins struck specifically for collectors and not intended to be circulated, hence their designation as non-circulating legal tender. What many folks don?t realize is that world mints are in the business of ?making money by making money.? The difference between the actual cost of producing a coin and its face value is known as ?seigniorage.? In the business world, we call it ?net profit.? The U.S. Mint is one of the very few government bodies that actually turns a profit every year.

Although NCLTs have been around for a couple of centuries, in the past 20 years production has exploded. Several factors have contributed to this growth. More collectors have become aware of their existence, and, concurrently, many third-world countries have seen the viability of NCLTs as an important source of revenue.

The increasing prices of many circulating issues also account for escalating numbers of NCLT collectors. With the current value of an uncirculated 1893-S Morgan dollar at $85,000, is it any wonder individuals are looking at alternative issues to fill their collecting needs?

Finally, the values of some earlier NCLT issues, whose mintages were limited to fewer than 5,000 pieces, continue to rise as more new collectors look for these pieces to fill out their collections. As recently as 5 years ago, for example, Palau Marine Life Protection Series dollar coins could be purchased for $12 to $15. Today, they are hard to find at less than $35, and some issues sell for as much as $75.

According to figures released by the U.S. Mint, 143,000,000 people are collecting the new state quarters. If we assume that 99 percent of those people will never become serious collectors, that still means 1,430,000 new collectors have entered the hobby because of the quarter program. A lot of those folks will gravitate toward NCLTs, and rightfully so. This is the time to get involved. Get ahead of the wave!