Hello, Dino -- You inherited a Madison Indian Peace Medal from your family? Great! Indian Peace Medals were minted under all US presidents from Washington to Andrew Johnson.
These medals have seen a lot of counterfeiting, so if you said you bought it on eBay for a few dollars, I'd be skeptical. Even so, Rich Hartzog, one of the nation's foremost authorities on medals and tokens, has a web page dedicated to fake IPMs at his web site Exonumia.com. You should check Rich's page before getting too excited about your holding.
The medal in the primary picture comes from the people at iCollector.com, who have several high-quality examples of genuine Indian Peace Medals for sale and at auction. In such wonderful numismatic (coin collector) condition, the iCollector piece would sell for about $200 US dollars, probably more. Dino's example is in 'average circulated' condition, so the value would be much less, say between $10 and $100. It is difficult to accurately estimate values of medals and tokens because the market is much smaller than legal tender coinage. If you happen upon a nice, original IPM and no one knows what it is or how much it is worth, you might get it (literally) for a song.
In summary, approximate catalog values run like this:
ORIGINAL MEDALS (not oversized restrikes, see below)
worn: $35 US dollars approximate catalog value
average circulated: $80
well preserved: $150
fully uncirculated: $300
Nevertheless, you must always be careful about spending too much money on a piece that you are not 100 percent sure about. The Washington IPM in our secondary picture is genuine, but it was not minted in 1789. Too bad. It was minted instead in 1972 as an oversized 'restrike' medal by the US Mint. The mint sells these to collectors for about $30 and you can buy them for half that on eBay.
NEVER CLEAN A COIN. CLEANING RUINS VALUE.
If you would like to send us a scan or photo of your medal, please start an e-mail exchange with CoinQuest by using the Contact Us link. We might be able to help with a better estimate of value.
CoinQuest thanks iCollector.com for the use of their photograph. Visit their site and you will see a lot more amazing Americana.