When it comes to investing in gold, silver, and other precious metals, your first thought is probably to buy bullion coins. After all, these are the most cost-effective way to invest in a small amount of gold or silver. If you have a gold IRA, there’s a high chance that you’re also dabbling in bullion coins. However, there are also numismatic coins out there that can offer the same or even better return on investment.
So as an investor, where should you put your money? To answer this question, it’s important to understand first what these coins actually are. Both are types of coins that have value not because of their metal content but because they were minted with specific properties in mind. A bullion coin is one meant primarily as an investment tool (i.e., it’s worth more as a collectible than its metal content suggests). A numismatic coin has special properties that make it more likely to appreciate over time than just as a collector’s piece (though it may still be worth collecting).
What is a Bullion Coin?
When most people think of a bullion coin, they’re actually thinking of a gold bullion coin. However, there are also silver and copper bullion coins. All of these coins are minted specifically to be worth far more than just the spot price of the metal they contain; they can even appreciate in value over time if the coin is in excellent condition and has been kept in a secure location. Because of this, these coins are often sold in bulk amounts. The Royal Canadian Mint sells gold bullion coins in bars of 100 units each, while American Gold Buffalo coins come in tubes of 25 units. This makes them a great way to invest in gold if you have a small amount to work with.
Advantages of Bullion Coins
- Low premium: The price of a bullion coin will often be lower than its actual value, which makes it an excellent way to invest in gold or silver at low cost.
- Visual appeal: A bullion coin is meant to be kept as a collectible as well as an investment, so it’s also likely to appeal to people who are interested in the design long-term even if they’re not interested in its value as an investment.
- Track record: Gold and silver bullion coins have been used as a form of money and an investment for thousands of years. Their track record of appreciation and value retention is strong.
What is a Numismatic Coin?
A numismatic coin is one that’s worth more than its metal content because it has special properties like being rare, having an interesting history, or being in great condition. This means that it’s possible to buy a numismatic coin for far less than even the spot price of the metal it contains yet still get a good return on investment. For example, the American Buffalo gold coin contains exactly one ounce (oz.) of gold, and is worth $50 or more since it’s minted by the U.S. Mint. However, since the American Buffalo is also a numismatic coin, it’s likely to appreciate over time as well. In fact, some of these coins are worth thousands of dollars thanks to their high quality.
Advantages of Numismatic Coins
- They’re liquid: Numismatic coins are valuable because they have specific properties that make them appealing to collectors, and collectors are willing to pay a lot of money for them. The good news is that even if you bought one of these coins for only a small amount, you can sell it for whatever the collector’s market price is.
- They’re a good bet even if the economy tanks: Unlike stocks and other types of investments, you can buy a numismatic coin at any time and have a good chance of a good return on investment.
- They’re low maintenance: Unlike stocks, which require careful monitoring, you can buy a numismatic coin and then forget about it. You don’t need to keep track of daily fluctuations in price. Instead, you just need to make sure you keep it in a secure location.
Which Type of Investment Is Right for You?
If you’re not sure if you should buy bullion or numismatic coins, ask yourself these questions:
Do you want to invest in gold or silver? If you’re not sure which one you want to buy, there are actually coins available that contain both.
Do you want a more liquid investment? Numismatic coins are more liquid than bullion coins, but they’re also likely to appreciate in value over time.
Are you willing to give up some long-term profit for a more immediate return? While bullion coins are a great investment, they may not appreciate in value as much as a numismatic coin. However, they’ll also give you a guaranteed return on investment. This is ideal if you’re putting money into a pension plan or individual retirement accounts (IRAs).
Do you want a collector’s piece? Numismatic coins tend to be very attractive, and many of them appeal to collectors even if they don’t expect them to appreciate in value.
Do you have a budget? Both types of coins have price points, but the price of numismatic coins can vary wildly.