Purchasing high-value coins can be a fulfilling hobby or a way to increase diversity in your investments. If you’re looking at adding valuable coins to your assets or your collection of rare items, you need to be familiar with the ins and outs of this trade and understand the common terminologies used in the industry.
Bullion and numismatic coins are some of the terms commonly used when it comes to identifying valuable coins. Basically, these two terms are used to classify the type of coin and how its worth is measured. Unfortunately, some scammers or false dealers prey on coin buyers who are unfamiliar with the difference between the two coin types.
For buyer protection and increased awareness, let’s look at bullion and numismatic coins and how they differ from each other.
Bullion coins are high-value coins made of precious metals such as gold and silver, and most of them are minted or manufactured each year. They are primarily bought for investments and as protection for inflation or economic downturns.
The value of bullion coins is dependent on the amount of precious metals found in them. In fact, it doesn’t necessarily matter what form it takes, because what will determine the worth of bullion coins will always boil down to its precious metal composition and weight.
Examples of bullion coins are:
- S. Gold Eagles
- S. Silver Eagles
- Canadian Silver Maples
- South African Krugerrands
Numismatic coins are rare coins, and their value goes way beyond their metal composition. These coins are no longer produced at present. The worth of a numismatic coin is measured based on collector’s demand, the history it holds, the way it was minted, and any special markings. Typically, coin aficionados and hobbyists collect this type of coins.
Numismatic coins are different than bullion coins because their value is influenced by factors that are beyond the prices of precious metals. Since that is the case, numismatic coins are not investments in the traditional sense.
Examples of numismatic coins are:
- Peace Silver Dollars
- British Sovereigns
- $10 or $20 Eagle coins that are minted before 1933
If you’re looking at purchasing numismatic coins as investments, you need to understand that there are risks attached to it. While it’s true that the value of a numismatic coin can increase overtime, you also need to understand that its price can also go down, depending on the current market. That’s why experts suggest holding on to a rare coin for at least 10 years before deciding to put it up for sale.
Genuine interest is important when purchasing numismatic coins. If you’re planning to buy a numismatic coin, make sure that you don’t mind keeping them for a long time, especially when their resale value is low.
Which is Better?
The better choice between a bullion and numismatic coin is dependent on what motivates you to buy a valuable coin piece.
If you’re goal is to grow a collection of rare coins, going for pieces with numismatic values can be the more suitable choice for you. Meanwhile, if you’re looking to increase your financial leverage, buying bullion coins may make more sense for your needs. But ultimately, you can purchase both bullion and numismatic coins if you want a diversified coin collection and long-term gains.
At the end of the day, buying coins will always be a personal and subjective decision. If you’re clear on your reasons for purchasing high-value coin pieces and if you’re aware of the difference between a bullion and numismatic coin, you are on the right track.