A frequent question we receive from gold bullion investors is, “What the heck is the difference between a bullion and numismatic coin?”
A recent article in our gold investors’ knowledge center explores this topic in-depth, but we wanted to provide a quick summary here in our blog. Essentially, the difference between bullion and numismatic coins lie in their purpose.
Let’s explore bullion coins first:
Bullion gold, silver, platinum and palladium coins are purchased for one of three purposes: investment, inflation hedge, or survival. Often times, though, all three of these purposes factor into a buyer’s decision.
Another unique quality of bullion coins is their weight. Their weight is expressed in an even amount such as one ounce; one half ounce; or even grams, if it’s a bar. These coins, with a few exceptions (…90% junk silver) are minted each year and purchased primarily as an investment.
Numismatic coins, on the other hand, are more historical in nature and most often purchased by collectors. Their value is based more so on their rarity rather than metal content. The amount of metal in the coin is usually a random amount such as .23 ounces, or something similar.
In summation, numismatic coins are purchased mainly by collectors. Their value may, in fact, be much more than the actual amount of gold or silver contained in them. A bullion coin is a coin that is valued by its weight in a specific precious metal. Unlike commemorative or numismatic coins valued by mintage, rarity, condition and age, bullion coins are purchased by investors seeking a simple and tangible means to own and invest in the gold, silver, and other precious metals.
But why is it important to understand the difference between bullion and numismatic coins?
It is important to understand the difference between bullion and numismatic coins because many unscrupulous dealers may try to steer a buyer in the wrong direction. If you’re like many of our readers, you’re interest in precious metals is driven by their investment potential in the current economic climate, and less so for their collectible value.
However, many unsuspecting investors have been convinced that numismatic coins, such as the Swiss 20 Franc are not subject to confiscation, while the American Gold Eagle could be. This, of course, is not true. Although there was a confiscation in 1933, the prospects of that occurring again are essentially zero.
(Read our prior post on the 1933 confiscation for some more background on this disastrous action taken during the depths of the Great Depression.)
To learn more about the difference between bullion and numismatic coins, and to read an interesting comparison between the two, check out our latest knowledge center article: “Bullion vs. Numismatic Coins” today!
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