Bullion vs. Numismatic Coins: Which is the Better Investment?

gold bullion vs. coins
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When it comes to investing, there are two types of coins to consider: bullion coins, graded coins made from precious metals with a tangible value, and numismatic coins, collectible coins without any inherent value.

Bullion coins are a better investment than numismatic coins. Numismatic coins can take decades before reaching their total value, whereas bullion coins can be sold at any time, rolled over into a gold IRA, and are parts of a larger and more active market. 

Both types of coins are popular and commonly result in a significant return on investment. Whether you’re looking to invest in one or both, understanding the differences between bullion vs. numismatic coins is necessary for every successful coin investor.

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Are Bullion or Numismatic Coins a Better Investment?

Many people invest in both bullion and numismatic coins. If you're only choosing one, though, numismatic coins make a better hobby, and bullion coins make a better investment.

But which one is right for you?

Bullion Coins

Bullion coins are coins made from refined and “elementally pure” metals, usually silver or gold. Like standard US coins, bullion coins represent a particular value of money, but they are not intended for day-to-day transactions, like standard US coins.

Many investors use bullion coins as a hedge against inflation. While the dollar's value drops by the day, the inherent value of a bullion coin’s precious metals persists. 

The value of bullion shifts like any investment but generally stays above inflation and promises a relatively high turnaround. Also available in gold bars rather than coins, bullion is sold by weight, usually via ounces or grams.

Risks of Investing in Bullion Coins

Some bullion coin investors run into issues after investing in sovereign coins from other countries. Rest assured, notable sovereign coins like Europe’s gold and silver Eagles or the South African Krugerrand work are entirely dependable.

On the other hand, coins from lesser-known countries can often resell for cheap. 

Successfully Investing in Bullion Coins

The best place for new bullion investors in North America to start is with Canadian Maple Leaf and American Eagle coins. These options are the simplest ways to liquidate your money into bullion, with silver and gold options accounting for different-sized investments.

There are seemingly endless online dealers for bullion and graded coins online with such a large market. Many dealers also offer buy-and-store programs to secure your coin investments safely for you.

Finding a bullion coin dealer that meets your needs is an essential first step for any new investor.

Numismatic Coins

Unlike bullion coins, numismatic coins represent no specific value. Numismatic coins are considered collectible coins, so their value derives from their rarity rather than the worth of their metals.

Because of this, there’s no guaranteed return on investment for numismatic coins.  Despite being considered less of an investment compared to bullion, the mark-up of numismatic coins can be significantly higher.

Unfortunately, it typically takes at least five years for the value of a collectible coin to rise, and even that isn’t guaranteed.

Risks of Investing in Numismatic Coins

Right off the bat, many new investors lose money in the acquisition of numismatic coins. Some coin dealers will price these coins higher than their actual worth.

It's easy to overpay if you're not paying attention since you can't track the numismatic value like bullion coins.  Selling your numismatic coins is even trickier than buying them.

The market for numismatic and collectible coins is significantly smaller than the market for bullion coins. With fewer buyers, there’s less demand and a less likely chance of you selling your coin for the highest price point possible.

There are numerous other barriers numismatic coin collectors have to trek through that bullion coin collectors don't. For example, numismatic coins cannot legally be held in an IRA in the US because they qualify as “collectibles.”

Successfully Investing in Numismatic Coins

Despite the risks, investing in numismatic can be a profitable endeavor if you know the market. The U.S. Federal Trade Commission said it best in their 2011 consumer report, Investing in Collectible Coins

“If you're thinking about buying collectible coins as an investment, the Federal Trade Commission (FTC), the nation's consumer protection agency, has three words for you: research, research, research. In fact, the agency says, there isn't a potential investor around who can afford not to spend time researching the coins, the graders who assess them, and the dealers who sell them.”

If you take the time to study and know the numismatic coin market, you should be able to turn your investments into a hefty profit.

Locate resources, keep an eye on how much other coins are selling for, and don't make any new investments without first giving them thought and research. 

Which One is The Better Investment?

Bullion coins are almost always a better investment than numismatic coins. However, there's no single way to invest in coins. Whether you’re investing in graded coins, collectible coins, or both, learning the hoops of the coin market is essential.

Now that you know the differences between bullion vs. numismatic coins, it’s time to get started. Find an online bullion dealer that suits you, set aside some money for your American Eagles, begin researching the complicated numismatic coin market, and start investing!

FAQ's

Here are some of the most frequently asked questions about this topic.

Do banks accept bullion coins?

Unfortunately, most banks do not accept bullion coins. Banks are generally unable to give gold and other solid metal coins proper evaluations to determine their legitimacy. Because of this, very few banks accept gold or bullion anymore. 

What does numismatic mean?

“Numismatic” refers to the study and collection of coins, tokens, and other monetary means. Numismatic coins, therefore, are coins intended for collecting.

Are gold or silver bullion coins the better investment?

Gold bullion coins are a better investment than silver bullion. Gold has a larger market heavily fueled by the jewelry industry. Gold’s value also shifts more than silver’s. 

Because of its industrial uses, silver bullion coins are most profitable when metal is cheap or during other economic down cycles.

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