Numismatics is the collecting of coins and paper money. Numismatic coins are those collected for more than their precious metal value. Best considered to be collectibles rather than precious metal investments, their value depends both on the intrinsic value of the metal they contain and on their age, beauty, or rarity.
Numismatic Coin as a Precious Metal Investment?
Such coins are more expensive than their non-numismatic counterparts – sometimes many times so. There are three layers of cost involved in the price of a numismatic coin: metal content, numismatic value, and dealer profit. This is in contrast to bullion coins and bars, which only have two layers: precious metal content and dealer profit. As a result, numismatic coins have a higher cost than similar non-numismatic coins containing the same amount of gold.
Proof and Graded Coins
Examples of gold numismatic coins include proof coins and graded coins. Proof coins use the same designs as non-proof coins such as the American Gold Eagle or Canadian Maple Leaf, but have been minted with a specialized process designed to produce a high-quality coin. Graded coins are examples of bullion coins that have been assigned a grade to indicate quality of appearance.
Both proof and graded coins typically command a premium over their non-proof and non-graded counterparts because of their high quality appearance, making them numismatic collectibles. Many precious metal investors find these to be a worthwhile investment, while others prefer to stick with coins and bullion bars whose value is based solely on the precious metal they contain, feeling that this will make a more stable investment over time.
There are also a number of gold numismatic coins advertised to investors who seek bullion ownership, but are not sure about the best coins to purchase. Unfortunately, there are a number of supposedly rare or collectible coins with a value that does not hold up over time. Although a select few numismatic coins will appreciate in value, many will not. Often advertised through TV or radio ads, these numismatic “collector coins” often attract inexperienced coin collectors.
Examining Precious Metal Content
If you plan to purchase numismatic coins for investment purposes, be sure that you understand how much gold is really contained inside the coin. Some numismatic coins, such as proof or graded American Eagle coins, do contain high percentages of gold or silver. Others, however, do not contain any precious metal, or have only been “plated” with the metal, giving it the same appearance but a much lower precious metal content than bullion coins. Often, the exact metal content of numismatic coins is unclear, which could make it more difficult to sell the coins quickly in the future.
If you do decide to purchase numismatic coin collectibles, do you research and learn as much as you can about the numismatic world. While they can be a way to diversify your precious metal investments, it pays to do your research, and to determine whether you consider yourself a coin collector or a precious metal investor.