Bullion vs Numismatic Coins: Which Is Right for You?

Posted on January 19, 2023

That numismatics coins appeal to bullion investors and the other way around is one of the many reasons why we like the physical precious metals market. But what's the difference? Which one is right for you? Staunch proponents of either side can easily confuse you, so we'll try to give you a neutral overview and let you decide.

Numismatic coins - rare, shiny, expensive

A numismatic coin can alternatively be called a collector's coin. It's a coin that has a premium past the value of its metal content. Well, these days, premiums on bullion are climbing so high that definition might not cut it anymore. But we can stick to it for the time being.

The American Eagle proof is perhaps the best example of a contemporary numismatics coin. It's a shinier and essentially better made version of the bullion variety. It comes in its own box, to be used for gifts or display. And the mintage is considerably lower than that of the bullion American Eagle.

Of course, brilliant, proof and uncirculated coins from modern mints are hardly all there is to numismatics. They're not even the cold air emanating from the tip of the iceberg. So long as a coin has a NGC or PCGS grading, it falls into this category. This can mean coins from mints in pretty obscure places issued recently as well as coins dating back decades or centuries.

The latter category is what many numismatists care the most about. You don't necessarily need precious metals to have a valuable centuries-old coin. But given the history of money, they'll include some precious metal more often than not. The coins fetching six or seven-figure auction prices tend to be gold coins that are older than a century, which is fitting because gold has long been used to store and trade value.  So many coins with an historical importance to them will probably be gold or silver.

A seven-figure price, of course, is an extreme in the world of coin collecting. The proof American Eagle doesn't cost that much more than the bullion version. When buying it over bullion, you're betting on a few things:

  • Coin collecting remaining popular
  • Precious metals remaining valuable
  • American Eagles remaining well-regarded

So far, those have all been pretty safe bets. A nice American Gold Eagle proof coin from 1990, depending on the grading, can go for upwards of $3,000. That's nearly double the spot price. And the 90s weren't that long ago.

Bullion coins - how much gold is in your coin?

Buyers of bullion coins are basically precious metals investors who find bars too dull. Less so with silver, since rounds exist, but it can be seen as a general rule. Physical bullion always commands a premium over spot, so it's not exactly right to say that these coins don't have a premium. But bars just barely have a premium compared to spot, and then bullion coins just barely over bars.

While bullion coins aren't treated as a collectible by many, they can just as easily be. Remember those centuries-old coins we mentioned? Well, they were issued as standard bullion coins. Investing in bullion coins made from any of the four precious metals is a more colorful way of gaining exposure than bars. And there are plenty of benefits.

Many find bullion coins more interesting, easier to store and manage due to their size, and overall a preferred investment compared to bars. Each bullion coin tells a story with its obverse and reverse, standing as a symbol of one thing or another.

It's not necessarily meant to do that, though. It's just a bonus. Bullion coins are primarily bought to gain straightforward exposure to precious metals without paying a particularly hefty premium. If they can bedazzle onlookers or appreciate in value irrespective of spot movements, great. But really, they're there to form a portfolio for the slightly picky but no less prudent investor.

While there is quite a bit of debate regarding some numismatic investments, sound numismatics have a pretty straightforward upwards price trajectory, as do bullion coins. Whichever you choose, you aren't likely to lose sleep over how your investment is doing. Nor are the grandchildren you might pass the coins down to.

Image by Jeff Belmonte on Flickr