gold investment, silver investment

Precious metals investment terms A to Z

Numismatic coins

Numismatic coins typically have a higher value for collectors than the face value on the coin or the value of the metal content due to the coin’s rarity or its age. Their usefulness to gold/silver investors is usually limited.

Eric asks:

As Eric grew increasingly interested in the precious metals sector he discovered the world of gold coins. After a couple of hours on the Internet he found out that a coin show was in town. So he convinced Jill and John to go there with him. Now, they are poring over stacks of gold coins, amused by the overwhelming amounts of gold around them.

Eric, the Beginner

Eric, the Beginner

It seems like all the coins issued in this country are here today.
Prof. Jill, the Investor

Prof. Jill, the Investor

That’s not true… But I get the same feeling.
John, the Trader

John, the Trader

And some of those coins look really unique. For me, numismatics has always had something of magic in it.
Read the whole discussion

Definition

Coins whose value is determined by factors other than their face value, most notably by the type of the coin, its condition, its rarity and the demand for it. Therefore, the value of such a coin might not depend strongly on the metal from which it is made gold or silver, for example. Consequently, numismatic coins should not a main point of interest for Gold or Silver Investors who want to gain maximum exposure to the prices of gold. In most cases, ownership of numismatic coins is discouraged, and the smaller the numismatic value of a given gold or silver coin is, the better.

Coin authenticity issues

One of the most important issues on the numismatic coins market is the issue of authenticity. For amateur or beginning collectors or investors it might be hard to tell counterfeit coins from authentic ones. Because of that some collectors/investors might require help from professional numismatists, such as American Numismatic Association Dealers, to establish the authenticity of a particular coin.

Another idea is to resort to the help of professional certification companies. These companies grade numismatic coins and certify their authenticity. Thanks to the grading systems one receives information on how much a given coin might be worth. The three leading certification companies are: Professional Coin Grading ServiceNumismatic Guarantee Corporation and American Numismatic Association Certification Service.

Apart from the help of professionals it is extremely important to carry out individual research and deepen one’s knowledge on the subject of numismatic coins. Such efforts might help improve one’s profits and avoid unfavorable deals.

Numismatic coins vs. bullion coins

Usually there is a difference between numismatic coins and bullion coins. The value of the former depends on factors other than only the amount of a particular metal in a coin. The value of the latter is strongly dependent on the value of the metal in the coin. Because of that the price of bullion coins is subject to swings each time the price of the metal changes. Bullion coins are bought for investment reasons rather than to include them in one’s coin collection.

The situation is different with numismatic coins. They trade to a large extent independently from the price of the metal they are made of. Factors like the condition of the coin or its rarity are of primary importance here. Numismatic coins are typically bought by collectors or by long-term investors. The latter buy numismatic coins because in the long term they might gain more value than traditional bullion coins.

In some cases the distinction between numismatic and bullion coins might fade. A bullion coin, which is old enough or rare enough, might be perceived as a numismatic coin and its value might lose its direct connection with the metal the coin is made of. In this sense relatively new bullion coins are not perceived as numismatic coins while bullion coins which have been on the market for long enough or simply are rare might take on the characteristics of numismatic coins.

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