Numismatic or Bullion – Numismatic Problems

One of the most frequent questions I’m asked is Numismatic or Bullion? Our recommendation at when you are buying physical precious metals is to invest in bullion coins rather than numismatic coins. The premium you pay over spot for numismatic coins is much higher than bullion coins. Your numismatic coin may not have appreciated because you bought at retail and now that you are trying to sell it back you can only get wholesale. In fact if you have to sell it you may not be able to sell it at a price that gets you back the price you paid for it.

There are also many more variables that go into determining the cost of a numismatic coin. Factors such as year, rarity, mintage, mint mark and condition. One of the most difficult variables in the price of a numismatic coin is the condition. One coin grading firm can rate the same coin differently than another. The condition, to some extent, depends upon the eye and expertise of the grader. Getting a coin graded by a recognized grading firm can be costly. Grading cost is another element going into the cost of a numismatic coin that you may not be able to recover even if your coin has appreciated over the years.

However in this video coin dealer and QA Check founder James Sego shares his valuable insights on the certified American Silver Eagle market. He adds some additional things things you must avoid when buying coins. He shows an example of two coins that have been graded MS69 or MS70 by either PCGS or NGC. The MS 70 is the higher grade coin. That one number difference in grade makes a tremendous difference in value. Of the coins he showed he said the MS69 was worth approximately $80 and the MS70 silver eagle was worth approximately $4,000.

But here is an additional variable I wasn’t aware of. The $4,000 silver eagle had a milk spot on it. This is a surface blemish on the coin. But how could that be? This was an MS70 coin that was graded by a reputable grading agency and was still in the plastic coin holder it was purchased in and never removed. The dealer said that the grading agency would have never graded this silver eagle an MS 70 with that spot on it. He speculated that the spot developed on the coin after purchase because the owner had stored it improperly! He said that milk spots on ungraded silver eagles were somewhat common. However this milk spot on this $4,000 coin made it unsaleable for anything near the price the owner paid.

But milk spots can also be placed or started on the coin at the time it was struck if the die was not sufficiently cleaned prior to the coin being struck. They start out like invisible ink, and only appear after a period of time. Some numismatic experts say if milk spotting is a concern, it’s a good idea to put the coin into an airtight capsule immediately. Milk spots occur more frequently and are more prominent on coins from the Royal Canadian Mint than most others. But milk spots have been found on other coins such as philharmonics and silver eagles.

Coin expert Anthony Swiatek says high-grade American Silver Eagles are “plagued” by milks spots. Many high-grade Silver Eagles don’t begin showing the milk spots until long after they’ve been inserted in sonically sealed plastic.

The US Mint and Canadian Mints have both traced the milk spot issue to the manufacturing process. You can read about more about the milk spotting issue here: Milk Spotting on Silver Eagles

But since milk spotting seems to largely have been traced to the manufacturing process that eliminates anything the buyer can do to prevent it like having it sealed in the airtight case immediately or “storing properly.”

The PCGS (Professional Coin Grading Service) which grades these coins and “sonically” seals them in the plastic cases after grading says the milk spots will affect the grading of coins and hence can drastically affect their numismatic value. You can read more about it here on the PCGS site: Milk Spots, Grading and Eye Appeal

The PCGS does have a guarantee on the coins they grade which you can read about here PCGS guarantee There were so many exclusions including one for coins stored under adverse environmental conditions like high humidity I felt the chances of successfully using that guarantee were slim. That impression from my reading seems to be born out by the comments of many others who talked about the problem on the web.

This is the Canadian Mint’s official position: The coins are bullion coins. They are not collector coins. They are sold as one ounce of silver. The Mint knows that there is a problem. The problem has existed since 1988, when the SML coin was first introduced. The Mint says that there is nothing that they can do about the problem.

From a registered Canadian Maple Leaf dealer: Our experience is that some SMLs have them and some do not. We do not know what we are going to get when we open the boxes of 500 ounces of silver that come from the Mint. We have to take what we get; we can not return them. We do not have the time to sort them, etc. We ship out what we get. Per the terms of our invoices, we do charge a restocking fee for returned bullion items. From: Milk Spots and the Canadian Mint/

The problem with milk spots, according to what I have read on the web from numismatic experts, is that they can occur on all coins but they are less of a problem with US silver eagles.

The advice from concerning numimatic coins is still the same. If you are investing in physical precious metals as a store of enduring wealth and buying bullion coins base the price you pay on the spot metal price at the time plus the small premium that covers the coin manufacturing and sale process.

There are also several suggestions on the internet for cleaning milk spots such as using an eraser, cloudy ammonia or industrial acetone. There is disagreement whether this cleaning is effective and whether or not the cleaning process itself decreased the value of the coin. Caution is advised because some of the chemicals used can be dangerous.

Don’t go for an expensive graded bullion coin that you initially have to be a large premium over spot. The coin may end up developing milk spots in your safety deposit box or vault storage over time and you will be left with coins that are valued at much less when you want or need to sell them.

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DISCLAIMER: The financial and political opinions expressed in this video are not necessarily of “” or its staff. Opinions expressed in this video do not constitute personalized investment advice and should not be relied on for making investment decisions.
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14 thoughts on “Numismatic or Bullion – Numismatic Problems”

  1. darrell crawford

    I have a 1999 american bullion silver eagle and was told it wasn't worth anything. It has no spots that I can see, its been in plastic since early 1990s sealed in a card board display. Thanks for your advice on this coin. Thanks Lone Bull.

  2. nonplayerzealot4

    PS: If you can afford a 1991 in 70, you rich enough not to feel much wariness. Sell that puppy sight-unseen. The shit's in the holder already, sell it online or at a pawn shop.

  3. dont silver always tarnish? I bought some high premium proof silver coins from the royal mint, and milkspots grew on them after a few months. . . Never buy high premium silver coins if you dont want spots.

  4. Not much fun in collecting coins that were never in circulation and that immediately went right into investor/collector's safes. These coins are not rare in any way. There were over 7 million 1991 Silver Eagles minted and MOST are still out there uncirculated, probably millions of 69 and 70s still in their original tubes. Half a million were proofs! No way is a BU MS70 1991 Silver Eagle worth $4000; That is laughable! Sorry, but slabbed ASE's are a joke and a scam. You'd be much better putting that money in a CC Morgan Dollar or buying two (with change left over) Mexican 50 Pesos Gold coins. ASEs are a solid bullion investment but that is it. Beautiful coin though!

  5. I just sent an email to QA asking the following question:I just watched an interview with James Sego "CoinWeek IQ: Collectors Should be Aware of Problem MS70 American Silver Eagles" where he stated that most likely the spots on the MS70 coin he showed appeared after the coin was graded and encapsulated. Now my question is – What are the odds that coins could develop similar spots after you certified the grade of a coin and place your sticker on it:Hope they answer.

  6. i'll never buy any graded coins as a 70 for exact reasons laid out here, ill stick to 69s cuz i can trust a 69 being a 69 more than i can trust a 70 being a 70.

  7. Great video and something people need to consider when they spend the extra money to buy modern graded 70 coins that are know to spot.

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