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Gold or Silver or Bullion or Numismatics??
Here on www.preciousmetalsinvesting.com you know I generally shy away from numismatics and focus more on bullion purchases. My bullion purchases focus on government issued gold and silver bullion coins. They are generally sold at a small premium over the spot values of the precious metals content to cover minting and marketing costs. I also purchase so called “junk silver” which are older US coins that were in circulation and contain varying percentages of silver. They are generally sold for a small premium over melt value. Because of the problems today of counterfeiting I only purchase from recognized dealers with a good reputation. Today there are counterfeiters not only making gold and silver bullion coins but also numismatic coins. Just search YouTube and you will find videos of factories in China producing numismatic coins and bullion coins. These are also basically the same recommendations you will find in the Precious Metals buying guide you can get at this site by subscribing to our newsletter.
The advantages of this approach to buying physical precious metals are:
1. Low premium over spot
2. No need to spend extra money for evaluation or certification of coin grade, etc. to establish value. There have been reported instances of so called “proof sets” or “certified grade” coins sealed in their plastic protective display cases turning out to be counterfeit. If I was buying a coin at a price that was high above spot I certainly would want to make sure it was genuine and could bring close to the value I was paying if I needed to resell.
3. Easily recognized value of a bullion coin makes it easy to sell for what I paid for it.
4. Generally no wide disagreement on the value of a bullion coin as contrasted with a numismatic coin whose value often varies by what the buyer views as the value.
5. Since generally condition of the bullion coin is not an issue there is not the expense of coin grading or a disagreement between recognized numismatic graders on the exact coin grade of the same coin. Since condition plays a large part in determining the value of a numismatic coin price can vary widely.
However this video is another view. In it he says that he became bored by just buying bullion and sold off 90% of his collection when prices dropped. Then he says he noticed an interesting thing. His numismatic coins maintained their value better than his bullion coins. Now this is completely possible. If you have a rare numismatic coin it’s value is based on the perceived rarity rather than the value of the metal. But the question for me is the value more than the price I paid for it? Are there any costs associated in selling it and possibly having to validate the value to the buyer? As they say in real estate the value of a piece of property is what a willing buyer is willing to buy it at and a seller is willing to sell it at. A buyer and seller’s idea of the perceived value may not be the same. But you could hit it lucky, have a rare coin you bought at good price, and be able to sell for more than you paid for it.
However for me numismatics just have too many variables if I am looking at physical precious metals as a store of value that might be needed for exchange some time in the future.
There is the allure of coin collecting. When I was growing up I had a coin collection and it was interesting to collect the different coins, see the different forms coins were produced in, etc. So numismatics do have value as an interesting hobby. However I don’t think you should confuse the hobby aspect with a dependable, exchangeable store of value.
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