Bullion and Rare Coins: What’s The Difference?

One of the major questions that those new to the industry often ask is “What is the difference between a rare coin and bullion?  Aren’t they both precious metals?”  Well, yes – but the difference is a distinct one when it comes to how you choose to allocate your collection when you’re attempting to achieve both profitability and security.

Bullion is any precious metal taken at base value.  This is what people are most often talking about when they discuss the daily price or they talk about how a particular precious metal is doing.  These can range from American Gold Eagles to Canadian Silver Maple Leafs to kilo bars of a particular precious metal, stamped by the producing company and marked for fineness (usually .999+).

Bullion is excellent for those looking to get into investing in precious metals because it can be bought for as close to the metal price as possible, but it does subject you to the volatility of the market, for better or for worse.

On the other hand, numismatics (or rare coins) are coins that are graded and no longer in production; these are often older (though not always) and are graded on the Sheldon scale of 1-70, with 70 being perfect.  These coins usually come with a premium that may put their value significantly higher than what the spot market price is.  Now you may be wondering why someone would pay more than the spot price for precious metals.  Rare coins offer protection against market fluctuation: when you buy bullion, you’re riding the market for better or worse.  With numismatic pieces, the price is protected against those fluctations because it isn’t tied strictly to the value of the metal: other factors, such as mintage, rarity in a certain grade, or whether or not the coin in question is a key date affect the potential value of the coin.  In fact, many times, when the spot market goes down, the price of rare coins doesn’t change at all – and can even increase as demand goes up due to other consumers getting out of the bullion market!

Another major factor is liquidity.  With bullion, you’re typically guaranteed to be able to make an immediate sale whenever you need to.  With rare coins, liquidity is often tied to whether or not you’re able to find a suitable buyer that will purchase the coin at the right price.  This is a reason why it is so important to develop a healthy, consistent relationship with your precious metals dealer.  Many times, the dealer who sold you the coin will be willing to act as an intermediary and help you find a buyer at the price you want to sell for.

The best option is to diversify and hold both: gold, silver, and platinum bullion allows you to take advantage of market fluctuations with ease due to liquidity, while rare coins allow you to hedge your investment against those same market influences and potentially significantly profit in the process.

If you have any questions, we would love to speak with you and address your concerns and questions about bullion and rare coins.  Give us a call at 1(877)795-9585.