Many people invest in coins since they are precious and easy to store. You can find gold, silver, and coins for other precious metals for investment purposes. However, one thing that investors need to remember is that the coin comes in different forms.
The coins fall into three categories: Premium, bullion, and limited minted. Each of these coins has a different valuation and offers unique benefits and limitations to investors. We will discuss all of these coins to help you better understand their characteristics. Let's get right into it.
Bullion Coins
Bullion coins have the same characteristics as regular coins, except they come from precious metals like gold, silver, and platinum. These coins are ideal for people who want to buy and invest in these precious metals. They are usually in three forms, coins, bars, and rounds.
However, private investors tend to choose bullion coins for investment purposes. The thing that sets bullion coins apart from regular coins is that they are using is not to make payments. In fact, people buy these bullion coins to invest in precious metals.
There are different reasons the bullion coins continue to be the top pick for investors. The most common reason many people are attracted to the bullion coin is portability. It has the same shape and size as regular currency. Also, the gold, silver, and platinum bullion have a standard weight.
Therefore, it becomes easy for people to reserve, transport, or trade it for any currency. Moreover, bullion is widely accepted, which makes it an attractive investment option. Some popular gold bullion coins include:
- Austrian Philharmonic
- Canadian Maple Leaf
- Gold Maple Leafs
- Silver American Eagles
- South African Krugerrand
Since the governments will only issue coins struck at official mints, it gives investors assurance and comfort regarding the origin when buying the coin. The bullion coins also have the date of when they were struck. As a result, it can help you track the investment source and assist you in future authentication.
A common thing about this coin type is that the value comes from the precious metals content. So, the bullion coins' price relates to the spot prices of the precious metals. The historical trends show that at no stage did the bullion coins' value was higher than the spot price.
Advantages of Buying a Bullion Coin
Buying a bullion coin can open you to a wide range of benefits. You can invest in this coin to reap the following benefits.
No Maintenance
The best thing about investing in bullion coins is that it does not require any sort of maintenance. Unlike other tangible assets, you can store gold or silver bullion coins in your home for several years. You will find no change in their condition even after many decades, making them an ideal investment option.
Easy to Liquidate
Another advantage you can get by having a bullion coin is that you can easily sell and liquidate it for cash. The coins are in high demand due to their rarity and value. Plus, you can easily find a buyer for your bullion coins. You can also use the bullion coin as collateral against a bank loan.
Less Volatile
Unlike other investments, the value of precious metals such as gold and silver is relatively stable. Therefore, you won't see the price of the bullion coins fluctuate too often. Also, they don't lose their value over time. Gold and silver bullion coins retain their value even during economic ups and downs.
Premium Coins
Not many people are aware of the Premium coins since they are highly valuable. A Premium coin cannot be reproduced and must be minted before 1933. Therefore, these coins will become rare and more valuable over time. The Saint Gaudens is the most famous Premium coin due to its design and shape.
Since the Premiums have a historical significance and are rare, their value can be far beyond the current spot price. Their uniqueness and rarity make them a top pick for investors, causing the coin's value to go higher than the spot value.
But, similar to the bullion coin, the Premium ones also carry the ingrained worth of their precious metals content. Therefore, its value will change due to two things the rarity of the Premium coin and the current spot price.
Additionally, the coin's condition will also play a critical role in determining the coin's value. If the coin is in good condition, it will have a higher value. The following agencies can help you with the Premium coin's condition:
Both the agencies are responsible for standardizing and quantifying the Premium coin's value. They have clear criteria for the coin grading and a record of the historical data of the coin's value over time.
Advantages of Buying a Premium Coin
While getting your hands on a premium coin can be difficult, you enjoy various advantages of owning one. Here are some benefits you can get by buying a premium coin minted before 1933.
Highly Valuable
Since the coins are extremely rare, they have an immense value, which is likely to increase over time. It can be a great investment that can help you enjoy good returns after some time. They are also very easy to liquidate and will likely surge in their value as the spot prices increase.
Good Investment
Many people buy coins since they consider them a good investment option. The premium coins are rare and limited in supply, making them an ideal investment option. Their rarity will continue to increase with time.
High Demand
The US government and other entities continue to pay their debts using gold coins dated before 1933. Therefore, the premium coins will be in high demand as the government and private banks will use them to pay off their foreign debts.
Limited Minted Coins
Lastly, there are the Limited Minted coins, which are valuable due to their rarity and uniqueness. These coins are unique versions of the gold and silver eagle coins. Various distinctive features make these coins highly valuable, such as:
- Come with a certification of authenticity
- Double-struck for enhanced brilliance
- Encased in a protective container
- Have not been handled by any person
The 2016 Silver and Gold Snow Falcons are prime examples of this coin category. The Silver Snow Falcon has an amazing thickness, fantastic weight, and a distinctive size of 1.5 oz. On the other hand, the Gold Snow Falcon is available in a quarter of an ounce.
They are struck by the Royal Canadian Mint and are 99.99% pure. Also, the coin's engraving is a stunning alternative to the usual maple leaf depiction of the Royal Canadian Mint. The thing that helps Limited Minted coins like Snow Falcon is their limited quantity and availability.
Thus, these factors give the Limited Minted coins a higher value than the regular bullion coins. The Snow Falcon coins are minted a year before they retire. Therefore, their population is way less than bullion coins, making them more valuable than other coin categories.
Similar to the Premium coins, the Limited Minted ones have two opportunities where their value can appreciate. One is the increase in the spot prices of precious metals and their rarity. While the Limited Minted coins are not as rare as premium coins, they still have a higher value than their bullion counterparts.
Also, the PCGS or NGC don't grade the Limited Minted coins. Nevertheless, they are relatively easy to find in the market than Premium coins. Therefore, they occupy a middle ground between the Bullion and Premium coins.
Advantages of Buying a Limited Minted Coin
Below are some advantages that you can get by having a Limited Minted coin.
Easily Available
Unlike the Premium coins, getting a Limited Minted coin is easier. These coins are easily available in the market, and it allows you to make an investment that will give you optimal returns. Most importantly, the Limited Minted coins have a higher value and demand than the bullion coins.
Doesn't Lose its Value over Time
The best thing about the Limited Minted coins is that they don't deteriorate over time. Therefore, they retain their value, ensuring your investment is safe. The Limited Minted coins are also in demand because of their low availability.
Price Stability
Another advantage of buying the Limited Minted coins is that their prices will stay stable due to their high demand and low supply. Thus, it is a better option to mitigate the impact of inflation and ensure your money doesn't lose purchasing power over time.
Final Word
We hope you now have a clear understanding of the three coin categories. It will allow you to know the difference between the different coins that you can purchase for investment purposes. However, you need to keep factors like price, rarity, availability, etc., in mind before choosing the coin category.
Having a coin of precious metal can help you diversify your portfolio. Investors who have made some risky investments in other avenues can reduce their losses by buying bullion, premium, or Limited Minted coin. So, you should keep these factors in mind and then invest in a coin.
