Bullion Coins versus Collectible Coins: What is the Difference?
The Short Answer
The main difference between bullion coins and collectible coins comes down to personal preferences. While modern bullion coins contain a standard amount of Precious Metals, older collectible coins are often made with similar ratios of Gold and Silver and may possess additional historical value to some collectors.
What are Bullion Coins?
Bullion made from Precious Metals and produced specially for investment purposes comes in three distinct forms: bars, rounds and coins. Worldwide, the most popular form for private investors is bullion coins. This type of coin is different from regular currency because it is not meant for circulation as payment for goods in stores.
Among the reasons for the attractiveness of the bullion coin is the portability. Because each coin is manufactured to a standard weight, Gold, Silver or Platinum bullion can easily be stored, transported or exchanged for currency. The accepted standardization of purity is also attractive to investors.
Some of the most popular Gold bullion coins in the world are the American Eagle, South African Krugerrand, Canadian Maple Leaf and Austrian Philharmonic. Because national governments issue bullion coins struck at official mints, there is a level of comfort and security about the origin upon purchase. They also feature the year the coin was struck, beneficial for tracking the source of the investment and helping with future authentication.
What Makes Certain Coins Collectible?
Purchasing antiques or fine jewelry made from Precious Metals as an investment is tricky because there are no standard practices to dictate the actual content of Gold, Silver or Platinum. For investors who appreciate the history of their holdings in addition to the current market value, collectible coins are a common choice.
Certain types of historical coinage, primarily Gold coins, are traded with regularity in the investment world. Some of these coin series include the British Sovereign, the Swiss 20 Franc and the German 20 Mark. For mintage years that date back to World War I and prior, many European coins have a value slightly higher than modern bullion coins. However, collectible coins from the U.S. and Europe tend to have values that go up and down over time.
Another reason Precious Metals investors may favor collectible coins has to do with government action taken in the early 20th century. In the 1930s, President Franklin D. Roosevelt closed banks due to the Great Depression and seized all Gold bullion via executive order, going so far as to ban Gold ownership in any form. Because of this history, many investors diversify their portfolio to include historic collectible coins, hedging against any similar executive orders in the future. Even when FDR ordered the turn-over of bullion to the government, rare collectible coins were exempt from seizure and some citizens did not turn in their Gold as ordered. In 1962, the U.S. Treasury officially defined all coins minted before 1933 as collectors’ items, further protecting them from future government appropriation.
Bullion vs. Collectible Coins
Precious Metals of any kind have proven to be an essential investment commodity. Tracking values from the early 1970s through today, Gold prices in particular have risen at a rate three times greater than stocks. Both historic and bullion coins share the distinction of being commodities that are collected and stored, rather than consumed. The difference between these two types of investments mostly comes down to personal preferences. While modern bullion coins contain a standard amount of Precious Metals, older collectible coins are often made with similar ratios of Gold and Silver and may possess historical value to some collectors.
Precious Metals produced today still have the same benefits they offered centuries ago: A tangible asset providing both historical and monetary value to collectors, investors and governments. Gold and Silver bullion are held as an asset by almost every government treasury in the world. Nearly all Gold that has been mined and manufactured throughout history is still around today. Just think about that. A fraction of the Gold found in your U.S. Mint-issued bullion coin may have been traded during the reign of the Roman Empire.