Many new investors in physical precious metals are unaware of how to invest their money to ensure the best returns and preservation of their wealth. There are two options for investors to choose when deciding to invest in physical precious metals: Numismatics or Bullion. Our team at New Orleans Silver and Gold have put together a short breakdown outlining the difference between these two investments.
According to Wikipedia, numismatics is the study or collection of currency, including coins, tokens, paper money and related objects. Does this mean that all coins and currency are numismatics? The answer is no. In short, something numismatic must be rare. Not all notes or coins/bars are numismatic. How do I know if a coin is numismatic? The answer to this question can sometimes be tricky. There are two major factors that determine the numismatic nature of a coin: rarity and condition. Most inexperienced investors believe that because a coin is old that it must be rare. In many cases the age of coin does not make it rare. For example, a 1921 Morgan silver dollar is 100 years old, but it is not a rare coin because 44 million of these coins were minted and there are many available on the market today for purchase. In contrast, a 1921 Peace silver dollar is a rare coin because only 1 million of these coins were minted and their availability is rather scarce. Therefore, most 1921 Peace dollars are worth 3 to 5 times more than 1921 Morgan dollars. The other factor that dictates the numismatic nature of a coin is its condition. Coins are graded on a scale of 0 to 70. For example, although any 1921 Peace dollar is a numismatic coin, a MS-65 1921 Peace dollar is many times rarer than a 1921 VF-20 Peace Dollar. This is because there are many more VF-20 1921 Peace dollars in existence than MS-65 1921 Peace dollars.
Another important factor when understanding rare coins is that not all grading companies are equal when it comes to numismatic coins. Only NCG (Numismatic Guaranty Corporation) and PCGS (Professional Coin Grading Corporation) are recognized as the industry standard for grading numismatic coins. Both NGC and PCGS implement grading standards that are far superior to all other companies on the market. Don’t be fooled by other third-party graders that claim to be as respected amongst the numismatic community as NGC or PCGS. This is simply not the case.
In conclusion, numismatic coins are very difficult for the average investor to understand and we do not recommend that the majority of our clients invest in Numismatic coins. Their values can rise and fall drastically even if their intrinsic value continues to go up. Many numismatic coins contain both an intrinsic and numismatic value. For example, a rare MS-69 $20 Pre-1933 U.S. Saint Gaduins $20 gold coin contains .967 troy ounces of gold which will always go up or down as the price of gold goes up or down. On the other hand, the numismatic value (the value above the price of gold) can shrink or expand as the price of gold does the same. Oftentimes when the price of gold goes up, the numismatic value goes down and visa-versa.
Physical bullion can be defined as investment grade gold, silver, or other precious metals in the form of coins, bars, or ingots that are purchased for their intrinsic value as a vehicle for investors to preserve the purchasing power of their currency. Physical gold, silver, platinum, or palladium bullion coins or bars are purchased based on the value of the actual precious metal they contain. These products trade in relation to the international spot price during the time of purchase. For example, if you are purchasing a 1 troy ounce Gold American Eagle bullion coin and the spot price of gold is $1900 per ounce, you will pay $1900 plus whatever the premium over spot is at the time. Furthermore, the value of bullion products correlates directly with the spot price of precious metals. If gold and silver move up or down, your investment follows.
This is what we recommend for 95% of our investors at New Orleans Silver and Gold. Most clients who seek physical gold and silver as investments do so to protect their wealth from inflation. Buying physical precious metal bullion coins in the most straightforward, direct, and secure way to do this. If you are interested in purchasing physical precious metals today, contact one of our brokers at 504-858-4653 or email email@example.com.