Bullion Coins and Numismatic Coins: The Differences
What exactly is a numismatic coin? There are many people who believe that coins currently minted
such as American Eagles, Canadian Maple Leafs and Chinese Pandas are "rare coins". In the case of
the American Eagles some of the confusion arises from the fact that the obverse (front) of the
coin takes its design from the St. Gaudens $20 gold coin that was minted from 1907 to 1932. Whereas
the St. Gaudens is a coin sold on its numismatic merits, the American Eagle is sold primarily on its
bullion content. Yet, to the novice, the two one ounce coins look alike due to the front design. In
addition, promoters and telemarketers have presented coins such as the Chinese Panda as "rare coins"
and other currently manufactured coins as "limited editions" furthering confusion as to what constitutes a
In this supplement, three categories will be discussed. The bullion coin, the numismatic coin
and the semi-numismatic coin.
This is the easiest area to explain. Bullion coins are valued based on the amount of gold, silver or
platinum contained in the coin. The coins are usually denominated in weights of 1/10 ounce, 1/4 ounce,
1/2 ounce and 1 ounce. The price is based on the "spot" price of gold, silver or platinum plus a
premium for manufacturing by the issuing country and a commission for the selling dealer. Commissions
are small, usually 2% to 6% of the selling price depending on the type of coin and the quantity
purchased. These coins are currently minted and are not used as currency although some coins display
a denomination. For example, the one-ounce American Eagle shows a $50 denomination on the coin.
Yet, the purchase price of this coin is presently $331.90 based on a "spot" price of gold at $321.50
per ounce. There is no wisdom in spending this coin for it's face value of $50.00. Bullion coins of the
same size but from different sources vary in price due to the amount of precious metal in the coin.
Some countries have more hardening metals in their coins, such as nickel or copper, than coins from
other countries. The Mexican 50 Peso is a physically larger coin than the Canadian Maple Leaf yet is
worth less since it has less gold than the Maple Leaf. The price movement of bullion coins follows
the price of the metals market. The coin form is simply a more convenient method of physically holding
the asset. Coins are only one form of bullion, with ingots (from 1/4 ounce to 100 ounce)
and bars (1 kilogram and up) as other common forms. In addition, many bullion coins are privately
minted since they are not a currency item. Examples of private hallmarks are Johnson Matthey and Engelhard.
All bullion coins are sold in the metals market using a bid-ask system that is quoted daily.
Numismatic coins are valued on their collector value rather than the intrinsic value of the metal
weight. The coins are predominantly minted for use as currency. Due to the fact that
many of these coins were used as intended, the remaining supply of coins that exist in a virtually
pristine condition is very small. This small supply of coins is sought by the many worldwide collectors
which establishes a classic supply/demand scenario. The third element is condition or "grade." Unlike bullion coins, numismatic coins are not valued based on
the amount of the precious metal contained but solely on the price that a willing buyer will pay for
the coin in an open competitive bid system. This is much like the art market where paintings sell to
the highest bidder; however, the rare coin market is more highly organized with established prices for
coins that are independently published on a weekly basis, in addition to having a worldwide computerized
bidding network (CCE). The coins are priced based on their individual characteristics, such as date,
mint mark (the city where it was minted), type (such as one cent pieces, nickels, dimes, quarters,
etc.), metal (copper, nickel, silver or gold), rarity and condition. Numismatic coins can be sold
either by auction or through the wholesale network. The table below provides a vivid example of value
differences for a one ounce American Eagle bullion coin (based on spot price of gold of $321.50) and
a 1913 $20 St. Gaudens (also containing approximately one ounce of gold) in grades of MS64 and MS65.
$20 St. Gaudens
$20 St. Gaudens
This category of coins is for numismatic gold and silver coins that are very common and priced with a
dominant emphasis on the metal value of the coin rather than the collector value. These coins are either
very common or in very poor condition or both. For example, using the 1913 $20 St. Gaudens in a poor
condition of "Fine -12", this coin sells for only $390. This is slightly more than the price for the
American Eagle. Common examples of these coins are low quality $20 U.S. gold pieces, common foreign gold
(Russian 5 Rubles, German 20 Marks) and common silver coins usually traded in poor condition. "Junk
silver" bags contain a face value of $1000 in silver coins than contain either 90% silver or 40%
silver in their composition. The 90% silver sells for $3,410 and the 40% bag sells for $1,370 (based on
silver spot at $4.42 per oz.) The semi-numismatic coins are popular for several reasons. When numismatic
coin values increase rapidly, these coins historically tend to increase more than pure bullion coins. In
addition, under current law, semi-numismatic coins are protected from bullion confiscation as occurred in
1933. In such a similar scenario, buyers of semi-numismatic coins would profit from the potentially
dramatic price increase due to the demand placed on these coins. The premium paid for this added security
is a small percentage over the price of a standard bullion coin. Semi-numismatic coins are sold only via
wholesale outlets since there is no collector demand to make an auction liquidation profitable.