Commodities versus collectibles: a precious metals buying guide

The Coin Shop | Michael McConnell

Before making a purchase, educate yourself on different types of precious metals.

By Michael McConnell

Troubled economic times have prompted any number of socio-cultural and economic trends in recent months, including everything from protests like the Occupy Wall Street movement to an increased interest in precious metals. According to Reuters, investors are increasingly gravitating toward gold, copper and other commodities in an attempt to achieve greater asset security; but without a proper understanding of the difference between bullion gold and numismatic gold, novice buyers may find themselves making purchases that are incompatible with their ultimate goals.

Bullion gold and numismatic gold: what’s the difference?

Bullion gold has a small mark-up from the actual value of the gold contained in the item, often as little as three or four percent. Therefore, when you purchase bullion gold, you are giving the dealer the smallest possible commission – and putting yourself in the best position to realize a profit if the price of gold goes up. While there are a variety of different gold bullion items available, the most popular and versatile products include:

  • Gold bars
  • Krugerrands
  • Maple Leafs
  • Gold Eagles

Numismatic gold, on the other hand, has a higher mark-up and is traded based on both the gold value and the collector value of each item. As such, these items require a more thorough education to ensure full understanding of how their value is derived, and how dealer markups are determined. Ultimately, buyers who purchase numismatic gold must wait until the dealer markup is overcome by price appreciation before realizing any individual profit – making such items a more complicated purchase as compared to fairly straightforward bullion. Popular numismatic gold products include:

  • Twenty-dollar Saint Gaudens
  • Twenty-dollar Liberties

Expert advice for purchasing gold from San Diego’s premier coin & bullion dealers

Because of the very distinct differences in value and purpose attributed to gold bullion and numismatic gold items, it is critical to first determine which type of item you wish to purchase before visiting a dealer. You can figure out which product is right for you by asking yourself the following questions:

  • Do I have any interest in collecting coins?
  • Do I have an interest in learning about numismatic gold and historical valuations?
  • Do I just want to have some gold as a hedge for my portfolio?

If you answered “no” to the first two questions and “yes” to the third (as many first-time buyers do), bullion gold is going to be your best purchase option. Armed with this knowledge, buyers should find it much easier to select the right products for their individual purposes: however, keep in mind that some people still end up with numismatic gold even when they originally wanted simple bullion due to the historical appeal connected to collector’s items. Each time you visit a dealer, remember that numismatic gold is priced to reflect its history and status as a collectible – and that any such purchases should only be made with a thorough understanding of both the item itself and the costs involved.

Don’t let dealer pressure or ignorance lead to a purchase that doesn’t make sense for you. Take your time and educate yourself on your options – and select a trusted, experienced dealer to ensure that your precious metal purchases reflect your own individual goals. At The Coin Shop, we take pride in giving our clients thorough, educational information: to learn more, come visit us at 7746 Girard Avenue in La Jolla, or access additional resources on our blog at

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Posted by Social Media Staff on Oct 27, 2011. Filed under Columns, Michael McConnell, Sponsored Columns. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

1 Comment for “Commodities versus collectibles: a precious metals buying guide”

  1. Nice article, but I think that anyone who invests in numismatics needs to be very weary of how illiquid they can often times be… obviously, you can always get spot price on the sell side, but I would suggest that people avoid them altogether and stick with Gold Eagles or Gold Maple Leafs.


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