There's enormous thirst for knowledge about precious metal coins as more
people consider whether or not investing in gold and/or silver is right for
them.
Reflecting the number of new investors currently taking their first steps
into the market, one of our most frequently asked questions is about the
differences between 'bullion' and 'numismatic' coins.
It's a great question that all 'gold bugs' will remember having to ask
themselves while developing a passion for precious metals!
What is a numismatic coin?
It helps to characterise numismatic coins so as to appreciate the
differences in the way bullion coins are manufactured and marketed.
A numismatist is someone who does more than simply collect coins. They
actively study currency, including coins and paper money, or related items
such as tokens and medals. Particularly, they're interested in its
historical, social and artistic significance.
Rightly or wrongly, the term numismatic has been adopted by many to
describe modern commemorative non-circulating legal tender releases featuring
design themes for collectors.
Produced by many of the same mints worldwide that offer bullion coins
programs, numismatic issues exhibit exceptional finishes. Unlike circulating
coinage, for example, they combine a highly polished (i.e. proof) table that
is literally mirror-like, with superb clarity and definition of the raised,
frosted elements (relief).
Proof coins were originally trial coins, hand-struck at the start of a
mintage, in order that any flaws could be detected and rectified. Then they
became a special sample kept as an example of each mintage. Today they are
considered numismatic coins - of interest to collectors.
Including intricately coloured, gilded and antiqued coins, modern
numismatic releases demonstrate the highly skilled art of the coinsmith. As
well as being beautifully finished, they are also typified by a tightly
restricted mintage, numbered certificate of authenticity, and decorative
packaging.
Motivation to acquire such coins is often complex. For many it is the
strong desire to own something rare and intrinsically valuable with an
aesthetically pleasing design that reflects a personal interest.
What is a bullion coin?
In contrast, a person's interest in bullion coins is likely to be driven
by different needs - namely, the desire to speculate in gold and silver; or,
more shrewdly, to invest in precious metals over the long term as a store of
wealth. Bullion coins can do this because they are valued on the basis of the
weight of their precious metal.
Our recently-released 1oz Silver Kangaroo is a classic example of a
bullion coin. Like the large majority of our numismatic coins, it is issued
as Australian legal tender - its guarantee of weight and purity. However, it
is mass-produced in unrestricted numbers with a more basic finish, and comes
without display packaging or a certificate.
These factors represent the key to its attraction for investors. They
allow the coin to be sold with a low mark-up or 'premium' - a small sum over
the price of metal to cover the cost of fabrication, including the wages of
those involved in design, production, quality control and so on.
As such, the price of a single Silver Kangaroo is only a few dollars above
the international 'spot' market rate for silver - the benchmark price per
ounce you see quoted on the nightly finance report. In short, it represents a
cost-effective, trustworthy, and easily tradeable method of gaining exposure
to the silver price.
(And with progressive reductions in the premium when buying these coins in
quantities of 25, 100, 250 or 500 coins, the ability to invest in silver
becomes even more affordable!)
With more than 10 million sold worldwide in less than 12 months,
investors have taken a shine to the Australian Kangaroo 1oz silver bullion
coin.
'Semi-numismatic' bullion coins
It won't take long for anyone researching the differences between modern
numismatic and bullion coins to see references to 'semi-numismatic' - a
potentially confusing third category!
The Perth Mint is probably guilty of inspiring its origin when, back in
1987, it introduced the Australian Nugget gold coin featuring a far superior
bullion finish to anything else available at the time. Essentially, this
involved striking shiny relief elements on a frosted table - the reverse of
how they appear on a proof coin.
Today, our gold Kangaroo, gold and silver Lunar, silver Kookaburra and
silver Koala bullion coin series are all renowned for their 'reverse proof'
finishes. Sold at spot plus premium, they're highly sought-after by
investors. Yet with annual design changes and, in some cases, a limited
mintage, they are also favoured by collectors.
Sometimes called 'reverse proofs', high quality bullion coins from The
Perth Mint use frosting on the coin table while the design areas are highly
polished.
Thanks to their innovative combination of quality and value, these
outstanding coins have occasionally provided canny investors with bonus
returns. Like all precious metal coins they have a 'buy back' or 'melt' value
which is aligned to the spot market. But thanks to strong collector demand
for some of our semi-numismatic releases, secondary market values have been
known to exceed the prevailing price of their metal.
