Are rare gold and silver coins better than bullion?

The slew of gold dealers in the United States means fierce price competitions among dealers, and for household investors it can also mean confusion. Some dealers swear by rare coins while rival dealers promote bullion as the only acceptable gold investment. Is one form of gold and silver better than others? Webster’s Dictionary defines “better” as “more advantageous and/or effective” so to determine if rare coins have more advantages than bullion one must determine what effects each of these two investment vehicles have on portfolios’ values.

Rare gold and silver coins cost more than their bullion counterparts of equal weight and purity. This may sound like a disadvantage, but consider the fact that while gold bullion coins have increased over 500 percent in the last decade, many investment-grade rare coins have outperformed that mark. Unlike modern-day coins, pieces like Double Eagles and Indian Heads are no longer minted so their rarity value tends to go up each year even if the gold spot price falls. Many investors prefer to pay a little more up front to get the increased profit potential that rare coins provide. However, due to the nuances of the rare coin market it is not advisable to buy rarities as a short-term investment.

A major reason many people prefer rare gold and silver coins has to do with an executive order that was signed by US President Franklin D. Roosevelt in 1933. The order forbade the hoarding of gold bullion and made it illegal for US citizens to possess more than five ounces of gold bullion at any one time. The law was repealed in 1976 but many Americans fear future government intervention in our financial markets. Rare gold coins were specifically exempted from confiscation in 1933 and many people choose investment-grade rare coins today for that reason. This is only an advantage for people who believe that another precious metals confiscation is possible, and investors should carefully research the historic gold confiscation before deciding on bullion or rare coins.

Rare coins and bullion each have their own advantages; the “better” or more advantageous investment depends entirely on the investor’s financial outlook and point-of-view. Both forms of gold and silver have the potential to gain value and the risk of tanking. Find a qualified (and ideally non-commissioned) professional who can help you set goals and choose the right type of gold for you. GoldSilver.org has a free investment tutorial and the latest copy of Real Money Magazine to help you get started, and investors who would like free product and company recommendations can contact us directly at 1-800-394-3337.

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