Numismatic coins, which are considered incredibly rare and worth more than their metal content, are no longer produced in modern times. Numismatic coins are held in high esteem by collectors and generally collectors are the only individuals who purchase these coins, classifying these types of coins, especially gold coins, not as investments in the typical sense. In fact, some gold and silver sellers define numismatic as a term for collector coins having added value by their collectors, such as the coin’s rarity and beauty, on top of the value the coin’s metal content contains. So what do the markups and premiums associated with numismatic coins, especially gold numismatic coins, look like?
The reason numismatic gold coin can sell for a much higher price than what its metal content is actually worth is all due to collectors. The collectors of numismatic coins drive the prices. These collectors often overlook the coins actual metal value. Simply put, the collector purchasing the coin values the coins rarity and beauty more than he or she values the actual worth of the coin’s metal content. The reasoning that these coin collectors use in regards to a coin’s value is what generally drives the markups associated with numismatic coins. In this situation the old saying really comes true, that beauty, or value, is in the eye of the beholder. In fact, numismatic silver and gold coins can be compared to any other tangible investment like stamps, baseball cards, guns, old books, and etcetera. Jay Taylor, a former banker and value investor, recently wrote this about numismatic coins on his website miningstocks.com:
Unless you wish to collect numismatic coins for the sake of their art rather than for their gold content, I do not suggest you buy numismatic coins as an investment hedge against declining stocks and bonds and other paper-denominated assets. In addition to not being good hedges, these coins can be very expensive in relation to their intrinsic gold value and frequently are subject to questionable pricing practices by dealers. Also, the market for numismatic coins is not nearly as liquid as for regular bullion coins.
In regards to numismatic gold coins there are no specific premiums associated with these coins. Many coin sellers will state that a numismatic coin is one with a premium of 15% or more over its gold value, however this is not true. Although in 1984 a regulation was proposed in the Federal Register to make it so that a coin with a premium of 15% or higher over its gold value is considered numismatic and could be seized just as many coins were in 1933, this regulation was never adopted.
While some look to numismatic coins, gold or silver, as investment hedges in uncertain economies, many recommend that this practice be avoided and that investments in other currencies be chosen.
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