Choosing the Right Investment Metals

After selecting from the three basic types of precious metals (gold, silver, platinum), the next step is to choose the investment category. Each of the listed categories has different characteristics, advantages and disadvantages. All physical investment metals carry a premium or added value above the current 'spot price.' The metal has to be mined, purified, assayed and configured into the form of a bar then into a coin. These cost factors are priced into the value of physical metals. The 'above spot price' of legal tender coins varies with bullion being the lowest and certified-graded coins being the highest.

The market premium is determined by factors such as dealer sales price, rarity, condition, mint, grading and supply and demand.

Choosing the Right Investment Metals

Bullion consists of bars and newer minted government coins such as the Chinese Panda, American Eagles, U.S Buffalos, Canadian Maple Leafs, Austrian Philharmonics, and South African Krugerrands. Bullion is mass produced each year and traded closer to the corresponding spot market price. You can purchase bullion slightly over the spot price and liquidate/sell it slightly under the spot price. The price is set by the mint, and overall open market demand. Certain bullion products are legal tender and some are non legal tender. Bullion is mostly acquired by institutions and corporations in large bulks as a short-term investment for small percentage gain.

Under past and current Federal laws, these government coins and bars require dealer reporting via an IRS1099 form. When you liquidate or sell government coins or bars and the cash amount exceeds $600, your personal information is requested including your name, address and social security number. These non-confidential transactions are reported to the IRS for their use of tracking etc. Government bullion coins and bars have been recalled, banned or prohibited by the government in the past. We mention this not because we foresee it happening in the future, but because it is a commonly asked question.


Are you looking for the privacy benefits that certified-graded coins offer without the high collector premiums?

Semi-numismatic coins are part numismatic and part bullion. Their value is set between bullion coins which typically carry the lowest market price and certified-graded coins which carry the highest premium. Investors looking to capitalize on the precious metals bull market acquire semi-numismatics because their value is directly affected by the corresponding spot market. The industry commonly refers to semi-numismatic coins as “Private Metals” offering the most metal content for your dollar in a non-government supervised investment. If you're looking for profit potential, a hedge against inflation, wealth preservation, and want to stay off the radar --- semi-numismatics are the asset of choice!

Semi-numismatic coins are raw, pre-1933 U.S and European Gold coins such as St.Gaudens and British Sovereigns --- and pre 1935 U.S. Silver coins such as the Morgan Silver Dollar and the Peace Silver Dollar.

These coins are not minted anymore due to their limited supply. History has shown that these semi-numismatics coins tend to be resistant to downward pressure in the market. They can often outperform bullion because of demand factors and their lower pricing.

Under past and current laws, these coins are exempt from dealer reporting of IRS 1099 form. No personal information like your social security is required when you cash out. Confidential transactions like this are favored by those concerned about the sharing of personal information. In addition, numismatic coins have been exempted from past government recalls, bans, and gold bullion prohibition. We mention this because it is a commonly asked question.

Certified-Graded Coins

Certified-Graded coins are full numismatic coins and carry high collector premiums well above the corresponding spot price. These coins are graded by two of the world’s most respected grading companies: Numismatic Guaranty Corporation (NGC) and Professional Coin Grading Service (PCGS). These coins are sealed in a transparent hard casing with a barcode and graded as Mint State (MS), 60 to 70. The higher the number, the higher the value of the coin. Certified-Graded coins are bought mostly by collectors, not investors who are typically trying to get the most metal content for their dollar. All numismatic coins carry higher premiums over bullion price. Higher graded coins like MS 68 to 70 may have a thinner trading market. The most compelling aspect of certified-graded coins is they have a history of stable pricing during volatile market conditions, meaning they do not tend to react to downward pressure in a falling market and have outperformed bullion up to 5 to 1 due to supply and demand ratios.

Under past and current laws, these coins are exempt from dealer 1099 reporting criteria. No personal information such as your social security number is required when you cash out. Such confidential transactions are favored by people with privacy concerns. Numismatic coins have also been exempted from past government recalls, bans and gold bullion prohibition. We mention this because it is a commonly asked question.

For more information on this topic, check out what best-selling author and private wealth manager Rob Russell thinks in: "Holding the Right Kind of Gold." Click the U.S. News icon below.