Bullion vs. Proof Metals: There Is No Debate

Bring up the question of bullion vs proof metals on any precious metals forum and you’re sure to get an earful on either side of the discussion. The truth of the matter is that this debate was settled long ago…

If the goal is preservation or growth, the smart money buys bullion every time.

And here’s why: Bullion coins are for investing. Proof coins are for collecting.

First, a quick primer. The U.S. Mint has produced gold, silver and platinum bullion coins since 1986. The Mint produces two types of coins:

“Proof” Coins
Specially minted for collectors and usually sold in a velvet presentation case, encapsulated in plastic, and come with a certificate of authenticity. They are triple stamped using specially adapted coining presses and specially polished dies. This creates softly glazed yet minutely detailed images that seem to hover over a mirrored field. Proof coins contain .999 pure content guaranteed by the U.S. Mint.

Uncirculated Bullion Coins
Minted for investment purposes, and sold to a select number of authorized buyers including major banks, coin dealers and brokerage firms. American Eagle bullion coins are the most popular coins on the face of the planet. They are produced using a single stamp method and have either a heavy frost, light frost, or brilliant polish. Again, here is the real key, bullion coins also contain .999 pure content guaranteed by the U.S.Mint.

Proof coins are for collecting. Bullion coins are for investing.

So what’s the difference?

While the “plain” bullion coins are less flashy, both types contain the exact same amount of precious metal. If you smelted them down, their value would be identical.

But proofs cost more because they have a semi-numismatic value. A numismatic coin is a collector coin that has value in excess of its metal content because it’s historical, rare or both. This value may go up or down over time depending on the demand for that particular year, coin, and rarity. If you are wanting to purchase a coin to commemorate a birth year of a child, grandchild, or any other special date a proof coin is a great choice. However, if you are looking to invest in precious metals with the understanding that you are buying an extremely finite resource, bullion is the clear winner.

How much will an individual numismatic coin be worth 10 years from now? No one knows. But we will always know what an ounce of pure gold, silver or platinum is worth no matter how shiny the coin is.

Bottom line: If your goal is an investment and not collecting, why pay more for the same amount of metal?

Beware the Numismatic Bait-and-Switch

Get more metal for your money

When you are looking to buy any precious metals product you obviously want to get the absolute best value for your dollar. The price of any individual precious metal product is determined by two things: spot price and premium at the time of purchase. Spot price is the current market price of the metal, and all products have premiums. Some coins have much higher premiums than others particularly when they are seen as having some collector or numismatic value. What many dealers will never tell you is that the premiums of proof coins give more of your money to the dealer. We follow one simple rule: Bullion coins are for investing, proof coins are for collecting.

To prove our point, let’s look at an investor who buys either three bullion silver american eagles or one proof silver american eagle:

Silver Coin Comparison

It boils down to one simple fact: With uncirculated bullion, you get more metal for your money.

Say you want to buy some proof coins because you like the look of them. For the sheer joy of it. Or maybe you want to give them to the grandkids for a graduation gift. Nothing wrong with that. They’re great-looking coins. We offer them in silver, gold and platinum for our customers who want them.

But when a precious metals company starts aggressively pushing them on you—and your goal is investment, not coin collecting—alarm bells should be ringing in your ears.

Investors Beware

Salespeople from disingenuous dealers try hard to get you on the phone to talk about their great deals on bullion for your precious metals IRA, but they have a clear financial interest in getting you to buy more expensive products. They can’t make much of a spread selling good ol’ bullion American Silver Eagles, so they try to upsell you on more expensive proof coins or other numismatic coins. Normally to do this, they will tell a clever story about why the proof coins are better for one reason or another, but do the simple math and it’s plain to see that they are always more expensive.

Often much more expensive…because some of these companies mark numismatic coins up 90–100%!

If you don’t believe that, try to buy and immediately sell a numismatic coin back to the same dealer. You will only get 50–80% of what you just paid—instantly losing a great deal of your money because of the dealer’s markup.

With West Hills Capital, you can be sure we will never try to sell you numismatic coins that don’t fit your investment goals in order to line our own pockets. Our purpose is to help you protect your purchasing power by making the right decisions with your retirement portfolio.

If you have further questions about bullion versus numismatic coins, our metals strategists are happy to discuss them with you. Call (800) 867-6768 or send us a message today.