If you watch any cable television these days, you’ve no doubt seen one gold advertisement after another.  And all of them recommend buying gold bullion as the way to enter the gold market.  Not surprisingly, a huge percentage of our clients at Wholesale Direct Metals call us initially looking to buy gold or silver bullion.  It’s at that point we tell them, yes, we’d be more than happy to sell them bullion, “but are you aware of the other gold and silver investment products that offer many advantages over bullion?”  Most of the time they are not aware, so we take the opportunity to do what we enjoy most:  arm our clients with game-changing investment guidance.

The fact is, bullion is not the only way you can invest in gold and silver, and it’s very often not the best way to invest in gold and silver.  You can often get the best out of gold and silver by investing in numismatic or semi-numismatic coins, sometimes referred to as certified coins.

In short, buying numismatic gold coins offers you numerous benefits over gold bullion:

• Numismatic gold coins are investment-grade and often outperform bullion investments due to the added value of rare coins
• Numismatic gold coins can be less volatile than bullion because they are not paper or ETF traded
• While gold has recently traded close to historic market highs, numismatic coins are well below their historic highs.  Their upside profit potential is very significant, while their downside risk remains quite small.
• Numismatic gold coins are completely private and non-reportable and can be bought and sold in any amount without paperwork
• Numismatic gold coins are not subject to government confiscation as gold bullion was in 1933

It’s a good idea to understand numismatic coin investing before making a major investment in numismatic coins.  The good news is, it really just comes down to a simple definition of each.  “Bullion” refers to gold that trades solely for its weight,  and “numismatic” refers to a coin that has a value premium in addition to its weight, usually because it is limited in population and has some privacy advantages.  Bullion can be a bullion coin like a Canadian Maple Leaf or it can be a bar or ingot in various sizes.  Bullion is worth nothing more than its weight when selling and, when buying, will be its weight plus a mintage fee.  Mintage fees are larger on coins and fractional coins than larger bars, but all bullion has a mintage fee to buy it.

Numismatic coins, by contrast, maintain a premium to their weight and can be sold for their weight plus whatever the current premium is.  Numismatic coins also tend to be more stable than bullion as they do not have a paper-traded component.  While gold bullion has had an impressive record of profitability since the mid-1970's, there really is no comparison with pre-1933 numismatic gold coins.  A $1,000 basket of pre-1933 numismatic gold coins in 1970 was worth a stunning $57,977 in 2007, and it’s worth even more today.

Numismatic coins also offer more privacy than bullion as they are non-reportable and less visible to the government.  With some forms of gold bullion, a 1099 form must be completed. This is not the case for pre-1933 numismatic gold coins, for which there are no reporting requirements whatsoever.  Pre-1933 numismatic gold coins are one of the few remaining investments today that can be accumulated privately and confidentially.  They are the least visible form of wealth.  By investing in them, you are not revealing a single thing to the world at large.  While banks and brokerages require the extensive disclosure of client information to governmental agencies, pre-1933 numismatic gold coins are absolutely free from this kind of intrusiveness.

As a rule of thumb, if you are trading in and out of gold several times a year, bullion might be a better asset for that strategy.  Yet numismatic coins are geared to the saver/investor who wants wealth preservation over a longer time-frame and when privacy and a lack of government interference is important.

A recent study by Penn State University, provided to the Joint Committee on Taxation of the House and Senate, showed that U.S. rare coins were a better hedge than gold and produced better investment returns.  The study served as the investment basis for legislation that was passed by Congress and which provided for the inclusion of gold in Individual Retirement Accounts.  The conclusions over the 28-year period covered by the report were remarkable:

• Rare coins were a better inflation hedge than gold bullion.
• Rare coins were a better hedge than gold bullion against falling prices for stocks and bonds.
• Rare coins produced significant profits even during periods when the price of gold bullion was falling.  For example, from 1988-1990, rare coins went up more than 100%; the price of gold bullion fell from $500 to $360.
• The average annual return on rare coins was more than 200% greater than the return on gold bullion.
• The return on rare coins in their best year was approximately 100% greater than the return on gold bullion in its best year.
• The return on rare coins in their three best years was approximately 100% greater than the return on gold bullion in its three best years.

Many financial advisers recommend that investors place 10% to 20% of their discretionary funds in tangible assets to maintain a properly diversified investment portfolio.  Rare U.S. coins have proven to be an excellent hedge against the effects of inflation.  Although renowned for their performance in periods of high inflation, rare U.S. coins have generated strong long-term price gains in virtually every period of economic growth over the past thirty years.  They can also be very useful in reducing the overall volatility of an investment portfolio because, on average, they tend to move in the opposite direction of paper investment vehicles.  Thus, rare U.S. coins can provide investors with security and peace of mind.

Furthermore, with the advent of the independent coin grading services – Professional Coin Grading Service (PCGS) and Numismatic Guaranty Corporation (NGC) – rare U.S. coins have become the most liquid collectibles of all.  On a typical trading day, thousands of certified rare U.S. coins are bought and sold on the Dealer Trading Network.

Below is a list of The 7 Best Gold & Silver Investments we recommend to our clients at Wholesale Direct Metals.  All of these investments are rare numismatic coins that maintain all the advantages of numismatic investing we have detailed throughout this article.

Best Investment #1:  St.  Gaudens Gold

$20 Saint Gaudens gold coins, also known as Double Eagle Gold coins, were minted from 1907-1933.  The $20 Saint Gaudens gold coins were commissioned by President Theodore Roosevelt and designed by sculptor Augustus Saint-Gaudens.  $20 St.  Gaudens gold coins are considered by many to be the most beautiful of U.S. coins.  Learn More

Best Investment #2:  Liberty Gold

$20 Liberty Gold coins, also known as Liberty Head Gold coins, are the most popular and recognizable coins of their day.  Designed by James B.  Longacre, the obverse of the $20 Liberty Gold coin features Miss Liberty donning a crown inscribed with the word “Liberty” and thirteen stars representing the original thirteen colonies.  The reverse features a bald eagle behind a striped shield and “United States of America” arced around the top.  Learn More

$10 Liberty Gold coins, also known as Liberty Eagle Gold coins, were one of the most circulated and popular coins in U.S. history.  $10 Liberty Gold coins were minted from 1838 to 1907 with a diameter of 27mm and containing nearly half an ounce of pure gold.

$5 Liberty Gold coins, also known as Half Eagle Gold coins, were the first gold coins minted by the United States government.  Millions of $5 Liberty Gold coins were minted between 1866 and 1908 and almost all were used as currency.  $5 Liberty Gold coins are the only U.S. coins to have been struck at all seven U.S. Mints open during its circulation.

$2.50 Liberty Gold coins, also known as Quarter Eagle Gold coins, were designed to look very similar to the other Liberty Gold coins.  The obverse of the $2.50 Liberty Gold coin contains an image of Lady Liberty with her hair in a bun and wearing a coronet inscribed with the word “Liberty” and is surrounded with 13 stars which represent the 13 original colonies.  The reverse side of the coin has the American Eagle with its head tilted sideways holding an olive branch in one claw and arrows in the other.

Best Investment #3:  Indian Head Gold

$10 Indian Head Gold coins were commissioned by President Theodore Roosevelt and designed by sculptor Augustus St.  Gaudens.  The $10 Indian Head Gold coins use raised images rather than incused images as those featured on the $2.5 and $5 Indian Head Gold coins.  The obverse side of the $10 Indian Head Gold coin includes the Head of Liberty wearing a headdress containing the word “Liberty” and a 13 star arc along the upper edge representing the original 13 colonies.  The reverse side contains the image of an eagle perched on arrows and olive branches.  Learn More

$5 Indian Head Gold coins were designed by sculptor Bela Lyon Pratt.  $5 Indian Head Gold coins were the first to be minted using the incuse relief method, which features recessed images rather than the standard raised image.  $5 Indian Head Gold coins were the first coins to feature an authentic American Indian.  The obverse side of the $5 Indian Head Gold coin contains a Native American in war headdress and 13 stars along the edges which represent the original 13 colonies.  The reverse side of the coin contains an eagle perched on arrows and olive branches.

$2.5 Indian Head Gold coins were also designed by sculptor Bela Lyon Pratt and joined their $5 counterparts as the first to be minted using the incuse relief method, which features recessed images rather than the standard raised image.  $2.5 Indian Head Gold coins also join the $5 coins as the first to feature an authentic American Indian.  The obverse side of the $2.5 Indian Head Gold coin contains a Native American in war headdress and 13 stars along the edges which represent the original 13 colonies.  The reverse side of the coin contains an eagle perched on arrows and olive branches.

Best Investment #4:  Gold Proof Eagle

The U.S. Mint produces proof versions of Gold Proof Eagle coins for collectors, also known as Gold Proof Sets.  Gold Proof Eagle coins are semi-numismatic with all the privacy and legislation benefits of a full numismatic coin in a contemporary piece.  Since Gold Proof Eagle coins are produced by the U.S. Mint, each coin's content, weight and purity are guaranteed by the United States Government.  Gold Proof Eagle coins are packaged in a custom-designed portfolio presentation case.  Learn More

Best Investment #5:  Silver Proof Eagle

The U.S. Mint produces proof versions of Silver Proof Eagle coins for collectors.  Silver Proof Eagle coins are semi-numismatic with all the privacy and legislation benefits of a full numismatic coin in a contemporary piece.  Since Silver Proof Eagle coins are produced by the U.S. Mint, each coin's content, weight and purity are guaranteed by the United States Government.  Silver Proof Eagle coins are packaged in a custom-designed portfolio presentation case.  Learn More

Best Investment #6:  Morgan Silver

The Morgan Silver Dollar was minted in the U.S. intermittently from 1878 to 1921.  The Morgan Silver Dollar is named for its designer, George T.  Morgan.  The obverse depicts a profile portrait representing Liberty, while the reverse depicts an eagle with wings outstretched.  Containing about 90% silver content, Morgan Silver Dollars are one of the most popular collector coins in the U.S.  Learn More

Best Investment #7:  Peace Silver

The Peace Silver Dollar was minted from 1921 to 1928 and again in 1934 and 1935.  Designed by Anthony de Francisci, the Peace Silver Dollar’s design is emblematic of peace.  Its reverse depicts an eagle at rest clutching an olive branch with the legend "Peace.”  The Peace Silver Dollar was the last U.S. circulating dollar coin to be struck in silver.  Learn More

Contact Damon for Free Expert Advice on your individual investment questions.

Also see:

The 7 Deadly Myths of Gold Investing
Why Gold Will Surge to $3800 per ounce

What are the best gold & silver coins to invest in?

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St. Gaudens Gold
Liberty Gold
Indian Head Gold
Peace Silver
Morgan Silver
Junk Silver
Gold Proof
Silver Proof