One of the first questions you’re likely to have when you start investing in gold is how to decide between certified coins and bullion. Bullion costs less per Troy ounce of gold than certified coins, which could reasonably make you question why to invest more for the same amount of gold.
Certified coins cost more for a reason – for several reasons, actually. Bullion has its role to play in gold investing, but for many people interested in buying gold, certified coins are the better choice.
What’s the Difference Between Gold Bullion and Certified Coins?
Bullion is gold in its simplest form. A piece of bullion is valued based on its weight and purity (which is measured in karats, 24 karats is the purest gold available). It typically comes in either bar form or as bullion coins. Because bullion is gold in its most basic form, the value of your investment is directly tied to the spot price of gold. When the spot price of gold goes up so does the value. Conversely, when it goes down so does the value of gold.
Certified gold coins have a specific design printed on them. That extra bit of fashioning makes them into something more distinct than bullion. More than that, they’ve gone through the extra step of having their condition evaluated by a reputable third-party organization. For all certified coins, one of the two main coin grading services, the Numismatic Guaranty Corporation (NGC) or the Professional Coin Grading Service (PCGS), has evaluated the coin and provided their seal of approval for the grade you see it listed as.
That certification ensures their value is no longer tied to the larger gold market. The coin becomes a commodity in and of itself.
Why Certified Coins are a Smart Investment
Now you understand just what a certified gold coin is, but you still might not get why they would be worth spending more on than a piece of bullion.
A Third Party Has Confirmed the Authenticity and Condition of Certified Coins
Any proof coins produced by the U.S. Mint already have their precious metal content guaranteed by the government, but the certification process takes things a step further so that any certified coin you buy (from the U.S. Mint or otherwise) is guaranteed to match the grade and purity it’s labeled as being.
This part is worth reiterating since gold scammers do exist. Certified coins have been evaluated by an organization with no direct stake in the sale. You don’t have to trust some random seller who assures you the coin is valuable; the certification process provides a level of trust you can count on.
When the Price of Gold Falls in the Market, Certified Coins Often Maintain Their Value
This is a key point. Bullion investments are directly tied to the sometimes volatile gold market. While many experts recommend gold as a long-term investment, as with any market, the value of gold falls from time to time. If the bulk of your investment is in bullion, then the value of the gold you own falls right with it.
If a significant portion of your gold investment is in certified coins, then you can easily weather the ups and downs of the gold market without much concern. Certified coins often maintain their value, and sometimes even gain in value, at times that other gold commodities lose worth.
Certified Coins Have the Rarity Factor
One bar of bullion is like any other, but a coin pressed at a particular time with a particular inscription is part of a limited release. As with a work of art or classic car, the very fact of there being a limited number of a certain coin in the world is a big part of what gives it value.
Certified coins are encapsulated in a durable protective slab. You can usually watch them become worth more over time as the available coins like it fall into private hands and fewer and fewer of them remain available for sale. When that rarity causes interest to grow, the value of your investment grows with it.
They’re Interesting and Beautiful
Gold’s beauty is one of the original reasons people started using it for currency hundreds of years ago. Certified coins let you appreciate that aspect of its value as well as the monetary worth of the item.
If you care about collecting, instead of just investing, then something that has some character and beauty to it is worth far more than just its price. Gold, in general, will bring more beauty into your life than a typical investment in something like stocks and bonds (a stock certificate isn’t much to look at).
Coins, in particular, have that additional bit of design that gives them something a little bit extra when it comes to aesthetics. That might not be enough reason on its own for you to buy certified coins, but it’s a nice bonus on top of everything else on this list.
Certified gold coins are well worth the cost, but many investors actually recommend having both certified coins and gold bullion. Diversification is the name of the commodities game after all. If you invest in both, you not only diversify your financial portfolio with precious metals but also within precious metals.