Choosing the Right Investment Metals

After selecting from the three main types of precious metals—gold, silver, and platinum—the next step is to decide how you'd like to hold these metals, whether for personal possession or within a qualified retirement account. Each of the listed categories has different characteristics, advantages and disadvantages. All physical precious metals typically include a premium above the current “spot price.” The metal must be mined, purified, assayed, configured into the form of a bar -- and then into a coin. These factors are priced into the cost of physical metals. The 'above spot price' of our coins varies with bullion being the lowest and certified-graded coins being the highest.

Retail pricing is influenced by factors including sales commissions, dealer-set prices, product condition, mint origin, grading, rarity, and current market supply and demand.

Choosing the Right 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 generally 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 sometimes acquired in bulk by institutions or corporations as part of broader short-term financial strategies.

Under past and current Federal laws, the clients' sale of these government coins and bars requires dealer reporting via an IRS 1099 form. For certain sales exceeding specific thresholds, we are required to collect personal information such as your name, address, and Social Security number, in compliance with IRS reporting rules. These reportable transactions are submitted to the IRS as required under federal guidelines.

Government bullion coins and bars were recalled, banned and/or prohibited by the government almost a century ago. We mention this not because we foresee it happening in the future, but because it is a commonly asked question.

Semi-Numismatics

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

Semi-numismatic coins are defined as part numismatic and part bullion. Their value is generally set between bullion coins, which typically carry the lowest market price, and certified-graded coins, which carry the highest premium because they may include numismatic value.

Many choose semi-numismatic coins because, like bullion, their value is influenced by the spot market and may also reflect numismatic demand.

These are sometimes referred to as “private metals” in the industry due to their general exemption from IRS Form 1099 reporting, depending on the specific transaction and coin type.

Some view semi-numismatic coins as offering a blend of metal content and potential collectible appeal. Depending on market factors, they may offer diversification benefits. These coins are sometimes chosen by those who prefer transactions with fewer reporting requirements.

Semi-numismatic coins are raw, pre-1933 U.S and European Gold coins such as Saint-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. These coins have shown resilience in some past market conditions, and their pricing may be influenced by collector demand and availability.

Certain historical coins may fall outside IRS 1099 reporting requirements, depending on the type of coin and transaction. Identification requirements may vary based on current federal and state regulations. Some buyers prefer coins that may allow for more privacy, depending on transaction specifics and applicable laws. Historically, some numismatic coins were not subject to certain past government gold recalls. This is noted here as a frequently asked question, not as a prediction of future policy.

Certified-Graded Coins

Certified-Graded coins are full numismatic coins and, by definition, 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, by definition, carry higher premiums over bullion price. Higher graded coins like MS 68 to 70 may have a thinner trading market. Some collectors value certified-graded coins for their historical performance in certain market conditions. In the past, they have shown pricing resilience and, depending on market demand, may trade at significantly higher premiums compared to bullion.

Certain numismatic coin transactions may fall outside IRS 1099 reporting requirements, depending on the coin type and applicable transaction rules. Identification requirements may vary under current federal regulations. Some buyers prefer coin types that may allow for more privacy, depending on how the transaction is structured and reported. Historically, some numismatic coins were not included in government gold recalls or restrictions. We note this as a frequently asked question, not as a forecast of future events.

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.