Chances are there has been a time or two when you were watching TV and a commercial came on talking about some long-lost minted coin being found and available or sale. They likely also promised that if you call now you can be one of the few owners of this amazing collectible. The first ten thousand callers might even get a free toaster oven for an incredible value. There might have even been a dramatic scene of some middle-aged men dancing around like they just found the winning lottery ticket!
Vignettes like this and some others that smack of invasive advertising turn some are off-putting to some serious investors who thinking about dabbling in numismatic coins. Yet for others, who are well-versed in this niche collectible a handful of these advertised deals turn out to indeed have some long-term value.
Like all serious investment strategies, the devil is in the details. Finding the right dealer or broker always calls for doing your research. One who happens to also be a certified professional numismatist will certainly help. Finding a third party to also confer with is a good idea before sinking money in the promise of a numismatic coin. Especially if you are new to this type of physical investing.
On the other side of the proverbial coin, numismatics and other forms of collectible ornamentations are not the only means to get your hands on some physical gold. While the average person often lacks the available capital to invest in a large bar of gold bullion, there are still smaller denominations of physical gold within reach.
Indeed, there are people who don’t care about the decorative, collectible or historic value of a numismatic coin. For this segment of physical gold investor, a simple gold round might be the better investment option.
They tend to be smaller and lighter as well as much easier to store, transport, or secure than large bullion bars. They are specifically formed to be flat, round and easily stackable. There are even some numismatic organizations such as the Professional Coin Grading Service and the Numismatic Guaranty Corporation who can certify them since they do technically classify as precious metal items.
While there are many similarities between gold numismatic coins, and gold round their values are determined very differently. Taking a closer look at each can go a long way toward helping you determine which is best for your personal, physical gold investing strategy.
What Is A Gold Numismatic Coin?
In ancient times and even into the middle ages and the Renaissance period gold coins were used by many nations around the world as a form of currency. There were even organizations like the Knight’s Templar who allowed you to deposit your gold coins at one location back in Europe. You were then given an official voucher or some other type of document, which you could present upon arrival in the Middle East, where you would be given the equivalent amount of gold coins back.
While there are a few of these historic relics still floating around the world in private collections, most are only found in museums. Today, the most popular form of gold “Coins” is the numismatic coin or a collectible bullion coin.
It’s round like how you would expect a coin to be. Almost all of them have been minted by a past or a present sovereign government. While many have a legal tender face value, they aren’t the sort of thing you are going to carry around in your pocket to buy a jug of milk or pay for a delivery pizza. They aren’t meant to be used as circulation coins.
A numismatic coin’s true value is often quite different from its minted face value. Special factors like the time it was minted, age, historical context, and other features often increases numismatic coin values. There are some rare coins that are astonishingly more valuable than their face value.
What Is A Gold Bullion Coin?
Of course, numismatics coins aren’t the only type of gold coins available for purchase. Indeed, there are gold bullion coins, which are intended to be investment pieces that are not intended for circulation. Some of these coins are minted by private parties without any association with a sovereign government. With these, the face value can often be low when compared to their precious metal content.
There are some coins that are minted by sovereign governments that still aren’t intended for general circulation. For example, the United States Mint has produced and occasionally still does produce gold and silver coins like the U.S. Silver American Eagle. Its face value is only one dollar. Yet the value of its metal content alone can be as much as 14-times greater!
A lot of coins like this commemorate something and often have designs that represent cultural or patriotic events or personalities. Many sovereign nations who produce coins like this even go so far as to have their legislative body or some type of advisory committee approve the design before they can enter production.
Some of the more popular examples of collectible coins other than the US American Eagle include the 2016 Australian 1-ounce Silver Kangaroo and the 2010 Canadian 1-ounce Gold Maple Leaf.
What Is A Gold Round?
On the face of it, a gold round is relatively boring from an aesthetic perspective. They are typically produced by private mints and carry no specific face value. They are never intended to be used or circulated directly as currency. They are meant to be used as an investment metal. Any printing or ornamentation on the surface is intended only to be decorative, for someone who wants to put a little bit of their wealth on display. The value of a gold round is based directly on its precious metal content. This also means that it can go up or down depending on how market swings can affect the price per ounce of that particular precious metal.
How Are Gold Rounds And Numismatic Coins Taxed?
Just like any transaction for a physical good, things like capital gains taxes can apply. In the United States, the IRS tax policy on gold rounds, gold coins, and numismatic coin transactions is assessed at 28% unless your federal tax bracket is lower than 28%. This is due to the fact that these coins are classified as being “Collectibles. This classification also includes other forms and denominations of precious metals like bullion bars, wafers, and the like.