When you are investing in gold and silver, you hear a lot about people telling you not to invest in numismatics unless you are looking for a new hobby or pastime. However, you might not be very well aware of what numismatics is and therefore you can’t figure out why they are such a bad investment. In order to better understand these coins and how they differ from traditional gold and silver investments, it is important that you take the time to learn a little bit about them before investing anything.
Numismatics refers to the gold coins that are created that are worth more than their own weight in gold. For example, you might have a small gold piece that is only worth $50 in gold price but because of its age, grade, denomination and/or rarity, it is worth around $4,000. This market is very unique because it has many factors that affect the value of the coin and those factors can change over time. Unlike gold bullion (coins or bars that are not graded and are only worth their inherent weight value), numismatic coins change significantly over time. Gold and silver bullion is a much more steady investment because the value is only based on the market value of bullion by weight, which means there are fewer variables and fewer risks.
If you were to spend $2,000 buying the gold piece mentioned above because it is predicted to be worth $4,000 in the near future, and then the collectibles market or the rarity of the coin changed due to some element, you could easily lose money. In the end, you could wind up with a coin that is only worth about $500 because of the current market situation for numismatics, which means you are out about $1500 in your investment. If you spend that $2,000 on gold or silver bullion instead, you will almost always get a better return on your investment in the future because the market price of precious metals is steadily increasing over time.
If nothing else, bullion at least holds value better than numismatic coins, even if it doesn’t gain anything. Therefore, you really need to take the time to consider your options. If you are looking to become a collector, numismatics is a great area to get into. If you are trying to protect your wealth with a secure type of investment, bullion is the obviously better solution.