Investing in precious metals can be a great opportunity to diversify a portfolio, and collecting vintage and modern products is a fun and fulfilling hobby that many people enjoy. But how are the products valued?
Key Things To Know
The value of gold and silver coins, bars, and other products is determined by several factors. An important factor is the metal content of a product and its premium. A premium is a markup over the spot price of a precious metal. The spot price is the current market value of 1 oz of metal, and it constantly fluctuates like the stock market. It is essential to stay up to date on the latest prices before buying and selling.
Gold premiums, as a percentage of the spot price, tend to be lower than silver premiums. Also, the lower the precious metal quantity, the higher the premium because they involve more work and resources to produce per ounce. For example, a 1/4 oz Silver Eagle will have a higher premium than a 1 kilo silver bar.
How Does This Differ From Bullion To Semi-Numismatics?
The value of a bullion product is tied to the price of the metal, whereas the semi-numismatic value is tied to the price of the metal, the premium, and the collectible value. The condition of the item, its rarity, and its age all contribute to how collectors will value a coin. For example, a well-preserved coin from ancient Rome will be worth more than a brand-new coin minted last year.
Supply and demand always play a crucial part in how a precious metals product is valued, whether bullion or semi-numismatic, modern or vintage. Additionally, supply and demand can also differ between products from the same mint. For example, among U.S. Mint products, Gold Buffalos and American Eagles are some of the most widely recognized and are usually in high demand. This increases premiums when buying or selling, especially when supply is limited.
APMEX sold a 2021 Grogu “Baby Yoda” Silver coin with a limited mintage at a $10 premium over spot at the time. Since it has sold out, people are reselling these coins for four or five times that premium on resale websites like eBay because the demand is so high. Whether a product is popular because it is part of a fandom like Star Wars or it is historic and in fine condition, it will be considered more valuable the harder it is to come by.
Nuances in How Certain Precious Metals Are Valued
Sovereign Coins & Rounds
Sovereign coins and rounds can seem very similar, but these categories have distinct differences. Sovereign coins are minted and backed by governments and typically have the metal content, purity, and denomination displayed. These qualities make coins more transparent and more trustworthy since you know exactly what you’re getting. Private mints do not always include this information on their products and are not typically backed by a government. As a result, sovereign coins can be more expensive because they come from a government-backed mint.
Additionally, premiums tend to be higher on sovereign coins. This is because government mints cannot distribute coins directly and must go through other parties to sell coins, often resulting in higher premiums.
Popular & Recognizable Series
For those new to investing or collecting precious metals, it may seem strange that products with the same metal content and purity can be priced differently. In these instances, it’s important to consider how popular and well-established that product series is.
Take a look at 1 oz Gold Buffalos and 1 oz Gold Kangaroos. They have the same purity and gold content and are from reputable mints, yet the Gold Buffalo often costs more than the Gold Kangaroo for several reasons.
The Gold Buffalo carries a higher level of collectibility because it was the U.S. Mint’s first 24K Gold bullion program. Because of this, there is typically more demand for Buffalos and higher premiums that come with acquiring them from the U.S. Mint. Gold Buffalos are APMEX’s third most in-demand gold coin, for example. Additionally, some American investors prefer products that carry U.S. dollar value and are backed by the U.S. government.
On the other hand, the Gold Kangaroo is in lower demand and costs less over spot than Buffalos, resulting in that price difference. The Australian government also backs the 1 oz Gold Kangaroo since it is produced by The Perth Mint, which might influence foreign investors.
Modern & Vintage Products
People love modern coins, bullion, and vintage coins for many reasons. Modern products can be exciting because there are always new releases and series to look forward to and that cater to different fandoms in pop culture. These products can draw in other individuals who don’t normally collect precious metals because of their pop culture appeal. Vintage coins, on the other hand, carry their own fascinating history and have a rarity that modern coins and rounds don’t since they were only made for a certain time.
These precious metals categories are subject to a degree of subjectivity based on each person. A Star Wars fan would treasure a Darth Vader bullion coin in a way that a collector of Pre-1933 Gold might not, for instance.
The Impact Of Grading
Getting a certified or graded coin can come with many benefits for collectors. Companies like PCGS and NGC grade coins that are sent to them by individuals, mints, or companies. Grading quantifies a coin’s condition and authenticates the metal content and purity. Coins are graded on the Sheldon Scale that ranges from Mint State 60-70 Brilliant Uncirculated (BU), and About or Almost Uncirculated (AU) 50-58.
| Adjectival Grade | Label Abbreviation | Numeric Grade Range |
| Poor | PR | 1 |
| Fair | FR | 2 |
| About Good | AG | 3 |
| Good | G | 4–6 |
| Very Good | VG | 8–10 |
| Fine | F | 12–15 |
| Very Fine | VF | 20–35 |
| Extremely Fine | XF | 40–45 |
| About Uncirculated | AU | 50–58 |
| Mint State / Uncirculated* | MS | 60–70 |
| Proof | PF | 60–70 |
This is perfect for people who enjoy collecting coins in a certain mint state, as some enjoy collecting the highest or lowest possible grade. Grading makes a big difference with older coins because their condition could have numerous variations, and grading certifies the exact condition, eliminating any need for guesswork.
Key Takeaways
Consider all these factors when determining the value of your gold and silver products. By understanding how value is determined, you’ll be able to make the right decision when buying and selling precious metals.
