Have you ever seen those shopping channel ads? You know, the ones prodding you to buy fancy coins made in select and limited quantities? Those ads selling some kind some apparently amazing government coin at a fantastic price... What are these coins? Are they really from the US Mint, and more importantly, are US Mint coins a good investment?
Below, we get into the fundamentals of "US Mint" coins, and what makes them a good investment...or not. Read on.
Since 1792, the United States Mint has made coinage at various locations from Philadelphia (the original US capitol) to Carson City. First operating under the Department of State and most recently the Treasury, the mint has produced everything from the USA's original gold and silver coinage to commemorative medals. In the early and mind 1900s, the Mint even diversified into producing coins for the Philippines.
So what does this have to do with anything? Well, to start with, the US Mint has been around for two centuries. The US Mint has had a long time by any standard to produce coinage. One of the first rules of investing in coins is that a coin should be rare. What we're talking about here has a lot to do with numismatic coins. In other words, for an old coin to be valuable it needs to be rare to drive the collectible market. On the other hand, the multi-million dollar value of a 1907 Double-Eagle excites most collectors.
When asking are US Mint coins a good investment from a historic perspective, keep in mind that more coins end up in the pockets of investors than in collections. You really want to look at coin grading factors such as surface preservation, luster, strike quality, errors, and so forth.
By far the most relevant question for many US Mint coin buyers is whether US Mint bullion makes a good investment. So how can you tell? Well, start by looking at the basics: price, reputation, and aesthetics. You should arrange these in your personal order of importance. You may even add special factors such as limited edition into the mix. In our opinion, limited edition bullion is rarely worth the hefty additional price.
If you are putting bullion into your IRA, RRSP, or TFSA, you want to know are US Mint coins a good investment in term of price? All bullion coins need to be evaluated in this crucial respect. Have a look at the math. At Global Bullion, the 1 oz Silver Eagle is USD $1.00 per oz. MORE expensive than the 1 oz Silver Maple, and THAT is USD $1.20 MORE expensive per oz. than a 1 oz Silver Buffalo Round.
With that in mind, the Silver Eagle is USD $0.45 cheaper than the 1 oz Silver Mexican Libertad! Why all this talk about the Silver Eagle? Well, it's a hallmark of the US Mint and stands well in place for any of their bullion products. So well that in 2016 alone 37,701,500 Silver Eagles were sold. Why are the US Mint coins so much more expensive?
Well here's where the reputation and aesthetics are making US Mint coins a better investment.
Susan Headley from The Spruce notes ten particularly valuable US coins. None of these are bullion. If you're buying US Mint bullion, that means there is little competing with premium over or under spot as a metric for investment satisfaction.
Aesthetically, our North American research suggests that the Eagle design (in Gold) is the most popular coin in the world. This is followed by another US Mint design, the 1 oz Gold Buffalo. Since Weinman's original walking liberty design, the US Mint has held sway over investors and collectors.
The US Mint also produces a range of commemorative coinage. These typically sell for significantly more than Silver Eagles because their price is not based on intrinsic metal value. In fact, not all are even made of precious metals. If you are investing in precious metals, these US Mint coins are not likely a good investment.
What's all that about a Mint's reputation influencing coin values? Daniel Jark explains the perceived value of corporate debt changes with credit rating. The analogy for Mints is how faith in their long-term success and reputation reflect how much we pay over spot. This helps explain the US Mint's higher premiums.
In some respects, the matter is up in the air. People may argue that the respect and symbol US Mint coins, well at least US Mint bullion has, deserves a higher premium. Others may say that investors should stick to silver rounds.
On a strictly financial level, you are unlikely to recover the full added premium per oz. Still, most people would agree that part of the joy of accumulating is having truly remarkable coins, and the US Mint does have a great reputation for making them.