Numismatics – Bullion vs Coins

It is advised, for practicality reasons, for employees to have an Individual Retirement Account (IRA) as early as possible. For one thing, it is a good investment for the future; second, it is coupled with tax advantages given that you follow their regulations. With the current trend of increasing inflation rate in America1, it is becoming a wise decision to start looking for alternatives.

“What Precious Metals Coins Are Approved By The IRS For Retirement?” – View The Full List Here

One common type of IRA is the gold coins IRA. It acts similar to a self-directed IRA but instead of utilizing current bills, it uses gold coins or bars. Other than gold, this is also applicable to other valuable metals like silver, platinum and palladium.

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One advantage of this method is that you need not worry about the devaluation of money due to inflation because the value of your assets would be dependent on the content and purity of your metals, and sometimes their historical value. Also, the physical properties of the coins allow them to be stored easily.

Bars and Rounds

Gold ingots and coins

Similarly, gold coins IRA is categorized into two major types – the numismatic (coins or rounds) and the bullion (bars or ingots). In this discussion, I would highlight the basic information about the two while citing some examples and derive a conclusion based on comparative analysis.

Comparative Analysis: Pros & Cons

Numismatic gold coins are mostly denominations that have a historical value attached to them. Because of that, they are deemed to be more valuable than their face value and attract coin collectors mostly due to their historical and aesthetic value rather than their actual worth.

warning icon - gold circle with diagonal lineMost numismatic coins are NOT allowed in an IRA (see irs.gov) with only a few exceptions. However, with the allure of high markups, several well-known gold IRA companies have  been convicted of fraud by using deceptive sales tactics when promoting numismatics for their clients’ retirement accounts (this company being one of the exceptions and most reputable).

It is to be noted that they are more of a collector’s item rather than an investment. An example that would supplement this fact is as follows: Suppose you want to collect a rare coin from ancient Egypt. Let us assume that its spot price is 2500 USD yet its face value is just 750 USD. Then some time in the future, when inflation rate is at its peak, you plan to sell your coins out of necessity.

Do you expect to sell it based on the price you bought it? Of course the answer will be no. During recession, people would only look for the real numismatic coin values which as I have explained is just a fraction of the whole amount.

On the other hand, gold or silver bullion bars and coins are ideal for both the purpose of investment and collection. Because they are minted in specific fractions of an ounce2 and have a purity of 900 thousandths and above3, they are easier to be tracked and priced, especially that most of them are legally tendered and recognized in some countries. Unlike numismatic, bullion prices are more stable and depend on content, purity and the gold silver spot prices which have shown to change minimally beginning this decade.4

It is now settled that bullions are better than numismatics in terms of investment. Now the question is which one is the best gold coin to buy? Although several lists are available on the internet, it is only you, the buyer, who can decide which one is most suitable for your needs. However, here is a set of questions that might help you in considering which one is appropriate for your IRA:

Gold Coins or Bullion For Your IRA?

  1. How much is your budget? Consider this as your starting point to narrow down your choices. Consult with experts on the proper management of your physical and liquid assets. You cannot just gamble all your money for bars and save nothing for yourself.
  2. Are you buying at a time when gold and silver prices are up or down? As with other markets, the gold and silver markets experience their own up and down period. As a beginner, you must understand that this is a vital part of the process and that it is completely natural. In turn, you must use this to your advantage and buy only when the prices are low to make it more profitable in the future.
  3. Are the gold bullion dealers you plan to buy from recognized in their field? Things you can do to check is look for their website and speak with a representative from their company to explain their arrangement. Moreover, see if they have the necessary documents that permit them to run their business. Also, look for third party websites that give comprehensive reviews on the most reputable gold IRA companies.
  4. Are the coins you intend to buy in the official list of the European Commission? Every year, the European Commission provides a list of gold coins that oblige EU member states to treat as investment coins. It is wise to invest on such coins because they are bounded by legal forces. Otherwise, HMRC also publishes an additional list of gold coins that fail to be included in the European Commission list but can still be recognized as investment gold coins although without legal support.
  5. Are the prices within the range of normal selling prices or just priced according to their aesthetic value? Take note that you are buying a bullion coin. Do not be fooled by sales talks highlighting the historical value of your purchase while masking the real value of the gold. You must look at the coins individually to ensure that they are in good condition.

Once decided on your shift to gold IRA, contact a trusted custodian to guide you. If you have previously acquired an IRA, you need not worry because they can be easily rolled over to gold IRA. Since it is a self-directed IRA, you are given much freedom to control your account upon the advice of your custodian. It is now your decision on how you would manage your IRA.

Also remember that the prices of gold, along with other metals, fluctuate every now and then; nevertheless, gold will be gold. Therefore, playing for the long-term would be beneficial to you and your future while still maintaining low risks.

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Retirement plans are very important to secure your future but making the wrong choices could be your greatest downfall. Here at Strategic Assets & Capital During Crisis (SACDC), we make sure that we give you all the best and unbiased options from the top gold IRA companies. We provide you a comprehensive list of their advantages and disadvantages over others so that you can find which one suit your needs.

Sources:

  1. What is the Current Inflation Rate? –  http://inflationdata.com/Inflation/Inflation_Rate/CurrentInflation.asp
  2. Bullion Coins – http://www.investopedia.com/terms/b/bullion-coins.asp
  3. Investment gold coins –  http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_ShowContent&propertyType=document&id=HMCE_CL_000108
  4. Price Charts – http://www.sacdc.org/gold-ira/price-charts/

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Comments

  1. Is there a list of coins that we are allowed to hold in an IRA or are they all off limits?

    • Jeroen Waning says:

      Hey Mari,
      First of all, any precious metals to be held in a self-directed IRA must be .999 pure as per the Internal Revenue Code’s fineness standards. With this in mind, these are some of the popular coins that are allowed in an IRA:
      -American Gold Eagle coins
      -Canadian Gold Maple Leaf coins
      -American Silver Eagle coins
      -American Platinum Eagle coins

      For a complete list, click here.

  2. I’m certainly happy I decided to stop by here. I was never really planning on investing in coins anyways, but I was looking up what “numismatics” meant and found your site. Knowing that investing in them might be fraught with risk will definitely help me with my investment decisions later on. Thanks.

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