Differences between Bullion and Numismatics...!!!

[EWAAN Galleries 11]

Hi Collectors / Investors

 

Please study the difference between Bullion and Numismatics. How can bullion coins be collectibles when they are not rare at all as they are easily available...

 

See differences below and then decide for yourself... Bullion coins (Krugerrands, Canadian Maple Leaf etc) should not fall under Numismatics as it is an investment and not a collectible....

 

 

Numismatics is the study or collection of currency, including coins, tokens, paper money, and related objects. While numismatists are often characterized as students or collectors of coins, the discipline also includes the broader study of money and other payment media used to resolve debts and the exchange of goods. Lacking a structured monetary system, people in the past lived in a barter society and used locally found items of inherent or implied value. A few people today still use bartering in absence of a monetary system. Early money used by people is referred to as "Odd and Curious", but the use of other goods in barter exchange is excluded, even where used as a circulating currency (e.g., cigarettes in prison). The Kyrgyz people used horses as the principal currency unit and gave small change in lambskins.[1] The lambskins may be suitable for numismatic study, but the horse is not. Many objects have been used for centuries, such as cowry shells, precious metals and gems.

Today, most transactions take place by a form of payment with either inherent, standardized or credit value. Numismatic value may be used to refer to the value in excess of the monetary value conferred by law. This is also known as the "collector value." For example, a collector may be willing to pay far more than 50 cents for a U.S. half dollar coin, given their low circulation.

Economic and historical studies of money's use and development are an integral part of the numismatists' study of money's physical embodiment.

 

 

A bullion coin is a coin struck from precious metal and kept as a store of value or an investment, rather than used in day-to-day commerce. Investment coins are generally coins that have been minted after 1800, have a purity of not less than 900 thousandths and is or has been a legal tender in its country of origin.[1] Bullion coins are usually available in gold and silver, with the exception of the Krugerrand and the Swiss Vreneli which are only available in gold. The American Eagle series is available in gold, silver and platinum, and the Canadian Maple Leaf series is available in gold, silver, platinum and also palladium.

Bullion coins are also typically available in various weights. These are usually multiples or fractions of 1 troy ounce, but some bullion coins are produced in very limited quantities in kilograms and even heavier.

Bullion coins sell for a premium over the market price of the metal on the commodities exchanges. This is due to their comparative small size and the costs associated with manufacture, storage and distribution. The margin that is paid varies depending on what type of coin it is, the weight of the coin, and the precious metal. The premium also is affected by prevailing demand. The ISO currency code of gold bullion is XAU. ISO 4217 includes codes not only for currencies, but also for precious metals (gold, silver, palladium and platinum; by definition expressed per one troy ounce, as compared to "1 USD") and certain other entities used in international finance, e.g. Special Drawing Rights.

 

 

 

 

Regards,

 

 

 

 

EWAAN Auction Galleries

[jwither 10]

I agree with your comments except for one. Coins are not "investments" at all but a form of speculation, just as most other "investments" also are. Other "investments" include financial instruments such as stocks and bonds. All of these are bought with the objective of realizing a gain through price changes.

 

Another (though slightly different) example is real estate. When someone buys a home to live in, its not an "investment" either but a consumer durable good (the structure) and a speculative asset (the land).

 

A "real" investment involves a business type operation. For example, the proprietors of your firm are in the coin business and therefore, actually are investors. The buyers of your coins are not. In the real estate example, a developer or buyer and lessor of rental units is in the real estate business. The home owner is consuming their house.

 

The reason why the distinction between "investment" and speculation matters is because people will use it to rationalize what they buy. Many people would never take the positions they do (in terms of financial exposure) if they either knew or admitted that they were actually speculating as opposed to "investing". It's one of many reasons most people lose money most of the time.

 

The other thing I would add is that many people incorrectly believe that the coins they are buying as supposed "investments" are rare when in actuality, they are not. This is especially true in the United States where most "investment" coins not only are NOT rare at all, they are either common or as common as the sand on the beach. The most widely bought "investment" coins in the United States are Morgan Dollars (1878-1921) and "generic" type gold such as Liberty $10 and $20 and the equivalent Indian Head and St Guadens issues. No Morgan Dollar is "rare" at all except for "conditional" rarities and the branch mint proofs. Only a few of the gold coins for these designs I list are rare or even scarce.

 

With Union and ZAR, some are rare or scarce but others are simply expensive. I have already provided numerous examples of both in other posts and so have others.

Edited January 7, 2011 by jwither

[Guest Guest]

For the record

 

Hi Ewaan

 

When quoting external sources it is important to note them...

 

for example your extracts have been cut and pasted from Wikipedia.

 

Here are the links: Numismatics - Wikipedia, the free encyclopedia

 

and Bullion coin - Wikipedia, the free encyclopedia

 

As Wikipedia is an open editing forum where anyone on the web can say what they think I think this clarification is even more important.

 

As I see it no numismatic "investment" coin is worth more than the its collectable value until the price of the metal in it exceeds that value. Then the value of the silver or gold determines its value. For example, in an extreme case, consider the "collectable" value of an "F" 1952 South African crown. The silver is worth more than that (collectable) value and the tide is rising and has (in my view) a long, long way to go! And as that tide (silver value) rises so the numismatic value become a passing and increasingly irrelevant shadow in time.

 

A year ago you would have laughed at paying ZAR100 for a 1952 crown in F .. now you pay with a smile on your face. And this coin, South Africa's commonest crown, reflects TWO HUNDRED times face value.. find me an equally common bank note from this time that can reflect this and I will never post on this forum again.

 

Kind regards

 

Scott Balson

Edited January 8, 2011 by ndoa18

[jwither 10]

Scott,

 

I would be interested to know how easy or difficult you find it to sell SA silver coins that are bullion substitutes. The same applies to any other world coins. There are a few I am trying to sell and have tried to sell on eBay but I have not had much success in doing so and I am not interested in a true auction.

 

Personally, I believe it primarily depends upon where the seller lives. As a US seller, I do not believe there are that many potential US buyers at a "retail" price because like me, they question how much of a discount will be required to move them later. If so, this makes these and most other bullion type coins an inefficient form of owning silver, even if they can apparently be bought cheaply because its questionable how much of the discount can be captured at a later date.

[EWAAN Galleries 11]

Hi Scott

 

 

If not an investments, then what would you call it? Hedge against the Falling Dollar?

 

Also please explain what your thread "On the Cusp" has to do with Numismatics?

Edited January 9, 2011 by EWAAN Galleries

[Guest Guest]

Ewaan

 

If you followed "On the cusp" you wouldn't be asking those questions

 

Kind regards

 

Scott Balson

[Guest Guest]

John

 

Hi John

 

There is plenty of demand for silver South African coins in Australia.

 

10% of the twenty million living in Australia are ex-South African (largely white) - and there are areas which are predominantly South African - like Kenmore / Chapel Hill near Brisbane where I live.

 

There are South African clubs around the country and they are well supported. There is even an NGK in Western Australia where most South Africans initially stay. The weather in Perth is very similar to that of Durban.

 

As a result demand for South African coins for their silver is well above the silver value. If I had wanted to I could have bought the crowns on BoB a year ago and resold them through ebay.com.au (eBay Australia) for a handsome profit. As sellers on BoB wake up to the value of silver this is becoming increasingly difficult.

 

I have kept every single one!

 

Kind regards

 

Scott Balson

[ThomasMueller 10]

Scott,

 

I would be interested to know how easy or difficult you find it to sell SA silver coins that are bullion substitutes. The same applies to any other world coins. There are a few I am trying to sell and have tried to sell on eBay but I have not had much success in doing so and I am not interested in a true auction.

 

Personally, I believe it primarily depends upon where the seller lives. As a US seller, I do not believe there are that many potential US buyers at a "retail" price because like me, they question how much of a discount will be required to move them later. If so, this makes these and most other bullion type coins an inefficient form of owning silver, even if they can apparently be bought cheaply because its questionable how much of the discount can be captured at a later date.

 

Australia, South Africa and the USA have much mining industry, some other counties have NO mining industry. Some counties have only very little gold and silver in their soil. Nevertheless the Cook-Islands silver ingot coins are produced in Pforzheim (Germany). And there are also produced big amounts of gold and silver ingots in Hanau (Germany) by Heraeus and Umicore (years ago it was Degussa). Where does all that gold and silver come from? There is dental scrap melted down, jewellery is melted down and as it said in this forum earlier: Coins en masse are melted down. It doesn´t matter if they are German coins or from overseas, only the silver content counts. The more you sell the better the price is you get (more close to spot value).

[jwither 10]

Thomas,

 

Are the claims you make for Germany or elsewhere?

 

If for Germany, I will take your word for it. do not believe this is true in the United States and I presume most other countries. For example, in Bolivia which I visit twice a year, its questionable whether they could be sold at all except at drastic discounts because there will be few to no buyers. In the United States, I cannot tell you exactly how much any particular coin will sell for (premium or discount to spot) but I consider it certain that most people do not view all coins from everywhere as equal.

 

Is that logical? No, but then if it was, then why could someone like Scott buy those silver coins he stated for less than melt? The best reasons are: 1) Most buyers and sellers did not even consider that the prices were less than the melt value. 2) What I describe below in terms of liquidity.

 

In the US, the only use a coin dealer who deals in bullion would have for most non-US coin silver is to sell it to a refiner. At today's prices, it's unlikely that most potential collectors would want it and silver buyers possibly or probably except at a discount and maybe a substantial one. The simple reason for this is because if someone wants to buy silver, they can buy American Silver Eagles (ASE), Johnson Matthey or Englehard bars, or 90% or 40% US coin silver. These are VASTLY more liquid than the 80% or 50% SA silver coins here.

 

So why would most people pay the same for them? I would not and would not expect anyone else to either. Silver is silver but all forms of silver are absolutely NOT equal because they are not equally liquid.

Edited January 9, 2011 by jwither

[ThomasMueller 10]

John,

I am only talking about Germany. Please look at the webpage of Heimerle+Meule

MÜNZBARREN

They are minting "coins" which are issued by the Cook Islands and sell them here in Germany.

These silver "coins" have a weight of 1kg, 100 oz and 5 kg pure silver.

This mint was in the press when a transport with some hundred kilograms of gold scrap to them was

ropped by false policemen. In fact it was a gangster rapper a his gang.

I don´t think that they buy small amounts from private. As far as I know they prefer buying in bulk

from coin dealers and jewellers.