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Silver: Are Proof Coins and Premium Coins Worth it?

If you are new to precious metal investing and you have been trying your hardest to find coins and bars as close to spot price as possible, then you have probably come across proof coins, which tend to cost much more than spot and are very rarely available for anything less than 50% on top of that spot.

These coins are not just for coin collectors and can also make a great addition to any investor’s stack. It is important to treat the purchase of such coins in much the same way as you would standard bullion, in that you need to try and source legitimate coins and to get them as cheap as possible and in as good of a condition as possible, but there are some important issues. Standard bullion is an easy investment. If it’s silver/gold and it’s cheap then you’re good to go, but there are many minefields with proof coins.

What are Proof Coins?

Simply put, a proof coin is one that has been specially stuck by a mint, and one that has been finished to a higher standard than a normal coin. The detail is better, the finish is of a higher quality and a great deal more care has been taken with it. Proof coins also typically come with Certificates of Authenticities (known as COAs) and they tend to be stuck in smaller numbers. They are also not meant for circulation.

Proof coins are available in both gold and silver, but there are also many bronze, nickel and even copper coins. As a Numismatists these have some value, but overtime they do not hold that value as much as precious metal coins do and they also have no value when melted down, which you can consider to be your plan B.

Are They Worth it?

If you purchase wisely then they are definitely worth it, but therein lies the difficulty. Proof coins are minted all of the time, with a greater number of sliver proofs doing the rounds than gold proofs. The issue is that all proofs carry a premium, which is money that you pay on top of the value of the metal, and not all of them will retain the value of that premium. The coin needs to be rare, struck in limited numbers, but rather conversely, it needs to be popular as well. A good example of premium coins that are increasing in value are the proofs from the Perth Mint, one of the most popular mints with collectors. They produce Lunar coins every year, and these usually carry a very small premium. Despite that, they are struck in limited numbers and the coins from just 3 or 4 years ago are already worth 3x to 4x the price they were when they first became available. They also produce coloured coins, using the same designs as the standard coins but colouring them in. These carry a higher premium when first purchased, but their price also seems to be climbing year on year.

On the flip side, the Royal Mint and even the US Mint have produced coins in similar batches and on similar dates, and those are worth the same now as they were when they were first struck. That’s because whilst famous the world over, these mints are not exactly “in” right now. No one wants a 1997 US Eagle or a 2001 Royal Britannia, because these coins have been minted for decades and they’re nothing new, nothing to get excited about.

Tips for Finding Proof Coins

The first tip you need to take on board is how to avoid fake coins. The best place to pickup cheap proof coins here in the UK (and in other countries where VAT is charged on silver) is eBay. As anyone with any experience on this site will tell you, whilst there are a lot of reputable traders on eBay, there are also a lot of scammers and a huge number of counterfeit products.

Make sure you pay via PayPal and make sure you check the coins when you get them. Use Neodymium magnets and other quick and simple methods. Simply search through this site if you need more details as we have discussed it all before. If it turns out that the coins are fake, then first put your findings to the seller who should apologise, give a refund and maybe offer something for your trouble (they have a reputation to maintain after all). If they do not respond or if they deny it, then you can file a dispute through PayPal and get your money back. We have sold products on auction sites and have been stung by false chargebacks ourselves, but it can also be used for good and you’ll find that PayPal favour the buyer in all cases.

You should avoid anything that looks too unique and seems too cheap. There are some “odd” coins and bars out there, such as colourful proofs that feature Dr Who and Disney characters and are produced by the New Zealand Mint, but there are a lot of fake ones on eBay, created in an effort to appear rare and therefore sell easily.

When you find a coin that you like, take the name and put it into the eBay search. You will find a huge disparity with these prices. We recently ran this test on a proof coin that had a retail value of £35. We found many of them selling for this exact price, but we also found ones selling for as much as £45, and a couple for just £30. In the end we were able to find one for £28 and we used the Make an Offer feature (available on some auctions) to get it for £26 after some haggling.

Such a bargain means that we have a coin that could already sell for close to a 50% profit, and one that could be worth much more than that in a few years.

Do your research, discover what the “in” coins are. Stick with the mints that are trending, the ones that everyone wants a piece of. Don’t disregard the main mints though. We actually recommend that you join the Royal Mint newsletter to stay up to date with new releases. Most of the stuff they sell is massively overpriced, but every now and then they will have an offer where you can buy a coin with a £20 face value for £20, or £10 for £10, £5 for £5, etc., The silver content is typically only an ounce, so roughly half of what you pay, but this is a premium coin, struck in limited numbers, and in the worst case scenario you have something you can use as legal tender to get your money’s worth.

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