Are Proof Coins a Good Investment?

Bullion coins are common investments for collectors who want to diversify their portfolios with high quality non-correlated assets. But not all precious metal coins are created equally. There are actually several different types of silver and gold coins available from dealers like Hero Bullion. Understanding the differences between these products can help you make a more informed investment decision about bullion deals for your own portfolio. 

Proofs are unique coins that undergo a special treatment and finishing process to ensure the best strike possible. For serious coin collectors, proofs are an opportunity to invest in low mintage silver, gold, and platinum products of exceptional beauty and unprecedented quality. But are proof coins a good investment for you? In today’s Bullion Academy article, we’re discussing the investment potential of proof silver, gold, and platinum coins. 

Benefits of Investing in Proof Coins

Proof coins come with several significant benefits. Some investors tend to prefer proof coins because of their high quality finish, limited mintage, and more. Are proof coins a good investment? We’ll outline five benefits to investing in proof coins below: limited mintage, numismatic value, historical significance, hedge against inflation, and tangible asset status. 

Rarity and Limited Mintage

Proof coins are almost always rare. Coin manufacturers like the United States Mint deliberately only release a certain number of proof-quality coins each year. Demand for proof coins is often higher than demand for non-proof variations, making them popular items for collectors. Are proof coins a good investment because of their rarity? The limited mintage of proof coins certainly improves the investment outlook offered by these bullion products. 

Over time, the limited availability of certain proof coins can lead to an increase in their numismatic value. Collectors appreciate the look and feel of proof coins, especially proofs of existing popular precious metal coins. 

Numismatic Value

These coins also offer relatively high numismatic value. As you already know, bullion coins come with some of the highest numismatic values in the precious metals market. While gold bars are always popular methods of investing in bullion, the beautiful designs and exceptional rarity offered by coins makes them premier investment vehicles for collectors who want to profit from numismatic appreciation. 

Are proof coins a good investment for numismatics? Absolutely. Compared to regular bullion coins, proof coins are especially beautiful. The hand polishing and finish that characterize proof coins make them even more collectable than the numismatically valuable traditional bullion coins that make up most collections. 

Historical Significance

Are proof coins a good investment for your financial future? With a question as important as this, we should cover all of our bases. Historical significance is one of the most important factors behind a coin’s collectable value – and its numismatic appreciation potential. Proof coins offer a fantastic degree of historical significance. Proofs of historically popular or significant coins are often sold at additional inflated premiums, making them a great way to invest and diversify your portfolio. 

Hedge Against Inflation 

All precious metal products function as a hedge against inflation. Gold, silver, and platinum are considered non-correlated assets. In other words, the performance of the traditional stock market – as well as the more general economy – don’t necessarily influence the intrinsic value of bullion. When inflation is high and faith in fiat currency is low, precious metals like gold and silver actually often fare better than traditional asset classes. 

But because of the high numismatic and collectable value of proof coins, these products are especially effective tools for hedging against inflation. As inflation negatively impacts the value of stocks, bonds, and real estate investments, the collectability and precious metal content of a solid proof coin can make it retain investment value for years. Are proof coins a good investment to hedge against inflation? This is most definitely the case. 

Tangible Asset

As physical precious metal products, proof coins benefit from being a tangible asset. Being able to hold and physically maintain your products helps to secure your investment. Unlike stocks and bonds, bullion coins aren’t held by financial institutions. This means that products like proof coins can help you keep your financial future securely in your own hands. 

Are proof coins a good investment because they are tangible assets? This certainly isn’t the only reason investors deplete the U.S. Mint’s stock of proof coins each year. But combined with the other value factors listed above, proof coins emerge as an ideal way to invest in gold, silver, or platinum. 

Factors to Consider Before Investing

We never recommend that investors jump right into a new product without doing the proper research. Are proof coins a good investment for you and your portfolio? We’ll discuss five factors to consider before investing in proof coins below: knowledge and research, authentication and grading, market demand and trends, storage and maintenance, and portfolio diversification. 

Knowledge and Research

Learning to research precious metals properly is the first step to answering a question like, “are proof coins a good investment?” Leaning on the advice of expert resources like the Bullion Academy is a good strategy, but it certainly isn’t the only way to get informed before buying proof coins. Look around for investor magazines and be sure to consult your financial advisor before making any serious investment decision. 

Authentication and Grading

The authenticity of a proof coin is a key component of its value. Are proof coins a good investment if they’re fake? Definitely not. While even fake proof coins might look pretty to the untrained eye, collectors will only ever pay top-dollar for legitimate, authentic proof coins from some of the world’s premier mints. 

A proof coin’s grade is also important when it comes to determining investment value. Are proof coins a good investment in BU condition? Proof coins in near-perfect condition are extremely valuable and will be worth quite a bit more than coins that are damaged, worn, or chipped. Coins in the latter category are sometimes called ‘cull,’ and cull coins are worth very little more than their precious metal melt value. 

Professional coin grading services can help you assess the investment value of your proof coins. 

Market Demands and Trends

Market demands are a bit trickier for new investors to evaluate. The price of precious metals and demand for bullion coins are both components that help determine the overall value of a proof coin. Are proof coins a good investment right now? This is the kind of question smart investors should ask themselves before buying proof coins. General market trends can influence the answer to this question, too, so it’s important for you to consistently gauge and evaluate the market for your favorite precious metal. 

Storage and Maintenance

It’s extremely important that new investors develop a process for properly storing and maintaining their proof coins. Coins that are not stored or carefully maintained will lose significant value over time. Are proof coins a good investment if they aren’t stored properly? We don’t think so. Developing your method for storing coins safely is the key to a healthy, profitable investment portfolio. 

Diversification of Portfolio

Diversifying your portfolio is one of the most important parts of smart investing. Even if you’ve already started collecting gold, silver, and platinum coins to diversify from traditional asset classes, proof coins serve a special purpose in intelligent investment stratagem. Unlike basic gold or silver coins, proof coins offer high numismatic value in addition to their precious metal content. Therefore, investing in proof coins can help you diversify your precious metal portfolio by giving you additional ways to profit. 

Risks and Challenges

Even though we love the value provided by high quality proof coins, these investment vehicles are not without fault. We’ll cover five main disadvantages and risks to investing in proof coins below: market volatility, counterfeiting and scams, liquidity issues, high initial premiums, and the speculative nature of collectibles. 

Market Volatility

Precious metal markets are exceptionally volatile. For some investors, this is a good thing. It means that they might be able to profit from short-term price swings. Other collectors believe that the long term outlook for gold, silver, and platinum is good – despite the price swings that characterize short-term price movement. 

Are proof coins a good investment, despite the historical volatility of bullion markets? We’ll leave that up to you. There are both advantages and disadvantages to investing in volatile markets, and bullion is no exception. 

Counterfeiting and Scams

When you buy from legitimate, respected bullion dealers, the risk of falling victim to a scam is exceptionally low. Hero Bullion guarantees the authenticity of all of our proof coins, which we source from only authorized dealers. Still, counterfeiting technologies are evolving constantly. The work of mints like the U.S. Mint and Royal Canadian Mint to combat counterfeiting help to secure the value of investing with them. 

Are proof coins a good investment, or is the risk of counterfeiting too high? We generally believe that proof coins are still a good investment, even though the risk of scamming exists. Work hard to ensure the legitimacy of your coins by buying from honest, fair dealers to avoid this problem entirely. 

Potential Liquidity Issues

Are proof coins a good investment for liquidation? Sometimes. Certain proof coins are extremely popular and might be easy to sell later on down the line. Other coins are far less popular among investors, so they might have liquidity problems. Doing research to find out which coins are in-demand can help you secure highly liquid proof coins for your portfolio. 

High Initial Premiums

Proof coins will come with some of the highest possible premiums in the bullion industry. Compared to silver bars, most silver coins will have inflated premiums. But proof coins require a hand polishing process and additional work on behalf of their mint. This means an even higher premium that’s kicked back to you. Are proof coins a good investment, despite high premiums? The value appreciation and numismatic collectable value associated with proof coins generally makes them worthwhile for investors. 

Speculative Nature of Collectibles 

The proof coins market is speculative. It is true that all bullion products rely on a highly speculative market. Whenever you buy precious metal coins, you’re really just betting that the silver coin will become more valuable over time. This is speculation at its core. But when you invest in proof coins, you’re betting both on the precious metal value of the product and the numismatic appreciation it offers. This makes the industry exceptionally speculative. 

Tips for Building a Proof Coin Portfolio

Below, we’ll outline three final tips for building a successful proof coin portfolio: setting a budget, establishing dealer relationships, and regularly reevaluating your portfolio. By following these basic tips, you can guarantee that your portfolio will maintain value over time. 

Set Budget and Goals

Setting a budget is the first step in successful investment. Not all investors are the same. Some of us are buying with millions of dollars, and others are putting down a couple hundred bucks a year on gold or silver coins. If you’re looking to invest in proof coins, be prepared to spend more money than you would on basic gold coins or silver bars. 

Are proof coins a good investment if you’re on a budget? Establish a realistic budget for yourself and stick to it. Doing so prevents you from overspending, and it can also help you determine the specific types of products that you should buy. After all, the high premiums associated with proof coins means that they aren’t great for low budget buyers. 

Establish Relationships with Dealers

If you work hard at it, you can establish relationships with dealers. Bullion dealers might provide you with discounts on bulk purchases if you become a repeat buyer. Even local dealers might help you find better deals on the precious metal products you enjoy. Are proof coins a good investment? Dealing closely with reputable sellers is a good way to improve the outlook of your investment. 

Regularly Reevaluate Portfolio

A solid portfolio is not static; it changes and shifts over time to reflect market conditions, collector demand, and other trends in the precious metals market. Regularly reevaluate your portfolio, and make adjustments as needed. Are proof coins a good investment for long-term profit? Sometimes they are, but you might benefit from buying more traditional bullion items, depending on market conditions. 

Final Thoughts: Are Proof Coins a Good Investment? 

So, let’s take a moment to recap and answer today’s core question: are proof coins a good investment? Our take is that proof coins can improve your portfolio by providing high numismatic value, exceptional quality, and fine precious metals. At the end of the day, only you know if proof coins are a good investment for your portfolio. Keep researching, keep reading, and keep on stacking! 

Please reach out with any questions you might have about proof coin investments.