gold proof coins

Is it better to buy proof gold coins?

Many first time coin buyers are unsure whether it’s better to buy proof gold coins rather than the cheaper standard gold bullion coins. Coin dealers often point out that proof coins are more valuable. Certainly they are more expensive … at least 60% more than a standard coin. And they are noticeably more beautiful, with a high gloss finish and amazingly fine design details. But does that make them the better buy?

It all depends on why you want to buy gold coins. If you want to convert some of your cash to gold, then gold bullion coins are the better buy. But if you are a coin collector, looking for the pinnacle of coin perfection, then proof coins are for you.

Gold content

Although you will pay a premium price for a proof gold coin, the actual gold content is the exactly the same as for gold bullion coins. Both contain 1 Troy ounce of pure gold. But proof coins cost more because they have a numismatic value, i.e. the coin is valued in excess of its metal content because it is rare or historical.

Gold bullion coins, on the other hand, have no numismatic value. It doesn’t matter what year the coin was minted, or what design it carries. All that matters is the gold content. This is linked to the spot price of gold. You will always be able to sell your gold bullion coins at the current market value.  

No one knows how much your proof gold coins may be worth in ten years’ time. How much you can sell for depends on demand for that particular coin. If there is no demand, you may only be able to see the coin for slightly over the value of its gold content.

Why are proof gold coins so expensive?

Proof coins are the highest standard of coins minted. Most are double- or even triple-struck, using special hand-crafted dies. This ensures the sharpest, most defined design detail. Each coin is hand polished and individually inspected, before being encapsulated in protective packaging.

Because the entire process is much more time-consuming and labour intensive, it is possible to mint many more standard gold bullion coins in the time it takes to mint just a small number of proof coins. This means that proof gold coins are both more expensive, and rarer.    

Most come in velvet presentation cases, with a certificate of authenticity detailing how many of that particular coin have been minted. Some are sold in sets. True collectors’ items. As such, they will attract coin collectors – just as stamps, classic cars, artwork and even vinyl records and comic books attract other investors and collectors. Which coins will dramatically increase in value, and which will not? That’s the question no one can answer.

Why investors choose gold bullion coins

If you are buying gold for preservation or growth, gold bullion coins are the better buy. Here’s why. At current market prices, you will pay £1 450 for a 1 oz gold Britannia from The Royal Mint, or £2 500 for a 1 oz Gold Standard proof coin. That’s 72% more for a single ounce of pure gold.

When you want to sell your asset, the price you will receive will always track the gold price. If the price of gold doubles, you will get double your money back on the gold Britannia. A dealer may offer you slightly more than the spot price for your proof coin. But unless you find a buyer who is willing to pay a premium for that particular coin, you could actually lose money on the proof coin. You would have to wait until the gold prices has risen by 72% just to break even.

Still want to buy proof gold coins?

If you’ve decided to buy proof gold coins, here’s some advice:

  • Only buy from a reputable dealer. Check to see if the dealer is a member of The British Numismatic Trade Association. Avoid buying on eBay or Gumtree, where unscrupulous dealers may try to convince you that a coin is far more rare and valuable than it is.
  • Make sure the coin is packaged in a such a way that it cannot be damaged by handling. Finger prints and scratches greatly reduce the value of a proof coin.
  • If possible, get a certificate with your coin, verifying its authenticity and the maximum number minted.
  • Find out how much the dealer would currently buy the coin for, if you were selling it. Be aware that the buying price might be considerably lower. After all, you are buying the coin for its historical and numismatic value, not the value of its gold content.

Remember the golden rule of coin buying: proof coins are for collecting. Bullion coins are for investing.

Learn more about gold bullion coins.

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