Difference between Bullion and Proof coins

Here at www.coinmerc.com we get questions from our customers of all sorts. Today's question is:
What is the difference between Bullion and Proof coins?

Actual Customer Question:

Sorry for my ignorance, as I'm not accustomed to buying many silver coins, but can you help me understand the pricing of proof coins? I have bought a few 1oz ounce silver coins recently for a little over $40. The price of silver is in the $30 range. What would be the rationale for paying 3 to 4 times the price, and for less silver content? Artistry? Subject matter? Rarity? In all sincerity...can you help me understand?

Our Answer:

Bullion 

It sounds like you are used to buying Bullion coins.  Bullion coins are typically not worth anymore than their weight.  Bullion coins often times have a bullion strike from the mint. This means that the strike is good but not the best it can be.  Also another reason Bullion is not worth very much is because they are usually minted to order for the entire year.  That could be 100,000 or 5,000,000, basically they are very easy to find and relatively cheap.

The best strike from a mint is Proof Strike.  It is the way the coin is made that causes a difference in appearance and qualifies it as a 'Proof' coin.  Often times Proof coins offer a low mintage of 20,000 or less.  Because these coins are struck in Proof Condition and offer a limited mintage it makes the coin more valuable.  They often come in a fancy display case with a Certificate of Authenticity, like this one.

  One of the biggest factors in a high priced silver coin is popularity of the design.  I had a 22gm silver coin go for $700.00 without a case, box, or COA. Because of the coin design, mintage, and proof strike it demanded that price.  If it had the COA with it then the coin would have been worth about $900.00.  It was probably worth around $22 in silver but because we were the last dealer to have it available we were able to sell it at that price.

Proof

Lastly, there is a general difference between purely investing and purely collecting.  If you are purely investing then most people will go with Bullion.  If you are purely collecting then most people go with Numismatics.  One advantage to Bullion is that it is easily sold at its value at any coin or pawn shop.  With most numismatics you will have to sell the coin to the general public to get the value that the coin demands. Personally I buy both.  I buy some bullion for the ease of movement in a pinch.  I also buy Numismatics because they are great collector items and do not lose value over time.  I look at it like the stock market.  Don't put all your eggs in one basket, diversify.

Finally, I have to disclose that there are no guarantees about whether or not a coin or any collectible, material thing or instrument in any asset class will increase in value and past performance of a coin’s return is not indicative of future results.

Browse our collection of Bullion and Proof coins at www.coinmerc.com.