buyer beware graded coins

Investors are losing thousands of dollars on graded bullion coins. Don’t make the same mistake!

For years now, investors have been misled by the promise of financial returns on modern, graded bullion coins. Dealers present recently minted, high-grade American Eagles and Buffalos as rare and charge as much as 10 times what these bullion coins are worth. While a 2017 MS70 1 oz. Gold American Eagle coin may be in perfect condition, in most cases, it isn’t especially rare or valuable. If you pay a high premium for this coin, you won’t get your money back when you go to sell.

Numismatic Versus Bullion Coins: Why Perfection Is Hard to Find in Rare Coins

bullion vs numismatic coins

Numismatic coins command a premium over their precious metal content because they are historical, unique, or have other special qualities that make them rare and valuable. Newer bullion coins—even in perfect condition—are typically only worth their weight in gold or silver.

True Numismatic Coins

Bullion coins, such as American Eagles and American Buffalos, are never circulated like older U.S. coins were. Back when the United States used gold and silver as money, coins were made on a very primitive minting press compared to today’s. The coins were then put in burlap bags and shipped around the country by train, ships, and other rough transportation. By the time these coins arrived at banks around the U.S., they had a number of bag marks from being rubbed together along the way. So, there were certainly no coins that would ever grade MS70 by today’s standards.

Once the banks got them, the majority of these coins were circulated to be used as money. Then in 1933, the government melted down most of the coins and the gold was reformed into large ingots that went into the United States Gold Reserves. Very few coins in comparison to what were minted survived in mint state condition—let alone high grades.

Graded Moderns

Today’s bullion coins are struck incredibly sharp from much more sophisticated minting presses. The coins are immediately placed in plastic and bought in large quantities by dealers. Many of these coins are then shipped directly to the Professional Coin Grading Service (PCGS) and the Numismatic Guaranty Company (NGC) to be graded. Since the strikes are so precise and these coins have never been touched by human hands—let alone been circulated—many of them grade in excellent condition: MS70 or at least MS69. The same is true with proof coins. They often grade PR70 or PR69.

Mint State Alone Doesn’t Make a Coin Rare or Valuable

graded buffalo coin

The bottom line is that a high mint state doesn’t make a coin rare. In most cases, when companies are selling coins in high grades, they are not and are likely never going to be rare. The mintage number is too high for most of these certified coins for them to ever compare to early American coins that are truly scarce in mint state condition. It’s a totally different market.

The problem is that people think of newer bullion coins mostly for their condition. Yes, it’s true that an MS70 is the highest grade. However, it’s not the grade that makes the coin valuable. It’s the number of coins that exist in that grade or potentially could be graded in that condition that make a coin valuable.

See for Yourself:

  1. Go online and see how many MS65 or lower Gold Buffalos you see. Try to find an MS67 Silver Eagle. There are almost none.
  2. Now go online and search for MS69 and MS70 Gold Buffalos or Silver Eagles. There’s an abundance. That’s because most of these coins are brand new and uncirculated when they’re graded. Therefore, how rare are they?
  3. In comparison, look and see how many Pre-1933 MS69-70 $20 Double Eagles you find. It will be nearly, if not entirely, impossible.

Think about it from this perspective. How many 1967 Mustangs are there still in great condition? The majority of these classic muscle cars no longer exist. So, the ones that are still around in great condition can appreciate in value as investments for many people. In comparison, how many Mustangs manufactured today will really have investment or collectible appeal in 50 years if they’re all preserved in perfect or near perfect condition?

Research Before Regret: Paying Premiums for “Rare” Modern Coins

man experiencing buyer regret

At Scottsdale Bullion & Coin, we are faced with breaking this news to clients far too often. They have paid premiums as high as 10 times what the actual coin is worth because a dealer misled them about the coin’s rarity and value. When they went to sell the coin, coin companies, and often even the very dealer who sold them the coin, will only pay the spot price. This is when they discover the unfortunate truth about modern, graded bullion coins: they’re bad investments!

Coin dealers have different tactics for misrepresenting these coins. Dealers often use autographs from prominent figures, such as former U.S. Mint directors, to exaggerate the value of coins. In rare cases has this ever been true. It’s a great way to hype something that on its own is not scarce to begin with. It’s really another way for companies to lead potential customers down the primrose path.

Buy to Collect, Not Invest

Here is our advice: if you are buying a graded modern bullion coin, do it because you love the coin and you want to have one preserved in a high mint state condition. Not because it’s an investment but because you love the coin.

Scottsdale Bullion & Coin rarely recommends these certified coins. If we do, it is as a novelty type coin. Never as an investment. If it’s done that way, you will have a wonderful specimen, but invest your money in coins that are truly scarce.

Reduce Your Losses on Certified Bullion

Paying a premium for certified bullion happens far too often in the precious metals investing community. If you think you may have overpaid for American Eagles, Buffalos, or other slabbed bullion, contact the advisors at SBC Gold. We’ve developed a strategy to help you reduce your losses on these coins.

Get A Second Opinion

Get a Second Opinion Before Buying

Unfortunately, dealers employ deceptive practices to charge a premium for certified bullion. Beware of promises that you’re getting a “rare coin” or “exclusive coin.” These are just two of the tactics they use.

With so much misleading or flat out false advertising surrounding the sale of bullion coins these days, it can be difficult to know if you’re truly getting what you paid for. Talking to a professional coin advisor can help you avoid the common mistake of paying premiums for certified coins.

The advisors at Scottsdale Bullion & Coin are here to help you make an informed decision that you’ll be happy with for years to come. Contact us today to make sure your next coin purchase isn’t one you’ll regret.

Get A Second Opinion