Category: Silver

The allure of commemorative coins isn’t surprising. Many investors believe these assets check all the boxes of a worthwhile investment: limited production, high luster, special designs, and authenticity certificates. However, all that glitters is NOT gold in the world of commemorative coins. A quick peak behind the curtain reveals these coins aren’t as valuable as many investors might think.

What are commemorative coins?

Commemorative coins are unique coins produced to celebrate, honor, or commemorate (hence, the name) a special event, person, or place. For example, it’s common to see prominent heads of state, popular landmarks, and historical events on this novelty coinage. Commemorative coins are distinct from standard minting in a few ways.

First and foremost, they’re not typically recognized as legal tender which means many are barred from circulation. On top of that commemorative coins can be produced by private companies instead of being limited to official government mints. Confusingly, some government mints produce commemorative coins on top of standard circulating coinage.

Private vs Public Commemorative Coins

Private commemorative coins are those produced by non-governmental mints. As a result, these private companies can produce coinage with virtually no restrictions. On the other hand, commemorative coins produced by the US Mint are bound by legislation. The government only produces coins at the behest of Congress.

Are commemorative coins worth anything?

Commemorative coin value is determined by a number of factors including scarcity (how many similar coins exist), demand (how many people want the coin), and purity (what percentage of the coin is precious metal). Unfortunately, most commemorative coins fall short in these metrics.

High mintage numbers

Despite what you might hear from that convincing TV sales pitch, most of these coins are produced in high numbers. Since any private mint is free to produce commemorative coins, there’s no regulation on how many enter the public sphere. These coins celebrate popular events or people which means several mints often produce similar coins at the same time, leading to a saturated market.

Low demand

Demand for commemorative coins tends to reach its zenith right after release when publicity is strong and associated trends are still relevant. When the next collectible coin is inevitably released, people naturally lose interest and demand drops quickly. As the interest wanes, so does commemorative coin value. As a result, many investors struggle to find secondary markets for these collectible coins.

Misleading purity

The US government, along with most government mints, sets official purity ratings to which all legal coinage is beholden. This practice is intended to mitigate the number of counterfeit coins in circulation. Commemorative coins don’t have standard purity ratings which makes it harder for investors to accurately gauge their value. It’s common practice for producers to mint commemorative coins with undervalued alloys with a thin veneer of gold or silver while overselling their purity.

High premiums

Private sellers tend to overstate commemorative coin value well above their inherent worth. Even the US Mint admits to adding a surcharge to the base price of their commemorative coins. If the government is openly adding high surcharges, just imagine how much private companies drive up their prices. These exaggerated dealer premiums mean you’re automatically losing money immediately following a purchase of a commemorative coin.

Commemorative Coins vs Numismatic Coins

Commemorative coins tend to be poor investment vehicles when compared to true numismatic coinage. While investment-grade coins hold inherent value due to real scarcity, high levels of purity, and historical significance, commemorative coin value tends to derive from their collectability. This crucial distinction results in disparate markets which further reinforces the varying values of investment-grade and commemorative coins.

Numismatic coins tend to attract serious investors interested in optimizing their ROI, protecting their wealth against economic pressures, and maintaining price stability. Commemorative coins are primarily geared toward people interested in historic memorabilia and collecting for collecting sake.

Collecting vs Investing in Coins

If you’re interested in using gold and silver coins as investment vehicles instead of just collectibles, you’re better off avoiding commemorative coins in favor of investment-grade coinage. You can learn more about investing in these numismatic assets by downloading our FREE Precious Metals Investment Guide.

The gold market is quiet on Wednesday as the bulls continue to take a breather following recent upside. Some stronger-than-expected economic data is also weighing on gold a bit today as the metal declines by less than $2 per ounce in mid-morning trade. The gold market dipped immediately following the release of the latest retail sales data for October, which came in above expectations. Not only was the October figure better-than-expected, but the September print was also revised higher. The stronger data may lead investors to assume that the Fed is unlikely to begin lowering interest rates any time soon, and that may be bearish for gold.

Inflation and Interest Rates: Crucial Factors Shaping the Future of the Gold Market

The economic data stream and inflation data will both be very important for gold in the months ahead. The Federal Reserve has already elected to leave rates as is rather than raise them again, for the time being anyway. That could change quickly, however, if the data stream shows a lot of strength or if inflation begins to increase again from already-high levels. The Fed has been successful in taking inflation a bit in recent months, as price pressures have eased from levels seen last year. That being said, the levels at which inflation remains are still way too high and far above the Fed’s desired target of 2% annualized. The Fed has made it clear it is quite comfortable leaving interest rates at or near current levels for longer than expected. The “higher for longer” mentality has gained traction among financial experts in recent months and may very well be the way the Fed finally gets inflation under control again.

Global Wars and Geopolitical Tensions Heighten Gold’s Safe-Haven Appeal

The gold market will not only pay close attention to inflation and interest rates in the months ahead, but it will also pay close attention to the ongoing wars. The Russian/Ukrainian war and the Israeli/Hamas wars rage on with no signs of ending anytime soon. The Russia/Ukraine war is particularly concerning for the world, as talk of nuclear weapons being deployed has been on the rise in recent months. Although use of such weapons may remain extremely unlikely, the mere threat or possibility of them being unleashed may keep a flight to safety bid in financial markets and gold in particular.

Israeli/Hamas Conflict Escalates Amid Concerns of Global Involvement

The war in Israel is now in what could be its deadliest phase as Israeli defense forces penetrate Gaza. This area is filled with civilians and non-combatants, who have already lost basic living necessities such as electricity and water. The lack of internet service in the region will not help either as innocents attempt to escape the violence. The biggest potential global threat in this conflict is if other powers become involved. The U.S. has already warned Iran, for example, to stay out of it. If Iran were to become involved in the conflict, the United States would almost certainly follow suit. The U.S. already has significant firepower in the region, with its largest carrier the U.S.S. Gerald Ford being present in the Mediterranean. Another carrier group has already joined the Ford, and together the two groups could unleash a staggering amount of firepower over inland targets.

Gold Bulls Eyeing $2,000 as Key Technical Level Poses a Challenge

The gold bulls may just be taking their time. The real test of the market will come when or if it challenges the $2,000 level. If the bulls can overtake this key technical level, the upside seen soon thereafter could be significant.

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