Most new investors have no idea of the many different types of precious metals available. Silver and gold bullion coins are a popular choice, as they’re more convenient than solid bars. Jewelry such as rings and necklaces has been made from gold and silver for centuries, but to invest in gold jewelry requires a more specialist eye. Gold and silver coins have also been around for a long time, used as the first-ever currency and legal tender. Nowadays, their use as money is less widespread, but the market for coins is booming.
The United States Mint categorizes its minted coins into four different types; bullion, proof, uncirculated, and circulating. Circulating coins are simple, they’re the coins we use each day, but the other categories are a little more interesting. Bullion coins are the most popular buy and make up the majority of production. These are the most common amongst investors as bullion offers the most effective store of value out of all coins made from precious metals. Strict regulations are in place defining what can be considered a bullion coin, to ensure that every investor receives the same quality.
One example of a bullion coin is the Gold American Eagle, which is one of the most popular precious metals investments globally and one of the best gold coins to buy. However, if you’ve ever browsed the available coins, you’ll notice a “proof” and “uncirculated” version of the exact same coin. In this article, we’ll explore in detail what sets each type of coin apart, and the important differences this can make to investors. By the end of the reading, you’ll be able to better identify the differences between each category of precious metal coins, and make smarter purchasing decisions because of it.
What are Proof Coins?
The term “proof” isn’t actually an indication of the condition or grade of your coin. This term actually refers to the method of manufacture, which leads to a singular and attractive finish. Proof coins shine more brilliantly than their alternative counterparts, featuring sharp cut edges and mirror-polished surfaces. Proof coins are minted in a highly particular manner which gives them their unique appearance, and their role in the entire process of making new coins is vital.
Proof coins were not originally intended for sale, and actually came about as a sort of by-product of the minting process. When any new coin is being put into production, its design must first be perfected and approved. After that, a master die is cast to mold the first coin of its kind. These dies are usually made from steel, with a stamp featuring the inverted design of the coin. The dies are pressed into precious metals to produce identical minted coins.
The first coin to be pressed in a new dye is called the proof, intended to test out the new design. This initial coin is pressed multiple times to ensure each and every detail of the design is visible. Sometimes several proof coins will be produced from a new die, so they can be closely examined. Once the relevant officials decide that the die and proof coin are satisfactory, production can commence making bullion coins.
The subsequent coins minted using this dye will only be pressed once, which is plenty to get the level of detail required. However, a single stamp cannot achieve the detail and precision of multiple pressings, so proof coins always look a little better than regular bullion. Their repeated exposure to the die makes every flat surface shine like a mirror, while angles and edges are cut with perfectly straight lines. Proof coins first came about as a test for regular rounds, but they’re now a fully established investment category.
Proof coins are now especially and purposefully produced, no longer a by-product of bullion coins. Proof coins you might purchase today all receive the utmost care and special attention during the minting process, and this is what sets them apart as an investment. Every coin is struck at least twice, hand-polished, and carefully packaged. When buying proof coins, you can be assured that the quality is as high as possible.
What are Uncirculated Coins?
It can be easy to get uncirculated coins mixed up with bullion and proof versions, as the differences can be slight. In general, the term uncirculated usually means a coin is in mint condition, without any of the wear and tear that usually affects coins that are in use. Proof coins are technically also uncirculated, as they aren't used amongst our everyday dimes and nickels, however, their categorization is slightly different.
Uncirculated coins feature the same designs as circulated coins, but they aren’t meant for regular use. These coins are intended for collectors and numismatic specialists, who will appreciate their impeccable condition. The U.S. Mint places uncirculated coins as a step between proof and circulated coins; not as polished and perfect as a proof version, but kept in mint condition without any markings.
Some confusion in the coin collection community surrounds the definition of an uncirculated coin. This is mainly due to the United States Government Mint changing its official definition in 2005. They originally referred to bullion coins having an “uncirculated finish”, but dropped this label to use on a new type of coin. The uncirculated coins were aimed at collectors who value the perfect mintage and condition. The appearance of bullion coins is of less consequence as their main purpose is to effectively store value, which is a primary reason to buy gold. The additional cost of buying an uncirculated coin over a bullion round isn’t worth it for plain investment, but coin collectors place a high value in the condition of their coins.
You might come across a term in the numismatic community called burnished coins, and this generally means the same as uncirculated. The US Mint uses burnished coin blanks to press uncirculated coins, as well as a minting mark which is singular to this type of coin. Because of the lack of clarity regarding the term “uncirculated”, many coin dealers still refer to this type of coin as burnished. A coin in mint condition, but only pressed once, is considered an uncirculated coin.
6 Differences Between Proof and Uncirculated Coins
There are 6 primary differences between proof coins and their uncirculated alternatives, and it’s vital to understand them if you want to be successful. Buying precious metals in any form is an important decision so taking the time to do your research is well worth it. In the following section, we’ll outline the most vital differences you need to know between uncirculated and proof coins. Read on to discover how each can affect your decision and become better informed about the world of coin investments.
The design itself doesn’t actually change between proof and uncirculated versions of the same coin. However, that doesn’t mean that there’s no difference in appearance. Proof coins stand out from uncirculated options because of their shiny mirror-like background and incredible levels of minute detail. The design can be much clearer on a proof version of a certain coin, especially those with a frosted finish. You can expect the same perfect mint condition from both proof and brilliant uncirculated coins, but a higher level of detail is possible in proof coins. There is also sometimes a discrepancy between the two types of the coin regarding mint marks; uncirculated coins that are more likely to feature a discerning mark because of their collectible nature.
2. Minting Process
We’ve already covered a little about the minting process of both uncirculated and proof gold and silver coins, but this area is where most of the differences stem from. Most investors know how bullion coins are made; the rounds are punched from strips of metal, and then polished and struck a single time with their design. Proof coins get better treatment, as the blanks are hand-polished and specially treated before being struck a minimum of two times. Following this, proof coins are carefully packaged to keep their condition intact.
The mintage of uncirculated coins is different from proofs and is closer to the process used for our everyday legal tender. However, certain enhancements are made to the minting equipment when uncirculated coins are struck, including a higher coining force and special cleaning for the dies. The coin blanks are burnished, which means they go through a special process before being minted. Unlike the high-polish finish of proof coins, burnished or uncirculated rounds have a matte finish which can be quite attractive. This low-shine option is considered by come coin collectors to be longer-lasting when it comes to the details. The burnished blanks are struck once before being packaged to preserve their uncirculated condition.
The difference in minting between proof coins and uncirculated versions is quite large, as from the start they are subjected to separate processes. Blank proof coins are hand polished to achieve a high shine, meaning their mirror-like background will be almost reflective after minting. Uncirculated coins differ as the blanks are burnished instead of polished, making the end result more matte. Like most options, uncirculated coins are struck only once. On the other hand, proof coins are subject to several pressings. This gives them a much-improved level of detail and clarity that no other coin can offer.
The finish of a coin is simply the final result, and the overall effect can differ a lot between different types of coin. Circulated coinage essentially has no finish at all, as within days of use it will be scratched and damaged. Investment and collectible coins are different though, as they’re made to be kept rather than spent. Because of the long-lasting effect of precious metals investments, most people want to buy attractive products. Investors dislike the dull appearance of circulated coins, whereas bullion, proof, and uncirculated versions are much more beautiful in comparison.
The finish of a proof coin is the most glamorous, as these coins are specially made to be the best possible version of their mintage. You’ll notice a neat frosted foreground with a design of incredible detail. Meanwhile, the background is highly polished and shines very brightly, making proof coins incredibly eye-catching. Uncirculated coins are also shiny but to a lesser degree, while the finish is matte and soft. Burnished coins are very attractive, but they aren’t quite on the same level as proof coinage.
The majority of precious metals minted into coins are bullion, meaning they have a regular finish without any special treatment. However, proof and uncirculated versions are much more scarce, which has an impact on their value as an investment or collectible. Proof coins generally make up between 5 and 20 percent of the total mintage of a coin, and this can make them more desirable. The extra time and effort required for a mint to produce proof coins are considerable, so they don’t make as many as other pressings.
Uncirculated coins vary in mintage, but they can sometimes be even rarer than proof versions. While the minting process is quite different for each, both are arduous and therefore neither type of coin is stuck in high numbers. The question of which is more scarce varies from coin to coin, but both types are without a doubt much harder to obtain than bullion or circulated coins.
Coin collecting is one of the main aspects which drives the market for precious metal mintage. Numismatists, or rare coin fans, often accumulate all different types of coin including both proof and uncirculated coins. However, there is a difference between the two in the value they could hold in a coin collection. Given the choice, proof coins are probably more attractive from a collectors standpoint because of their super high-quality presentation. These make for a much better display than regular coins.
Many coin collectors appreciate the availability of proof sets, which can include a range of coins as well as a certificate of authenticity. This Gold American Eagle Proof Set is ideal for storage or display and makes a great gift for any collector. Proof coins are the finest quality available from the US Mint, so it’s not surprising that proof sets are the pride of many a coin collection.
Uncirculated coins are not without their collectible value either. In fact, they were originally aimed at collectors rather than investors. Many numismatists enjoy the opportunity to acquire a coin that is usually circulated in its mint state. Mint sets are in much better condition than coins from the street, and also offer more as a decorative item. Silver, palladium, and gold coins have been coveted collectibles for generations, so the more choice on offer the better.
We all know that bullion coins are intended only to store the value of precious metals, so their price reflects this. Only a small premium is added on top of the spot price of gold or silver when you buy bullion coins, whereas proof and uncirculated coins generally have a higher price. Because of the impeccable condition you expect from both families of a coin, their luster will most definitely cost you.
Proof coins are doubtless the most expensive coin to buy, as they’re the rarest and most expensive to produce. Due to the arduous and time-consuming process including hand-polishing and multiple pressings, proof coins are the most costly of all precious metals coins. The process for pressing uncirculated coin sets is usually simpler than proofs, so this makes them a little cheaper to buy.
Additionally, as uncirculated coins are easier to find than proof copies, this can lower their spot price as well. No matter which type of coin you choose, it will be shiny and blemish-free, and a valuable investment. Proof sets are more costly but are also estimated to hold their value better due to the improved striking technique. Uncirculated coins are easier to find and purchase, they aren’t as rare but this also makes them easier to sell.
Proof Coins Vs. Uncirculated Coins
So, you know the difference between proof coins and their uncirculated counterparts, but which is a better purchase? The answer depends on the reason you’re seeking to buy precious metals. If you’re a coin collector, then it depends on which coin is more attractive to you. Uncirculated coins offer an accurate representation of the exact coins we use every day but in mint condition. This can be an attractive prospect to numismatists, as the historical value of these brilliant uncirculated coins is immeasurable.
If you’re buying a gift for someone or making a one-time special purchase, you may want to consider proof coins. Commemorative sets make an excellent present, while the beautiful finish of proof gold and silver coins makes them ideal for display. If you want a coin with as striking design as possible, the sharp detail and reflective facade of proof coins is the obvious choice. Investors who choose proof coins benefit from the highest quality possible asset, which minimizes the risk. On the other hand, uncirculated coins are generally cheaper and can be bought in larger quantities, so it all depends on your collection. Both uncirculated and proof coins offer excellent gold and silver investment opportunities.