When reading about precious metal coins we often read about distinctions between standard bullion coins and proof coins. But what is the difference? Well, bullion coins' value depends strictly on the amount of gold (or other precious metal) contained inside it. Proof coins, on the other hand, are intentionally produced to be collector's items and have value over and above the value of their gold content.
Proof coins are normally produced in limited quantities, so that their scarcity adds immediate numismatic value for collectors.
They are minted at a higher standard of quality, being struck with brand new and polished dies. They seem newer and more precisely imprinted, with sharper rims and design, and smooth fields (the flat background areas not part of the design). They exhibit a brilliant luster compared with the duller luster of standard bullion coins.
Sometimes the dies used for striking proof coins use chemicals to create a frosted look on the coins. The light and dark tones of the coin's design are also more sharply contrasted in a proof edition coin than in a bullion coin.
Proof coins are also normally pre-packaged in nice commemorative cases and come with a certificate of authenticity. Unlike bullion coins which must be purchased from a bullion dealer, or from another investor, proof coins can be purchased directly from the mint.
Which one should I buy?
Well, if you are a serious coin collector and you collect coins to enjoy their aesthetic qualities or appreciate their rarity, then by all means by the proof. Because if you are buying it not to make a profit but rather for the love of the hobby, then you will not mind paying the huge premium that is often charged in proof coins. I have personally seen gold and silver proof coins selling for more than 600% over the spot price of their metal content. If you plan to simply enjoy the coin and maybe someday resell it to another collector maybe that's fine. But if you ever need to liquidate that coin quickly and use it as real money, it will have to have increased in value 600% before you would break even. That's an extreme case and the premiums are usually not that rediculous, but if your purpose is
to hold precious metal as a safe haven and an emergency medium of exchange, then bullion is a much better option.