Many people think that all coins are made the same way, just with different designs and out of different precious metals. This couldn't be further from the truth. Coins are minted in various ways and for different purposes to produce different finishes. Proof coins and uncirculated coins, for instance, are both wonderfully designed and carefully minted, but take a closer look. These two types of coins are more different than you think.
The term “uncirculated” can actually refer to three things, the last of which we will focus on here since it’s the U.S. Mint’s preferred usage. Just keep in mind that if you hear or read about an uncirculated coin elsewhere, the user may be referring to any one of these three things:
- a coin that’s released to the public but not intended for general circulation
- a coin that has been given an official grade of “Mint State 60+”
- the process by which a coin is made (This is how the U.S. Mint refers to the uncirculated coins it sells and the definition we’ll rely on.)
Knowing the difference between proof and uncirculated coins, as well as how they relate to circulating and bullion coins, can help you make the best, most informed decision for your precious metals portfolio.
A Quick Look at Bullion, Proof, Uncirculated & Circulating Coins
The U.S. Mint groups their coins into four different families: bullion, proof, uncirculated, and circulating. In this blog, we’re going to focus primarily on proof and uncirculated coins.
|Bullion Coins||Proof Coins||Uncirculated Coins||Circulating Coins|
|Coin Example||Bullion Gold American Eagle||Proof Gold American Eagle||Uncirculated/Burnished Gold American Eagle with “W” Mintmark||Lincoln Penny (once-cent coin)|
|Minting||Blanks are “punched” from strips of gold, then cleaned, polished, and struck only once with their design||Hand-polished blanks are specially treated, struck at least twice, and then carefully packaged to preserve their exceptional finish||Burnished blanks are hand-loaded into the press and struck once; the minting process is mostly similar to circulating coinage||Blanks are cut from long strips of metal, then washed, dried, and struck; coins are then inspected, bagged, and stored until sent to the Federal Reserve Bank|
|Design||Could have same designs as circulating coins, but not common; the Secretary of the Treasury usually selects the design; unless specified by an Act of Congress, the Secretary generally has the final approval||Could have same designs as circulating coins; the Secretary of the Treasury usually selects the design; unless specified by an Act of Congress, the Secretary generally has the final approval||Could have same designs as circulating coins; the Secretary of the Treasury usually selects the design; unless specified by an Act of Congress, the Secretary generally has the final approval||The Secretary of the Treasury usually selects the designs shown on United States currency; unless specified by an Act of Congress, the Secretary generally has the final approval|
|Finish||Uniform surface finish that’s neither very matte or very shiny; appears more satin with a slight frost||Frosted foreground with glamorous shine, highly-detailed design, and mirror-like background||Soft, matte-like finish; some shine, but not as vibrant as proof coin||Not minted to have a high-quality finish; tend to be scratched or dull|
|Face Value||Symbolic value; not used as a medium of exchange for everyday transactions||Symbolic value; not used as a medium of exchange for everyday transactions||Symbolic value; not used as a medium of exchange for everyday transactions||Used as a medium of exchange for everyday transactions|
|Use||Made for saving, not spending||Made for saving, not spending||Made for saving, not spending||Made for spending|
|Mintages||Typically produced in much higher mintages than proof coins, making them easier to find||Typically produced in lower mintages than bullion counterparts||Mintage numbers vary, but can sometimes be even rarer than the Proof Eagle||Mintage numbers vary; millions of coins can be produced for circulation in 24 hours|
|Price||Based on spot price of gold, the coin’s weight, the supply and demand of gold, and economic conditions; condition is a very minor factor||Given their limited mintages and the extra care that goes into their production, proof coins tend to have a higher price point than uncirculated coins; condition is also an important factor||Since uncirculated coins are relatively easier to produce and are more widely available, they tend to have a lower price point than proof coins; condition is also an important factor||Not necessarily applicable; a circulating coin is stamped with its legal tender value, which our monetary system acknowledges as the coin’s worth in a transaction|
*A quick note on the word, “burnished:” This term is commonly used within the coin industry to describe Uncirculated Gold American Eagle Coins, since burnished blanks are used in the minting process. The U.S. Mint, however, does not use this term. More on this a bit later.
What Are Bullion Coins?
Bullion is most simply defined as “precious metals in bulk form.” Bullion coins are “valued by the weight of the precious metal, which fluctuates based on its daily price,” notes the U.S. Mint. This family of coins is great for novice buyers, as bullion coins are easy to understand and easy to buy.
What Do Bullion Coins Look Like?
Bullion coins are struck only once, meaning that the coin’s design is pressed into the front and back of the coin once, as opposed to multiple times (like proof coins). Bullion coins have a basic finish that is neither incredibly matte nor incredibly shiny. You could say the finish is satin or just slightly frosted. Bullion coins are generally not sealed in plastic slab cases.
Why Buy Bullion Coins?
There are numerous reasons to buy gold bullion coins. Bullion coins can be optimal for a short-term holding strategy, as they tend to behave more like commodities. A few of the most popular gold bullion coins include Gold American Eagles, Gold American Buffalos, and Canadian Gold Maple Leaf Coins.
What Are Proof Coins?
What's a proof coin? “Proof” indicates a coin's finish and method of manufacture, not a coin’s condition or grade. The Guide Book of United States Coins (via NGC) defines the term as: “Proof, A specially made coin distinguished by sharpness of detail and usually with brilliant, mirror-like surfaces.”
To understand how proof coins came to be, it helps to understand how most coins are made.
Once a coin's design is approved, a pair of master dies are made and the coin's manufacturing process begins. A die is a metallic piece, usually a steel rod, that contains an inverse version of the design that is to be pressed into a coin. Dies are kind of like rubber stamps, as the design on a stamp is used to create multiple copies of the same image.
The first proof coin was made as a die test, not necessarily for public distribution. Only a few copies were made, since that's all that was needed. Each proof coin was struck multiple times to bring out each and every detail in the design. The proofs were then examined to ensure every part of the design rendered perfectly. If all looked right, the proof was approved and the die then started making circulating coins—but only striking them once.
The Smithsonian collection now guards the first “unquestionably” proof gold coins, an 1821 Quarter Eagle and Half Eagle. Without these proof coins to reference, notes NGC.com, scholars would have a much more difficult time deciding whether or not a coin should be designated as proof.
Some proof coins were kept as records, writes the U.S. Mint, and others were given as gifts to leaders of other nations. Historical records indicate that sets of proof coins were put together in 1834 as gifts for the King of Siam and the Sultan of Muscatine.
Proof coins are more than visually stunning. They can act as a store of wealth, safe haven, portfolio diversifier, and more. Learn more about gold ownership and wealth protection today. Sign up to receive your free gold kit from America's Gold Authority, U.S. Money Reserve!
What Do Proof Coins Look Like?
Silver and gold proof coins are the finest quality of coin produced by the U.S. Mint, and they're no longer produced for die tests. Instead, proof blanks receive special treatment. They're hand-polished and cleaned to ensure high-quality strikes. The dies are also specially polished. Each blank is struck at least twice (remember, bullion coins are struck only once) and then carefully packaged to preserve the coin’s exceptional finish.
The resulting coin has a frosted, sculpted foreground, glamorous shine, highly-detailed design, and mirror-like background. This is a hallmark quality of a proof coin.
Why Buy Proof Coins?
Proof coins are the finest quality of coin produced by the U.S. Mint. They can help precious metals owners minimize risk and maximize reward over a long period of time.
Why? While the price of bullion coins is primarily determined by the spot price of precious metals and the coin’s weight in gold or silver, the price of a proof coin is also tied to its availability and condition. Accordingly, proof coins, especially those that are graded and certified, have shown to not be subject to the same level of spot price volatility as bullion coins. When economic conditions start seesawing, you could see the price of a proof coin fluctuate less than that of a bullion coin.
Due to their rarity, grading, and insulation from spot market volatility, proof gold and silver coins can achieve greater potential when held for longer periods of time. By nature, their scarcity allows for increased potential. Proof coins also make exceptional and memorable coin gifts for holidays, birthdays, and anniversaries.
What Are Uncirculated Coins?
“Uncirculated” can indicate that a coin is in mint condition and does not have the usual wear and tear of circulated coins. While proof coins aren't circulated in everyday currency like penny, nickels, and dimes, they aren't technically classified as “uncirculated coins.”
Per the U.S. Mint, “the term ‘uncirculated’ refers to [a] specialized minting process… uncirculated quality coins are distinguished by the presence of a mint mark, indicating their production facility, and by the use of burnished coin blanks, which are hand-fed into specially adapted coining presses one at a time.”
Uncirculated coins can have the same designs as circulating coins (the workhorses of our nation's currency), but they're not meant for daily use.
Instead, “they are for collectors, and are kept in far better condition than coins that have been handled every day,” explains the U.S. Mint.
Sounds simple enough, right? Do a little online research and you’ll see that everyone seems to have a different definition of the word.
“Much of the confusion lies with changes in 2006 to the U.S. Mint’s terminology and with the hobby’s use of an alternative term,” explains Coin World. “From 1986 to 2005, the Mint referred to the American Eagle gold and silver bullion coins as having an ‘Uncirculated’ finish.”
Then in 2006, the Mint introduced a “collector ‘Uncirculated’ [American Eagle] coin while at the same time dropping the same term from all marketing materials for the bullion coin versions, even though those pieces still had an Uncirculated finish.” Meanwhile, the hobby side of things “seized upon the term ‘burnished’ and eventually began referring to the collector coins as ‘Burnished Uncirculated.’”
The numismatic community continues to use the term “burnished” in reference to coins produced with burnished blanks during the minting process, while the U.S. Mint does not use the term “burnished.” The U.S. Mint refers to these coins as “uncirculated.”
Bottom line? Get clarification on the terms “uncirculated” and “burnished” whenever and wherever used, especially if you’re looking at buying a coin with these labels. The seller may not use the term in the same way that the U.S. Mint does.
What Do Uncirculated Coins Look Like?
In 2005, the U.S. Mint began making uncirculated coins with specially prepared dies so that the coins would have a smooth, beautiful finish that was attractive and more detailed than a bullion coin, but not as shiny as a proof coin.
Uncirculated coins are hand-loaded into the coining press and struck on specially burnished blanks. The result is a soft, matte-like finish. While uncirculated (read: burnished) coins often share the same design as your pocket change, they can also be minted with commemorative designs or the same designs as your favorite silver or gold proof coin.
Why Buy Uncirculated Coins?
Like proof coins, uncirculated coins are made for saving, not spending. Because they’re minted in much the same way was circulating coinage, though, uncirculated coins tend to be more affordable than proof coins. They can also be produced in higher numbers than proof coins, but not always. For example, the Burnished Gold American Eagles with the “W” Mintmark offers the absolute lowest mintages of any coin in the entire history of the Gold American Eagle program.
Some precious metals holders may look to buy uncirculated coins to keep with a certain theme in their portfolio, or for sentimental reasons.
Got Coin Questions? Get Answers.
A proof coin and uncirculated coin are both visually stunning but hold these two coins next to one another and you'll see: their production and appearance are entirely different! Learn more from U.S. Money Reserve, America’s Gold Authority® and the only gold company led by a former U.S. Mint Director. Call 1-844-307-1589 to enhance your precious metals portfolio with the power and potential of proof coins.