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When shopping for precious metals, you'll see coins described as "BU," "Proof," "Circulated," or with numerical grades like "MS-70." These terms describe the condition of a coin and can significantly affect its premium over melt value. Here's what you need to know.
A BU coin has never been used in commerce. It retains its original mint luster — the distinctive shine that comes from the striking process. BU coins may have minor contact marks from being handled, shipped, or stored with other coins (known as "bag marks"), but they've never been spent or worn.
Most bullion coins sold by dealers are BU. When you buy a new American Gold Eagle or a Canadian Silver Maple Leaf, you're getting a BU coin.
BU is not a precise technical grade — it's a general description meaning "uncirculated and in nice condition." Within the BU range, there's variation. A coin with virtually no marks would grade higher than one with noticeable bag marks, even though both are technically BU.
A circulated coin has been used in commerce and shows visible wear. For precious metals investors buying junk silver (pre-1965 U.S. coins) or older gold coins, circulated condition is common and expected. The wear doesn't affect the metal content — a worn 1964 Washington quarter still contains the same 0.1808 troy ounces of silver as a mint-condition one.
Circulated coins are typically priced at or near melt value, making them an economical way to acquire precious metals.
Proof coins are struck using a special minting process: polished blanks (planchets) are struck multiple times with polished dies at slower speeds and higher pressure. The result is a coin with mirror-like fields and frosted raised design elements — sometimes called a "cameo" effect.
Proofs are produced for collectors and come in protective capsules or presentation cases. They carry significantly higher premiums than BU coins because of the additional production cost and lower mintages. From a pure metal content standpoint, a Proof 1 oz Gold Eagle contains the same gold as a BU 1 oz Gold Eagle — but the Proof will cost more.
For collectors and investors who want a precise, certified assessment of a coin's condition, third-party grading services (PCGS and NGC are the two most recognized) evaluate and encapsulate coins in tamper-evident holders ("slabs") with a numerical grade.
The Sheldon scale runs from 1 to 70:
MS-69 and MS-70 coins command the highest premiums because they're essentially flawless. An MS-70 American Gold Eagle can trade at a significant premium over a generic BU example — sometimes hundreds of dollars more — even though the gold content is identical.
If you're buying precious metals purely as a store of value and plan to sell based on metal content, condition matters less. A BU coin and a circulated coin of the same weight and purity contain the same amount of precious metal.
That said, condition does affect resale price. BU coins and graded coins tend to command better buyback premiums from dealers because they're easier to resell. A tube of mint-condition Silver Eagles will receive a better bid than a bag of worn, tarnished ones — even though the silver content is the same.
For most bullion investors, BU condition is the sweet spot: better than circulated, much cheaper than graded or proof, and liquid enough to sell easily.
If you're buying for metal value, BU is the standard and the best balance of quality and cost. If you're a collector or looking for a premium product, Proof and graded coins offer that — at a price. And if you're buying junk silver or vintage gold coins, circulated condition is perfectly fine and often the most economical choice.
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