Bullion coins aren’t just shiny collectibles; they’re serious business for investors and collectors alike. But here’s the kicker: most people have no idea what sets a bullion coin apart from the rest.
Is it just the gold? The weight? The fancy government stamp?
Well, it’s a bit more complex and way more interesting than that.
In this post, we’re breaking down what bullion coins really are, how they work, and why they might belong in your collection (or investment portfolio). Whether you’re just curious or seriously considering buying one, you’re in the right place.
Let’s unpack the glitter and get to the gold.
Bullion Coins: Definition And Overview
Bullion coins are specially minted from precious metals and bought for one of these three purposes: investment, hedge against inflation, or survival. The most popular materials used to make them are gold and silver, although platinum and palladium may also be used, sometimes very rarely.
These coins are generally weighed in fractions of a troy ounce. Bars, rounds, and coins are the three typical forms in which bullion coins are produced primarily for investment purposes. They are the most widely used medium for investors worldwide.
Bullions have a ‘numismatic value,’ which is a subjective measurement, and a ‘melt value,’ which is a different measurement solely based on the precious metals they contain.
Bullion has been around for practically thousands of years in various forms. Throughout most of history, precious metals were the main form of money. However, with the establishment of the modern fiat currency regime, the functions of bullion have been reduced to that of a collector’s item and an investment asset.
Many countries currently produce their official bullion coins, like the American Eagle series issued by the US Mint and the Canadian Maple Leaf series produced by the Royal Canadian Mint. Apart from government issues, privately produced bullion is available across the globe.
Since it is not intended for use as currency to purchase goods in stores, this kind of coin differs from standard currency. While some investors buy bullion coins as collectibles or gifts, most people do it because they believe precious metals have value as an inflation safeguard.
These investors frequently express concern over the fiat currency system’s inability to effectively stop financially reckless government actions, such as adopting an overly expansionary economic policy or leaning on unsustainable volumes of government borrowing.
According to this viewpoint, bullion coins might be a desirable investment since they should appreciate in value if somehow the purchasing power of fiat money, like the US dollar, decreases.
3 Reasons Why Bullion Coins Are So Popular As A Precious Metals Investment Instrument
Due to their accessibility to a wide range of investors and the power to keep the investment in your hands, gold and other precious metals seem to be a superb hedge against inflation, hence, are considered one of the most-preferred alternative investments. Bullions have long been a wise choice.
Following are the prime reasons why people who want to invest in precious metals opt to purchase bullion coins –
1. Portability
Gold, Silver, Platinum, and Palladium bullion can be readily stored, transported, or exchanged for cash because each of these coins contains a standardized weight.
2. Purity
Investors prefer the established standards of purity. These coins provide them with what they want.
3. Trustworthiness
Bullion coins issued by national governments are produced at authorized mints, giving the buyer a sense of trust and security regarding the coins’ grading.
Additionally, they include the year the coin was minted, which is useful for tracing the source of the investment and assisting with subsequent authentication.
Bullion Coins Vs. Numismatic Coins: What’s The Difference?
The ‘ignorance’ of clients may be exploited by deceptive precious metals dealers to lead them in the wrong direction and persuade them to pay more for less.
To avoid this scenario, let’s know the key differences between bullion and numismatic coins.
| Factors | Bullion | Numismatic Coins |
| Source of value | Their precious metal content | Their rarity and collectibility |
| Price | Generally lower than numismatic coins | Generally than higher than bullions |
| Availability | High | Low to medium |
| Investment risk | Low | High to medium |
| Period of production | Current, produced yearly | Old, no longer produced |
| Purpose | Specifically for investment | As collectibles |
| Intrinsic worth | The price of the metal | The price collectors are willing to pay for rarity |
Any form of precious metal has been successful as a crucial investment asset. Both these coins have the unique quality of being items that are acquired and preserved as opposed to being consumed immediately.
Various Bullion Coins Based On Metal Content
As mentioned earlier, bullion comes in various precious metals and is produced both publicly and privately. The limited reserve of precious metals on earth accelerates the perception of them being a good investment. Investors understand that bullion with recognized silver or gold content will retain its fixed value depending on the metal content.
Let’s discuss bullion fabricated from silver, gold, platinum, and palladium –
- Silver Bullion
A highly concentrated silver piece, usually characterized as being 99.9% pure, constructed in the form of bars, rounds, or coins, is referred to as silver bullion.
As compared to numismatic silver coins, silver bullion is often more affordable and comes with a value that closely reflects the spot price of silver. It implies that you can routinely track fluctuations in its value by looking at the current price of silver as long as you store silver bullion properly. In fact, the same goes for other precious metal bullion coins as well.
Modern silver bullions are 99.9% pure silver (.999 fine) or above. One troy ounce, or 31.1035 grams, or 1.097 ‘standard’ ounces, is the weight of the majority of pure silver bullion coins.
These standards make it simple to keep track of your silver holdings. No matter what country issued them, the total weight of the coins you possess is equal to the weight of the silver you own.
The Evolution Of Silver As A Good Bullion Investment
One of the most beneficial elements known to mankind is silver. Of all pure metals, it has the best thermal and electrical conductivity. It has long been the chosen material for producing mirrors due to its superior capacity for reflecting visible light. But as a repository of wealth, silver has actually sparkled.
The earliest civilizations to produce silver coins were the Greeks and the Persians of ancient times. The widespread accessibility of these coins brought silver into the hands of ordinary people for the very first time. The most convenient way of storing wealth for the common public evolved into saving silver coins.
As silver prices increased in the middle of the 20th century, stockpiling of silver rose. Governments were consequently forced to either lower or altogether eliminate the silver content of their circulating coins.
The 1970s saw a spike in inflation, which boosted demand for silver. As a result, pure silver bullion coins were first made available as an investment tool in the 1980s.
Popular Silver Bullion Coins
The most popular silver bullions in the world include –
- American Silver Eagle
- Canadian Silver Maple Leaf
- Vienna Silver Philharmonic
- Chinese Silver Panda
- Australian Silver Kangaroos
- Silver Kookaburra
- Silver Britannia
- Silver Krugerrand
- Silver bars and rounds from famous private mints and refiners like Scottsdale, Johnson Matthey, Engelhard, etc.
- Junk Silver Coins
The American Silver Eagle, issued by the US Mint, is arguably the most popular silver bullion ever. Since its debut in 1986, more than 500 million Silver Eagles have been sold.
To commemorate the 50th anniversary of the Gold Krugerrand, South Africa issued a commemorative Silver Krugerrand in 2017. The decision to sell Silver Krugerrands annually was made as a result of the one-year coin’s high demand.
The Chinese Silver Panda belongs to the elite grade of silver bullion coins based on its mintage. Despite this, the higher premium for Pandas somewhat reduces support. The Silver Panda is priced comparably to collectible coins such as the Silver Koala and Silver Kookaburra. Also, the Silver Panda has a new design every year, just like these coins.
What Is A Junk Silver Coin?
Junk silver coins are common silver coins that are only valuable for their silver content and have no collectable or numismatic value. Junk coins are generally purchased and sold for their silver content. The price of these coins is calculated by multiplying the weight of the silver a coin contains by the current market or spot price of silver.
While 90% US. Silver dimes, quarters, half dollars, and dollars minted in 1964 or earlier are most frequently associated with junk silver coins, they can also include 40% silver Kennedy half dollars minted between 1965 and 1970, 35% silver war nickels minted between 1942 and 1945, and even 40% silver war nickels and Kennedy half dollars.
Except for the previously mentioned 40% silver Kennedy half dollars, the US mint discontinued using silver to make coins for regular circulation in 1965.
There are also junk silver coins from other countries, including Canadian 80% silver dimes, quarters, half dollars, and dollars issued in 1967 and prior.
Junk silver coins are usually sold in large quantities in junk silver bags, stacks, or rolls. These bullion coins come with a small premium, so both investors and collectors can readily purchase them.
Silver Bullion Bars
Silver Bullion Bar. Photo by Scottsdale Mint on Unsplash
The same .999 purity is used to produce silver bullion bars as it is for silver bullion coins. The majority of silver bullion bars sold today are produced by private refineries. The Australian Perth Mint and the Royal Canadian Mint are the only two exceptions. They both sell silver bars in addition to bullion coins.
Silver bars are more affordable than legal tender bullion coins with the same purity and weight. There are two basic forms of silver bullion bars – poured and minted.
Individual poured bars are created by pouring molten silver into molds. Minted or pressed silver bars, like silver coins and rounds, are cut from a chunk and stamped with a design. Pressed silver bars can be produced far more quickly and simply than poured ones. However, many people are willing to pay a little bit extra for the distinctive, rustic appearance of poured bars.
Silver Bullion Rounds
Although silver bullion rounds resemble coins, there are some major differences. The best way to conceptualize silver rounds is as disc-shaped or coin-shaped silver bars. Silver rounds sell for substantially cheaper than bullion coins since there is no seigniorage charge.
Rather than the government, private refiners and mints produce silver rounds. As a consequence, they are not protected by a country’s anti-counterfeit laws. Naturally, creating counterfeit silver rounds and silver bars is still illegal.
Any motif imaginable can be featured on silver bullion rounds. Religious and Christmas-related themes are popular. The same goes for patriotic and historical commemorations. Themes involving animals and aquatic life are also popular.
When silver was inexpensive in the 1960s and the 1970s, promotional themes were common. A company’s logo and occasionally, the date of a major conference were displayed on these silver rounds.
Anyone with the funds and the desire can commission the production of a custom silver round (subject to copyright and trademark laws). To make a profit, however, you would have to sell hundreds of rounds due to the expense of having those custom dies made.
The Purity Of Silver Bullion
Silver bullion is defined in the market as silver that is at least .999 fine or 99.9% pure. London Bullion Market Association (LBMA) exchanges or the COMEX are where the majority of the world’s silver is traded.
Both LBMA spot contracts and COMEX futures contracts specify .999 silver. This standard is also applied to the retail silver bullion market. Although certain silver bullion supplies may only be 90% pure, consumers prefer the .999 pure /1 troy ounce standard.
What Silver Bullion Should You Buy?
All of it depends on your financial objectives. Silver bars can be your best choice if all you care about is receiving the most silver for your money, either gram-for-gram or ounce-for-ounce.
But if you want more upside potential from your silver investment, you might be attracted to numismatic and semi-numismatic silver coins since those have a greater collectable appeal.
Is Now The Right Time To Buy Silver?
The quick response is yes. Silver is a precious metal with many applications. Moreover, silver is still far below its highest price ever, which it will probably soon surpass.
It is practically difficult to time an investment correctly. Dollar Cost Averaging is one way to deal with this. According to this method, you can just purchase silver with the same fixed dollar amount regularly, irrespective of the price, to steadily increase your silver holdings and benefit from price drops without having to anticipate when they will happen.
Not only just silver, but you can also adopt this strategy for other bullion metals.
- Gold Bullion:
The items that fall under the category of gold bullion include coins, bars, rounds, and tokens. Basically, it is any gold that is highly pure and in an investment-friendly form.
Gold bullion is valued based on the amount of gold it contains and the current spot price for gold. The price of gold changes every two minutes due to economic and geopolitical reasons. Therefore, gold bullion’s value fluctuates along with it and is not fixed.
For the majority of gold bullion, a dealer would simply multiply the current price by the weight of the particular piece to determine its market value. To compensate for any expenses associated with testing or processing the item, they will then generally offer a significant percentage of this value.
The sizes of sealed ( packaged in tamper-proof plastic) gold bullion bars today range from 1 troy ounce to 100 grams. The largest size typically found in the retail investment market is gold ‘Kilobars.’
The massive 400-troy ounce ‘Good Delivery’ bar is the standard in the institutional gold market. The COMEX gold futures market offers gold contracts that can be settled in 100 oz, kilobar, or 400 oz gold bars.
The Evolution Of Gold Bullion
The phrase “gold bullion” has an ambiguous history, while it is widely acknowledged that it has French roots. Popular theories suggest that the name comes from the French words “bouillon” (the action of boiling), “bille” (an ingot), or even “Claude de Bullion,” the minister of finance under French King Louis XIII.
Gold has been used for a variety of purposes over the years, including the production of the most exquisite coins in the entire world. Gradually, this metal has evolved as an excellent inflation hedge.
It is now considered one of the popular options for investments since it is available to many investors and lets you hold the investment yourself. In times of uncertainty when the market becomes unstable, gold is also a fantastic investment.
This evolution of gold bullion started from the notion that our understanding of money would evolve. Even now, we can clearly see that the real worth of money has reduced as a result of the huge money injection. The expression ‘currency war’ is becoming more common.
Many people think that devaluing their currencies will help lower the debt. In this scenario, inflation will increase and our savings will decline. Financial institutions such as banks may impose account limits in this situation to avoid bankruptcy.
Gold bullion helps in this regard because it is characterized by its volume and pure gold content, which influences its value along with broader economic dynamics.
The Karat Of Gold Bullion
Gold bullion generally has a karat or carat, as it is known in the UK, of 24 carat. It is 99.99% pure gold. The London Bullion Market Association (LBMA) sets the quality standards, and its Good Delivery Rules are regarded as the international regulatory standard for silver and gold bullion.
The typical LBMA gold bullion bar weighs roughly 400 troy ounces and must be of a minimum purity of 995 highly purified gold (99.5%). They must bear a product code or serial number, its fineness, year of production, and the refiner’s hallmark.
Nonetheless, as previously said, most mints and refiners manufacture gold at a somewhat higher purity of 99.9%, or even 99.99%, with considerable competition amongst various companies throughout the ages to offer ever-higher purity of gold bullion.
However, certain gold bullion coins are made with a 22-karat/carat purity. Older coins frequently followed this custom since the copper reinforced the coins and prevented them from bending or scraping when used.
The mints still make these coins with the same old 22-carat quality even if they are not used in daily life anymore. The Sovereign, Eagle, and Krugerrand are examples that fall within the category of gold bullion despite being less pure.
The Difference Between Gold And Gold Bullion
Anything composed of the yellow precious metal is referred to as containing gold. Directly extracted gold ore, gold flakes found in riverbeds, as well as gold jewelry and watches. These are all clearly made of gold.
On the other hand, high-purity gold is referred to as gold bullion and is traded for its recognized gold content, not its form. Even 24K gold jewelry isn’t regarded as bullion because a significant portion of its worth comes from its artistic aspects and form. Even if the prices of gold remain constant, jewelry is worth less when tastes change.
Understanding ‘Good Delivery’ Gold Bars
A ‘Good Delivery’ gold bar refers to a 400 oz gold bar produced by licensed gold refineries for trading in the London-based global bullion market. The international physical gold market is located in London and governed by the LBMA. It’s the most prominent and continuously operating physical gold market ever.
Because transactions happen between principals and never involve an exchange, trust is crucial. The London Bullion Market Association (LBMA) maintains a Good Delivery standard for the big gold bars exchanged in London to uphold that trust. In the London physical gold market, only 400 oz bars prepared by a ‘Good Delivery’ certified refiner are permitted to trade.
To maintain their Good Delivery status, these big gold bars must always be kept in a vault that has received LBMA approval. This system of control assures the market of trading Good Delivery bars without first seeing them.
To increase their reserves of gold, governments and central banks purchase London Good Delivery bars. Gold wholesalers purchase and distribute these gold bars for resale to mints and jewelers. It’s possible that your wedding ring, or any small gold bar you may have, was formerly a Good Delivery gold bar.
Gold Coins And Rounds As Bullion
In the past, bullion was usually held in the form of gold standard coins that were 90% fine or better. But it is difficult to track your investment while using these coins because their gold content is determined by the country’s official exchange rate.
Many countries today produce bullion coins from pure gold for investors in sizes measured in full troy ounces. Instead of their artistic value, the worth of these coins is defined by the spot price of gold. The most common option for an average investor to get physical gold is through gold bullion coins.
These coins were produced in .999 pure gold for many years. The quality of several countries’ gold bullion coins has now been increased to ‘four nines’, .9999 fine gold. However, the American Gold Eagle, one of the most popular series of investment gold bullion coins, is a .9167 fine (22K). To put it another way, there is no set standard for the level of purity that investors find ideal.
Bullion coins are remarkably similar to other regular coins in appearance. However, since they are not actual currencies, they will be different from regular coins. A bullion coin essentially has an acquiring value and, despite not being accepted as legal tender, has monetary value because of the precious metal it contains.
Popular Gold Bullion Coins
Since the beginning of coinage production, gold has been used to create coins. During the second millennium, gold coins were regarded as the lifeblood of the Mediterranean’s trading industry.
Gold bullion coins today are produced by both public and private mints around the world at a purity of up to 99.9% gold and are guaranteed by them to be pure, allowing them to be traded and trusted internationally. The most common sizes for gold coins are 1/10 oz, 1/20 oz, 1/25 oz, 1/2 oz, 1 oz, and also 0.5 grams.
Here are some of the most popular gold bullion coins in the world –
- Gold Krugerrand
- American Gold Eagle
- UK Sovereign gold coins
- Australian Gold Kangaroo/Nugget
- American Gold Buffalo
- South Africa gold sovereign coins
- Australian sovereigns
- Chinese Panda
- Gold Britannia
- Austrian Gold Philharmonic
- Canadian Gold Maple Leaf
The South African Krugerrand, the first 1-ounce gold bullion coin ever produced, is a very famous international bullion coin and evidently one of the most widely used bullion coins ever.
The American Gold Eagle is also currently one of the most prized gold coins in existence. The coin has a face value of $50 and is made of 22-carat (916.7 purity) gold.
Another popular option among one oz gold coins from Australia’s Perth Mint is the Australian Kangaroo, sometimes referred to as the Australian Nugget. Due to its 9999 percent fine gold composition and coin capsule, the Australian gold Kangaroo is becoming more and more well-liked.
Although very popular, the U.K. Gold Sovereigns have been 22-carat gold since 1817, not pure gold. Sovereigns were also minted in Bombay and Delhi, India, Ottawa, Canada, and Pretoria, South Africa. They are still regarded as good investment coins, and if a coin is in mint condition, buyers will pay more.
Apart from all these popular and famous ones, for a more affordable option – the Mexican Peso and the Australian 100 Coronas are less popular but are still available at a lower premium.
What Is The Best Gold Bullion To Buy?
Physical gold bullion items come in two main categories, each with a unique set of benefits. While gold bullion coins have several advantages, they are sometimes the most expensive type of gold bullion.
When compared to an ounce-for-ounce, gold bullion bars are considerably less expensive than gold coins but they also lack certain benefits. Let’s look at their advantages separately –
- Advantages Of Gold Coins:
National governments issue legal tender gold bullion coins. This gives investors a greater sense of security, which increases the liquidity of gold coins relative to gold bars. In general, gold coins are more aesthetically appealing than gold bars.
- Advantages Of Gold Bars:
Cost-effectiveness is the biggest benefit of purchasing gold bars. Ounce for ounce, gold bars are less expensive than gold coins. The most cost-efficient way to get physical gold is to buy large gold bullion bars.
Expert Opinion And Tips
It is crucial to note that the greater the amount of gold in almost any form, including gold coins, the less that gold item costs gram for gram. For instance, a one-troy-ounce bar or coin of gold will normally carry a lesser premium than four-quarter-ounce coins or 31 bars that are only one gram in weight. This effect is amplified with larger gold bars.
So, always opt for the larger unit while buying gold, if you can.
Is Gold Bullion Really A Good Investment?
A common misconception is that gold’s value is continually rising. The truth is that market demand, economic fluctuations, and other factors can cause changes in gold prices.
Instead of referring to gold as an ‘investment’ in the strictest sense, it would perhaps be more accurate to say that it serves as an excellent store of value and hedge against inflation. Although gold prices fluctuate, its intrinsic value is typically much more stable than that of the state of the economy.
Owning physical gold can effectively safeguard against the negative consequences of inflation and abrupt market fluctuations. It can lessen the impact of the negative market movement when incorporated into a diversified investment portfolio.
6 Common Mistakes To Avoid While Purchasing Physical Gold
Purchasing gold bullion these days is not necessarily a simple and secure process. It’s always a good idea to educate yourself on how to avoid making specific, unfamiliar gold shopping mistakes so you can better preserve your gold acquisition and financial stability. The more knowledge you possess, the more effectively you can respond to problems.
Let’s discuss 6 such mistakes you must avoid making while buying physical gold –
1. Not Understanding Your Purchase
You need to understand what you are buying and have sufficient insights regarding the following relevant factors:
- Purity:
Before purchasing gold, always check its purity because not all gold is the same. Gold can be 100% pure or 97%, 98%, 99%, 99.10%, or 99.99% pure. There are many different grades and variations of gold, therefore to ensure the quality, examine the certificates that attest to their purity.
- Price:
For whatever precious metal they wish to trade in, either buying or selling, investors must be very aware of the current spot price. Depending on the amount of the gold, several bullion items often sell for just a little bit more than 3 to 5 percent higher than the current market price. The Canadian Maple Leaf, South African Krugerrand, and American Eagle are a few examples.
Avoid being pressured into making a purchase. Sometimes prices are so exorbitant that before you could turn a profit, gold or silver would need to quadruple or triple in value.
- Weight:
You must understand how traders weigh gold. On the global market, troy ounces are the most widely accepted unit of measurement. Spot prices are typically also expressed in troy ounces.
Just remember that it differs from an ordinary ounce. A troy ounce weighs substantially more than a standard ounce since one troy ounce is equivalent to 1.0971 standard ounces. It is converted to 31.1035 grams in grams.
- Design:
Every gold coin has a distinctive design rich in tiny details, making it incredibly challenging to create a nearly flawless counterfeit. Therefore, pay attention to these aspects when purchasing gold coins and confirm that they are all present in the ones you intend to purchase.
2. Only Purchasing Gold While It Is Rising
It’s never a ‘wrong’ time to purchase gold; it is always a good choice. But gold is also subject to the Supply and Demand Law.
When more individuals purchase gold bullion, the price of the metal may increase and the market may run out of gold coins. The demand for gold would increase as the number of buyers increased.
However, there are occasions when the market’s supply may not be enough to satisfy demand. The pricing will thus be affected. Whether it’s gold, silver, petroleum, food, or foreign currency when demand rises, prices rise, and there is a risk of a supply shortage.
3. Buying The Least Priced Gold
Be aware if a dealer sells a bullion product at a price that seems too good to be true, and perhaps that includes lavish incentives or even exaggerated claims.
Bullion items made of gold and silver often do not fall below spot values. If you own any precious metals, you can visit a dealer at any moment and sell the things at their full price right away. With this ease available to everyone, there is no need for anyone to sell their gold or silver as a “sacrifice” item.
Legitimate sellers would incur losses if they sell products at a discount, so be cautious. In order to pay the costs associated with product minting while also covering their own operating expenses, dealers must add minor premiums to spot pricing.
4. Not Verifying A Dealer’s Reputation And Experience
Choose to do business with those who have a lot of industry experience. Find dealers who have satisfied repeat clients since buyers won’t go back to a dealer who provides poor service or a bad experience.
You should always choose a reliable source and a respectable seller. If you are unsure, do not invest. Make sure you can physically possess the gold before paying any fees or deposits and insist on viewing the certification before assuming it is genuine or coming from a reputable source.
Online forums regarding investing in gold and other precious metals are excellent sources of information. By speaking with other professionals in the industry, you may explore potential businesses, dealers, and investments. To help you avoid fraudulent businesses or dealers, many forums regularly provide warnings about scammers.
5. Purchasing Rare Coins As An Investment
You may come across some dishonest coin sellers who would try to offer you numismatic coins like an investment item and use sweet talk to persuade you. Don’t fall for this deception. Numismatic coins are mostly used for collection and are poor investments.
The value of numismatic coins is determined by a variety of factors, not just the current price of gold. You must consider criteria such as rarity, quality, mintage, and popularity, which would have a substantial impact on their pricing. If you want to invest in actual gold, acquire only well-known bullion coins with modest premium rates.
6. Spreading The Word About Your Purchase
The desire to talk about your acquisition to relatives and friends on social media is always strong once you’ve purchased your gold. It’s normal because purchasing gold is thrilling.
While taking measures to safeguard your financial future is a wise decision, be cautious about who you tell about your gold stockpile. You may bring danger to yourself in the process.
Think twice before publishing anything about your purchases on social media, blogs, or your website. You are mindful of the possibility that anyone anywhere on the planet may have access to your social networking sites and view everything you post. Keep your gold in a secure location, such as a vault, safety deposit box, precious metals depository, etc, and limit the number of individuals who know about it.
How Much Gold Bullion Should You Purchase?
It’s tough to recommend a specific amount of gold to purchase at once. For starters, there are no restrictions on your investment. However, you need to be acquainted with the gold market regarding portfolio strategy.
Given that gold is prone to instability despite having been on a rising trend over the past century. Based on the volatility of the market, it can either gain or lose value in the brief term. As an investor, you should consider factors like pricing, preservation, and how rapidly you can sell the gold. Whatever the situation, it all comes down to your investment goals.
Platinum Bullion
Platinum, like silver and gold, is traded on international commodities markets around the clock. Since it is significantly rarer, it frequently commands a greater price per troy ounce than gold during regular times of political and market stability. The actual annual extraction of this metal from the ground is much lower.
About Platinum And Its Usage
Platinum is a precious metal. It has a silvery, lustrous appearance. Platinum, like silver, is regarded as an industrial metal. The highest demand for platinum is from automotive catalysts used to minimize the toxicity of emissions. Beyond that, jewelry is responsible for the vast majority of demand. Catalysts for petroleum, chemical refining, and the computer sector consume the rest.
Platinum As Bullion Investment
Platinum bullion refers to a piece of high-purity platinum traded by weight instead of a fixed typical face value. The maker stamps the platinum bullion with purity and weight information. Even though a face value indication may be included in the stamp, this coin is hardly traded at that value.
Platinum coins, bars, and ingots are available for purchase. Several countries officially mint platinum bullion, while other private entities also produce it. Because this precious metal is cumbersome and difficult to handle in large quantities, people buy and sell it as an investment commodity, usually in the format of trade certificates instead of bullion.
The Price Of Platinum
The geopolitical factors in the countries whereby platinum mining occurs, along with the supply-demand equation, have a massive effect on platinum pricing. Prices have been established in large part by automobile sales and manufacturing numbers in this regard.
During the COVID-19 pandemic, the decline in vehicle production plus reduced demand for autocatalysts, which contributes to one-third of platinum consumption, pushed prices down. In the first half of 2021, supplies fell by 5% while demand climbed by 21% (mainly due to the automobile industry), which could result in a rise in the metal’s price.
Demand went up in 2022 as well, but only by 2%. However, keep in mind that the rise of zero-emission automobiles may put downward pressure on the pricing of platinum.
Only two countries have a high concentration of platinum mines – South Africa and Russia. This increases the possibility of cartel-like activity to sustain or even artificially hike platinum prices.
Investors should take into consideration the fact that all these factors combine in making platinum the most unpredictable of all the precious metals.
Platinum Bullion Bars
Like gold bars, platinum bars usually have a certification attesting to their weight, purity, mint of production, etc. Considering that platinum items are more scarce than their gold or silver counterparts, it is ideal for someone trying to increase their platinum portfolio and buy the largest pieces they can find because you pay a lower premium over the spot price.
While most platinum bars weigh 10 troy ounces and have a purity of 99.95 percent, you may come across some that are not. Be wary of dealers who say that their platinum bar is 100 percent pure. No metal can really be 100 % pure.
Platinum bars, like coins, are simple to store or even transport. They weigh slightly over half a pound and can be stored in a bank vault or your own home safe. If you choose to store the precious metal at home, make sure to get an insurance policy that protects it.
Some popular platinum bullion bars are Pamp Suisse, Credit Suisse, Valcambi, Engelhard, etc.
Platinum Bullion Coins And Rounds
Platinum bullion is typically ornamented with decorative devices such as national seals and any other artwork to make it more aesthetically attractive. A government mint may stamp the metal with heraldic insignia to mark it as a creation of the mint. These marks serve as a guarantee of purity which is important for investors who wish to dodge counterfeit bullion from unverified sources, which may be challenging to resell.
Various sizes of platinum coins are available, measured by weight. The ‘standard’ and most frequent weight for these coins is 1 troy oz, just like other precious metals. Additionally, they come in ‘fractional’ weights of 1/2 ounce, 1/4 ounce, and 1/10 ounce. Smaller fractional quantities such as 1/15 oz, 1/20 oz, and even 1-gram coins are occasionally found, but they are quite uncommon.
Platinum coins offer one major advantage in terms of form. Platinum coins, as opposed to platinum bars, are more easily recognizable and, in general, simpler to sell if you have to liquidate them. Furthermore, aftermarket appreciation depending on the year of mintage, appearance, and other criteria may raise collectors’ demand even for bullion-grade platinum coins.
Popular Platinum Coins
These are some of the top-selling platinum coins –
- Platinum American Eagle
- Australian Kangaroo
- Australian Koala
- British Queen’s Beasts
- Platinum Canadian Maple Leaf
- Chinese Panda
- South African Platinum Elephant
- Platinum Vienna Philharmonic
- Swiss William Tell
Only 1-oz-sized platinum American eagles are available. They are made of 0.9995 pure platinum and feature a face value of $100. The Queen’s Beasts coins from the Royal Mint UK are also 1 oz coins with a £100 face value.
Chinese pandas are 30 grams (a little below 1 troy oz) with a yearly-variant design. These coins are composed of 99.9% platinum and are only produced in a limited quantity of 10,000 pieces.
Factors To Consider While Choosing Platinum Bullion
When deciding which platinum bullion to purchase, take into account the following factors –
- Weight and Size:
The ideal size for you ultimately depends on whether you prefer varied weights for selling or bartering, or if your objective is to obtain the cheapest deal per ounce.
Generally speaking, a heavier platinum coin has a lower markup over the spot price of platinum than a lighter-weight one. A 1 oz coin of platinum, for instance, might only attract a 15% premium over the current price, whereas a 1/10 ounce coin might cost 50% more.
This discrepancy results from the fact that producing a platinum coin, regardless of weight, requires roughly the same amount of expense and labor.
- Fineness:
There are several purity levels of platinum coins. Many platinum coins have a fineness of 0.9995, which is regarded as a high-purity level.
- Availability:
A platinum coin cannot be purchased if it is not in stock, and they are generally minted in far lesser quantities than silver or gold coins. Verify that the platinum coins you intend to acquire are in supply and readily accessible before making a purchase.
- IRA Eligibility:
While talking about fineness, according to IRS regulations, only platinum coins made of 99.95% (0.9995 pure) platinum and created by sovereign mints are acceptable for self-directed IRA investments.
- With Or Without An IRA:
You must decide if you want to keep your platinum bullion in an IRA or somewhere else. If you choose to put platinum items in a tax-deferred SDIRA, be sure to read up on the IRS rules governing bullion coins, which include keeping them with a bank or other non-bank trustee that has been approved. It should be noted that it is prohibited to keep platinum coins held in IRAs at home.
To know more about the right coin storage, please read my article The Best Methods To Store Coins.
How To Trade Platinum Bullion
Using the current platinum market rate, investors can purchase platinum bullion either straight from manufacturers or through other traders. Trades must be carefully timed to get the benefit of the best pricing because this fluctuates frequently.
Since precious metal investors often prefer to trade at extremely high prices, they frequently purchase and then sell certificates to such metals rather than the actual metals. The certificates’ issuer keeps a reserve of platinum in a secure place and uses this supply to back the certificates it generates.
If a person is unable to invest on a big scale, they can purchase individual units of platinum bullion. Low-level metals speculation might be riskier for investors since they are less able to profit from moving big quantities of materials as the market swings and may lack access to the right storage facilities.
If platinum bullion gets sole or lost, it can’t be found again unless it has a serial number stamped on it.
Palladium Bullion
Palladium is a bright, silvery metal utilized in numerous industrial and technological products. The metal is a member of the platinum group of metals, which also includes platinum, iridium, osmium, rhodium, and ruthenium. Palladium is 30 times rarer than gold. The United States, Canada, South Africa, and Russia provide the world’s largest palladium supply.
Palladium could well be rolled into panels or sheets and used in industries such as solar power and fuel cells. Additionally, it has applications in groundwater treatment, jewelry, dentistry, medicine, and chemical processes.
Numerous characteristics of palladium make it a preferred choice for coinage. Palladium is precious because it is both extremely rare and in high demand for usage in a variety of industries.
Like the other metals in the platinum group, it is extraordinarily chemically stable. It is relatively easier to work with since it is ductile, soft, and has a melting point that is lower than any other element in the platinum group – 2830.82 Fahrenheit, or 1554.9 Celsius.
Along with silver, gold, and platinum, palladium is one of the four precious metals to be classified as currency under ISO 4217, a listing of the world’s currencies and their respective exchange rates recorded by the Organization for Standardization (iso). The currency code for Palladium is XPD-964.
About Palladium And Its Usage
Palladium was discovered in 1802 by William Hyde Wollaston. When he submerged platinum in a solution of hydrochloric acid and nitric acid, he discovered the metal by mistake.
Palladium was introduced to jewelry in 1939, but its popularity did not rise until the late 1980s. It was first used by automakers in catalytic converters. Evolving from there it is now utilized in a huge range of goods and industries, such as dentistry, watchmaking, electronics, computers, photography, and hydrogen purification.
Palladium is more resilient and harder than gold, and also costs more per ounce. It can be worked into sheets as thin as 150 thousandths of an inch by metalworkers.
Although pure palladium is flexible, working with it at room temperature causes it to become stronger and harder.
Due to the metal’s excellent catalytic properties, which accelerate chemical reactions, catalytic converters are the major industrial application for palladium. This gleaming metal is 12.6% tougher than platinum and thus more durable.
Palladium As Bullion/Investment
Palladium Several ways exist for investors to get exposure to palladium. One of the simplest ways to achieve this is to invest in exchange-traded funds (ETFs) that are specifically focused on palladium and track palladium bullion, like the Palladium Trust (SPPP), Sprott Physical Platinum, and the Aberdeen Physical Palladium Shares (PALL).
By holding physical palladium in these ETFs, you can avoid having to keep the metal yourself while still having exposure to its price. The alternative to investment in palladium is to buy the metal itself in the form of bullion. Costs related to the storage and transporting of the actual metal result from this.
The Price Of Palladium
The price of palladium fluctuates according to the state of the market, like other precious metals. In February 2022, the price of the metal rose to all-time highs of almost $2,981. In August 1977, the record-low price of $41.70 was set.
From 1986 to 1996, the price of palladium varied between $100 and $150 per ounce before skyrocketing in 2001. From 2001 to 2016, the price fluctuated more than it had in the past. After that, it began to grow consistently until it reached the $1,500 threshold in February 2019.
Palladium Coins And Rounds
Since Sierra Leone’s government first issued palladium coins in 1966, many different mints have continued to create them until this day. Due to the high value of palladium, it is more commonly utilized for investments or commemorative pieces than for regular financial transactions.
A privately struck palladium coin is typically referred to as a round because the word coin is frequently used to designate particularly to something made in government mints and accepted as legal tender.
A palladium coin’s weight is often expressed in troy ounces, which are equal to 31.1034768 grams or 480 grains. A troy ounce weighs 9.7 percent more than an avoirdupois ounce, the unit more usually used to measure weight in countries that use the Imperial or United States customary systems, along with pounds.
Although no coin can be totally pure, palladium coins typically contain 99 percent palladium.
Popular Palladium Coins And Bars
There aren’t many coins made of palladium. Compared to silver and gold, palladium investors have fewer possibilities for investments. However, due to the metal’s rising price, a wide variety of bars and coins are now produced in palladium.
The most popular palladium coins, rounds, and bars include –
- American Palladium Eagle
- Palladium Britannia
- Palladium Maple Leaf
- Palladium Koala
- Russian Ballerina
- Chinese Palladium Panda
- Johnson Matthey Palladium Round
- Pamp Suisse Palladium Bar
Bottom Line
Both in the markets for collectible coins and spot precious metals, bullion coins, rounds, and bars will continue to be a sound investment. To prevent losses, it is best to spend some time researching about it and analyzing the coin market.
This site intends to be an excellent educational resource pertinent to every coin there is.
FAQs
How Can You Tell If A Coin Is Bullion?
While it is usually a good idea to consult a specialist, there are a variety of ways that users can start the testing procedure on their own. Here are a few of them –
- Measuring Weight:
Since the weight of many bullion pieces is stamped on them, an easy test is by comparing the item’s actual weight to the weight stated in its markings. You will be certain that bullion is fake if there is even the tiniest discrepancy.
- Inspecting The Edge Of The Coin:
The edge finish of coins is one of the trickiest structural elements to imitate. It was developed especially with this in mind.
Some coins have smooth edges, while others include inscriptions or tiny ridges. Some edge finishes even incorporate several textures. Therefore, examine whether the edge finishing is proper for that specific coin design.
Then, check to see if the texture was accurately executed. For example, a lot of fake coins that imitate the reeded edge frequently have a reeding that is uneven or the wrong size.
- Testing Magnetism:
Silver and gold are not magnetic, so the magnetism test will let you know if it is made entirely of pure metal or just an alloy. If the metal and the magnet attract each other, then the precious metal is fake.
Please be aware, though, that many fake metals aren’t magnetic, so make sure to perform additional testing before determining whether the bullion is authentic.
Why Do Bullion Coins Have A Face Value?
The majority of bullion coins contain a face value, making them legal currency in the country in which they were produced. This legal tender status gives bullion coins certain advantages. Since they are made legal tender this way rather than just bullion, they are easier to transport across national borders without incurring taxes and tariffs.
The face value stated on the coin is only a “nominal” face value; neither the different mints nor the market ever accepts them at that price. Nevertheless, the coins do receive a significant legal tender status as a result of their value.
Do Bullion Coins Increase In Value?
Most likely, yes. Bullion coins and also bars made of precious metal do increase in value. Over longer periods, bullion has been proven to make a comparatively more stable option than the stock market. And even if it doesn’t increase, it at least maintains its intrinsic value. Contrary to paper money, the value of precious metals is not impacted by inflation.
Bullion coin values can fluctuate. In the near term, they are subject to ups and downs. Long-term price increases are likely since precious metals have a limited supply and rising demand.
Premiums on collectible bullion coins can climb faster than the spot price of those metals owing to interest from both investors and collectors. Therefore, we may conclude that there is very little downside risk associated with purchasing precious metal coins. Particularly coins can produce positive returns over time while still keeping your portfolio’s tax efficiency.
How Much Is A Bullion Coin Worth?
A coin’s bullion value is determined by the quantity of precious metal it contains. For instance, a coin containing 90% silver and weighing 0.2 troy ounces contains 0.18 troy ounces of pure silver. The coin’s bullion value, assuming silver sells for $20 per troy ounce, is $3.60.
Since different metals’ market prices differ from one another, bullion coins made of a particular metal will also have a different price from others.
What Coins Are Considered Bullion?
Bullion is defined as a purified and imprinted weight of precious metals. A bullion coin is crafted from a precious metal that is traded for more than its spot price. Silver and gold are the most common metals used to make bullion coins, while platinum and palladium are also possible materials.
Some popular examples of bullion coins are – the American Eagle series, Chinese Panda series, Australian Kangaroo, Canadian Maple Leaf, etc.
What’s The Difference Between Bullion And Proof Coins?
In contrast to coins produced for regular circulation, proof coins have undergone extra processing and meticulous handling at the mints, resulting in an enhanced finish and quality of strike. On the other hand, bullion coins are coins primarily used for investment purposes based on their metal content.
Every single type of coin, such as circulating, commemorative coin, bullion coin, collectors coin’ coin, etc, has a proof version.
Is It Better To Buy Coins Or Bullion?
You can opt for either bullion coins or bullion bars, or both. Investing in bullion coins as well as bars offers pros and cons, just like any other type of investment.
Remember that there is no absolute right or wrong choice when deciding between bullion and bullion bars. Your overall investment goal should be a deciding factor when deciding whether to invest in bullion bars or coins.
Regardless of whether you like bullion coins or bars, every investor would always purchase bullion for a premium over the spot price. In light of this, if you want to reduce the premiums to a minimum, you may choose to invest in bullion bars.
The rationale behind this is that since bullion bars have a bigger unit size than coins and frequently have lower manufacturing costs, they tend to command significantly lower premiums.
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