What Are Bullion Coins?
Bullion coins are coins made from precious metals. They are typically minted in weights that are fractions of one troy ounce, and they are most commonly made from gold and silver.
Many countries have their own official bullion coins, such as the American Eagle series produced by the United States Mint or the Canadian Maple Leaf series offered by the Royal Canadian Mint.
Key Takeaways
- Bullion coins are physical coins made of precious metals.
- The most common types are made of gold and silver, although platinum and palladium are also sometimes used.
- While some investors purchase bullion coins as gifts or collectible items, others invest in them for their perceived value as a hedge against inflation.
Understanding Bullion Coins
Bullion coins have existed in various forms for literally thousands of years. Bullion coins served as a primary form of currency throughout most of history; however, since the advent of the international fiat currency system, their role has been relegated to that of a collectible item and investment asset.
For collectors, bullion coins can be prized for their rarity and aesthetic beauty, which can often cause their value to increase relative to the base value of their precious metals content. This subjective value is known as the "numismatic value" of bullion coins, whereas the value solely attributed to their precious metals content is known as their "melt value."
Investors, on the other hand, will often purchase bullion coins as a hedge against inflation. These investors often share a concern that the fiat currency system fails to adequately prevent fiscally irresponsible government practices, such as engaging in excessively expansionary monetary policy or relying on unsustainable levels of government borrowing. From this perspective, bullion coins may be an attractive investment in that their value should rise if the purchasing power of fiat currencies, such as the U.S. dollar (USD), declines.
Real World Example of Bullion Coins
American Eagle gold bullion coins are among the most widely traded bullion coins in the world. These coins are minted from 22-karat gold (91.67% purity) and are available in four weights—one-tenth, one-fourth, one-half, and one troy ounce.
Other popular gold bullion coins include the Canadian Maple Leaf, South African Krugerrands, and Chinese Gold Pandas.
FAQs
Bullion coins are physical coins made of precious metals. The most common types are made of gold and silver, although platinum and palladium are also sometimes used. While some investors purchase bullion coins as gifts or collectible items, others invest in them for their perceived value as a hedge against inflation.
How does a bullion work? ›
Bullion trading typically involves purchasing or selling gold or silver traded in the form of bars, coins or ingots. There are three main types of bullion trading: physical bullion trading, futures bullion trading, and spot bullion trading.
What is a bullion coin? ›
Bullion Coins: Are precious metal coins intended for investors. They are: Valued by the weight of the precious metal, which fluctuates based on its daily price. Not sold to the general public through the United States Mint. Instead, these coins are sold through dealers located throughout the United States.
What is an example of bullion? ›
Bullion is an item that value derives from its precious metal content rather than its form. A gold bar, for example, is bullion. A silver ring, however, is not. Therefore, bars, ingots, coins, and silver rings are the most common forms of bullion.
What is the difference between a bullion coin and a regular coin? ›
Bullion coins are acquired for their precious metal content only and are often available for much less. Numismatic coins may or may not have as much inherent value, and are often sought for their rarity.
Is it better to own gold coins or bullion? ›
While gold bars give you the best option if you want to preserve your wealth, gold coins offer the best value when selling.
Are bullion coins a good investment? ›
Safe-haven investment: Gold isn't just safe during inflationary periods. A gold coin "can be a good investment to help settle down your portfolio during uncertain economic times," says Azoury. "Ultimately, it could help mitigate some of the risk other assets carry."
Are bullion coins worth anything? ›
bullion coins depends primarily on the specific coins being compared. Some rare coins are worth tens of thousands of dollars beyond their melt value. Others sell for relatively cheap.
Is bullion a safe investment? ›
Bullion coins are easy to transport and equally easy to store, making them a smart investment choice for savvy investors. It is, however, important that bullion coins are stored in a safe, secure environment that's protected against theft and damage.
What is the point of buying bullion? ›
Throughout history, gold has been seen as a special and valuable commodity. Today, owning gold can act as a hedge against inflation and deflation alike, as well as a good portfolio diversifier. As a global store of value, gold can also provide financial cover during geopolitical and macroeconomic uncertainty.
Most bullion coins and bars are pure 999.9 gold, and should therefore not be magnetic. There are some coins however - such as the gold Sovereign - that have a purity of 916.7 per tradition.
Do banks buy silver coins? ›
Q: Can I sell my silver coins back to a bank? A: Most banks do not buy back precious metals from individuals. It is usually advisable to sell your silver coins to a reputable precious metals dealer or through an online marketplace.
How much is a bullion worth today? ›
Live Metal Spot Price (24hrs) Sep 16, 2024 at 04:32 EST
| Gold Spot Prices | Today | Change |
|---|
| Gold Price Per Ounce | $ 2,598.87 | 14.71 |
| Gold Price Per Gram | $ 83.56 | 0.47 |
| Gold Price Per Kilo | $ 83,555.61 | 472.94 |
Investors generally prefer bullion coins due to their direct link to the current spot price of silver, while collectors may prize numismatic coins.
What is the point of bullion coins? ›
While bullion coins are often government-issued legal tender, their primary use is as a financial asset rather than as legal tender. Bullion coins' legal-tender face value is often far less than their actual market price.
Is it better to buy bullion or proof coins? ›
Long-Term Potential. While bullion and proof coins can appreciate over time, proof coins have the potential for greater price appreciation due to their collectability and limited mintage.
What are the disadvantages of bullion? ›
Storage and Insurance Costs
Precious metals require secure storage. This leads to extra costs. For instance, you may need a safety deposit box at a bank or to invest in a secure home safe. Additionally, most financial advisors suggest insuring your precious metals and this adds to the overall investment cost.
What happens if you win gold bullion? ›
If a supporter wins Gold Bullion as part of their prize, they have the option to store the gold at no cost for the first 12 months, or sell part of or all of the gold back at any time for cash. Gold is valued at the purchase price on the day of the draw.
Is it legal to own bullion? ›
Today, there are no specific limits on how much gold a person can own in the U.S. Whether it's bullion, coins, or jewelry, you can buy, own, and possess as much gold as you like. The only restrictions may come from reporting requirements if you simultaneously buy or sell large amounts of gold.
