Gold, Silver, & Platinum Bullion

Most everyone knows something about bullion coins and bars, but the number of these products may cause even the experienced investor to pause. The good news is that most are similar in nature, meaning they move up or down directly with the price of gold, silver, or platinum on a daily basis. And their buy and sell prices are easy to understand.

The precious metals are measured by the Troy ounce, as opposed to your bathroom or postal scale weight which is called Avoirdupois. For the record 14.58 troy ounces = 16 postal scale ounces. The Troy ounce is about 10% heavier than Avoirdupois. All of these bullion products move directly with the New York Commodity Exchange, which opens for trading at 5:30 AM and closes at 10:30 AM California time. After the Comex is closed the price of these coins usually remain constant until the beginning of the next trading day. On occasion, however there is an aftermarket which may cause quote changes.

A simple definition of any bullion coin is one in which there is little premium above the content or weight value of the coin. In other words you are buying only the commodity itself. Coins like this will increase in value if world markets go up and will decrease in value if world markets go down. This happens because bullion manufacturers produce large numbers of them each year, thus eliminating the notion of these coins being rare in any sense.

So what is the difference between a bullion gold coin and a bar of bullion? In the early days of bullion trading the bar was popular. More and more people became interested in owning gold so trading volume increased dramatically which sometimes led to problems with bars in general. They were produced by private manufacturers, so at times it was difficult to know the exact weight and purity. This led to confusion and did not encourage public participation.

That was before governments decided to produce bullion coins. Producing a bullion coin to replace the bar was a great idea because international standards were developed and coins were uniformly produced. This opened up the world to the easiest way of buying and selling bullion. And because large numbers of coins were produced the premium was the same for bullion coins as it was with bullion bars.

Today gold bars are also popular and safe because large private manufacturers like Pamp Suisse standardized production and created a polished look which the general public has faith in.

GOLD BULLION COINS

Gold Bullion Prices

South Africa was one of the first to develop this market with the Krugerrand series of gold coins which are 1 oz., the 1/2 oz., the 1/4 oz., and the 1/10 oz.. These coins are .916 fine gold with some copper alloyed to keep them from being too soft. As with all bullion coins the 1 oz. size is the most popular and the most economical to own.

Then followed Canada with the gold Maple Leaf. They produced the same sizes in .999 fine gold meaning they are pure with no alloys. Keep in mind all 1 ounce bullion coins contain the same amount of gold. Alloyed or not makes no difference in value. Some prefer pure gold coins which can be melted and some want alloyed coins which do not scratch.

The Chinese then introduced the gold Panda series which, like the Maple Leaf, is .999 pure. Unlike other world bullion coins the Chinese chose to change the picture of the Panda bear each year. This series was the first to offer a 1/20 oz. coin, but the smaller sizes are more for the jewelry trade.

The United States then developed the Eagle series. It, too, comes in the standard four sizes (1 oz., 1/2 oz., 1/4 oz., & 1/10 oz.), is .916 fine gold, and is very popular.

Australia was next to enter the bullion market with their Nugget/Kangaroo Series and produced a fine looking prooflike gold coin which is .999 fine and has its own hard plastic holder.

The British Gold Sovereign (.2354 oz., .916 fine) is also a popular bullion coin because many believe it is not subject to confiscation.

All these coins move directly with the price of gold, and are easy to buy, sell, and store.

PLATINUM BULLION COINS

Platinum Bullion Prices

Like gold the initial buying and selling of platinum bullion was in bar form. A better way of trading was needed, for bars are subject to state sales tax. Still it took years before a platinum bullion coin was developed which is sales tax exempt.

In 1984 The Isle of Man produced the Noble bullion platinum coin series. This was exciting because it made buying and selling platinum for content a simple proposition.

It was followed by the Australian platinum Koala series in 1988, which was a winner because it had its own hard plastic holder. The picture of the Koala also played big in Japan where platinum jewelry is popular. This series is available in all sizes as well. Canada then followed suit in 1989 with its popular Canadian Platinum Maple Leaf series available in 1 oz., 1/2 oz., 1/4 oz., and 1/10 oz.. The United States developed the Platinum Eagle in 1997. All of these bullion coins will move directly with the world price of platinum but the one ounce sizes are by far the most popular. They have replaced the older bars, are recognized and traded in quantity around the world, and are easy to store.

LEGAL TENDER SILVER BULLION COINS

Silver Bullion Prices

The $1000 Face 90% Silver Bag: A popular way of owning silver bullion is in the form of $1000 face value silver coins struck in 1964 or before. They weigh about 54 pounds and are sometimes called "junk" silver bags which is misleading. This unfortunate name was developed in the 1970s and used to describe a bag of average circulated silver coins which did not contain anything that was rare. These bags contain $1000 face so if half dollars were used there would be 2,000 coins. If the bag contained quarters the count would be 4,000 coins. If it contained dimes there would be 10,000 coins. If a bag were melted it would contain about 715 oz. of pure silver. All silver coins struck in 1964 or earlier are 90% pure so bags will move up or down with the daily price of silver. For your convenience we divide a bag into two smaller units of $500 face each. This makes for easier handling and storage.

The investor should note these old silver coins are no longer being produced. This means if demand increases the price over their normal silver value could develop. Premiums also develop because survivalists, who want only U.S. silver coins for barter, insist on this form of silver bullion. The premium on 90% silver bags can vary from negative (trading for less than content) to as much as 30% over their actual silver weight.

The difference between the buy and sell is fairly constant and there are investors who buy bags when premiums are cheap or negative and trade them when premiums increase substantially. Keep in mind that we are required by law to report your sale of $1000 face 90% bags on I.R.S. Form 1099B. Smaller quantities of 90% are not reportable by us.

The $1000 Bag Of Silver Dollars: This interesting play in silver is not exactly a bullion investment but it is not a rare coin investment either. Circulated silver dollars struck between 1878 and 1935 carry higher premiums, yet they are a prime source of legal tender silver coins because they are so recognizable. These early dollars are divided into two price categories. The more expensive Morgan dollars struck between 1878 and 1904 and the Peace dollars struck between 1921 and 1935.

The Peace dollar being the less expensive is quoted by the bag. Such coins are always in average condition and grade VG (Very Good). A Morgan dollar bag and better quality coins are available at slightly higher prices so it pays to ask questions before placing an order. This option is popular because silver dollar bags have represented real, portable wealth for more than 100 years.

The 40% Silver Bag: The last silver coin the United States made for general circulation was the 40% silver clad 50¢ struck from 1965 through 1969. This is another popular way to own silver bullion in legal tender form. Like circulated 90% coins these $1000 face bags are traded primarily for content. Because they are 40% pure a bag contains substantially less silver (296 troy oz.) which is reflected in a lower selling price.

The buyer has a number of advantages. First these are real U.S. coins and therefore are legal tender of our nation. In an emergency this could be a significant. Second, the bag has a high face value ($1000) which limits the money anyone could lose should silver move lower. This is easily seen in a down market because premiums almost always move higher. And finally, unlike 90% silver bags, we are not required to fill out I.R.S. Form 1099B on 40% bags when you sell.

The 100 oz. Silver Bar: Another popular way to own bullion silver is the 100 troy oz. bar which is .999 fine. But keep in mind that not all bars are equal. Meaning some 100 oz. bars are better than others, a fact many bullion dealers neglect to mention especially if they are not delivering the very finest available. The two most accepted 100 oz. bars are produced by Johnson and Matthey (J.M.) and Engelhard. Any other 100 oz. bar can trade at a discount so J.M. or Engelhard are the better choice. They cost no more to purchase and will fetch more when you sell. These bars weigh 6.8 pounds and will fit into a small safe deposit box. We are required to report your sale of 100 oz. bars when you sell 10 or more.

The 1oz. & 10oz. Bar: Finally and equally popular are these .999 fine smaller units. In each case the two so called "generic" rounds or bars trade worldwide and can be bought or sold in virtually any quantity. They do, however, cost slightly more than 100 oz. bars but are easier to handle. The 1 oz. silver piece is actually produced in the shape of a coin because they are easily stored in plastic tubes, thus the name 1 oz. silver rounds.

The U.S. Silver Eagle: This popular silver bullion product has been produced by the United States Mint since 1986. It contains 1 oz. of pure silver, and actually represents $1 in legal tender. The Mint produces these coins each year and their price fluctuates directly with silver.