Bullion Coins

Bullion coins are another way to invest in bullion. These coins can be purchased in a variety of sizes from 1/20 of an ounce all the way up to a kilo coin, at the time of writing this article, a 1/20 of an ounce gold bullion coin would cost US$87 and a kilo gold bullion coin would cost US$36,762.

In contrast a 1 kilo gold bar would cost US$36,175. The difference, or the premium that you are paying for your gold or silver bullion coins is in the manufacture of the coins, there is far more work involved in producing the die for the coins than merely stamping a bullion bar. Bullion dealers, coin shops and anywhere else that you purchase the bullion coins will always charge this premium.

Most serious investors do not bother with coins, be it gold or silver coins or the more fanciful numismatic coins, bullion investors want to purchase their gold and silver at the cheapest possible price and paying a premium to have a coin manufactured is not a requirement.

Bullion ‘investing’ is a little bit different from ‘collecting’, there is obviously nothing wrong with ‘collecting’ gold and silver if you are after the aesthetic look. Bullion coins are a great way to start collecting, giving them as a gift would be ideal for somebody that has everything, after all, who would not want to receive a gold coin. Giving a silver bullion coin for around US$28 is a great way to get kids interested in saving and investing. Giving a silver bullion coin to a new born child dated in the year of their birth, to my mind this makes a great gift.

Numismatic coins are getting away from bullion investing.  When buying a numismatic coin you are paying a premium for the metal content, dealer profit and the numismatic collectability. Coins of this nature are for the serious collectors who know what they are looking for and know the real value of the numismatic coin. The dealer or the seller will load the profit margin according to what they think they can get away with.

Be very careful if you want to ‘invest’ in numismatic coins, only purchase them if you like them and want to collect them, as an investment I would not bother, at some point in the future you may want to turn your investment back to cash. There are many variables that will affect the price that you will receive for your ‘valuable collectors piece’ such as state of the economy, price of the bullion, the value at which the purchaser thinks the coin is worth and so on.

If you had the choice between an uncirculated 100 year old gold coin and a brand-new uncirculated gold coin for the same price, always go for the 100-year-old coin. In today’s market, many coins mints are manufacturing thousands upon thousands of brand-new collectables that are not worth the title of ‘collectable’. There is a reason why the uncirculated hundred-year old coin would be worth collecting, that’s because there’s hardly any of them around! If you bought a brand-new uncirculated coin, in 100 years presumably they would still be thousands of these coins still in the hands of collectors or their ancestors! The hundred-year-old uncirculated collectable coin was a mistake, it has slipped through the net and should have been in circulation when first minted, but for whatever reason somebody put it to one side and it has been forgotten about. In these circumstances, for uncirculated coins this is where the true value lies.

There are gold and silver coins going back 300 years, 400 years and more that are worth more than their weight in gold. For example, a gold sovereign from the reign of Queen Elizabeth I in fine condition is worth US$8360 and in very fine condition is worth US$22,800.  A silver Groat of King Henry IV in very fine condition can fetch as much as US$10,300. These coins that are going back into history obviously become rarer as time goes by. These coins really are collectable pieces. Coins going back to the Roman period and beyond are often found on the open market, one needs to research and understand exactly what these coins of antiquity are worth. This is no longer ‘bullion’ investing, but can be regarded as investing in rare and ancient coins. I for one would love to be the owner of a King Edward III Gold Double- Florin from the year 1344, it is worth today US$342,000. But don’t forget the value of the ancient coins are only what somebody is prepared to give you for them!