What’s The Best Form to Purchase Precious Metal Bullion?
There is a basic misunderstanding of what “bullion” is.
The common perception is that rectangular bits of gold (“bars”) are the most cost effective, and perhaps the only available, form of precious metals bullion.
The same thinking has it that round bits of gold (“coins”) are not really gold bullion.
There’s also common mis-perception that “coins” are limited in supply, expensive, and perhaps, to some extent, collectors’ items.
When you go to buy precious metals for the intrinsic value, what you are looking for is a practical and tradable form of gold/sliver – bullion.
Precious Metals bullion is a globally standardized weight and fineness of gold/silver, usually measured in “troy” ounces, that you can purchase for the current price, plus the small percentage costs incurred in refining, fabricating, and shipping that bullion to you.
Bullion Bars
Gold and silver bars are thin, rectangle-shaped pieces of metal that are produced by private minting companies all around the world.
These mints charge a small premium over spot price for fabricating raw gold and silver into neat, stackable bars.
When a mint fabricates a gold or silver bar, they will stamp their company name or logo onto the bar, along with the weight and purity.
These indications help investors determine exactly what amount of metal is contained within the bar.
Most mints produce gold and silver bullion bars with fairly similar dimensions, but each mint’s sizing will be slightly different, so you can usually only stack bars that have been produced by a single mint.
Gold and silver bars carry the lowest premium (extra fees) over “spot” or base-price, so they are favorites of investors who are primarily interested in accumulating as much metal for their dollar as possible.
Common metric weights for gold/silver bars range from 1g to 1kg.
Common English weights for gold/silver bars range from 1/2 oz to 10 oz.
Of course, what most of us think of as gold bullion is the large gold ‘bricks’ that we imagine are stored in Fort Knox.
These large bars are an efficient way to buy physical gold/silver, particularly if you are going to store your larger bullion holding in a recognized insured precious metals storage facility.
Also, if you have a working use for the gold/silver, such as in electronics, manufacturing, or the arts, these large bullion bars are the most cost-efficient way to buy it.
*For Your Consideration*
If you don’t actually make use of them, in some working business, bullion bars can be costly to liquidate once removed from storage.
You may encounter assay, refining, or just handling fees in trying to liquidate that size bullion bar.
It’s much more difficult and time-consuming to liquidate gold bullion in a single chunk that is worth over $100,000 than it is to sell the same amount of gold/silver bullion, in more convenient and “exchange-able” unit sizes.
Advantages of Bars:
– Easily stored and transported, as you can stack bars which were produced by the same mint.
– Carry the lowest premium over spot price for both gold and silver.
Disadvantages of Bars:
Generic bars produced by normal mints do not offer any sort of “collectability” factor.
The largest bars (10 oz gold bars or 100 oz silver bars) may be harder to trade in event of a crisis than smaller bars.
Bullion “Rounds”
Bullion Rounds are minted from precious metal, usually gold or silver, and bought for investment purposes by major banks, coin dealers, brokerage firms, and precious metal dealers.
A round’s “value” is based on its gold or silver bullion content.
Prices fluctuate daily, depending on the price of gold and silver in the world markets.
Let’s Clear Up the Confusion
Many investors confuse rounds and bullion coins, but there is one significant difference:
“Coins” … have a status as legal tender and are produced by government mints.
“Rounds” … have no status as legal tender and can be produced by government or private mints.
When a mint fabricates a gold or silver bullion round, they will stamp their company name or logo onto the round, along with the weight and purity. These indications help investors determine exactly what amount of metal is contained within the round. Most mints produce gold and silver rounds with fairly similar dimensions, but each mint’s sizing will be slightly different, so you can usually only stack rounds that have been produced by a single mint.
Advantages of Rounds:
– Easily stored and transported, as you can stack rounds which were produced by the same mint.
– Carry the lowest premium over spot per ounce for both gold and silver.
Disadvantages of Rounds:
– None really – Care should be taken to store in “sleeves” to protect from environment and to keep uniform “count”.
Perhaps the best-known Bullion Rounds are the American Gold Eagle, the Canadian Maple Leaf, the Australian Gold Nugget, and the South African Krugerrand.
Recognized Mints – Your Best Direct Source For Bullion Rounds – Buy Direct
There are a few highly recognized global Mints worth mentioning.
These Mints sell “direct” to the public.
– Apmex
– The Perth Mint
– HW Minting
– Monarch Precious Metals
– Northwest Territorial Mint
– Silvertowne Mint
– Westminster Mint
U.S. Goverment Mint
The U.S. Mint has produced gold, silver and platinum bullion coins since 1986, and guarantees their precious metal content.
Government Mints generally produce two types of Bullion Rounds:
– Proof bullion coins, which are specially minted for collectors and usually sold in a protective display case directly by the Mint.
– Uncirculated bullion coins, which are minted for investment purposes and sold to a select number of authorized buyers based on the current market price (the spot price) for the precious metal plus a small premium charged by the Mint.
Foreign governments also mint coins, but they may not be produced to the same standards as U.S. coins and they aren’t guaranteed by the U.S. government. The value of foreign bullion coins depends primarily upon the coin’s melt value – the basic intrinsic bullion value of a coin if it were melted and sold. A bullion coin’s condition – its “grade” – isn’t the most relevant factor in determining its price.
Next on Precious Metal Investors …
“Precious Metal Certificates and Commodity Exchange Traded Funds (ETFs or ETCs)”
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