Bullion can be purchased in three different forms: coins, rounds, and bars. Making the right choice for your investment portfolio is easy when you know the differences between the three available product types, and which may be a better fit for you.
Bullion Coins
Government mints worldwide produce gold and silver bullion coins every year, which are issued as official legal tender meant to represent a currency. The issuing government guarantees the weight and purity of bullion coins, which also backs the coin’s nominal value. In other words, you can trade your bullion coin for its equivalent in cash with little difficulty.
Many bullion coins contain an actual face value, but that is not what determines their value. Rather, bullion coins are valued according to the spot price of gold, silver, platinum, or palladium. The per-ounce value of bullion coins is typically higher than bullion rounds and bars because their mintage process requires a more rigorous production process. Bullion coins often include security features such as micro-engraved radial lines and color-shifting ink.
Due to the government institutions issuing these coins, some investors have a greater sense of trust in the authenticity. Although not technically intended for circulation, silver and gold bullion coins are stamped with a monetary amount by the issuing country. They are guaranteed to retain that value at the country’s central bank, even if the precious metal content loses value, which causes bullion coins to feel like a safe choice.
Bullion Rounds
Designed to replicate the look and feel of government-issued coins, gold and silver bullion rounds are minted by private companies and carry no face value. While they look a lot like currency, these round bullion pieces are not meant for circulation.
Bullion Coins vs. Bullion Rounds: Things to Consider
If you are new to bullion investing, knowing when to buy coins vs. rounds can be tricky. While bullion is all the same in the bullion market’s eyes, coins are typically more valuable because they are made by world governments that control precious metals supplies. The fact that rounds come from private mints means rounds carry only the value of gold, silver, platinum, or palladium, plus any collector’s value.
If you are trying to decide between bullion coins and rounds for your collection or portfolio, here is a direct comparison of the two to help with your purchasing decisions:
Mints
A significant difference between coins and rounds is who does the minting and manufacturing. Bullion coins typically are minted by sovereign mints, featuring a government-backed denomination. For example, all United States gold and silver coinage is minted by the U.S. Mint, while most other countries either have a branch of their government’s mint or a contract with an independent refinery to produce their bullion.
Bullion rounds, on the other hand, are often produced by private mints. Depending on production capacity, private refineries can be either “minor” or “major” in scale. While the U.S. Mint has branches throughout the country, many private refineries are located in major cities, like San Francisco or New York City.
Pricing
Historically, rounds were priced lower than coins. That is often no longer the case, given the increased popularity of licensed products like those featuring a movie, sports team, or cartoon. While bullion coins and rounds may be chosen for collector’s reasons, bullion is more often bought for its metal value. Rounds may be purchased as collector’s items, for investing, or for sentimental reasons.
Finishes
Bullion coins and rounds can be beautifully finished. Coins are held to stricter standards than rounds, so you may notice that coins are consistently similar if they are of the same release. However, those who produce rounds also deliver consistent products to gain the trust of their distributors and customers. Choosing between the two is up to your aesthetic standards.
Size & Diameter
The most recognizable difference between bullion coins and rounds is size. While different from manufacturer to manufacturer, coin weights can range from four ounces up to five ounces, whereas bullion rounds generally weigh less than one ounce. Coins, on the other hand, are produced to strict government standards. They must meet specific diameter requirements so the coin can be used within the world of commerce without issue.
Rounds vs. Coins: The Final Word
The main difference between bullion coins and rounds is in how they are produced. While both can be an excellent investment, their design, rarity, and production processes will vary depending on who produces them. For this reason, it is essential to understand what sets each apart from the other before you buy so you can make an informed decision about which type is best for your needs.
Bullion Bars
Bullion bars are rectangular-shaped bars made from precious metals such as gold, silver, platinum, or palladium. They are typically produced by private or government mints and are stamped with the weight, purity, and mint mark for authentication.
Investors often choose bullion bars as a tangible asset to diversify their investment portfolios or as a hedge against inflation and economic uncertainty. The flexibility of bullion bars is a key advantage, as they come in various sizes, ranging from small fractional bars to larger bars weighing several kilograms, catering to different investment budgets and goals.
One advantage of bullion bars is their liquidity—they can be easily bought, sold, and stored. Additionally, bullion bars usually have lower premiums over the spot price of the metal compared to coins, making them a cost-effective way to invest in precious metals.
In the past, bars adhered to simple designs; some even cast. Nowadays, you can purchase bars with elegant designs and licensed products at a premium.
A simple bar is suitable if you want to purchase bullion for its metal value. If you are a collector looking to add specific items to your collection, there are many licensed bars you can choose from.
Making the Right Choice for You
Ultimately, your decision should align with your investment strategy, risk tolerance, and personal preferences. It’s essential to research and purchase from reputable dealers to ensure authenticity and quality. Additionally, consider diversifying your holdings by investing in a mix of bars, coins, or rounds to mitigate risk.
