Learn About Bullion and Factors to Consider When Buying It
Bullion refers to Precious Metals in bulk form, valued by weight. In popular culture, Gold or Silver bullion usually appears as bars or ingots, but the forms bullion might take are more nuanced than that. Good delivery bars are the most popular form, but coins and rounds can also be considered bullion.
What is a Bullion Coin?
A bullion coin is a coin that has no collectible value beyond the Precious Metal contained in it. Bullion coins are usually manufactured to meet demand from investors looking for smaller denominations of Precious Metals products. Many mints manufacture bullion coins with a minimal amount of Precious Metal because Precious Metal content is what gives bullion value.
Bullion coins are typically sold at a lower premium price over the market price of the underlying metal when compared to numismatic or semi-numismatic coins. The coins come in half-ounce, quarter-ounce, tenth-ounce, and even one-twentieth-ounce sizes.
The classic Gold and Silver coins are the South African Krugerrand, the Chinese Panda Coin, American Buffalo Coin, or Canadian Maple Leaf Coins. These coins are all manufactured with 1 troy ounce of .9999 fine Gold each. The value of these physical Gold coins is often based on their Precious Metal content, but also the scarcity and collector value.
The American Eagle Coin series has become extremely popular. Minted by the United States Mint since 1986, they are available in four sizes: 1 oz, ½ oz, ¼ oz, and 1/10 oz. These coins are guaranteed by the US Government to contain their stated weight of .999 fine Precious Metal. More than 400 million American Eagle Coins have been minted.
Adding a Silver or Gold coin as a Precious Metals investment to your collection is a more accessible way to improve its value.
There are multiple factors to consider when buying bullion:
- Precious Metals value: Bullion and Precious Metals values are often mentioned together. any factors such as the economy, supply and demand, trading frequency and political circumstances play a role in bullion value. Whether you are interested in bullion bars or coins, understanding the value will help put your purchasing power into perspective.
- Bullion shapes: Bullion comes in many shapes, such as bars and rounds, but can also come in non-traditional shapes like stars and Silver bullets. Hand-poured Silver is considered bullion, even though it does not have a traditional finish as molded bars do. Some jewelry can even be considered bullion.
- Coin types: Bullion coins come in a variety of types from around the world. These common coins are considered bullion and are highly valuable, including the Australian Kookaburra and Kangaroo coins, American Eagle and Buffalo coins, Canadian Maple Leafs, Austrian Philharmonics, British Sovereigns and Britannias, Mexican Libertads and Pandas from the Central Mint of China. These coin types are just some of the many bullion coins available.
- Precious Metal types: Bullion extends to both Platinum and Palladium, which are rarer than Gold and Silver. Despite the rarity, Platinum bullion and Palladium bullion are readily available for investors.
Collecting or Investing in Bullion
The appeal of collecting or investing in bullion is different for each buyer, but the vast array of options to choose from ensures there is something for everyone. Novice and experienced investors can find something within their budget and investment strategy. Having a good understanding of what makes bullion so unique and valuable will go a long way in helping you develop and reach your investment goals.
Bullion appeals to many investors because the sizes and shapes vary, providing a plethora of options. The traditional 1 oz Precious Metals sizes are common, but other sizes include 1/10 oz Gold or 5 oz Platinum, and even 1/4 oz Silver or 1/2 oz Palladium. Smaller sizes provide an affordable approach for buyers because they do not require a large financial commitment but still make a nice introduction to bullion collecting.
Larger sizes of bullion can also be purchased; sizes like the 10 oz Silver bar or 1 kilo Gold Bars and Rounds. They require more of a financial commitment but add diversity to any Precious Metals portfolio.
Types of Silver Bullion
Once you have determined your goal for buying Silver bullion, the next step is to select the best quality Silver for your needs. Silver bullion may be purchased in several forms. For a new collector looking to buy Silver bullion, there are several tempting options.
So-called “junk” coins — older U.S. coins minted with a Silver content of 90% — are a viable form of Silver bullion. They are still attractive, they just have no numismatic, or collectible, value beyond their Silver content.
The U.S. Mint has a long history of producing bullion coins, with mintage going back to 1986. The most popular modern coin – the American Silver Eagle – is arguably the best way to own Silver as an investment.
Millions of these coins are minted every year and they contain one troy ounce of .999 fine Silver. The Silver American Eagle coin is available in smaller weights. Backed by the United States Mint, these are considered investment-grade bullion coins.
While the artistry involved with minting Precious Metal rounds can vary, many rounds have a distinct bullion finish. They are often minted by private mints and contain the same amount of Precious Metals as government-minted coins, but they may come in different shapes and sizes.
A well-informed bullion investor should have a firm understanding of Silver spot prices, value and liquidity before buying Silver in bulk.
In order to buy Silver bullion may select a form of Silver more typically thought of as bullion: larger-format Silver bars. Weighty and beautiful, stereotypical bars of bullion make a gorgeous display to serious investors and collectors. For an investment of this size, it is key to follow Silver prices today and the time your purchase accordingly. Small fluctuations in Silver bullion prices will add up quickly when you are considering buying 100 oz or more at a time.
Types of Gold Bullion
Buying Gold bullion is a larger financial undertaking that rightly demands greater consideration. That said, there are many ways to get started as a Gold bullion investor even with a modest budget. First, if you carefully follow Gold bullion prices you can maximize your buying power.
While Gold has a strong upward trend over the long term, you can take advantage of momentary dips to get the best value for your money. Secondly, you might consider buying Gold bullion in smaller amounts. For example, a 1/10 oz Gold bullion round is an affordable entry point into purchasing Gold bullion without making a large financial commitment.
Thirdly, consider buying Gold coins. Gold coins are sold by many different sovereign nations and these coins are not only a good investment because they are made of quality Gold but also because of their proof or burn status. With proof Gold coins, the coin is specially manufactured to have any aspect of visual appeal. These proofs may be done with special dies, polished dies, or a special strike.
Proof Gold coins often carry a high premium because of their controlled mintage, artistic value and scarcity. In contrast, burn Gold coins are those that have been specially processed to wear as if they were used as currency. These types of coins also allow for the actual design on the coin to be clearly seen, which also adds to the visual appeal.
Most Gold bullion investors are drawn to Gold bars because of their affordability, portability and ease of storage. For individuals looking for simple ways to invest in Gold, buying Gold bullion bars is a good option. The typical types of investments found in most investment portfolios are stocks, bonds or mutual funds.
Other Precious Metal Bullion
You might consider looking for rare and unusual forms of Platinum and Palladium bullion as well; these might include proof coins, burnished coins, and commemorative coins. Platinum and Palladium bullion is often sold in smaller sizes that are more affordable for those with a modest budget.
Both Platinum and Palladium enjoy great demand across several industries and have a completely different supply and demand dynamic than Gold or Silver. Platinum and Palladium may be purchased easily online; you can buy Platinum and Palladium coins, rounds and bars with a quick phone call or by surfing the web. Be sure to compare prices among different sellers before buying Platinum and Palladium bullion.
Many times, Platinum and Palladium dealers may have a widespread in their premiums. This means that you could buy your items for one price and sell them back the next day for a higher price because of market fluctuations.
Palladium bullion has the added benefit of helping to reduce vehicle emissions, making it popular among those who want to invest in an environmentally friendly way. Palladium also makes a good choice for those looking to balance their portfolio with a commodity that is less volatile than Gold or Silver. Additionally, Platinum is also used in many industries, including the automotive industry, medicine and jewelry. This bullion is available in the form of coins, bars and rounds. Platinum bullion is becoming more popular because it is an affordable way to diversify any investment portfolio.
Platinum prices are not as volatile as Gold or Silver prices; however, Platinum still has a significant impact on the market price of these Precious Metals. This means that Platinum has a low correlation with most other asset classes, making it an excellent addition to any portfolio.
Buying Palladium and Platinum bullion is a smart way to diversify your investment portfolio, ensuring that you are not putting all of your eggs in one basket.
Bullion is a vehicle for Precious Metals investment that is valued by its weight. It can come in bars, ingots, rounds and commemorative pieces. Bullion provides an accessible entry point for new investors, giving them the opportunity to invest in Precious Metals based on their budget. Silver, Gold, Platinum and Palladium all come in various forms of bullion, but it is important to research their spot prices and market value before making a decision to invest.
It is important to keep in mind the different industrial uses of these Precious Metals and how supply and demand in another industry may impact spot price.
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