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Investing in Metals: Coins or Bullion?

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Basis of Value

For thousands of years, gold and, especially silver, have been used as money.  Today, they are both liquid and industrial commodities. You can actually hold your investment in your hands, unlike many other financial instruments, like stocks and bonds, which represent ownership in a firm or debt instrument.

The value of precious metal is determined daily based on worldwide futures contract prices and trading volume.  Kitco.com is a great place to find “spot prices.”  The prices you see there are not necessarily what you pay or receive on any given trade.  There are always middle-men (jewelers, wholesalers, and dealers) diluting the prices you would receive upon a sale and charging a premium on a purchase.

The Magnusson Group
The Magnusson Group

Forms of Silver…

You can buy silver in the form of bars or rounds.  Silver Bullion Bars carry a purity level of at least 99.9% (.999) and are weighed in troy ounces (different than avoirdupois ounces). There are 12 troy ounces to a troy pound.  Bullion comes in even amounts such as 1-(troy) ounce bars, 5-ounce bars or even 1000-ounce bars, and they can vary in size and shape.

Silver Rounds are coin-shaped silver pieces produced by private mints, such as Engelhard, SilverTowne, Johnson Matthey, Sunshine Minting and PAMP Suisse.

Silver Coins are legal tender minted by governments. Authorized by the Bullion Coin Act of 1985, the United States began to produce American Eagle coins in gold and silver.  The Eagle quickly became one of the world’s most popular “investment” coins, as well as having legal tender “face” value. There is typically a premium value added for its collectibility.

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Gold and Other Holdings…

Other Sovereign Coins (those manufactured by a government), like Canadian Maple Leafs, Chinese Pandas and Mexican Libertads, will also sell for a premium over their metal content because of the value-added trust that the coins contain their stated amount of gold or silver.

While bullion is a great way to accumulate a nice “stack” of gold and silver, Numismatic (“collectible”) Coins are valuable because they have rarity or historical value beyond the value of their precious metal content or have special mintmarks.  Most popular coins are U.S. Silver Coins produced from 1794 to 1964, and U.S. Gold Coins produced from 1796 to 1933.  These coins contain 90% (.900) silver or gold, unlike bullion coins, which mostly contain 99.9% (.999) precious metal content.  These old coins can be a fun way to “diversify” investment in precious metals.

You can also buy Sterling Silver, 92.5% (.925) in the form of flatware and hollowware.  And of course, you can always buy and wear both sterling and gold jewelry.  That will be another blog!

The Magnusson Group

If you’d like to learn more about numismatics and coin collecting, below are some great follow-up resources to accomplish that!

U.S. Mint

American Numismatic Association

The National Numismatic Collection at The National Museum of American History

The Numismatic Guaranty Corporation

Clients ask us every day if it’s a good time to buy or sell silver or gold.  The answer lies in your own motivation.  Our answer is usually “Yes!”  If you need help valuing, buying, or selling your gold and silver, feel free to call us at 973-425-1550!


Co-authors: Lynn Magnusson, ASA, AAA and Jack Daly, Administrator

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