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James Cook - February 15th, 2022
What Is a Bullion Coin? Everything You Need to Know
Did you know that every time the US Government mints a copper penny they lose money? These one-cent coins cost more in materials and labor than they're worth! In fact, every penny that you find on the sidewalk is worth almost two cents.
This is not the case for all coins, however. One of the most popular exceptions is the gold bullion coin. If you are looking to invest in precious metal, you may have heard this term before - but what is a bullion coin, and how does it differ from your favorite lucky penny?
Understanding the value of gold and other precious metals is key to finding success in metal investing. Keep reading to learn about what makes bullion coins unique, as well as where to start if you're looking to start a collection with Investor Crate!
A Brief History of Currency
We have proof that man used forms of currency to barter going back thousands of years. The first "coins" were shells and stones. By the time of classical antiquity, technology had advanced to the extent that humans were able to design and mint their own coins using precious metals.
At the time, it made the most sense for each coin to contain the amount of gold equal to the value of the coin. Thus, you can often judge the value of an ancient gold coin based on its weight and heft. This practice continued until the modern-day and was a common practice in America until 1933.
The problem was that, during The Great Depression, the value of paper money decreased to the point that it became more valuable for feeding fires. Meanwhile, citizens hoarded coins, knowing they'd maintain some value in foreign markets. The way the US government minted its coins changed forever, making those valuable, pre-depression gold coins even more valuable as time went on.
The US began minting gold coins again in the 1970s. These are the same gold bullion coins that you can collect today.
A picture of a 1 troy ounce .9999 Fine Silver coin from the Cook Islands. Also known as the "Sailing Ship," coin. Photo Credit: Investor Crate staff picture.
What Is a Bullion Coin?
The coins that are worth their weight in gold - literally - are bullion coins. Bullion coins must be legal tender and contain 90% or more fine gold. They are the most popular way for precious metal investors to buy gold, silver, and platinum.
In the case of bullion, value does not come from the metal's form. When you buy precious metal jewelry, for example, you are not just buying the metal it's made out of. You are buying a piece of art with other value, with the potential to go out of style.
Bullion does not have any other uses and does not go out of style. It serves as a physical representation of its own value. As a bonus, bullion coins do tend to be attractive, as many nations put effort into their aesthetic design.
Gold bars are another form of bullion. Because they are not considered the legal tender of any government, they are sometimes considered a less secure investment.
Should You Invest in Bullion Coins?
The economy is a fickle thing. While we may not be on our way toward the next Great Depression, the value of gold is certain to rise and fall over the next few years. With so much uncertainty, should you invest in bullion coins at all?
While the value of gold isn't fixed, it's stable. When you own gold bullion, inflation or rapid economic change can't affect its value.
These forces might affect other markets, however. This makes gold bullion a great addition to a diverse portfolio of investments. You will always have tangible precious metal to fall back on, and its value is sure to rise.
In essence, gold bullion coins make excellent hedges against risk. These coins can serve as a safe harbor. When the stock market is in good shape, you will be grateful to have so much valuable gold bullion to sell!
Another .9999 Fine Silver Coin, this time a 1/2 troy oz coin from the Royal Canadian Mint. Photo Credit: Investor Crate staff picture.
What Are Examples of Gold Bullion Coins?
Many countries mint gold bullion coins. Which coins you add to your collection is a matter of preference. They each have different art and different values.
Some of the most popular gold bullion coins include:
- American Gold Eagle
- South African Gold Krugerrand
- Canadian Maple Leaf
- American Gold Buffalo
- Austrian Philharmonic
Many of these coins are highly collectible. Some, like the American Eagle, feature artwork by notable artists. Individual coins may come in a variety of different sizes.
Where Can You Buy Bullion Coins?
While you can sometimes buy gold coins directly from government mints, these institutions offer them in very limited quantities. The average collector or investor gets their bullion coins on the secondary market.
In some cases, institutions other than government mints also issue gold bullion coins. Regardless of the source, all bullion coins include a stamp indicating their weight and their purity level. Like gold bars, they may be more challenging to liquify than bullion coins issued by governments.
If you are looking for a way to begin collecting bullion coins, you should consider a monthly subscription from Investor Crate. Each month, you'll receive a curated collection of fine bullion coins, bars, or rounds. It's a wonderful way for you to start or maintain a gorgeous collection of valuable precious metal coins!
Your Bullion Collection Begins With Investor Crate
So, what is a bullion coin? It just may be your key to making your strongest investment yet! These valuable coins have a long history, and as long as the price of gold continues to increase, their value will, too.
You don't need to be an expert to begin increasing your holdings! Investor Crate offers a monthly subscription at a variety of price tiers to help you build your collection of gold, silver, or platinum bullion coins. Check out Investor Crate Plus to learn how you can break into the industry today!
This is in no way to be considered investment advice. Past performance is no guarantee of future results. Asset allocation and diversification do not ensure a profit or guarantee against a loss. Keep in mind that any form of investing involves risk and you should always consult with your financial advisor before making any financial decisions. Investor Crate, LLC., it's subsidiaries and staff will never advise you on any asset as our aim is to provide a fun and affordable service should you decide to purchase Precious Metals.
Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.
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Good information
Another interesting article
I didn’t know this. Thanks for the info.
I needed to read it again, because it really interested me
I was unfamiliar with them until now. This is great information!