At the time this article was published, the question of how to buy gold coins and bullion could seem simple at first glance. For people with little prior exposure to the precious-metals market, though, it was often among the first questions raised. The original article noted a sizable increase in new, first-time buyers, likely connected to market prices for gold, silver, and platinum that were favorable at that time. Because so many readers were approaching these purchases for the first time, Atlanta Gold & Coin considered it useful to cover the basic distinction between gold coins and bullion, along with practical considerations for acquiring each type. Although the discussion was directed mainly toward newer gold-coin and bullion investors, the original article also suggested that experienced investors could find value in its discussion of how to buy gold coins and bullion if they had not previously weighed the available choices and the advantages and disadvantages associated with each one.
Coins & Bullion Defined
A useful starting point is defining coins and bullion. Coins are government-issued monetary pieces made from various metals, recognized as legal tender, and assigned a stated face value. For instance, a one-ounce American gold eagle is legal tender in the United States and carries a face value of $50. In principle, it could be spent in the same manner as a $50 bill. However, when this article was originally published, gold’s spot price was approximately $1,150, so using the coin that way would not have been sensible. The American gold eagle illustrates a coin made for collectors and investors, though gold coins were once minted for ordinary circulation in the United States. The last U.S. gold coin made for general circulation was produced in 1933. Many other major nations also formerly minted gold coins for circulation but, like the U.S. Mint, later produced them for collectors and investors. Bullion, by contrast, generally refers to privately minted pure-gold bars, rounds, and ingots. Engelhard, Johnson Matthey, Credit Suisse, and Pamp Suisse were widely known, popular gold-bullion producers. At publication, gold bullion came in many sizes, including 1 kilogram, 10 ounce, 5 ounce, 100 gram, 2 ounce, 1 ounce, 1/2 ounce, 20 gram, 10 gram, 5 gram and 1 gram sizes. Less commonly chosen sizes were also available at that time.
Primary Differences Between Coins & Bullion
The original article identified three clear distinctions between gold coins and bullion. First, as noted above, sovereign governments produce gold coins, while private refiners or manufacturers produce gold bullion. Second, gold coins are legal tender. Their face value is substantially below gold’s market value, but the article explained that, in an emergency, they could potentially have been used to pay for goods or services. Third, the issuing government guarantees that its coins contain the weight and purity stated in their specifications. That final distinction was presented as one reason some people favored coins over bullion. Given the comparatively substantial amount required to buy gold coins, investors may have found reassurance in the government backing associated with a genuine government-issued coin. The article also included an important limitation: that guarantee did not apply to counterfeit pieces acquired from a secondhand seller. For that reason, when this article was originally published, readers considering a purchase were advised to deal only with established, reputable gold-coin and bullion dealers.
Liquidity
Before purchasing gold coins or bullion, the article said it was important to consider the item’s liquidity. Put simply, if a holder later needed to sell gold coins or bullion, a broad, active market for those items would matter. The article therefore favored well-known, easily recognized coins and bullion. At the time of publication, widely recognized and highly liquid modern gold coins included American gold eagles, American gold buffaloes, South African krugerrands, Canadian gold maple leafs, and Austrian gold philharmonics. The original article also noted other popular fractional-gold choices, including British gold sovereigns and 20 Swiss and French francs, so buyers were not confined to one-ounce gold coins. Regarding bullion, Atlanta Gold & Coin’s publication-era guidance was to purchase rounds, bars, and ingots from recognized mints, including the brands mentioned earlier. More obscure gold coins or privately minted bullion could have been more difficult to sell later if the need arose.
Price
For investment-oriented gold coins and bars, the article described a direct relationship between price and liquidity. Collectible, or numismatic, gold coins were identified as the exception. Because of their rarity and condition, these pieces can bring substantial premiums above melt value—sometimes many times their underlying gold value—yet they are not as readily traded as the coins discussed previously. The article further observed that the United States typically showed a preference for U.S.-issued gold coins, which was why those coins generally sold for somewhat more than certain foreign coins mentioned in the discussion. American gold eagles and gold buffaloes could sell at slightly higher prices than foreign-issued gold coins; correspondingly, the article said owners could expect somewhat higher resale proceeds when it was time to sell U.S. coins. At publication, popular foreign gold coins such as krugerrands, philharmonics, and maple leafs generally sold at modestly lower premiums than American-issued coins. Well-known privately minted bullion offerings commonly traded at prices comparable to, or a little below, those popular foreign coins. The article also emphasized a pricing point about fractional coins: quarter-ounce, tenth-ounce, and twentieth-ounce gold coins generally traded at higher rates than one-ounce gold coins.
Summary
To summarize, the original article covered how readers could buy gold coins and bullion. It defined both categories and reviewed the three principal differences between them. Gold coins carried an implicit government guarantee and, in general, tended to trade at somewhat higher rates than gold bullion. The article also stressed the value of choosing recognizable coins and bullion so that, if a later sale became necessary, there would be a broad and liquid market for the items. On price, the publication-era discussion stated that buyers could expect to pay a little more for U.S. government-issued and fractional gold coins because of their popularity. It also noted that buy-back rates for those coins tended to be slightly higher than rates for foreign government-issued coins. When this article was originally published, readers were invited to contact us if additional clarification on the subject was needed.
