Gold is probably the most well known of all the precious metals. Because of it’s beauty and scarcity it was used as ancient currency and as a medium for creations for personal adornment by jewelry designers. It also retains value as financial markets fall on hard times; it’s never worthless. It’s for this reason that some investors make gold part of their investment portfolios be it indirect ownership with stock in gold producing companies or actual physical ownership of gold bullion coins.
The Basic Bullion Coin
Gold bullion coins are basically gold coins that are struck at a mint and issued by some governments as a form of legal tender. When they sell them internationally there are no trade legalities that accompany the sale of gold bullion. They can be purchased at the Central Banks, precious metals brokers, storefront coin dealers, or online.
Gold bullion coins, and bullion coins in general, are not always of the same purity which depends on the nation offering them. Purities of coins currently produced usually range from .9167 pure (22 karat) of the American Gold Eagle and the South Africa Krugerrand to .9999 pure (24 karat) of the Austrian Philharmoniker and the Canadian Maple Leaf (also available in .99999 pure).
Denominations
Each nation that offers these coins often produce them in different denominations (weights). The most common weight measurement is in Troy ounces (ozt). Some coin weights are measured using the decimal system in grams; these are usually the heaviest coins. The most common denominations are: 1/20 ozt, 1/10 ozt, ¼ ozt, ½ ozt, 1 ozt, and 1 kg.
Price and Premiums
The price of any bullion coin, and its premium over the market price, is determined by a number of factors; the most obvious one is the coin’s denomination. The heavier the coin, the higher the price is going to be.The premium for something that small is large in relation to bullion bars which are 1,000 grams or larger and have the smallest premiums over market price.
Storage
Other contributions to the premium of gold products are the costs of storage and distribution. Usually the more hands that any item goes through the higher the premium is going to be. Gold coins aren’t an exception. Gold bullion coins can be taken possession of physically and stored in one’s home or a safe deposit box, which reduces these storage costs considerably compared to bullion.
Economics
Last but definitely not least in importance for determining the price is the supply and demand for a coin. If the supply of coins is low and demand is high the price of a gold coin is going to rise. If the supply of coins is high and the demand for them is low the price is going to fall.
Gold bullion coins are just one of the many ways to purchase gold. They are probably the most accessible way for small investors to physically own a gold investment due to the size of the denominations. There are probably many people who would rather be able to hold an investment in their hands than keep it with a third party. Gold bullion coins are ideal for that.
Written by Bruce Tintelnot
Professional writer
