As a precious metals investor, it is important to understand the difference between bullion coins and rounds. Not all precious metals investment products are created equally. Although bullion’s value fluctuates according to market forces, the price of a 1-ounce gold bar can differ from that of a gold coin or round that weighs the exact same amount.
Bullion coins and rounds are an excellent way to invest in gold because they can be liquidated easily, are highly divisible, and have an intrinsic value that cannot be diminished. Understanding the difference between gold coins and rounds can help you make a more informed decision when investing in precious metals.
Bullion coins derive their value from the precious metals they are made of. This is referred to as intrinsic value, or melt value. Some classic examples of bullion coins include:
- American Eagles (available in gold, silver, platinum, and palladium)
- Canadian Maples (available in gold, silver, platinum, and palladium)
- South African Krugerrands (available in gold)
- Austrian Philharmonic (available in gold, silver, and platinum)
In contrast to rounds, coins must have the following attributes:
- Purity no less than 900/1000
- Legal tender (or have been at some point)
- Produced by sovereign mints
- Face value as currency
Investors may notice that the face value of these coins is incredibly low compared to the value of their precious metal content. In fact, as we write, a 2018 Silver American Eagle has an intrinsic value that is approximately 19x its face value of $1.
Though bullion coins have a disproportionately low...