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Bullion Coins

Gold - Silver - Platium

South Africa started minted Krugerrands in 1967 as a way to sell its gold. Prior to that, if someone wanted to own gold bullion he would have to buy it in the form of bars.

This cost a lot of money since you had to buy a quantity of gold - one of the most popular small bars, the kilobar contains 1000g or about 32 troy ounces.

(Gold is sold in troy ounces which weigh a little more than a regular ounce.)

Buying bars also brought with it the cost of having the bars assayed, stored and insured.

When the Krugerrands became available, for the first time the average individual was able to own gold bullion without all the associated costs.

South Africa at that time was facing boycotts because of apartheid. Some were unwilling to buy Kruggerands for that reason. So other countries stepped up with their own versions - China's Panda. Australia's Gold Nugget, Canada's Maple Leaf, the US American Eagle and more.

While the idea behind these coins was to allow the simple purchase of bullion, the coins do carry a premium to the cost of the precious metal content. This can run from $15 to $40 depending on the coin. This reflects the cost of minting the coins and, in a way, mirrors some of the costs a bullion buyer faces.

On the either hand some of the older of the bullion coins do have some numismatic value over and above the cost of the metal. So some of the rarer American Eagles can cost 50% more than the price of gold.

Bullion Coin Collecting

While the purpose of bullion coins is to amass gold, silver or platinum, these coins are some of the most attractive around. The US coins have copied the designs of Augustus Saint-Gaudens, considered the best coin designer the US ever had,

Also, the coins are not circulated - and mirror finish proof versions are available - so they are always in mint condition - barring mishandling.

The bottom line is they make a very attractive display.

You can collect by country, mint mark, year etc.

In the US, you can buy uncirculated versions at your local bank. The US Mint sells both uncirculated and proof versions directly. Other bullion coins can be purchased from coin dealers. There are many websites that publish current prices for all major bullion coins.

Silver and Platinum

Seeing the popularity of their gold coins, government mints began to add silver and platinum coins to their offerings. The coin on the left is a US Platinum Eagle.

As with the gold coins, they are available in both uncirculated and proof versions. You should also expect to pay a premium over the price of the metal.

The silver coins are reasonably priced at around $30 . Platinum is a much more expensive metal and the coins are priced accordingly - about $2700 an ounce.

(July 2008 prices.)

Portability

Precious metals and diamonds have always been the refuge when paper money started to loose its value. Over the years, the buying power of an ounce of gold or a carat of diamonds has, if anything grown. Read this article about the damage caused by Inflation for more information on the staying power of gold.

Another reason that these coins and jewels are valued is because of their portability.

It is not that hard to conceal and move a reasonable amount of bullion coins or diamonds. This makes them very valuable in unstable political climes.

The US Mint routinely sells out of these coins every year. I am sure the same can be said for other governments making them. As a collectible or as a means of diversifying into hard assets, they are very useful tools.

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