Bullion Coins Vs Rounds Or Bars

Jan,

Govt produced bullion coinage permits Uncle Sam to charge a premium over current spot for their efforts. Reputable bullion producers (Englehard, Sunshine Mining, etc.) are available at spot and sell near spot. Unc American Eagles (gold and silver) are available at a premium over spot and for the most part sell near spot. Profits on this margin are kept by Uncle Sam and Bulk sellers. If you're in it just for the potential increase in silver/gold spot ... buy the reputable private rounds/bars. If you are speculating on a 1996 or 1995W, then buy the Eagles.

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If silver were to get really high like it did back in 1979/80 at $50 an oz, for a 100 oz bar you have to find someone with a ready $50,000. Whole lot easier to find someone to buy a single oz or two. And you don't have to haul a $50,000 item through the streets down to the buyer.)

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You need to check your math. 100x50 = 5,000.

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But to the topic, that is a good question. I think SeatedNut is on the right track.

Generic bars and coins are guaranteed by the assay company that produced them. For pure speculation I bought a mix of 1 oz and 5 oz silver bars, and now I am starting to get into the ASEs. What is the real differance? Not much to me except Eagles tend to trade a little above spot, and in armageddon will still be worth $1.

Two reasons, both of which have been touched upon.

1. For coin collecting "purists", people who only collect "real coins" and not those other silly round things like medals and tokens, a government giving a bullion coin "legal tender status" makes all the difference between wanting them and not wanting them in their collections.

2. Should the price of silver fall drastically, you can always go down to the bank and spend them. Granted, silver would have to fall a long way for it to be less than US$1/oz for ASEs (which is precisely why the US government fixed the ASE face value so low). But there are bullion coins from other countries that have a much better face value to bullion value ratio. For example, Canadian maple leaves are C$5/oz.

It has happened before. For example, Australia started issuing gold coins denominated $200 back in the gold boom of the early 1980's. When the price of gold collapsed not long afterwards so there was less than $200 worth of gold in those coins, hordes of bitten investors with hoards of these gold coins simply took their losses and went down to the bank to get face value for them.