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 Replies: 13 / Views: 2,374 |
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Pillar of the Community
United Kingdom
548 Posts |
At what point does a coin which contains precious metal become a bullion coin?
I have pre-decimal coins in my collection that are Sterling Silver (925) but I don't consider them to be a part of my silver bullion collection (maple leafs, philharmonics, etc). Is this right? For the purposes of cataloging my collection should I keep the two separate?
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Pillar of the Community
United States
1200 Posts |
My guess is the house will be solidly divided on this one. I don't think I've seen a generally accepted definition of "bullion coin" but I always thought it to be a coin that was issued by a government and intended to be a piece of PM rather than actual circulating coinage -- e.g: ASE, CSM, Libertad, Philharmonic, etc. A lot of world bullion coins are less than .999 and many of them are .925. US "junk silver" is considered bullion these days and it's mostly .900. So-- are your .925 pre-decimal coins bullion? They definitely contain enough silver to be considered bullion, but you could argue for or against that idea until the cows come home. |
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Pillar of the Community
United States
919 Posts |
I think you get to define it how you want. For example, I bought 2 rolls of MS60-62 Peace dollars for the silver content. I am holding these as bullion and will sell when/if bullion appreciates. I also bought a handful of slabbed MS63 Morgans at $40 each. I consider those bullion and will sell if silver goes up in my lifetime. |
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Pillar of the Community
 Canada
9862 Posts |
If numismatic value exceeds PM value it's not bullion.
"Dipping" is not considered cleaning...
-from PCGS website
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Moderator
 Australia
16808 Posts |
"Bullion coins" are those which are intended to have a value at or slightly over the bullion price. They do not need to be .999 fine. Krugerrands at .900 fine are probably the best known example of non-999 bullion coins. Nor do they need to be exact multiples or fractions of the troy ounce in weight; post-1918 sovereigns qualify as "bullion coins", even though they weigh an odd fraction of an ounce.
Older coins made of precious metals, the ones that were intended for circulation as money, generally don't count as "bullion coins", even if they are low-grade examples of common dates that are only worth bullion value. Sovereigns can thus be divided into two groups, pre-1918 sovereigns are "circulation", post-1918 sovereigns are "bullion".
Don't say "infinitely" when you mean "very"; otherwise, you'll have no word left when you want to talk about something really infinite. - C. S. Lewis
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Pillar of the Community
Canada
1751 Posts |
@ Sap it's the best and most concise definition I've come across. I hear lots of people calling old silver coins bullion only. This was confusing me greatly, since I just actively got started just over a year ago. I'm still struggling with how to apply some of the terminology. @ DBM yours is another good definition.
I struggle big time with the term junk silver! I don't understand what or how it's applied to.
Edited by pocket change 50
11/20/2013 9:27 pm
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Pillar of the Community
Canada
3692 Posts |
My definition is as follows:
Must be a high purity, higher than the most popular alloy for jewellery (today .930 Argentum is gaining popularity). Traditionally in England, the coins had to be of a lower purity than the jewellery alloys. England had .950 silver but .925 coinage. Therefore, the bullion had to be over .950 pure. They did this so that people had to buy into what was available to them - The goldsmiths pretty much controlled the market and it had to be because really all the gold in the realm belonged to the monarch. The goldsmiths (and scientists such as Sir Isaac Newton) ran the mints and the foundries, so this system prevented outsiders from gaining access to high alloys for jewellery and basically commit fraud against the king. A jeweler had to buy bullion in order to alloy it so had to be connected to the foundry. Refining isn't that easy to do by yourself. Back then they didn't have torches the way we have now - they used a blowpipe and a lamp to do their work. Ancient Egypt was even tougher - they had dozens of men blowing into the flames in their refineries.
MONARCH > FOUNDRY > GOLDSMITH > MINT > PLEBS (the hierarchy of money)
I personally do not consider anything but "Standardized" bullion bars coins to be bullion. What I mean is that .900 fine coinage is not bullion. It is not meant to be stored in banks; they are meant to circulate in the hands of the public. Bullion is sold by the (troy) ounce. My definition covers Mexican onzas, which are .925 sterling silver but they weigh 33.62g, so one troy ounce. These are traded muuuuch easier in relation to spot price because there's no calculation involved. You don't need to do a formula like (SPOT/31.1)*.900*23 you just say SPOT*OZT.
Bullion must have a high degree of purity. Bullion is meant to stored and literally stacked onto skids. They maintain their weight because they don't get circulated. Silver coinage is neeeever equal to its "book weight". If I were buying it I would buy it by the GRAM. Scraps = junk = gram weight. When you sell gold it's by the gram or the pennyweight and you never get anywhere close to its bullion value for lots of reasons. Bullion is LIQUID. Gold scrap, not so much but at least it's negotiable and will have Some value to someone.
That's why I hate it when people list their silver coin collections in the form of ounces. First of all, if you have a coin that is its "book weight" that means it's in mint state. But then, if you have a mint state coin why would one account for it as being a specific weight in silver when it's worth more as a numismatic coin than as bullion? The numismatic coin might be worth more than its weight in PM, but it's not liquid like bullion. Therefore, in order to count the real weight of your silver coin collection you must use grams.
BULLION = TOP FINENESS (.917 and higher) * TROY OUNCE (or simple fractions thereof)
Gold: .917 and higher, Silver: .925 and higher
This info is not from studying coins, but from the history of gold and goldsmithing. Sap had it right, but I felt like elaborating the why side from history.
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Bedrock of the Community
13014 Posts |
I would agree with the sentiment that "junk silver" type coins don't fall into the bullion category. Even if they do act like bullion there's a point where silver could get low enough where they would turn back into something with numismatic value. I'd be shocked is a silver quarter was ever worth 25 cents again regardless of any silver price. Since metal prices are always moving and can have extreme spikes their bullion labeling can come and go. For me bullion coins are things who are designed just to be worth metal content. I say designed because theoretically that could change in practice. For instance a bullion ASE during a period of 50 cent silver would have a higher face value. It was never intended to circulate as a silver dollar though. That's not very likely but theoretically possible. Just like at the other end of the spectrum a Reverse Proof ASE was never designed to be valued based on silver price. The commercial and refining aspect is very interesting in the consideration as well. Like mentioned you want a high level of purity from that standpoint. Privately though other than how liquid it is it doesn't really make much difference in my opinion. The vast majority of private usage or trading would be for the silver weight with little to no consideration for how easily they could melt it down. In larger quantities that becomes a concern if they're considering selling to a refiner but not so much for an ounce round or bar. |
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Pillar of the Community
Canada
1751 Posts |
@ Libertad great history lesson, I never realized the king controlled the silver and gold or that there were levels of people to go through. I figured that back them people just bought from the silver smith. You certainly have vast historic knowledge. I like coins for this reason, they can teach you a lot about history.
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Pillar of the Community
United States
979 Posts |
If it's in your collection, I wouldn't consider it bullion. Bullion (to me) is what you keep liquid, the stuff you sell when you need/want to. It's all opinion. Anyone who argues one way or another is really just playing a semantics game.
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Pillar of the Community
United States
684 Posts |
Would not separate maple leafs, philharmonics, etc from other coins for purposes of cataloging my collection. You might make up a separate category like "rounds." I collect coins of Mexico and categorize the collection such as revolution, colonial Iturbide, and so on.
I use excel and enter attributes (date, denomation, composition cost, etc.) in separate columns. This makes it really easy to find stuff. Or database.
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Pillar of the Community
Canada
3692 Posts |
The currency that is the closest to ever being bullion was the 8 Reales and 8 Escudos. Those were between .900 and .931, but what's really interesting is the weights that were prescribed for them.
8 Reales: 0.8ozt ASW
4 Reales: 0.4ozt ASW
2 Reales: 0.2oztASW
Real: 0.1ozt ASW
1/2 Real: 0.05ozt ASW (or one pennyweight! Cool!)
Therefore, 10 Reales (if there had been a coin this size) would be equal to one ounce troy of .900-.917 silver. Gold worked the same way, so 1/2 Escudo would be a pennyweight of .917 fine gold (22K). Maybe someone can help me figure out how many Reales to an Escudo and we can find out what the gold:silver ratio was like for the Spanish Empire.
They mined entirely too much silver from the "new" world and didn't even realize it until they had some bad inflation in Eurpe. They had to constantly mine to maintain their standard of living. In any case, this is the currency that had held up fine for a few hundred years, and was valid money anywhere in the world from USA to China. China loved pieces of eight and was the only form of payment they would accept from England for their tea until Indian opium was forced onto them. After the American Civil War, Mexico started using a similar design but the same fineness and weight and called it a Peso (a weight). This currency rivaled the American dollar for a long time until the debasements of the 1960s.
I've vaguely heard a similar standardization from gold Guineas but that's where I lack more info. (*ahem* Sap help us!)
Also, I add to the list of "junk" or circulation coins the Mexican pesos from the early 20th century that are 1.2 or so ounces of gold. They are .900 fine, and not standard weight.
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Pillar of the Community
Canada
2805 Posts |
Bullion is made for export, coins are made to stay within the country. This might have a few more holes in it (i.e. Americans who buy ASEs) but it is very concise if you stretch the meaning of "export".
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Pillar of the Community
Canada
3692 Posts |
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Replies: 13 / Views: 2,374 |
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Posted 11/20/2013 11:15 am
