| Author |
 Replies: 7 / Views: 1,152 |
|
|
Pillar of the Community
United States
595 Posts |
What is the general benefit of having bullion coins -- that is, round hunks of silver or gold (or not in my lifetime, platinum) that is issued by a government as legal tender, like our American eagles -- as compared with silver or gold (or you-know) in round hunks or bars or some such shape? Is it because the government minting and denominating makes them coins, which gives them a collectible value above the value of the metal they're made of? I presume that's the case, but I would like for someone to explain it better. I'm sorry if this is a dumb question. I have lots more, but I am trying to limit releasing them to the general public one dumb question at a time. Thanks for listening.  Jan |
|
|
|
Bedrock of the Community
United States
12437 Posts |
When a bullion coin is backed by a governmental entity, whether it be the US, UK, Australia, Canada, etc, that is a guarantee of purity and weight that you do not always have with generic bullion rounds or bars. The collectible value does come into play somewhat but I think the guarantee is more important. Not a dumb question at all btw  |
|
Pillar of the Community
United States
2797 Posts |
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.
|
|
Bedrock of the Community
United States
17884 Posts |
One advantage is divisablity. If you have a 100 oz bar of silver and you need a little cash, you have to find someone who can purchase the entire bar, and instead of a little cash and a lot of silver you have a lot of cash and no silver. If you have 100 1 oz rounds or ASE you need only sell whatever small amount you need to for the moment. It's also easier to find a buyer. 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.) |
|
Pillar of the Community
United States
533 Posts |
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.)
You need to check your math.  100x50 = 5,000.
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.  Edited by MorganNoob
02/14/2008 6:13 pm
|
|
Pillar of the Community
United States
1130 Posts |
One thing not mentioned is if you are investing large $$, bars are more economical than bullion or coins to produce, thereby lowering total cost.
If you wanted 100 oz, you can buy the bar for close to spot, while there is a relatively large premium to pay if you wanted 100 coins.
|
|
Moderator
 Australia
16806 Posts |
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. 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
|
|
Pillar of the Community
 United States
595 Posts |
As I had hoped, a good discussion. Thanks, everyone. Jan |
| |
Replies: 7 / Views: 1,152 |
|
Posted 02/14/2008 1:56 pm
