Doug Hornig, Contributor, GoldSilver
JUL 24, 2018
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:
In contrast to rounds, coins must have the following attributes:
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 face value, their status as legal tender gives investors an extra layer of protection due to the significant penalties associated with illegal counterfeiting of currency.
Precious metals investors should be careful to stay away from numismatics and semi-numismatics. The value of numismatics is based on the rarity and collectibility of the coin itself. While many numismatic coins have intrinsic value, it isn’t a part of the conversation during a trade, as most of the value is derived from the coin’s design, form, condition, and demand. Therefore, unless you’re an avid coin collector, we recommend that you steer clear.
Rounds can be produced in a variety of shapes and sizes, but no round can have the exact same specifications as a government-issued coin. This helps protect against counterfeiting.
A round is different from a coin in that it:
Rounds are produced by private mints. Private mints can produce their own coins with their own sizes and specifications because they aren’t intended for circulation and are not considered currency. Rounds can be an excellent value when investing because their entire value is based on the precious metal content, making it more affordable to buy a round than a coin. Because rounds aren’t intended for circulation and aren’t as regulated as coins, designs are endless. They commemorate events such as the Olympics, pay homage to classic coins like the Saint Gaudens Double Eagle, and even come in exclusive designs like the Pegasus and Silver Bull.
There are several factors to consider when choosing between coins and rounds. It is important to consider what the goals of the investment are, and how important the following traits are:
Consider these investment goals when choosing between coins and rounds. GoldSilver offers gold coins and silver coins and rounds at excellent prices with a simple and secure purchasing process. Invest in your financial future today.