Absolutely! Many of our clients utilize gold and silver bullion as a necessary component to their diversified hard asset portfolio. Whether as a hedge against a soft economy, to profit from underlying moves in the price of the metal itself, or just because the coins are beautiful, the reasons for ownership are many.
Our core business focuses on numismatic coins, meaning those whose price is determined by their rarity, condition, and collector demand. A 1916 Standing Liberty Quarter, the key date of the series contains approximately seventy five cents worth of silver yet is usually worth anywhere from $1000 to well over $20,000 depending on its condition. A rare date $20 Saint Gaudens contains just under one ounce of gold and can also be worth many thousands of dollars. Changes in precious metal values have a relatively negligible effect of the prices of such items.
Bullion on the other hand refers to gold, silver and platinum coins or bars whose value is directly tied to the price of the underlying metal they are composed of. If gold fluctuates by $5 on any given day for instance, one ounce gold bullion products will move accordingly. These items are not rare, nor particularly collectable and thus maintain very little premium over their intrinsic value.
The most commonly traded forms of gold bullion are American Gold Eagles which come in coin form and are available in weights of one, half, quarter and tenth ounce denominations. These are 92% pure or 22 carat gold. Usually the smaller the denomination, the higher the premium and thus the less gold you will be getting for your dollar. Smaller denominations however can come in handy for those who may be in need of small change or even as great gift items.
The Canadian Mint produces Maple Leaves which come in the same denominations as the Gold Eagles described above with the primary difference being that they are 99.99% or 24 carat pure gold.
In addition, numerous manufacturers produce gold bullion in bar form, usually in weights of one and ten ounces. It is important to own bars made by widely recognized refiners such as Credit Suisse, Johnson-Matthey or Englehard and that they be a minimum of 99.9% purity.
All of these items are comparably priced with each other in relation to the price of gold, and recently have been hovering at close to $15 over spot. Neither really has an advantage over the other in terms of investment potential, ownership is really just a matter of preference.
The most commonly traded form of silver bullion are American Silver Eagles which are about the size of a silver dollar and contain one ounce of 99.9% pure silver. These are very popular as a form of silver ownership and also make great gift items. There are certain refining and manufacturing costs involved in the production of Silver Eagles which is passed along to the end user, usually resulting in their price running about $1.75 over the spot price of silver.
Various manufacturers also produce silver bullion in bar form, usually in weights of one, ten and one hundred ounces. It is important to own bars made by widely recognized refiners such as Johnson-Matthey or Englehard and that they be a minimum of 99.9% purity. These bars often trade at prices much closer to spot than the Silver Eagles, often just a few cents over as they are treated more as a bulk item and have smaller production costs involved.
Please note, certain marketers send these items to third party certification services whereupon they are encapsulated in a tamper proof holder and assigned a technical grade. These sellers may then offer them at inflated prices while extolling the virtues of these rarities which are now officially bestowed with super high grade designations such as Mint State or Proof-69. Understand that these are not rare, as a matter of fact the vast majority exist in this approximate condition due to strict production standards. It is our opinion that this is a poor form of bullion ownership and that you will be better served by ignoring these products. Except in very rare cases, certifying bullion does not increase the value and any premium paid at the time of purchase will usually be completely lost when it comes time to sell.