Bullion Coins

There have been no definite criteria in deciding what is a bullion coin, however a few general characteristic of a bullion coin are:

• High purity coins often with millesimal fineness of .999 and above in precious metals content, usually gold, silver and platinum.


• Coin value determined based on their precious metal content rather than face value minted on the coin


• Never used in day to day trading, though most of them are legal tender in their respective country of issue


• Generally have mintages (quantity issued) less than 10,000

Krugerrand Image owned and photographed by Chris Welsh, cachecoins

In addition to being very beautiful objects, bullion coins are appealing the coin collectors in that they are also rare at the same time, this is because most issues have a mintages of below 10,000. Bullion coins also require minimal storage and management (unless you start hoarding them in large quantities!!!). It is also relatively economical to start off collecting with the silver coins as they are much cheaper than gold coins.

Collecting bullion coins can be also viewed as an investment as well especially accumulating gold coins, as they are one of the methods in gold ownership in addition to bars and ingots, gold ownership provides a hedging against the stock market movements. It is also a storage of securities as gold prices has been on the rise for at least the past 5 years.

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Many countries have since issued their own series of bullion coins, some of the most well known series include:

• United States: The American Gold Eagle, The American Silver Eagle


• Canada: The Canadian Gold Maple Leaf, The Canadian Silver Maple Leaf


• United Kingdom: The British Gold Sovereign


• China: The Chinese Gold Panda


• Czech Republic and The Netherlands: The Ducat


• Islamic Dinar


• Austria: The Austrian Philharmonic


• Mexico: The Mexican Silver Libertad


• South Africa: The Krugerrand


• Australia: The Silver Kangaroo, and The Silver Kookaburra

The American Gold Eagle is the official bullion coin of the United States, it is a 22-karat gold coin (see Weight and Purity) that is offered in denominations of 1/10 oz, 1/4 oz, 1/2oz or 1 oz. The gold coin is issued in 1986, and is guaranteed by the United States mint to contain the stated actual gold amount in troy ounces. The coin contains 91.6% gold and 8.4% of a copper-silver alloy.

The design of the face depicts a full length figure of Lady Liberty with flowing hair, holding a torch in her right hand and an olive branch on her right hand with the Capitol building in the left background, this rendition is inspired by Augustus Saint-Gaudens. The reverse features a male eagle carrying an olive branch flying above a nest containing a female eagle and her hatchlings, this is a design by sculptor Miley Busiek.

American Eagle Bullion Coins are accepted in major investment markets worldwide. They are also the most widely traded bullion coins in America, affording investors narrow spreads between buy and sell prices.

The first bullion coin ever minted, the Krugerrand was introduced in 1967 by the South Africa to market their gold, today it is the most widely traded gold bullion coin worldwide, at a premium of less than one percent on top of its gold value. The 22-karat coin is originally offered only in one troy ounce denomination, currently there are four sizes available, 1 oz, 1/2 oz, 1/4 oz and 1/10 oz.

The coin is intended from its first moment of issue to be an avenue for private gold ownership, therefore there is no face value minted on the coin. And by bestowing legal tender status on the coin, the coin can be owned by the citizens of United States who were at that time prohibited from owning gold privately but allowed to own foreign coins. Additionally being a legal tender, the coin can be imported into many countries without being subjected toimport taxes, duty or VAT. However due to the Apartheid policy of South Africa at that time, Krugerrand are prohibited to be imported into many Western countries, but this situation has changed after the political reform of the 1990's.

There are proof version of Krugerrand available, they can be differentiated from ordinary bullion Krugerrand by the number of serrations on the edge of the coin. Proof Krugerrand has 220 serration whereas the ordinary bullion coin has 180 serrations.

The People's Republic of China issued the Chinese Silver Panda coin in 1982, since then the coin has been issued with a different panda design every year except for the year 2001 and 2002. The obverse design consist of a depiction of the Temple of Haven, with the inscription of The People's Republic of China (in Mandarin) and the year of issue at the bottom. The reverse design features a panda figure which change every year.

The Chinese Silver Panda is offered in many denominations, from face value of 3 Yuan (1/4 ounce), 5 yuan (1/2 ounce), 10 Yuan (1 ounce), 20 Yuan (2 ounces), 50 Yuan (5 ounces), 100 Yuan (12 ounces) and 300 Yuan (1 kilogram). There are also many variations of coins offered, including partially gold plated and proof versions.

However due to the prevalence of counterfeit even fake coins in the market, it is not advisable to buy online directly from China, and especially in buying through online auction, one should only buy from reputable seller who has sold many units of the coin without any complaints in the past.

Mint produce proof coins as samples to determine the quality of the die and keep the proof coins as their archival samples, however due to popular demand, in modern times proof coins are issued in special collectable sets to enthusiatic numismatists, or coin collectors.

The appearance of a proof coins can be differentiated from normal coins by their sharper rims and design, as well as smoother "fields" (blank areas on coin), as the die is often polished prior to strucking the coin. Another distinct feature is the frosted appearance on certain parts of the designs as modern dies are often treated with chemical deliberately to produce that effect. In the past, the dies are often subjected to sand blasting or matte proof to achieve similar effect.

One should note that Proof is not a coin grading standard, though most proof coins are sold in fairly excellent condition as it is usually a collectable items, and therefore not subjected to the wear and tear of daily circulation.

Proof Coinage photo by Alfons Åberg, note that the right hand side is the proof coins

Because bullion coins have low mintages, and often collectors would not offer them to the open market once they acquired them fresh out of the mint, it can be quite a challenge to hunt for bullion coin in your local coin store especially for the older issues. Therefore nowadays many people would have brought them on the internet from bullion coin store or online auctions like ebay, however since the merchandise cannot be inspected unless payment is made and goods delivered, there are many cases of fakes or even plated samples that are sent to the buyers!!!

So to avoid losing your hard earned money, not to mention all the disappointment and heartache (ouch!). There are a few ways to prevent being cheated of your purchases:

• Read more about the coin that you buy, when is it issued? What is the dimensions and weight? Are there proof versions? What are the features in the design? Armed with this information would save you many time in identifying which is genuine and which is a scam, for example there is no such thing as a 1970 American gold eagle coin as the coin is only issued after 1986. Many counterfeit coin makers or scam artist often neglect little details when making fake items.


• Read fully the item description when buying from online store and auction sellers, many disputes and buyer dissatisfaction arises due to misunderstanding of not reading the item description, e.g. the seller would have purposely sold counterfeit coins for black museum collectors, and did specifically said so in the particular auction.


• Buy only from reputable online stores or auction sellers that you know of, ensure that the seller is contactable through its phone, or address or email. Check for the seller's feedback rating in online auctions, ensure that they have sell similar items in the past with no complaints.


• Only buy from sellers or online stores that have a money back guarantee, in case you are not convinced of your purchase, you can still have most of your money back maybe minus the shipping charges.


• Do not buy from sellers claiming to sell from an 'estate'. Most estate item are sold "as is where is" basis, where the seller takes no responsibility when the buyer encounter "what I purchase is not what I get" situation, so buyer beware!!!


• In auctions, avoid sellers that quoted very low selling price but inflated its shipping charges!!!


• Buy using a credit card or better yet Paypal if it is available, Paypal provides reimbursement in the event that the item is not received or significantly not as described (read about Paypal buyer protection here). Many credit card companies offered similar protection (albeit with more procedures to follow). Do not pay with debit card or money from your bank account as it cannot be refunded should something go wrong.


• Examine your coin when it arrives immediately, this is because should there be something unusual, it can be clarified and resolved quickly with your seller, failing which a claim for your money can be quickly filed with Paypal or your credit card company.


• Measure the dimension of the coin and weight the coin, ensure that it conforms to the technical specification of size and weight. A too light coin might be some cheaper metal coated with silver, a too heavy coin might be lead coated with silver as well.


• I will be coming up with info on how to identify fake silver, fake gold etc. hopefully in a week :)

Coin grading provides a standard to describe the coin condition to make them easier to trade in the market. In the past, when people trade coins, there are only TWO condition: used or new. As the market grew more sophiscated, this eventually gave way to the development of the letter grading system, where a coin is given a letter grade that denotes its quality ranging from:

• Basal State (or Poor (PO): You see a lump of metal that can be roughly recognized as a coin
  
• Fair (Fr): The coin is worn in all areas that you can barely see the design on the face
  
• About or Almost Good (AG): Very worn coin where the date and legent might be barely discernible
  
• Good (G)
  
• Very Good (VG)
  
• Fine (F): The coin has most of its edges and higher points extensively worn, but its design is still visible
  
• Very Fine (VF): The coin has most of its edges and high points that are worn but the design is clearly visible
  
• Extra Fine (EF or XF): The coin looks as if new or uncirculated, but more closer inspection will reveal that its highest points are slightly worn off
  
• Almost or About Uncirculated (AU)
  
• Uncirculated (Unc): A coin that has never been circulated, may have bag marks
  
• Brilliant or Beautiful Uncirculated (BU) or Gem Uncirculated: Newly Minted coins that have never been in cirulation, may have very slight imperfections
  

In the 1950s, the system further evolves as William H. Sheldon in his book Penny Whimsy comes out with the Sheldon Scale, where the grading is based on a numerical system of 1 to 70, where one is Basal (PO)and 70 is Brilliant Uncirculated (BU).

Later on in 1986, the Professional Coin Grading Service (PCGS) was incorporated and they combine both the letter and the numbering system into grades that becames the MS scale, ranging from BS-1 (or PO-1), FR-2, AG-3, G-4, G-6, VG-8, VG-10, F-12, F-15, VF-20, VF-25, VF-30, VF-35, XF-40, XF-45, AU-50, AU-53, AU-55, AU-58, MS-60, MS-61, MS-62, MS-63, MS-64, MS-65, MS-66, MS-67, MS-68, MS-69 up to MS-70. There is also another standard developed later for proof coins from PR-01(or PF-01) to PR-70 (or PF-70).

Today there are three prevaling institution offering coin grading services, the Professional Coin Grading Service (PCGS), the Numismatic Guaranty Corporation (NGC) and the ANACS which is formed by the American Numismatic Association (ANA). As their systems might have subtle differences, therefore it is advisable for purchasers to obtain professional consultance prior to acquiring an expensive coin.

Coins are weighted in troy ounces however for certain coins like the Chinese Gold Panda can be weight in taels, metric systems like the gram are also occasionally used. The conversion table are as follows:

In the past, the Carat is used to denote the purity of precious metal in a coin*, however this standard is fast being replaced by the millesimal fineness system where the purity of precious metals is denoted by parts per thousand of pure metal in the alloy.

The Carat of a coin is calculated by:

The millesimal fineness system indicate purity by the parts per thousand of pure metal in the alloy. Therefore the most common carats used in gold or platinum converted to millesimal fineness are:

• 24 carat = millesimal fineness 999


• 22 carat = millesimal fineness 916


• 20 carat = millesimal fineness 833


• 18 carat = millesimal fineness 750


• 10 carat = millesimal fineness 417

Note that in gemstones, carat is used to denote weight, whereby 1 carat of gemstone is 0.2 grams in weight.