Bullion Coins Defined

Bullion Coins Defined

Bullion coins are coins made from precious metals. These coins are minted from 22 karat gold (91.67% purity) and are available in four weights — one-tenth, one-fourth, one-half, and one troy ounce. Other popular gold bullion coins include the Canadian Maple Leaf, South African Krugerrands, and Chinese Gold Pandas. American Eagle gold bullion coins are among the most widely traded bullion coins in the world. For collectors, bullion coins can be prized for their rarity and aesthetic beauty, which can often cause their value to increase relative to the base value of their precious metals content. Many countries have their own official bullion coins, such as the American Eagle series produced by the United States Mint or the Canadian Maple Leaf series offered by the Royal Canadian Mint.

Bullion coins are physical coins made of precious metals.

What Are Bullion Coins?

Bullion coins are coins made from precious metals. They are typically minted in weights that are fractions of one troy ounce, and they are most commonly made from gold and silver.

Many countries have their own official bullion coins, such as the American Eagle series produced by the United States Mint or the Canadian Maple Leaf series offered by the Royal Canadian Mint.

Bullion coins are physical coins made of precious metals.
The most common types are made of gold and silver, although platinum and palladium are also sometimes used.
While some investors purchase bullion coins as gifts or collectible items, others invest in them for their perceived value as a hedge against inflation.

Understanding Bullion Coins

Bullion coins have existed in various forms for literally thousands of years. Bullion coins served as a primary form of currency throughout most of history; however, since the advent of the international fiat currency system, their role has been relegated to that of a collectible item and investment asset.

For collectors, bullion coins can be prized for their rarity and aesthetic beauty, which can often cause their value to increase relative to the base value of their precious metals content. This subjective value is known as the "numismatic value" of bullion coins, whereas the value solely attributed to their precious metals content is known as their "melt value."

Investors, on the other hand, will often purchase bullion coins as a hedge against inflation. These investors often share a concern that the fiat currency system fails to adequately prevent fiscally irresponsible government practices, such as engaging in excessively expansionary monetary policy or relying on unsustainable levels of government borrowing. From this perspective, bullion coins may be an attractive investment in that their value should rise if the purchasing power of fiat currencies, such as the U.S. dollar (USD), declines.

Real World Example of Bullion Coins

American Eagle gold bullion coins are among the most widely traded bullion coins in the world. These coins are minted from 22 karat gold (91.67% purity) and are available in four weights — one-tenth, one-fourth, one-half, and one troy ounce.

Other popular gold bullion coins include the Canadian Maple Leaf, South African Krugerrands, and Chinese Gold Pandas.

Related terms:

Collectible Defintion

Collectibles are items worth more than they originally sold for because of their rarity and popularity. Learn about investing in collectibles. read more

Debasement

Debasement refers to lowering the value of a currency, particularly of one based on a precious metal, by adding metal of inferior value.  read more

Expansionary Policy

Expansionary policy is a macroeconomic policy that seeks to boost aggregate demand to stimulate economic growth. read more

Fiat Money : How Is Currency Valued?

Fiat money is a government-issued currency that is not backed by a physical commodity, such as gold or silver. read more

Gold Certificate

Gold certificate, issued as U.S. currency equivalents until 1934, is a document that proves ownership of a specific amount of gold. read more

What Is an Inflation Hedge?

An inflation hedge is an investment that is considered to provide protection against the decreased value of a currency, made by investing in safe-haven assets and other less volatile instruments. read more

Krugerrands

Krugerrands are South African gold coins that were minted in 1967 and remain popular among gold investors today. read more

Numismatics

The study and celebration of payment media (currencies), that mainly focuses on researching the production and use of coins, to determine their rarity. read more

Palladium

Palladium is a shiny, silvery metal used in many types of manufacturing processes, particularly for electronics and industrial products.  read more

Platinum

A chemical element, precious metal and commodity used primarily in jewelry, electronics and automobiles.  read more