What are Bullion Coins?

Bruce T.
Bruce T.
The South African Krugerrand is a type of bullion coin.
The South African Krugerrand is a type of bullion coin.

Gold bullion coins are coins made of gold that are struck at a mint and issued by some governments as a form of legal tender. When sold internationally, there are no trade legalities that accompany the sale of gold bullion. The coins usually can be purchased at central banks, precious metals brokers, storefront coin dealers, or online.

In general, not all bullion coins are of the same purity. The amount of purity usually depends on the issuing nation. Purities of coins typically range from .9167 pure, or 22 karat, such as the American Gold Eagle and the South Africa Krugerrand, to .9999 pure, or 24 karat, such as the Austrian Philharmoniker and the Canadian Maple Leaf.

Each nation that offers these coins typically produces them in different denominations, or weights. The most common weight measurement is the Troy ounce (ozt). Some coin weights are measured in grams by using the decimal system — these are usually the heaviest coins. The most common denominations are 1/20 ozt, 1/10 ozt, 1/4 ozt, 1/2 ozt, 1 ozt, and 1 kilogram (kg).

Gold has been used as currency throughout most of recorded history. The first coins ever minted were made of gold. They were a logical choice for an alternative to the barter system for trading goods of value. Another use for them was as a public relations device for kings, queens, and emperors. Their likeness on a coin showed the people what he or she looked like.

Bullion coins are not to be confused with numismatic gold coins. Numismatic coins are not legal tender and other elements factor into their value. These coins are collectible, but the worth of these coins is generally determined by the finish, rarity, and design. The numismatic market is quite different than the market for gold bullion coins.

In modern times, gold bullion coins are usually purchased strictly for the value of their gold content, thereby creating an investment. They are one of the most accessible ways for small investors to physically own a gold investment due to the size of the denominations. Besides, there most likely are numerous people who would rather be able to hold an investment in their hands than keep it with a third party.

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    • The South African Krugerrand is a type of bullion coin.
      By: Loic LE BRUSQ
      The South African Krugerrand is a type of bullion coin.