If you’re new to precious metals, you’re probably unfamiliar with the verbiage and industry terms used to describe various assets. Fortunately, there are companies like U.S. Money Reserve with resources that can walk you through the basics. For example, bullion coins may be a great starting point for you if you’re building a precious metals portfolio from the ground up. If you read that and are asking “What are bullion coins?” you’re in the right place.
In this article, you’ll learn what bullion coins are, what differentiates them from proof coins, why they may be beneficial to own, and what the most popular bullion coins are today.
What Are Bullion Coins?
Hearing the words “coin” and “bullion” together is a clear indicator that a discussion is about precious metals. A bullion coin is a legal-tender product that has been produced based on the weight and purity of its precious metals contents. The most common precious metals used to create bullion coins are gold and silver.
The U.S. government guarantees the weight and purity of bullion coins manufactured by the U.S. Mint. Unlike collectible coins that can’t be held in an IRA, bullion coins are primarily viewed as a way to hold precious metals like gold and silver as portfolio assets.
U.S. bullion coins, first introduced in 1986, are produced mainly at the U.S. Mint’s facility in West Point, New York. Bullion coins are also produced by government mints in Australia, Austria, Canada, China, and South Africa.
Can Bullion Coins Be Purchased From the U.S. Mint?
The U.S. Mint does not sell bullion coins directly to the public. Instead, the Mint distributes these coins through a network of official distributors known as “authorized purchasers.” Pricing for bullion coins from these distributors typically depends on the market price of the coins’ precious metals contents, plus a small premium to cover minting, distribution, and marketing costs.
Are Bullion Coins Different from Proof Coins?
Yes. While a bullion coin and its proof coin counterpart contain the same amount of a precious metal, proof coins are created using a more intricate process that results in frosty design and mirrored fields. Proof coins are also generally created in far fewer numbers than bullion coins. In addition to their precious metals content, proof coins are desired for their designs, condition, and relative scarcity, all of which may contribute to higher market prices. People often buy proof coins alongside bullion coins in the hopes of taking advantage of these additional benefits.
To create the superior finish of proof coins, “proof blanks are specially treated, hand-polished, and cleaned to ensure high-quality strikes,” the U.S. Mint explains. “The blanks are then fed into presses fitted with specially polished dies and struck at least twice. The coins are then carefully packaged to showcase and preserve their exceptional finish.”
Together, bullion coins and proof coins can bring balance and diversification to a precious metals portfolio.
Why Should You Own Bullion Coins?
People decide to own bullion coins for many reasons. Owning bullion coins offers several advantages:
- They’re easily recognizable.
- They’re easy to trade.
- They typically sell at a higher premium than bars of the same precious metal weight.
- They are often recognized as a hedge against inflation.
- They hold intrinsic value based on their precious metals content.
- They can help diversify your portfolio.
What You May Want to Watch for When Buying Bullion Coins
While it’s almost always a good time to buy precious metals, some moments are better for buying bullion coins. When you’re ready to buy, watch for:
- Moments of market stress: Bullion coins are highly liquid assets and may be able to provide a practical means of wealth protection during periods of economic upheaval.
- When central banks are buying gold: Gold has long been a reserve asset for the world’s largest banks. When central banks buy more gold, they may be trying to increase their diversification away from paper-based assets such as the U.S. dollar—a strategy also employed by many consumers worried about the effects of inflation. Historically, gold has been negatively correlated with the U.S. dollar.
- When the U.S. dollar shows signs of weakness: Similarly, “when the dollar is weak, gold is cheaper to purchase in other currencies,” writes Philip N. Diehl, President of U.S. Money Reserve. A slumping dollar could signal an uptick in gold prices, including the price of gold bullion coins.
What Is the Most Popular Type of Bullion Coins for Silver?
The Silver American Eagle is considered the most widely purchased silver bullion coin in the world. However, many silver bullion coins are recognized around the world and may be worthwhile additions to a portfolio. These examples represent some of the most popular silver bullion coins:
- Silver American Eagle
- Silver Canadian Maple Leaf
- Silver Mexican Libertad
- Morgan and Peace Silver Dollars
What Is the Most Popular Type of Bullion Coins for Gold?
One coin soars to the top when you mention the most popular gold bullion coins: the Gold American Eagle, designed by American sculptor Augustus Saint-Gaudens, is one of the best-known and most-loved coins in the world.
But the Gold American Eagle doesn’t fly alone in the flock of popular gold bullion coins. Others include:
- Gold American Buffalo
- Gold Canadian Maple Leaf
- Gold South African Krugerrand
- Gold Austrian Philharmonic
Common Questions About Bullion Assets
What is bullion?
The term “bullion” refers to a precious metal that is refined but in raw form and at least 99.5% pure. Typically, bullion is created for the express purpose of being used as an asset for storing, preserving, and growing wealth. Both physical gold and silver can be made into bullion. There are also different types of bullion: In addition to silver and gold bullion coins, there are also silver and gold bullion bars and ingots.
What does “bullion” mean in coins?
Bullion, in coin terms, refers to high-purity precious metals coins produced to specific weights and sold primarily as portfolio assets. Bullion coins’ market prices are typically based on the weight of their precious metals content.
Are bullion coins real?
Yes, bullion coins are real gold coins or silver coins. Bullion coins are also typically official legal tender guaranteed for weight and purity by their issuing governments.
Can you buy gold bullion from a bank?
Purchasing gold bullion from a bank may be possible, but most banks don’t sell bullion. For a large selection of precious metals products, you can buy from a reputable distributor like U.S. Money Reserve.
What’s the difference between bullion, proof, uncirculated, and circulating coins?
There are many designations for coins, and it’s important to understand what they all mean.
Bullion coins—coins struck from refined precious metals, generally produced with a purity of at least 95%. Bullion coins are typically guaranteed by their issuing government for weight and purity, factors which also help determine their market price.
Proof coins—proof coins are also struck from high-purity gold or silver but feature lower mintages, a greater level of detail, and both frosted and mirrored surfaces.
Uncirculated coins—these are coins that have not been used as legal tender or circulated as part of a nation’s money supply. Most uncirculated coins are in mint condition.
Circulated coins—these coins have been used as legal tender. They tend to have significant wear and can be in poor condition.
What is the difference between investment-grade gold coins vs. bullion coins?
There is no difference. Bullion coins are “investment-grade” or high-purity coins produced and sold primarily for inclusion in portfolios.
What is the difference between currency and bullion?
Currency is made with the intent that it will be used as legal tender, meaning it will be used to make purchases. While bullion coins are often government-issued legal tender, their primary use is as a financial asset rather than as legal tender. Bullion coins’ legal-tender face value is often far less than their actual market price.
Who owns the most gold bullion?
The U.S. federal government has the largest gold bullion holdings. The American gold reserve is 8,133 metric tons worth around $535 billion in gold based on recent market prices.
Ready to shop for bullion coins? Buy government-issued and government-guaranteed bullion coins online or over the phone with U.S. Money Reserve.