Let us begin by clearly defining the three choices and industry definitions of bullion bars, bullion rounds, and bullion coins.
Bullion Coins - (n) physical precious metal in a coin shape. Its value is almost entirely derived from its melt value alone. By definition a bullion coin is struck by a sovereign government mint. They almost always have an enforceable legal tender face value (the South African Krugerrand being one exception).
Bullion Rounds - (n) physical precious metal in a flat round or wafer shape. Its value is almost entirely derived from its melt value alone. By definition a bullion round is struck by private mint.
Bullion Bars - (n) physical precious metal in a bar or ingot form. Its value is almost entirely derived from its melt value alone. Mostly struck by private mints, although some sovereign mints (like the Royal Canadian Mint for example) strike bullion bars.
If you look around the internet or visit a trusted local coin shop you will likely discover that there are thousands of silver and gold products available. Some struck by government mints others by private mints. How do you decide which products are the best for your specific buying objectives?
In order to choose which bullion products are best one might consider the following factors which we will elaborate further on:
To take direct delivery or not
Smallest prices over spot
Privacy when buying / selling (USA)
Highest brand recognition
Legal tender law rights
International movement ease
Currency crisis insurance
Potential for high product premiums
Lower counterfeit potential
High liquidity and speed of sale
Ease to store and safeguard
We believe it prudent to own some portion of your physical bullion direct and in hand. The majority of our customers typically buy their bullion through our website and choose to take delivery in fully insured nondescript parcels to their doors. Even if it is a small percentage of your overall bullion holdings, having some close at hand will likely add to your and peace of mind and understanding of how the bullion industry operates.
It is highly unlikely your homeowner’s insurance policy will cover bullion or physical precious metals, thus when your holdings become too risky to safeguard in one location, we offer professional fully insured third party non-bank segregated bullion storage account services as well.
Bullion ownership directly and diversified amongst even geopolitical risks (outside of one’s own nation state) is a strategy employed by many investors who allocate 10% or more of their wealth to physical precious metal holdings.
During tranquil economic times, when the bullion industry is under normal supply and demand, an investor can expect bullion price premiums to range from 1 to 20% over a precious metal spot price given the specific precious metal type and product form one is acquiring.
Private Mint bullion products often have lower prices per ounce than Government Mint bullion products typically due to lower seigniorage fees and production costs associated with the former as opposed to the latter option.
For instance privately minted gold bullion bars tend to offer the lowest premium over its fluctuating spot price while silver government issued coins typically have the highest average price premium percentage over its respective spot price.
Typically the bigger a bullion product is in terms of overall troy ounces, the lower the price you will pay to acquire each precious metal ounce.
The lower a premium that a bullion product has when you are buying it also usually means that when you go to sell that same bullion product, you can expect that a lower price premium to spot will be offered for it. Conversely and in general, the larger a premium a popular bullion product carries, the higher the offer price will be when you go to sell back that same popular bullion product to a bullion dealer.
Even for the most price sensitive bullion buyers, there are other buying factors one should take into consideration when choosing which products to purchase and own long term.
Kitco Metals is a Canadian based bullion dealer. The majority of our customer base are US citizens thus the following information may apply to your bullion buying and selling within the United States of America.
In the USA the IRS requires that banks, financial institutions, and even bullion dealers help to thwart both tax avoidance and money laundering.
Consistent cash transactions within a small timeframe amounting to $10,000 USD or more are deemed reportable by the IRS. Thus for larger bullion orders, most online bullion dealers only accept non-cash payments like check, bank wire transfers, credit / debit cards, etc. when taking payments from customers.
By utilizing more secure bullion purchase payment policies, online bullion dealers can help make their customer’s purchases more private while simultaneously lessening their paperwork filing compliance.
Certain quantities and types of bullion products when sold to US based bullion dealers and bullion buying companies are deemed reportable on IRS-1099B forms.
The following are the current minimum reportable bullion transactions when selling to US based bullion companies:
MINIMUM REPORTABLE AMOUNT
Gold bars / wafers / rounds
Totaling 32.15 oz or more
Silver bars / wafers / rounds
Totaling 1000 oz or more
Platinum bars / wafers / rounds
Totaling 25 oz or more
Palladium bars / wafers / rounds
Totaling 100 oz more
1 oz Gold Maple Leaf Coins
25 oz or more
1 oz Gold Krugerrand Coins
25 oz or more
1 oz Gold Mexican Onza Coins
25 oz or more
Old US 90% Silver Coins
$1,000 face value bag of any combination of dimes, quarters, half dollar, or dollar coins.
All other bullion items not listed above remain fully exempt from US based bullion dealer and bullion buying company IRS 1099B reporting requirements.
For example, you can currently sell any and all government minted .999 silver bullion coins to US based bullion buying companies and those silver coins remain currently exempt from IRS 1099B dealer reporting requirements. So too exempt are many of the modern sovereign gold bullion coins not listed above (for example, all US Mint bullion coins and Perth Mint bullion coins are currently exempt from US IRS 1099B bullion buyer reporting requirements).
Of course we are merely referring to bullion reporting privacy rules in the USA. Consult your tax professional on any and all capital gains or losses from your bullion holdings.
When selecting your bullion product brand or hallmarks you may want to consider the bullion industry and investor recognition and popularity for that specific bullion product.
For example, there are many thousands of coin dealers who buy and sell Royal Canadian Mint bullion bars and coins or even Republic Metals bullion bars. Yet there may not be many active buyers and sellers of niche private mint branded bars or rounds. The more niche your bullion product may be, potential respective bullion buyers may be limited and they may not offer a fair or reasonable price when you move to sell.
Trustworthy government bullion hallmarks with large two way trading, include some of the following sovereign bullion brands in no particular order:
Trustworthy private mint bullion hallmarks with large two way trading, include some of the following bullion brands in no particular order:
What makes bullion coins different from other bullion products are their legal tender rights within their nation of issuance.
Virtually all modern government bullion coins produced today have legal tender face values from their respective nation of issuance. For example, the Royal Canadian Mint produces the 1 oz Silver Maple Leaf Coin with a face value of $5 CAD.
By owning legal tender Canadian bullion coins, it gives an owner the potential right to explicitly use their face values in private contracts of sale or purchase within Canada.
Legal tender bullion coins give the owner the option of being able to buy assets outright with notarized and court enforceable contracts, the same cannot be said of privately minted bullion bars and rounds. Sure you could barter with a willing counter-party with virtually any good, but setting up enforceable contracts using generic bullion items as payment is not as simple as explicitly using legal tender bullion coins.
Generally the easiest bullion products to transport internationally are government issued fine .999 bullion coins with legal tender face values. With gold, many governments (Canada and Singapore for example) tax 22k gold thus those moving gold bullion abroad should avoid buying 22k American Gold Eagle Coins, 22k South African Gold Krugerrand coins, and 22k Mexican Onza Coins for example.
If you are going to move 24k gold bars internationally, perhaps buying government issued bars may make the process easier as border guards may have less concern if they read a government mint stamping and hallmark. Even most government minted bullion bars do not have legal tender face values, if a border guard sees a government stamping on it they are less likely to give you trouble.
When personally crossing national borders with bullion you may be presented with a customs declaration form to document what you are traveling with (the U.S.A. wants you to declare if you have $10,000 or more in cash, cash equivalents, gold, silver, bonds, stock certificates, etc.).
We and other large bullion buyers and owners often utilize secure logistics firms when shipping bullion abroad. Companies like G4S, Brink’s, and Malca Amit allow us and many others to more easily transport large volumes of bullion safe and securely across country borders.
If you have concerns about bank and financial system closure and the need to own and potentially use bullion in direct commerce, you can perhaps buy small silver and gold coins, bars, or rounds and even breakable gold bars if you like.
At less than twenty US dollars an ounce, silver would likely be a better choice to buy dinner for two than it would using a 10 oz gold bar. Yet today, you can also buy gold in one gram bits thus silver is not the sole option for a currency crisis bullion hedge.
During physical bullion shortages, like in the fall of 2008 for example, many bullion coin premiums spike. It is during these times bullion owners of highly demanded bullion products could choose to arbitrage by selling for example many American Silver Eagle Coins when premiums are high and use the proceeds to acquire lower premium bullion and ultimately own more ounces in the end.
Note the +30% premiums that American Silver Eagle coins were sold at over the fluctuating silver spot price in late 2008 and early 2009. In the case of another major financial crisis, highly trusted bullion products could again receive large premiums in relation to their respective precious metal spot prices.
Protecting bullion buyers from purchasing fake products is a real concern in the bullion industry. Many private and government mints have designed new counterfeit-proof features for their popular bullion products. For example the Royal Canadian Mint has introduced many new security features on their popular bullion coins and bars in recent years.
Be wary of any bullion deals which sound too good to be true. We suggest you only buy your bullion from trusted well known bullion dealers who source their metals direct from bullion mints and refiners. Trusted bullion dealers should also test and verify 100% of all the products they buy and sell from secondary market sources.
When it is time to liquidate bullion, you will likely want the transaction(s) to be quick and efficient. From bullion to fiat currency within a small timeframe.
This is why buying a majority of homogenous popular well recognized bullion brands and like-kind bullion products makes good sense. If you are not interested in trying to squeeze premiums out of single coin sales, buying and owning large volumes of the same popular bullion products may make liquidation easier and less cumbersome.
By also buying well known bullion brands you increase the amounts of potential buyers you will have when it comes time to sell some of your bullion.
Before you buy your bullion, you will want to have an idea on where you may safeguard it.
Bullion bars stack and stow easiest. Mint cases of bullion coins are also easy to stack and stow.
Obviously the denser a precious metal is, the less volume of space it will take up. For instance platinum bullion bars and coins will take up about 5 times less space than silver bullion bars, coins, or rounds as platinum’s mass and density is higher than silver.
Click here and learn how to safe and securely take “Action” and acquire bullion.