Precious bars originate from precious metals. The materials that make up the precious ingots are found in rare metals, most of them being gold and silver. The value of bullion is determined based on the type of metals used and is generally not valued based on currency. In other words, the purer the metal, the higher the value of the bars. As the ore has been found in large quantity and the mining and refining process has improved, gold, silver and precious metals of similar value are experiencing a drop in value. This is due to the fact that the term ‘precious’ refers to the value of the metal as perceived by the current market.
Bullion trading is done in two ways: bulk bullion and coins. The government bears the responsibility of minting its own bullion coins. So far, a minimum of 10 countries have been minting their own silver and gold bullion coins. The countries are the United Kingdom, South Africa, Poland, Canada, Austria, China, Switzerland, the United States, and Mexico. The issuance of precious bullion coins is considered legal tender. However, since minting is done by imposing face values, the actual face value is often well below the current price of metals.
For example, most governments will use at least 31g of gold to create their bullion coins that are worth between US$10 and US$100. Therefore, the average value of gold contained in precious gold bullion is only twelve US dollars. Obviously, the value of coins and bullion metals is not interchangeable. There are a few examples of precious bullion coins to look for:
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1. Australia – Gold Nugget, L. Series (1) and L. Series (2)
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2. Australia – Philharmonic
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3. Canada – The Maple Leaf
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4. China – The Golden Panda
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5. Mexico – Onza, Centenario and Libertad
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6. Poland – Orzel Bielik
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7. South Africa – The Krugerrand
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8. Switzerland – Vreneli
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9. Great Britain – Sovereign and Britannia
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10. USA: Buffalo, Eagle, and Double Eagle
The largest precious bullion coin is the Australian gold nugget. Worth $10k, these coins are minted by the Australian government in the form of 1kg coins containing pure gold. There are other larger coins available, but they are not for mass production and are impractical to handle. A good example is the Vienna Philharmonic gold coin, which has a value of €100,000 and was minted sometime in 2004. It is made up of 31 kg of gold. The second example is the Maple Leaf, produced in Canada. Minted in 2007, it has a face value of one million dollars and is made up of 100 kg of gold.
In total, there are at least three elements that affect how precious bullion is valued. The elements are the type of metal, its purity, and how much it weighs. To conclude, the full value of a bullion coin is derived from the choice of metal. This makes sense since certain metals are more valuable than others. For example, platinum is considered more valuable than gold, and gold is valued more than silver. Many coin collectors like to buy silver bullion because of its lower price compared to gold and platinum.
