Buying Bullion Is Not as Simple as One Might Hope
Buying bullion is easy, just go to a coin show or a coin shop, or find an online dealer. And, if there were nothing else to consider there would be no need for this article, but there are many things that one must take into account. The first is what kind of bullion is desired, but other issues are also present. Size and shape of the pieces are also significant issues.
Please be aware that the contents here are just to make the readers aware of things. What is best for you is subject to your particular needs, and no investment decision should be made on the basis of this article.
Buying Bullion: What Kind?
Choose from Gold, Silver, and Platinum (Or Other)
Many people simple want to go right to gold bullion, but before doing so consider that there is a ratio of values between gold and silver that has traditionally valued one based on the other. In recent times silver has lagged behind the traditional ratio. Of course the ratio is not absolute, and may have even adjusted for current times. Only time will tell. Perhaps silver is setting a new ratio now that less of the metal is needed in photography, including X-ray negatives.
Another consideration is that platinum has traditionally been valued higher than gold, partially because it has industrial uses that can impact the supply, but the two metals have crossed values several times in modern times.
Simply put, regardless of the ratio of values, silver is the cheapest per ounce, and gold and platinum take much less storage space. And, there is a reputation of the value of gold. Who says “Good as platinum?” No one. But, the expression “Good as gold” is often heard. Does this give gold a psychological advantage?
Buying Bullion: The Price
What Bullion Can You Afford?
The first thing one must know is that there are about 31.1 grams of precious metal in one Troy ounce. This is especially necessary for gold and platinum. Usually, small bars of these are weighed in grams.
Small pieces are more universally affordable. The problem is that the smaller pieces often are expensive when one compares to the spot price of one Troy ounce. As a general rule, the larger the piece the lower the percentage marked up, up to a point. This is partially due to the minting cost. And, remember that unless it is a coin there is usually, but not quite always, no numismatic value, so selling to someone intending to melt the piece will not bring a premium.
On the other side of the size dilemma, large pieces such as a kilogram of gold are not easy to find a buyer to take, other than someone intending to melt the gold down. And, with precious metal comes another consideration. You bought the metal for a reason. If you have ten thousand dollars and need to spend one hundred dollars you can still have the change. But, if you have ten thousand dollars of gold, all in one piece, you can spend one hundred dollars’ worth of the gold, but you will not get gold as change. In order to get the balance in gold you would have to pay a premium for the smaller pieces.
Silver coins of one Troy ounce have a small mark-up, but can be easily converted to cash one at a time. Likewise, fractional gold and fractional platinum can be converted to cash in small quantities.
Buying Bullion: Size and Quantity
What Size Coin, Round, Or Bar Is Best for You?
Silver pieces are coins often in the half, one, two, and five Troy ounce sizes. Certainly the five-ounce America the Beautiful quarters are worth consideration. Many have gone up in numismatic value. But, past trends are no guarantee of future value.
For gold and platinum, the small one gram bars are about as small as one might find.
Some coins are 0.9999 pure, others are just 0.9167 pure. This is the difference in 24-karat gold and 22-karat gold. Make certain you compare like purity of the precious metal, or at least know what you are getting.
Buying Bullion: Shape
Choosing Bullion Bars, Or Bullion Coins
People often come up at a coin show and ask for bars. Others want rounds. Simply put, you can get more rectangular bars into the same size bank box than you can rounds. Round objects store with wasted space.
Coins and rounds are similar, except that a coin is minted by the authority of a legitimate government, and has a denomination. Coin collectors will take coins at a premium more frequently than they will take rounds, although there are a few exceptions such as the Official Alaska State Medallions.
Buying Bullion: Spot Value
Finding the Value of Bullion
There is a free service at XE.com that giver currency values. Since bullion acts as an international currency in a sense, you can also find the value of a precious metal in any currency. The calculator resets frequently, so you have a good value to work with when buying. Simply go to the link above, using your Smart Phone, and know the value while placing the order or finishing the purchase. The currency on the left should be set to XAG for silver, XAU for gold, or XPT for platinum. You can then enter the number of Troy ounces, or use one for a per ounce value. The right side should be set to your country’s currency.
Buying Bullion: Source
Where Should You Buy Bullion?
Buying bullion can be done using sources you trust. Gold and Silver Bullion Coins from Royal Mint Bullion are available to sell to the public. This is a highly credible source, and the Royal Mint handles gold from many countries. Of course there is the international shipping when dealing with a foreign mint. And not every mint will sell direct to the public, some use authorized dealers, or physical outlets that you might not be able to visit.
There are large companies that sell bullion. One that usually has a nice selection is given here.
One thing you might think about is quantity. Often price depends on the quantity ordered. You might thing buying one each of twenty different one-ounce silver coins would be nice, and if you are a coin collector it is, but buying twenty of the same coin might lower the price per coin. For gold, or large pieces of silver there might be a price break with as few as four coins purchased, depending on where you buy and exactly what you buy.
Buying Bullion: Conclusion
Bringing Things Together
One must consider all aspects of the metals when making a purchase. You must look at affordability, storage cost, and future value. And, with things like future value there is never a guarantee.
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