Do you find yourself bedeviled by sundry myths and misconceptions about your favorite bullion coin? You’re not alone. Happily, we’re pretty good at busting myths around here — so let’s look at five common bullion coin misconceptions.
Misconception #1: Real bullion only comes in bars.
Hardly. Once you’ve done a little research you’ll know better, but it’s amazing how many newbies come into the bullion-buying field thinking this is true.
If you’re new yourself, allow us to point out not only that coin bullion does exist, it’s:
- just as good as bar bullion;
- much more plentiful;
- easier to buy, sell and trade;
- more convenient;
- easier to transport;
- backed by the U.S. government;
- doesn’t need to be assayed when it’s time to sell… (assay means to analyze in order to determine the quantity of the gold, silver, etc. in it).
Need we go on?
Misconception #2: Coin bullion is more expensive than bar bullion.
Not in the long run. Admittedly, dealers often charge a bit more for coins than they do for bars, but that’s only the initial cost.
You see, there are cost issues involved with liquidating a bullion bar, especially if it’s gold or platinum bullion. Not only is it harder to sell or trade, to do so you need to get it assayed by someone. By the time you pay assaying and handling fees, where are the savings?
American coin bullion doesn’t need refining; its value is plainly stated, and fully backed by Federal guarantee. And because it’s mass produced, coin bullion pricing is extremely competitive. It’s up to you to do the comparison shopping, of course.
Leave the bars for banks and Fort Knox. For most people, coins are the better bullion for private investors.
Misconception #3: All coin bullion is created equal.
Not. Standards of purity, size, and weight vary from country to country. American Eagles, for instance, tend to be 91.7% pure, while foreign bullion can be as much as 99.9% pure.
Even American coin bullion is more variable than you might think. For example: the Gold Eagle alone comes in four weights (tenth-ounce, quarter-ounce, half-ounce, and one ounce).
Then there are the American Buffalo and half-ounce First Spouse rounds, not to mention the classy MMIX Ultra High Relief gold coin — all of which are made of 99.99% pure 24 karat gold, not the 91.7% pure 22 karat gold, of the Gold Eagles.
Misconception #4: U.S. bullion rounds aren’t really legal tender.
Wrong. For trading purposes, the U.S. Mint always assigns coin bullion a denomination, generally $1 to $100. So officially, you could buy a cup of black coffee with a $1 Silver Eagle and expect a few cents in change.
Now, would it be foolish to do that? Sure it would. But similar things have happened. In the August 2010 issue of Numismatic News, a correspondent reported coming across some rare Morgan dollars and silver quarters in a gas station — coins that someone had spent as if they were worth the face value.
Misconception #5: Coin bullion isn’t as liquid as gold mining stocks.
Well, let’s see. Suppose the stock market crashed tomorrow (as in 1929), or at least got badly bent (as in 1987), and you had a pound of mining stocks in one hand and a pound of gold bullion in the other. Which would be worth more?
We’re betting the gold.
And if something even worse happens (as in 2012, the movie), the gold still has some worth. At the very least, you can use it in jewelry, circuit boards, and trade. As for the stocks… well, they might help you start a campfire.
Any bullion coin is the clear winner here!
And you can buy bullion with confidence — as long as you avoid the pitfalls and traps most new gold investors make. You can find out how by subscribing to our free newsletter, the Gold Minute.
Do you know other misconceptions? Tell us by commenting below.