The Value of Minted Gold Bullion
Gold bullion refers to gold coins that do not have numismatic value, and gold bars.
Gold coins that have collectable value are typically graded by PCGS or NGC, the
two primary precious metal coin grading firms. Gold bullion's value comes purely
from the gold metal content of the coin or bar.
Investing in gold bullion has become an increasingly common feature in many investment
portfolios due to the positive diversification effects adding gold represents. Adding
precious metals, including gold, silver, platinum, and palladium, to an investment
portfolio enhances its risk/reward profile. Generally, adding an asset class whose
returns are not perfectly correlated with other asset classes in an investment portfolio
will enhance the portfolio's risk/reward profile.
Gold Bullion Facts
When minted by a government, bullion gains face value as legally nominated tender.
However, that face value is usually far lower than the material value of the bullion,
at 1$ or 50 cents, for example, when the actual value is in the hundreds. At the
same time, minted bullion has a greater numismatic value.
The material value of gold bullion depends on weight, purity and condition. Bullion
purity usually starts at 99.9% and sometimes goes up to 99.999%.
There are three types of value that minted
bullion coins can have. When raw, they begin with material value mentioned
above. This value is not as directly linked to national banks and governments as
the value of regular currency. There is the face value that comes with minted bullion
because of the fact that they are minted. This value is largely symbolic and not
used in purchasing or selling coins except to identify them. Finally, minted bullion,
as opposed to the same metal with the same quality that is not minted, has added
numismatic value. That is, it becomes more valuable to coin collectors.
For many investors and collectors, gold bullion is widely considered as a hedge
against inflation and economic depression because of its intrinsic material value.
Gold bullion represents the purest form of this precious metal. It can come in the
form of either bullion bars
(also sometimes called ingots) or coins. Although bullion from other precious metals
like silver, palladium,
and platinum are available,
gold bullion remains the most popular and valuable form.
Currently, the price of gold is set twice a day, a process known as London Gold
Fixing. Via telephone, the five members of the London Gold Pool determine gold's
price for the London market. Although the London Gold Fixing is the official price
of gold only in London, it serves as a price guide by which the rest of the world
buys and sells gold.
Because the price of gold remains relatively stable over time, bullion is an appealing
option for investors. Unlike prices on the stock market, which are heavily dependent
upon the economic health of businesses, the price of gold is largely determined
by supply and demand. Because investors tend to buy gold and hold on to it for long
periods of time, supply rarely exceeds demand. Furthermore, bullion can be purchased
in virtually any quantity, from a half ounce to several kilograms. This makes gold
bullion attainable for everyone, from the novice investor to the established trader.
If the purchase and physical storage of gold is an unattractive option, investors
can also benefit with gold certificates or exchange-traded funds.
Gold bullion is forged into either bars (also called ingots) or coins. While bars
are a satisfactory option for investors, coins are usually more popular for collectors.
Often gold bullion coins have an even higher value as collector's items than they
do as mere bullion. Because gold is such a soft metal, coin collectors handle and
store gold bullion with great care. Many choose to store
gold bars in safe deposit boxes, where they take up little room. Coins may
be easier to store at home, but they also lose value as collector’s items if they
show signs of wear or damage.
Collectors may note that dealers never advertise 100% pure gold bullion. This is
because the forging process introduces traces of other substances, making it impossible
to certify complete purity. Therefore, the highest quality gold bullion is 99.99%
pure. For gold bullion coins, collectors and investors should look for proof-quality
coins, which have no marks from wear or use.
Gold bullion offers investors and numismatists a beautiful opportunity to expand
both portfolios and collections. With its versatility and stable value, gold bullion
bars and coins are an excellent diversification option. Call 813.482.9300 to speak
with a trader today, or see all of our
Gold Bullion Coins & Bars at Gainesville Coins.