Tag Archives: bullion

Bullion: Mass Of Precious Metals

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Bullion is a mass of any one of the known precious metals. By strict definition, precious metals are those metallic elements that are rare. Bullion is commonly made of either gold or silver. Its value is determined by the worth of the metal rather than by its face value as money.

To put it another way, bullion is valued based on the mass and purity of the metal used, instead of its artificial currency value.

New sources of ore have been discovered and there also have been improvements in the mining and refining processes. These two factors may cause the values of gold, silver, and the other precious metals to diminish. Also, the “precious” qualification of a metal is determined by the market value or high demand.

Bullion is traded on commodity markets in two forms: bulk ingots or coins, the latter minted by the government of a country. At least ten countries are known to mint gold and silver bullion coins. These are Australia, Austria, Canada, China, Mexico, Poland, South Africa, Switzerland, the United Kingdom, and the United States.

While bullion coins are issued as legal tender, with nominal values assigned to them on minting, such face values are far below the commodity value of the metals themselves. Here’s an example: Most of the gold coins issued by national governments, particularly those with currency values of between 10 and 100 U.S. dollars, usually contain no less than 31 grams of gold. On the average (considering the consistent rise in the exchange rate of gold), the value of gold is around USD12 per gram. Here, it is clear that the currency value assigned by the government to a gold bullion coin has no meaning.

Below is a list of some of the government-issued gold and silver bullion coins:

1. Australian Gold Nugget, Lunar Series I, and Lunar Series II
2. Austrian Philharmoniker
3. Canadian Maple Leaf
4. Chinese Gold Panda
5. Mexican Centenario, Libertad, and Onza
6. Polish Orzel bielik
7. South African Krugerrand
8. Swiss Vreneli
9. British Britannia and Sovereign
10. American Buffalo, American Eagle, and Double Eagle

The 10,000-dollar Australian Gold Nugget is one of the world’s largest bullion coins. Minted by the Australian government, this bullion coin is made of 1 kilogram of 99.9% pure gold. Some other bullion coins larger than the Australian Gold Nugget have come out. However, these are not produced in mass quantities and are not practical to handle. Two examples are given here: One is the 100,000-euro Vienna Philharmonic, minted in 2004, which contains 31 kilograms of gold; the other is the 1 million-dollar Canadian Maple Leaf, minted in 2007, which contains 100 kilograms of gold.

Three factors – metal, purity, and weight – affect the value of bullion. The overall value of bullion is determined by the metal used. We know, of course, that platinum is worth more than gold, which, in turn, is worth more than silver. It is easy to understand, therefore, that silver bullion coins have become popular with collectors because of their relative affordability.

Krugerrand: Most Well Known Precious Metal Coin

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There are thirty-three known bullion coins in the world. Of these, 5 are made of platinum, 1 of palladium, 9 of silver, and 18 of gold. And of all these precious metal coins, the South African gold bullion coin Krugerrand is perhaps the most popular.

In 1967, the South African Mint Company introduced the Krugerrand, with the intention of circulating it as currency. Its status as a legal tender was seen as the best way for marketing South African gold around the world. In fact, thirteen years after its introduction, this precious metal coin accounted for about ninety percent of the gold coin market.

The Krugerrand comes in four varieties:

1. One-tenth ounce coin (0.11 troy ounce in weight, 1.35 millimeters thick, and 16.55 millimeters in diameter).
2. Quarter ounce coin (0.27 troy ounce in weight, 1.89 millimeters thick, and 22.06 millimeters in diameter).
3. Half ounce coin (0.55 troy ounce in weight, 2.22 millimeters thick, and 27.07 millimeters in diameter).
4. One ounce coin (1.09 troy ounces in weight, 2.84 millimeters thick, and 32.77 millimeters in diameter).

Each of these four coin varieties is 22K, containing 91.67% pure gold and 8.33% copper. This composition was meant to make the coins more durable and harder and thus resist dents and scratches, as, again, they were originally intended for circulation.

On the obverse of the Krugerrand is the face of Stephanus Jonannes Paulus Kruger, fifth president of the South African Republic (note the surname Kruger and the South African currency Rand were combined to give this precious metal coin its name). Also here are the Afrikaans and English versions of the name “South Africa”, both inscribed in capital letters.

On the reverse of the coin is an image of the springbok, an antelope specie which is a South African national symbol. Atop the image is an inscription of the name of the coin, in capital letters, while below it is the coin’s gold content, inscribed in Afrikaans and English.

Special samples of the coin (proof Krugerrand) are minted and offered as collector’s items. These proof Krugerrands are priced above the bullion Krugerrands. The two coin versions can be distinguished from one another by the number of serrations they have – the proof version has 220, while the bullion has 40 less than the former’s.

Other nations, such as Canada, Australia, the United States, and the United Kingdom, started producing their own precious metal coins one after the other beginning in 1979. The decisions of these gold-producing countries to mint their own bullion coins were most likely inspired by the success of the Krugerrand in its role as a vehicle for promoting the South African gold to the international market. As of 2008, about 1.3 million kilograms of South African gold, contained in Krugerrand coins, have been sold.

Unlike the bullion coin series of other countries, which come in gold and silver, the Krugerrand comes only in gold. Coins made of silver that are passed off as “Krugerrands” are neither produced by the South African Mint Company nor sanctioned by the government of South Africa.

The Four Platinum Bullion Coins: A Brief Description Of Each

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Bullion coins are coins made from precious metals. Their market values are determined by their inherent precious metal contents. As such bullion coins are mainly kept as investments or stores of value.

Most of the bullion coins available are made from silver or gold. A few also come in platinum though, including the American Platinum Eagle, the Canadian Platinum Maple Leaf, the Australian Platinum Koala, and the Manx Noble. Here’s a quick rundown of each of these four platinum bullion coins:

The American Platinum Eagle:

The American Platinum Eagle bullion coins were first minted and released in 1997 by the United States Mint. They are offered in four varieties:

1. 1/10 ounce (oz.) coin – With a face value of USD10, 3.112 grams (g) in weight, 0.95 millimeters (mm) thick, and 16.5 mm in diameter.
2. 1/4 oz. coin – With a face value of USD25, 7.78 g in weight, 1.32 mm thick, and 22 mm in diameter.
3. 1/2 oz. coin – With a face value of USD50, 15.56 g in weight, 1.75 mm thick, and 27 mm in diameter.
4. 1 oz. coin – With a face value of USD100, 31.12 g in weight, 2.39 mm thick, and 32.7 mm in diameter.

All coin varieties consist of 0.9995 fine platinum. One interesting feature of the American Platinum Eagle coin is that its reverse design changes every year.

The Canadian Platinum Maple Leaf:

The Canadian Platinum Maple Leaf bullion coins were issued from 1988 until 2002 by the Royal Canadian Mint (RCM). They were offered in four varieties: 1/10 oz. coin (with a face value (FV) of CD5), 1/4 oz. coin (FV: CD10), 1/2 oz. coin (FV: CD20), and 1 oz. coin (FV: CD50).

Two additional varieties, 1/20 oz. coin (FV: CD1) and 1/15 oz. coin (FV: CD2), were issued by RCM, but only in 1994. In 2009, the 1 oz. coin was reintroduced. All coins, which have legal tender status in Canada, consist of 0.9995 pure platinum.

The Australian Platinum Koala:

The Australian Platinum Koala bullion coins were first released in 1988 by the Perth Mint, the oldest currently operating mint in Australia. The coin comes in 1 oz. variety, with a face value of AD100. As with most other bullion coins, this value is much lower than the coin’s bullion value.

On the coin’s obverse is a koala, in sunken relief (i.e., lowered from the coin’s plane); on the reverse is Queen Elizabeth II. The coin has legal tender status in Australia.

The Manx Noble:

The Manx Noble platinum bullion coins were minted from 1983 to 1989 by the Pobjoy Mint, the leading private mint in Europe. The coins were offered in five varieties:

1. 1/20 oz. coin – With 1.555 g platinum content, 1.556 g in weight, and 13.9 mm in diameter.
2. 1/10 ounce coin – With 3.11 g platinum content, 3.112 g in weight, and 16.5 mm in diameter.
3. 1/4 ounce coin – With 7.776 g platinum content, 7.78 g in weight, and 22 mm in diameter.
4. 1/2 ounce coin – With 15.552 g platinum content, 15.6 g in weight, and 27 mm in diameter.
5. 1 ounce coin – With 31.103 g platinum content, 31.119 g in weight, and 32.7 mm in diameter.

The coins have no currency value. Their value, rather, is equal to their respective platinum contents. All coins consist of 0.9995 pure platinum.

On the coin’s obverse is Queen Elizabeth II, along with these texts: “ISLE OF MAN” and “ELIZABETH II”. On the reverse are a Viking ship, the denomination, platinum content, and the words “Platinum fine”.