Bullion coin

• 1. Introduction

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  Bullion coins occupy a strange place in the world of money. They are struck by government mints, carry a legal tender face value, and yet almost no one spends them. Their purpose is not to buy groceries or pay a toll. It is to hold value, in physical form, in gold or silver or platinum or palladium refined to as much as 99.99% purity.

  What separates a bullion coin from an ordinary coin? What sets it apart from the private rounds that circulate in similar circles? And why do buyers routinely pay more than the coin's metal is worth on the open market? Those are the questions this documentary sets out to answer.

• 2. Metal, Purity, Weight

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  Every bullion coin carries two numbers on its face that ordinary currency never bothers to mention: its weight and its fineness. Fineness is the proportion of precious metal in the coin, expressed in thousandths. A coin at 900 thousandths fine is ninety percent pure metal. The range for bullion coins runs from 91.9% purity, which corresponds to 22 karat gold, all the way up to 99.99% purity, the 24 karat standard.

  That distinction between 22 and 24 karat matters to collectors and investors alike. A 22 karat coin contains a small amount of alloying metal, which makes it harder and more resistant to scratching. A 24 karat coin is softer but purer. Both are considered bullion, so long as they meet the standards that qualify them as investment-grade precious metal.

• 3. Rounds Versus Coins

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  Not every disc of refined silver or gold that resembles a coin is legally a coin. Under United States law, pieces not stamped by authority of a government cannot be called coins at all. They must be advertised as "rounds" instead. That distinction is more than a technicality.

  Government-minted bullion coins carry a legal tender face value, however nominal. That face value almost never reflects what the coin is actually worth on the market, since the metal content alone typically exceeds it. But the government stamp confers legitimacy that private rounds do not share. In the United Kingdom, the line matters for tax purposes too. Investment coins are exempt from value-added tax on transactions, while privately minted rounds do not automatically enjoy that status.

• 4. The UK Investment Coin Standard

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  Britain's rules for classifying an investment coin are specific. A coin qualifies if it was minted after 1800, is at least 900 thousandths fine, has been legal tender in its country of origin, and is not normally sold at more than 180% of the value of its precious metal content. Any coin meeting all four of those conditions earns the VAT exemption automatically.

  There is also a second path. A long list of named coins is separately deemed investment coins regardless of whether they clear every threshold. That list gives regulators flexibility to recognize well-established coins from other countries without forcing each one through the standard formula. The Sovereign, one of Britain's most enduring bullion coins, appears among the notable examples of coins in this category.

• 5. The Premium Puzzle

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  Bullion coins almost never sell for exactly the spot price of their metal. Buyers routinely pay a premium over the commodities exchange price, and several forces drive that gap. The coins are small objects, and small objects cost proportionally more to manufacture, store, and ship than large bars of metal do.

  Demand also shapes the premium directly. When investors rush to precious metals, premiums climb because dealers cannot restock fast enough to meet orders. When demand eases, premiums compress. The type and weight of a specific coin matter too. A one-ounce gold American Eagle commands a different premium than a one-tenth-ounce coin of the same series, because the per-unit production cost is spread across less metal. Numismatic value adds another layer. A bullion coin that also carries collector appeal can trade at a price that reflects both the metal market and the rare-coin market simultaneously.

• 6. Series and Notable Coins

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  Among the dozens of bullion series minted around the world, the American Eagle and the Canadian Maple Leaf stand apart in one specific way. They are the only two series available in all four investment metals: gold, silver, platinum, and palladium.

  Other series are widely recognized in their own right. The Krugerrand, the Britannia, the Australian Kangaroo, the Chinese Panda, the Mexican Libertad, the Austrian Philharmonic, and the American Buffalo all appear among the notable examples of bullion coins. So do the Noah's Ark from Armenia, the Polish Orzel Bielik, and the Spanish Lynx. Each series carries its own design tradition and mint standards, but all share the defining trait: struck from highly refined precious metal, marked with weight and fineness, and held not for spending but for the enduring value of the metal itself.