Bullion Coin

A Bullion Coin typically derives it's value based on the precious metal content of the coin. Gold, silver, platinum, and palladium coins are minted by several governments.

Background
How does a Bullion coin differ from a regular-issue or commemorative coin struck in the same metal? First of all, a bullion coin is not struck for regular circulation—then again, neither is a commemorative coin. The key differences are these: a bullion coin bears the stated metal content and purity on the face of the coin. Yes, the bullion coin will usually have a stated “denomination,” but a U.S. bullion silver eagle “dollar” has a full ounce of pure silver in it, while the everyday U.S. dollar coin has no precious metal in it whatsoever. When you buy a bullion coin, you’re buying a container of precious metal, albeit in coin form. Why must it be in coin form? It doesn’t HAVE to be, but bullion coins serve two purposes: you get the full benefit of pure silver, gold or platinum, while at the same time you possess a collectible “coin” for your collection. And while bullion coin values are definitely tied to supply and demand, their values are also very much tied to precious metal prices—far more so than regular issue or commemorative coins.

History
Many U.S. collectors are quite aware that, since 1986, the U.S. Mint has struck bullion coins in silver and gold, as well as platinum, starting in 1997. But a good many U.S. collectors are only vaguely aware of the bullion coins struck at various world mints.

The concept of a “bullion coin” began in 1967. That was the year the South Africa Mint issued the Krugerrand gold coin, so named after Paul Kruger, former President of South Africa, whose bust adorns the obverse of the coin. In 1967, there was a series of attempts to demonetize gold. The Chamber Mines of South Africa came up with a plan to get gold into the hands of everyday citizens. They issued a gold bullion coin. This coin bore no stated denomination. Instead, in addition to the Paul Kruger bust on the obverse and antelope on the reverse, it only stated that the coin contained one ounce of pure gold.

In the next few years, up into the early 1980’s, the Krugerrand gold coin became one of the most popular ways for worldwide citizens to own gold bullion. That changed for a time: from 1985 through the early 1990’s (in response to Apartheid) many nations made it illegal to import Krugerrands. Today, that has changed, and the Krugerrand continues to be a popular gold bullion coin, and is issued in four sizes.

Silver and gold are clearly the two leading bullion coin metals. Silver bullion coins are popular to own because silver is the least expensive precious metal. Gold bullion coins are the most popular of the world bullion coins, obviously because millions of people want to own pure gold as an investment and/or hedge against inflation.

World Bullion Coins
Among the popular world gold bullion coins, besides the aforementioned Krugerrands, are the following:

Austrian Mint
The Austrian Mint strikes gold bullion coins with the Philharmonic theme, in four different sizes and denominations.

Australia Perth Mint
The Australia Perth Mint issues gold Kangaroo bullion coins, as well as a series of Lunar Calendar gold bullion coins.

Royal Canadian Mint
The Royal Canadian Mint strikes the $50 gold bullion Maple Leaf coins.

China Mint
The China Mint issues the popular silver and Panda gold bullion coins.

Platinum Bullion Coins
The first country to issue a platinum bullion coin was Australia, with their platinum Koala bullion coin of 1988. Canada soon followed, with their platinum Maple Leaf bullion coin (the U.S. Mint didn’t strike platinum bullion coins until 1997). There was a brief platinum craze in the 1990’s, as investors rushed to purchase platinum when word got out that it was scarcer than gold, and in heavy demand as a worldwide industrial metal. But in the early 2000’s, the enthusiasm for platinum has waned, largely due to its high price tag. Purchases and mintages for world platinum bullion coins have since declined.

Palladium Bullion Coins
Incidentally, there is now a FOURTH kind of bullion coin that’s made its appearance on the world scene. In 1995, the Australia Perth Mint issued a palladium bullion coin featuring an Emu design. Palladium, a white metal, is a close cousin to platinum, is also used in the industrial arena, but is much more affordable than platinum. The Royal Canadian Mint also now strikes palladium bullion coins: the Palladium $50 Maple Leaf.

In the past, people owned bullion by virtue of purchasing privately-struck bullion bars or rounds. But now the collector can own a legal-tender coin, struck by an official world mint, and have confidence in its intrinsic precious metal value. Bullion coins are not only collectibles, they are liquid—their value can never fall below the current spot prices for their respective metal.