Now that you know more about the basic differences between gold and silver, we are going to explain the differences between physical forms of gold and silver. The physical forms we are going to cover in this article are bars, rounds, and coins.
Gold and Silver Bars
Gold and silver bars are thin, rectangle-shaped pieces of metal that are produced by private minting companies all around the world. These mints charge a small premium over spot price for fabricating raw gold and silver into neat, stackable bars.
When a mint fabricates a gold or silver bar, they will stamp their company name or logo onto the bar, along with the weight and purity. These indications help investors determine exactly what amount of metal is contained within the bar.
Most mints produce gold and silver bars with fairly similar dimensions, but each mint’s sizing will be slightly different, so you can usually only stack bars that have been produced by a single mint.
Gold and silver bars (along with rounds) carry the lowest premium over spot, so they are favorites of investors who are primarily interested in accumulating as much metal for their dollar as possible.
Common metric weights for gold bars range from 1g to 1kg, while common English weights for gold bars range from 1 oz to 10 oz. Lesser and greater bar weights certainly exist (such as Good Delivery bars which weigh ~400 oz and are primarily held by central banks and investment trusts), but these ranges contain the most common gold bar weights available to individual investors.
Common weights for silver bars are always measured in English, and range from 1 oz to 100 oz. Again, you can find lesser and greater bar weights than this (including Metric weights), but almost all silver bars available to individual investors will be measured in English and fall between 1 oz and 100 oz weights.
Advantages of Bars:
- Easily stored and transported, as you can stack bars which were produced by the same mint.
- Carry the lowest premium over spot price for both gold and silver.
Disadvantages of Bars:
- Generic bars produced by normal mints do not offer any sort of “collectability” factor.
- The largest bars (10 oz gold bars or 100 oz silver bars) may be harder to trade in event of a crisis than smaller bars.
Gold and Silver Rounds
Gold and silver rounds are thin, circular discs of metal produced by minting companies all over the world.
Many investors confuse rounds and coins, but there is one significant difference: “coins” have a status as legal tender and are produced by government mints, while rounds have no status as legal tender and can be produced by government or private mints.
When a mint fabricates a gold or silver round, they will stamp their company name or logo onto the round, along with the weight and purity. These indications help investors determine exactly what amount of metal is contained within the round. Most mints produce gold and silver rounds with fairly similar dimensions, but each mint’s sizing will be slightly different, so you can usually only stack rounds that have been produced by a single mint.
Like bars, rounds carry a very low premium over spot price per ounce. This is due to their generic status as well as their wide availability.
Common weights for gold rounds range from 1/10 oz to 1 oz. Common weights for silver rounds range from 1/2 oz to 5 oz.
Advantages of Rounds:
- Easily stored and transported, as you can stack rounds which were produced by the same mint.
- Carry the lowest premium over spot per ounce for both gold and silver.
Disadvantages of Rounds:
- Generic rounds produced by normal mints do not offer any sort of “collectability” factor.
Gold and Silver Coins
Gold and silver coins appear similar to rounds, but coins are different in that they have status as legal tender and are produced by government-run mints.
Coins often have different designs year-to-year, making certain years “collectibles” that carry a serious premium over the spot price of the metal contained in the coin.
Coin designs include both the obverse design, which is the front side of the coin, and the reverse design, which is the back side of the coin.
Most coins have their face value, year, and an intricate design stamped onto their obverse, with their purity, weight, and a different design stamped onto their reverse. There are plenty of exceptions to these norms, but almost all coins will at least include their face value, year, weight, and purity somewhere on the coin.
Different coins have different dimensions, so investors usually can only stack coins of the same variation. Some coins are also minted in multiple dimensions/weights, such as the American Gold Eagle, which is regularly minted in 1/10 oz, 1/4 oz, 1/2 oz, and 1 oz sizes.
Coins usually sell slightly above the spot price of the metal contained inside them, and they almost always carry a higher premium than bars or rounds due to their collectibility, relative rarity, and status as legal tender.
Common weights for gold and silver coins range from 1/10 oz to 1 oz, although there are larger coins out there like the Chinese Silver Panda, which is occasionally produced in 5 oz, 12 oz, and 1kg weights.
The majority of the coins we sell here at JM Bullion are “uncirculated” coins, meaning that the coins were never circulated as currency and are in terrific condition. However, there is another class of coins that is much rarer, shinier, and more expensive: “proof” coins.
Proof coins include special designs and finishes that make them stand out from normal uncirculated coins. Proofs contain the same amount of gold or silver as uncirculated coins, but their enormous premiums over spot make them poor purchases for investors solely interested in accumulating as much gold or silver as cheaply as possible.
For example, our uncirculated 1 oz Silver American Eagles regularly sell at around $4.50 over the spot price of 1 ounce of silver. This is a fairly standard price throughout the retail precious market industry. Proof 1 oz Silver American Eagles, however, regularly sell for fifty or more dollars over the spot price of 1 ounce of silver. We do offer the Proof coins for sale, as they are very collectible and quite beautiful, but if you are investing solely for the value of the metal, you are much better off buying uncirculated coins.
Another class of coins is “junk” coins. Junk coins describe any coin that is in fair condition and contains some amount of silver. Junk coins are not pure silver, and usually contain a silver percentage ranging from 35% to 90%.
The most popular example of junk silver coins is any USA coin made before 1965. For example, pre-1965 dimes, quarters, and half-dollars were made of 90% silver, thus making them more valuable as a precious metal than as USA currency.
Junk coins are sold collectively in bags with specified face values. The amount of silver in each USA coin is directly correlated to the coin’s face value, so these bags can contain any denomination of coins; as long as the total face value adds up correctly, the bag will contain the correct amount of silver.
Common bags include $1,000 face value bags, $500 face value bags, and $100 face value bags. $1,000 face value bags contain approximately 715 ounces of pure silver, regardless of what denominations of coins are inside.
Advantages of Coins:
- Offer a collectibility factor that bars and rounds do not provide.
- Junk coins allow individual investors to buy silver at or under spot price.
- Are considered legal tender (although it would be foolish to spend coins as legal tender, as they’re worth much more as metal).
Disadvantages of Coins:
- Uncirculated coins sell for a slightly higher premium above spot than bars and rounds, while proof coins sell for an astronomically higher premium above spot than bars and rounds.
Ok, that wraps up this article. Our next article will delve deeper into the difference between Proof and Uncirculated coins, and then we will discuss our most popular products here at JM Bullion.