Let us begin by differentiating amongst the three choices so we are on the same page regarding the industry’s definitions of bullion bars, rounds, and coins.
Bullion bars – (n) physical precious metal in a bar form, its value almost entirely derived from its melt value alone. They are mostly struck by private mints, although some sovereign mints (like the Royal Canadian Mint for example) strike bullion bars.
Note: there are virtually no government issued bullion bars with legal tender face values, thus using bullion bars in an enforceable private contract of purchase or sale is next to impossible.
Bullion rounds – (n) physical precious metal in a flat round shape, its value almost entirely derived from its melt value alone. By definition a bullion round is struck by private mint.
Bullion coins – (n) physical precious metal in a coin shape, its value almost entirely derived from its melt value alone. By definition a bullion coin is struck by a sovereign government mint. They almost always have an enforceable legal tender face value (the South African Krugerrand being one exception).
Note: Generally, governments today give their legal tender bullion coins low face values for they understand the dynamics of Gresham’s Law. By overvaluing fiat currency notes and circulating base metal coinage legal tender face values and then undervaluing bullion coin’s face values in comparison to their melt values, governments can ensure their fiat notes and base metal coinage stay free from circulating bullion coin competition. Bad currency almost always drives good money (silver and gold bullion) into stockpiles and hoards.
So of the 3 types of bullion product forms, which is best and why?
How do you decide which products are the best for your specific buying objectives?
If you look around the Internet or visit your local coin shop you have likely discovered that there are thousands of silver and gold products available. Some struck by government mints others by private mints.
Let me ask you this important question…
What bullion product factors are most important to you?
- Smallest Premium / Cost over Spot
- Privacy When Buying & Selling
- Highest Liquid 2 Way Buy & Sell Markets + Brand Recognition
- Private Contract & Court Enforcement via your country’s respective Legal Tender Laws
- Cheapest Customs Duties / Easier International Transport
- Currency Crisis Hedge / Use in Direct Commerce
- Low Susceptibility to Counterfeit
- Speed of Sale
The next article in our Beginners’ Guide to Buying Physical Bullion will discuss the bullion types with the smallest premiums.