September 19, 2022

gold bullion coins, silver proof coins, brilliant uncirculated coins

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Gold Bullion vs Gold Proofs vs Brilliant Uncirculated Coins

In general, the words are used synonymously in conjunction with precious metals coins and rounds. The truth is there is a significant difference between these three and investors will want to understand those differences based on their individual investment objectives.

The term "bullion" refers to gold coins that have not been minted. Bullion is often used as an investment and trading tool. It is also used as a form of currency in some countries, such as the United States. Bullion is generally referred to as unfinished gold or silver. However, it is more used today in terms of bullion coins or rounds which have investment value based on the amount of metal in each.

The term "proof" refers to a coin with the finest quality minting done by a US Mint. These coins typically are for investors looking for items that have high gold or silver content but are also good to display and purchase in sets. Proof Coins Minted by US Mints can be purchased directly from the mint. 
Brilliant Uncirculated (BU) coins have the impression that they have never been in circulation. This is untrue and true all at the same time. BU coins are graded between 1 and 70 and a BU "uncirculated" coin has a grading between 60-70. If you purchase BU coins with a grading between 60-70 they you are buying the highest quality coin. 

Knowing there is a difference, educating yourself, and being knowledgeable will help with your investment decisions. We hope you find the information educational, remember to do your own due diligence before making any investment decision. 

Gold Bullion Coins

Bullion Coins are a product of sovereign mints and can be made with gold, silver, palladium, and platinum. It is produced in large quantities and then sold to authorized dealers who in turn sell directly to the public for investment. Bullion is not graded; it is priced by weight. Gold bullion coins are sold by volume and weight. As an example, a bullion coin would have a current Spot Price plus maybe a premium when you purchase. 

The bullion gold or silver coin may have no numismatic or collectible value when purchased as bullion. Still, it could potentially increase in value if the price of gold increased. Ultimately bullion coins are typically purchased by investors looking to hold large quantities for a diversified portfolio and not necessarily for those collectors looking for one-of-a-kind items. 

Gold Bullion Coins Are Perfect for Investors

Those investors want to buy gold and hold it for the long term without the intention of collecting value. Gold bullion coins have no collectible value and are not graded by third-party grading services. 

They are usually sold in bulk quantities for investors who want to buy gold and hold it long-term taking any appreciation in value for a profit. Coins are minted by sovereign governments and have a face value of $5 to $50 dollars. Rounds have no face value and are minted by private mints and not backed by the local government. 

Bullion Coins Are Minted With a Specific Weight and Purity

If a coin is not graded, it will never have any numismatic value. Bullion coins are minted with a specific weight and purity. The value of bullion is based on the market spot price of gold or silver at any given time.

The bullion market is traded around the clock in London, New York, Chicago, Sydney, and Hong Kong by participants who include central banks and institutional investors such as hedge funds and pension funds.

In contrast to numismatic coins that may be sold for thousands or even millions of dollars each (such as Liberty Head Double Eagle $20 St. Gaudens), bullion coins are typically sold by weight at the spot price of gold or silver rather than face value.

Not Graded and Usually Carry No Numismatic Value

Bullion coins, on the other hand, are minted to exact weights and purity. They are not graded and usually carry no numismatic value.

"Coins" Always Have a Legal Tender at Face Value

Bullion coins are bought and sold by weight, so a 1-ounce bullion coin will be priced at Spot plus any premiums. 

If you want to sell your bullion coins, they can be sold to local coin shops or online dealers specializing in buying and selling coins and bars.

There are two types of bullion: government-issued (minted) gold coins and privately minted gold rounds which typically have the same gold content as a sovereign coin but have no face value and cannot be used as currency. 

Brilliant Uncirculated Coins

Brilliant uncirculated coins are not the same as bullion or proof coins. They are, as the name implies, coins that have not been in circulation and have a BU rating above 60. All coins can have a BU rating from the Professional Coin Grading Service (PCGS). The ratings range from 1 to 70. One being the most worn coin and 70 being a coin with no imperfections. Being graded between 60-70 is Brilliant Uncirculated. 

BU coins are typically picked up by collectors who want uncirculated coins that could possess a future value premium. Proof Strikes generally get a premium price due to the extensive nature of finishing.  U.S. Mints can produce uncirculated coins with a Certificate of Authenticity. Again, these coins are typically picked up by collectors. 

If you purchase a roll of dimes, nickels, or quarters that are brand new, these are not considered BU coins. They are produced for production and circulation and don't hold the same investment value. 

Gold Proofs Coins

This coin is struck twice, once to give a mirror-like finish and once to give the frosted finish. This process creates a subtle color contrast between the two finishes. Proofs are often sold in sets that include multiple denominations of coins.

These coins are specially prepared by the United States Mint to be collected or purchased as investments. The first step in creating a proof gold American eagle coin is to use specially polished dies to press a design into two pieces of metal called planchets (which are an alloy).

Next, the planchets are burnished with abrasives until they reach their final shape and size. They are given another high polish finish using soapstone, water, and oil emulsion pastes. This is the last step before being shipped to become part of history!

Because proofs have a higher quality standard than other types of gold bullion, gold proofs can be more expensive than different types of gold bars like Brilliant Uncirculated or investment grade bars.

These kinds of gold coins are highly prized by collectors and investors alike, as they have distinctive minting marks and beautiful surfaces that create an eye-pleasing depth of color. Manufacturing a proof coin is quite different from regular circulation coins.

Gold Proofs Coins for the US Mint come in fractional weights of one-tenth ounce, one-quarter ounce, and one-half ounce. These weights are not available for bullion coins.

Interested in Proof Coins? You can purchase from the US Mint directly. The West Point Mint Produces the Proof coins and you can purchase them in a variety of sets or on-off coins minted for special occasions. Check out what's available here

Proof Coins can also be purchased from dealers, retailers, and local coin shops. Since these are investment-grade many have purchased and sold their investment. Be cautious of the grade of the coins if they have scratches or marks it could influence the value of the coin. Make sure you understand the metal in the coin and give value based on the spot price of the metal plus any premiums. 

Should I Buy Gold or Silver Coins, Proofs, or Bullion?

The spot price of gold is the key indicator for all coins, rounds, bars, proofs, or others. Understanding the metal content and the value based on the spot price is the first step.

From that point, you need to understand your intentions when it comes to investment. Are you looking to make this a significant part of your portfolio? If so, then you would look to bullion coins for a retirement IRA portfolio. You could buy rounds from private mints. These are typically cheaper than the coins but could be a good investment option. The negative of buying rounds from private mints is you cannot use them for a self-directed IRA purchase. 

A long-term buy-and-hold investor could purchase Proofs as they would cost more in the beginning and since fewer are produced they could have a positive return in the future. Proofs can also be purchased by rare coin buyers or any investors looking for unique options to add to their precious metals portfolio. 

Brilliant Uncirculated Coins are purchased mostly by investors that are into numismatics and rare coins. While you could purchase BU-rated coins for your individual portfolio, understand there is a difference in value from that of the Proof or Bullion coin. 

In general, Gold is also a hedge against inflation, economic uncertainty, political uncertainty, and currency devaluation. Gold coins are not just for collectors anymore. They make great gifts for friends and family members!

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