Gold and silver’s intrinsic value and unchanging fundamentals make them the ideal way to safeguard your wealth. The security and financial peace of mind they provide are invaluable, especially in these turbulent economic times.
The process of learning the market, deciding what to buy, and getting maximum value from it can be difficult, but it doesn’t have to be. With the proper navigational tools, anybody can find the path that suits their financial needs.
We built this Quality Guide to help you understand all your options and know your terms. We want to use our many years of precious metals market experience to make your course to financial security as clear and direct as possible.
And of course, if you have any additional questions, you can always speak with one of our courteous and knowledgeable portfolio managers by calling (888) 532-2644
Gold and silver are both elements. This means that they cannot be fundamentally altered. Pure gold always has exactly the same molecular makeup, no matter the physical shape it takes. Jewelry, coins, bars, plating … it’s the same substance, and has the same value in its pure form. The value of an ounce of pure gold or silver is known as the ‘spot price’.
The process of mining, transporting, purifying, measuring, and minting the actual gold and silver products does incur some additional costs. This process is crucial, as it ensures the quality and consistency of every single unit. The mint will always print basic information about the product onto each unit – weight, purity, and mint location/company insignia, at the very least.
At the end of this process, the final product can take several physical forms, each with its own unique set of pros and cons to the investor or collector.
Precious metals have been minted into many different forms throughout history. However, most gold and silver products will fall under three basic categories: bars, rounds, and coins. Rounds appear identical to coins at first glance, but the two should never be confused, as the differences are highly significant to the buyer.
Bars and rounds generally fall under the category of bullion. Investors usually acquire gold or silver bullion as a store of value. Bullion is obtained for the exact price of the metal it contains, plus a slight markup from spot price due to production costs. It’s the most straightforward way to organize and keep track of your physical metal assets.
Coins, on the other hand, usually fall under the category of collectibles, or numismatics. Coins are issued by government mints only, and depending on condition and rarity, can have significant additional markups beyond their intrinsic metal value. Numismatics (certified coins) and semi-numismatics (loose uncertified coins) can still be very advantageous to investors, but rare and uncirculated coins are often especially appealing to collectors.
The minting company stamps each bar with their company name/logo, and the weight and purity of the bar.
- Stackable, and therefore easy to store and transport
- Carry a very low premium above spot price
- Many investors will buy their metal for emergency purposes, to use as currency in case of a financial crisis. Heavier bars are not very portable, and are much more difficult to make change with.
- Bars typically have little value to collectors.
The minting company stamps each round with their company name/logo, and the weight and purity of the round.
- Stackable, and easy to store and transport
- Very low premium above spot price
- Compared to large bars, rounds are available in smaller weights, which can appeal to uninitiated investors who don’t want to buy in large quantities just yet
- Like bars, rounds may not appeal to collectors as much as rare and uncirculated coins might
Unlike bullion bars and rounds, coins have a dollar value minted on them that corresponds to a specific weight and purity. Almost every coin shows the year in which it was minted. This unique trait, as well as limited production and regular design changes implemented throughout the years, gives coins a collectible quality that rounds and bars lack. The collectible premium that buyers pay depends on the rarity and quality of the piece.
For some, the markup is mere cents. However, certain issues of coins can have astronomical value to collectors. The 1933 Gold Double Eagle is one of the rarest coins on earth; in 2002, one of the last specimens known to exist was sold at an auction for $6.6 million.
- Have a high collectability factor for coin enthusiasts
- Legal tender status (though the intrinsic value is always higher than the face value)
- Value can be far greater than the intrinsic metal, depending on quality and rarity
- Reselling for fair market value be more difficult than with bullion
- Value depends on supply and demand of that particular coin besides the metal they contain
So how do sellers and collectors determine the value of any given coin? Any collectibles market will have value disagreements between merchants and buyers, as items are always going to be worth more to some people than others. In addition, due to the diversity of collectibles, sellers sometimes try to take advantage of a buyer’s lack of knowledge regarding an item’s true worth.
Thankfully, a universal standard does exist for determining the quality of coins. The American Numismatic Association (ANA), a non-profit group created in 1891 and chartered by Congress in 1912, established a universal grading scale for numismatic coins.
As you can see, the scale uses a rating system of 1 (poorest quality) to 70 (perfect uncirculated). For further clarification, the scale divides into ten designations of quality (MS, AU, EF, VF, etc). Every certified coin receives a rating (shown as the letter designation, followed by the number).
After a coin is graded, it is encapsulated into a special plastic core, which is specifically designed to preserve the coin in the exact condition to which it was graded. It is then encased in a transparent holder, which displays pertinent information about the coin: the grade it received, the minting date, mintmark (if any), denomination, variety (if any), and a unique identification number.
The following chart shows a visual spectrum of graded and certified coins, from perfect (MS-70) to poor condition. The photos show diminishing grades of the same type of coin, a Gold Liberty Double Eagle.
The term “Junk Silver” may seem to have a negative connotation, but the term doesn’t refer to “junk” in the traditional sense. Junk silver refers to pre-1965 dimes, quarters and half-dollars that have gone through circulation and are heavily worn. Mint condition dimes, quarters and half dollars are still considered junk silver but trade with a larger premium.
Before 1965, silver was used in many units of official U.S. currency including some nickels, and all dimes, quarters, half-dollars and dollars. Some junk silver coins are still in circulation today, waiting for keen observers to spot them and claim the silver within (usually 90%). Since silver has grown in value exponentially since any such coins were minted, they’re worth far more than their face value.
Junk silver coins can be a decent way for folks with limited funds and experience to break into precious metals investment. Some people also purchase and hold onto junk silver to use as currency in the event of economic disaster.
However, for either of these uses, we recommend buying bullion instead. Bullion is a much better way to guarantee weight and metal content, as both of those are printed on each precisely measured round or bar. Buying one roll of silver bullion is a very reasonably cheap option for those who don’t have a lot to invest just yet.
Bags of junk silver, on the other hand, can often contain damaged coins; dishonest dealers sometimes use the haphazard and disorganized nature of junk silver to get rid of their worst coins. Buy at your own risk.
Remember – don’t ever buy damaged coins for a premium. If your dealer charges you a premium above spot price (plus delivery and business expenses) for the coins you buy, and some or all of the coins you receive look like the ones pictured above, then you paid too much. Contact the dealer immediately to have the damaged coins replaced, or to get your money refunded.
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