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Precious Metals

Precious Metals: Investing In Bullion Coins  

Most investors choose precious metals as a way to hedge their savings against changing "paper" currency values. While the purchasing power of the dollar and other world currencies constantly rise and fall, the value of bullion tends to be more stable over time. In fact, in recent times when the buying power of the dollar fell, the purchasing power of gold, silver, platinum and palladium increased. Even when the bullion market goes through softer periods, the value of precious metals never drops to zero as is the case with some paper stocks and has even been the case of some paper currencies in the world.

There are all sorts of options when it comes to buying bullion.

Bullion investors may choose between bars, rounds and coins. Small mints strike coins and rounds or pour bars, and these are backed by the credibility of that mint. Many official government mints, including the U.S. Mint, strike bullion coins. Some popular examples of official bullion coins are the Canadian Maple Leaf, the South African Krugerrand, the Australian Kangaroo, and of course, the American Eagle and American Buffalo. These coins all have an official face value but are generally worth more than this face value because of the value of gold, silver or other precious metals that they contain.

Usually, mints will produce their bullion coins in a variety of sizes, and some common examples for gold coins are  tenth-ounce, quarter-ounce, half-ounce and 1-ounce sizes. Once in awhile, governments will produce smaller or larger coins as well. This gives a variety of investors a chance to buy coins that suit their budgets and needs.

Bullion coins are primarily struck as bullion investment vehicles. Investors often favor investment coins over bars or rounds because they are struck and backed by the government that mints them. In some cases, they sell for a premium over their mere bullion value because of that credibility. In other scenarios, official bullion coins may also have some collectible value on top of their worth as a precious metal.

Investing in bullion coins is not the same as investing in collectible numismatic coins, but occasionally, the disciplines overlap. The collectible value of coins depends more upon their rarity, artistic merit or historical significance. Still, some examples of bullion coins may become quite scarce on the market and enjoy a collectible value over and above the value of the gold, silver, platinum or palladium that they contain. Some mints limit production of investment coins in order to increase the likelihood that their products will become collectable, and this will make purchasing new series more attractive to investors and collectors in the future.

Also, there are some historical coins that have become collectible and also gain some of their value because of the bullion that they contain. Some examples might include Morgan silver dollars or almost any U.S. silver currency.

The IRS allows savers to hold certain bullion coins inside of individual retirement accounts or IRAs. In this circumstance, the coins can only be valued because of the bullion that they contain and not any collectible value over that amount.