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The status of bullion rounds


Ætheling
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Are bullion 'coins' coins?  

40 members have voted

  1. 1. Are bullion 'coins' coins?

    • Yes
      15
    • No
      15
    • 'ish'
      10
    • Undecided
      0


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I've come across this several times and it perplexes me. I go looking on the internet for US gold coins, i go looking for eagles (by this i'm thinking pre-1933 $10 pieces), and what do you come across? Bullion! It's rather annoying i must say.

 

 

The question is though would you consider bullion 'coins' to actually be coins at all?

 

 

Discuss.

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I think they are "bullion coins." They are certainly coins, they have a nominal value, issued by the government and guaranteed for content. They are just different than older gold coins in the nomenclature. The old gold coins were the same way, a double eagle was nothing more than a coin required to contain 0.9675 oz. of gold. The main difference there was that the dollar was defined by a weight of gold, therefore the content of the coin dictated face value. The values on modern bullion coins are merely arbitrary and low enough to prevent embarrassment by Treasury officials at the utter debasement of the dollar under the current fiat system. In any case, I voted "ish" since I believe they are coins, and certainly better than the "Merry Christmas" silver rounds I've received in the past. But a 1/10 oz. gold eagle will NEVER be a $5 gold piece in my view, since it's 0.14875 oz. short of what I consider the weight of a genuine half eagle. And don't even get me started on the Mint's complete and utter bastardization of Saint-Gaudens' beautiful double eagle design!!!

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I think they are "bullion coins."  They are certainly coins, they have a nominal value, issued by the government and guaranteed for content.  They are just different than older gold coins in the nomenclature.  The old gold coins were the same way, a double eagle was nothing more than a coin required to contain 0.9675 oz. of gold.  The main difference there was that the dollar was defined by a weight of gold, therefore the content of the coin dictated face value.  The values on modern bullion coins are merely arbitrary and low enough to prevent embarrassment by Treasury officials at the utter debasement of the dollar under the current fiat system.  In any case, I voted "ish" since I believe they are coins, and certainly better than the "Merry Christmas" silver rounds I've received in the past.  But a 1/10 oz. gold eagle will NEVER be a $5 gold piece in my view, since it's 0.14875 oz. short of what I consider the weight of a genuine half eagle.  And don't even get me started on the Mint's complete and utter bastardization of Saint-Gaudens' beautiful double eagle design!!!

 

 

I thought you'd find that Saint Gauden's adaption a dispicable one. I think much in line with you on that front.

 

With regards to bullion 'coinage', i use the term carefully. Generally i voted no, simply because the 'coins' were issued as bullion and not as circulation pieces for the value expressed upon them. However as you pointed out they do have a face value which makes me think perhaps they could just about qualify as 'coinage' if you take the term in a liberal sense rather than a definate precise one.

 

 

Generally i say no, thinking a bit 'ish'.

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My view of coins (at least the ones I collect) is that they are issued at face value to fulfill the need for currency in the market place. Some of these have bullion content and can be smartly purchased at less than the melt value if you take the time to shop around.

 

My view of bullion coins (the ones I don't touch) is they are issued at significant markup of actual cost to folks that will generally never see a dime of profit from them unless inflation hits 30% annually for a few concurrent years,,,, they meet no market place demand and only make some folks a VERY quick buck.

 

cheers

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From my perspective, I'd say that they are not collectible coins. Collectible coins to me have history in their corner. It's the history and the thoughts of who may have used the coin and why that make them interesting to me. I have a few MS examples of coins that I like, but they are so that I have the fullness of the design available.

 

I don't have a problem with bullion "coins" being issued by governments for people to hold as investments - good or bad. I just don't view them as coins.

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My view of coins (at least the ones I collect) is that they are issued at face value to fulfill the need for currency in the market place.  Some of these have bullion content and can be smartly purchased at less than the melt value if you take the time to shop around.

 

My view of bullion coins (the ones I don't touch) is they are issued at significant markup of actual cost to folks that will generally never see a dime of profit from them unless inflation hits 30% annually for a few concurrent years,,,, they meet no market place demand and only make some folks a VERY quick buck.

 

cheers

 

A couple points, first most currencies, from the Ancient Romans and Greeks to the US Dollar, were defined by a specific quantity of gold or silver. The dollar was not some abstract unit of account as it is today, but was defined at our founding as 416 grains of 892.4 fine silver. At that time the exchange ratio of gold to silver was 15-1, which meant that a dollar was also equal to 1.75 grams of 916.7 fine gold. In 1837, due to the imbalance the weights were changed such that a dollar was defined as 412.5 grains of 900 fine silver, which remained until the discontinance of the silver dollar in 1935 and the cessation of silver certificate redemption in the late 1960s. Similarly, in 1837 the ratio of gold to silver was shifted to 16-1, such that a dollar was defined as 1.68175 grams of 900 fine gold where it remained until 1933.

 

Now modern bullion coins are not issued at face value since the dollar is no longer defined by metal but by the all-knowing Federal Reserve. As for the premium, on silver eagle it is pretty high, as an ounce coin worth $7 sells for $8-9. As for the gold coins, the once ounce eagles can generally be purchased for 3-4% above spot, hardly an outrageous premium. As for not making money, well you might be ignorant of the fact that a one-ounce gold eagle I bought in 2001 for $290 can now be sold for $445, a 53.4% gain, and an 11.3% compound rate over that period. All that and according to government statistics inflation hasn't exceeded 4% during that time (though that's a debate for another thread!). The idea of buying coins for less than melt generally works better in silver than in gold as I have very rarely purchased a classic gold coin for less than current melt.

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Also, I am not advocating the purhase of modern bullion coins, just suggesting that they are more coin than bullion. Personally I buy Mexican 50-peso gold coins for bullion purposes. And one final point, if these coins were all just bullion with no numismatic value, how would you explain coins like the 1996 silver eagle? They contain only about $7 worth of metal, but due to the low mintage they sell for $35 or more in the market, suggesting something more than bullion at work. And if any of you have a few extra rolls of 96 silver eagles, I'll buy them from you at melt anytime!

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Guest Stujoe

I went with 'ish'. For me a 'real' coin has to be intended to do work that which coins are supposed to do. Circulate in commerce. Bullion coins are certainly not that. Neither are proofs, for that matter, which I would also put in the exact same 'ish' category. The new US matte finish mint sets also. Commemoratives too.

 

That is not to say I don't like them or they aren't collectible. Just that I can't think of them as 'true' coins. Of course, that is my definition and by most other, reasonable definitions all of the above are coins.

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I agree with what many have said above; some more, some less. I voted "ish".

 

.... For me a 'real' coin has to be intended to do work that which coins are supposed to do. Circulate in commerce. Bullion coins are certainly not that. ....

 

I will offer another optional (though concededly unconventional) way to view them. To loan a physics term, I look at them as potential coins. :ninja: While they are not intended to circulate now, there may come a day. History teaches us that societal constructs are not inherantly stable nor eternal. Nothing lasts forever. While I have been fortunate enough to be born in the western world during an era of peace, no amount of Greenspan economic algorithms will guarantee that forever. So, let me say that while I view them as potential coins, I hope they do not become kinetic.

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I agree with what many have said above; some more, some less. I voted "ish".

I will offer another optional (though concededly unconventional) way to view them. To loan a physics term, I look at them as potential coins.  :ninja: While they are not intended to circulate now, there may come a day. History teaches us that societal constructs are not inherantly stable nor eternal. Nothing lasts forever. While I have been fortunate enough to be born in the western world during an era of peace, no amount of Greenspan economic algorithms will guarantee that forever. So, let me say that while I view them as potential coins, I hope they do not become kinetic.

 

 

This is something i forsee too although i didn't put it because at the time i managed to completely confuse myself... yes i struggle to comprehend half of my thought trains just like everyone else struggles to keep up with my bizarre way of thinking... here goes;

 

 

What i initially thought was that these coins have a face value stated on them, and should it come to a governmental crisis or some sort and the fait currency devalues then the bullion coins could be used as currency. But then i figured this was rubbish because of course if the government fell then gold prices would go up and thus it's be further away from the face value stated on the coins anyhow. But of course the coins could still be used as a method of bartering. So the previous statement stands but is modified? Or is it because haven't i just said the same thing twice but differently?

 

Does it really matter, either way i think...

 

 

Just read Sisu's it's much better put there.

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But then actually you'd have to ask if the bullion pieces are being used as bullion in bartering but not for the face value stated are they coins or just precious circulating bullion? So technically they might still not be coins.

 

Conversely of course a coin can circulate at something different to it's stated face value and still be a coin. British predecimal coins still circulated after decimalisation, they might have said 'two shillings' on them but they were now worth 10p,. of course 2/- and 10p were same value between two systems but they were now circulating in a new system as something they'd not been considered when issued.

 

 

Simple... ;):ninja:

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Also, I am not advocating the purhase of modern bullion coins, just suggesting that they are more coin than bullion.  Personally I buy Mexican 50-peso gold coins for bullion purposes.  And one final point, if these coins were all just bullion with no numismatic value, how would you explain coins like the 1996 silver eagle?  They contain only about $7 worth of metal, but due to the low mintage they sell for $35 or more in the market, suggesting something more than bullion at work.  And if any of you have a few extra rolls of 96 silver eagles, I'll buy them from you at melt anytime!

 

 

A bit of example cherry picking,,, but very strong points.

Would chalk up the inflation of gold to 2 things:

1 - Marketing,,, After the bubble burst, gold was a prime commodity to push on the masses at huge markup from the $290 the major brokers purchased it for.

2 - Real inflation,,, filled your tank up lately? (marketing loves fear....better than sex)

* Test gold over the long haul when purchased at a 3-4% immediate loss to spot and see how it compares to the stock market or real estate. It's a terrible growth investment, but a pretty good hedge investment (meaning that you'll generally stay in pace with real inflation).

 

1996 silver eagle - yep,,, and probably why the Franklin Mint makes money,,, press some bullion into something that "looks" like a coin,,, bake in a bit of "limited edition",,, 5 shakes of marketing,,, and turn six dollars of silver into $11.99 overnight..... nice. I'd buy em' at melt too,, all the marketing is already done, collector base has been created/purchased.

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Yes they are coins - just as much as a St. Gaudens or a Liberty $20 dbl eagle. Here's why.

 

Ever since the beginning, gold coins have rarely been used in commerce. Sure they were from time to time, but rarely. Most folks simply never even had any of them - it was too much money. They were used the rich more than anything - but then that's because they had the money to spend and they spent a lot. So they needed gold coins to pay their large debts.

 

Even in the 20th cnetury, when gold coins were still technically in circulation - people didn't use them. They sat in banks - as bullion reserves. Take a $20 gold piece into a store to spend it on a common purchase like milk or bread - odds are the shop keeper couldn't make change for you.

 

So I see little difference between the bullion coins of today - and yesterday. They both have face value, they are both issued by the same legal govt - they are both gold.

 

Now if ya wanna talk about silver - same basic story. People in the US have absolutely HATED $1 coins since the very first was ever minted. They never or rarely circulated - they sat in bags in banks. Because people simply wouldn't use them.

 

So what's the difference ? Other than some psychological hang up that we collectors have about it - I say there is none.

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A bit of example cherry picking,,, but very strong points.

Would chalk up the inflation of gold to 2 things:

1 - Marketing,,,  After the bubble burst, gold was a prime commodity to push on the masses at huge markup from the $290 the major brokers purchased it for.

2 - Real inflation,,, filled your tank up lately? (marketing loves fear....better than sex)

* Test gold over the long haul when purchased at a 3-4% immediate loss to spot and see how it compares to the stock market or real estate.  It's a terrible growth investment, but a pretty good hedge investment (meaning that you'll generally stay in pace with real inflation).

 

1996 silver eagle - yep,,, and probably why the Franklin Mint makes money,,, press some bullion into something that "looks" like a coin,,, bake in a bit of "limited edition",,, 5 shakes of marketing,,, and turn six dollars of silver into $11.99 overnight..... nice.      I'd buy em' at melt too,, all the marketing is already done, collector base has been created/purchased.

 

Marketing? Have we really seen any major increase in gold investment by the public? Sure, we now have the gold ETF, but that's really small relative to the size of the market. As for the brokers "pushing" gold on the masses? What planet are you on? Central banks have been selling their gold positions for the last decade, and most large brokers are net short gold. Last I checked, if you wanted to dupe the masses by making them pay higher prices for a commodity, the last thing you do is have the largest holders of that commodity very publicly sell it! And if you are a broker, it's really hard to make money shorting someting that rises 50%. As for gold as a growth vehicle, not sure where you picked up on that, but nowhere have I suggested that gold provides growth or income for that matter. It's a hedge against weakening fiat currencies. That's it. It's just another currency as far as I am concerned, but a unique one in that it does not represent someone else's debt. The 11% coumpound increase in gold prices since the lows of 2001 roughly correspond to the 9-10% increase in M3 over the same time period. The fact is, we've had significant inflation over the last decade, but rather than seeing the affect of massive increased in money supply on consumer prices we've seen inflation in asset prices. Something the economists hadn't quite anticipated. We first saw it on stock prices, then real estate and commodities. As for stocks, they have long-run returns superior to gold in nominal terms, but you have to be very careful what time period you measure, since as they say, "in the long-run we're all dead." A 50-year old investing his life savings in stocks in August of 1929 was likely dead by the time he broke even (that is if he did jump out a window that October). In the same way, I know a number of folks in their 50s who will likely never recover their losses from the Nasdaq implosion in 2000. All that said, we are talking about coins, not investments. They are a hobby and as such should not be used as a retirement vehicle. As for bullion, it is an investment, which should be incorporated into a larger portfolio of diversified investments, including stocks, bonds, cash and real estate. My personal preference is that most folks shouldn't have more than 5-10% of their portfolios in gold or other commodities. And one last thing, your comment about the 3-4% markup on bullion coins is a fair one, but remember that is a one-time hit, unlike the 1-2% in management fees taken out of your mutual fund investments every year that you own them.

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