For many newcomers to the bullion industry, bullion can be a bit intimidating. Our goal is to help you determine what bullion is and how you can make it work for you. Bullion is defined as a metal-based product, whereby it value is solely its metal content. For example a one ounce silver bar is worth one ounce of silver, there is no additional intrinsic value beyond the metal content. All bullion is measured in troy ounces (ozt) and there are 31.1 grams in a troy ounce.
Bullion comes in many metal varieties, the more common ones are:
- Gold
- Silver
- Platinum
- Palladium
When considering your overall bullion strategy, here are two significant numbers to keep in mind. In the state of Texas, sales tax is eliminated if you purchase more than $1,000 of bullion on a single receipt. The entire receipt from dollar one becomes tax-free saving you $82.50 on each thousand dollars spent.
The second item to be aware of is the $10,000 threshold. If a cash transaction is more than $10,000 it must be reported to the Treasury Department via a CTR (Currency Transaction Report) under the Homeland Security Act.
When buying bullion, find a dealer that you can trust that will work with you to accommodate your bullion strategy. Working with companies that advertise on television can be dangerous. These "power brokers" will offer you things beyond your strategy and will make you feel like you really got a “deal”. Do your homework and don’t deviate from your strategy. Local dealers can be as competitive, if not more competitive, than any advertiser on the national open market.
Local dealers that sell bullion will also buy it back. However, keep in mind that the same dealer may not be the best option on both ends of these transactions. In other words, you may have found a dealer that is very competitive when selling to you, but may not be your best buyer if you decide to sell it back. Once again do your homework to maximize your bullion strategy.
Gold Bullion
Gold Bullion has become very popular as a safe haven product due to the uncertain economic conditions that exist today. Gold comes in many sizes and shapes to accommodate most budgets. Generally speaking, the larger the size of gold the better the price will be per ounce.
For example: it is cheaper to buy 1-ounce of gold then to buy four quarter ounce coins that equal one ounce. Fractional gold has higher premiums versus a one ounce gold product. Here is a listing of the most common sizes of gold:
- 1/10 ounce
- 1/4 ounce
- 1/2 ounce
- 1 ounce
Some of the more popular gold products are:
- American Eagles
- American Buffaloes
- Canadian Maple Leafs
- South African Krugerrands
- Chinese Pandas
- Austrian Philharmonics
Gold also comes in bar form and sometimes is referred to as ingots. These bars come in numerous sizes to accommodate most buyers’ budgets from one gram up to ten ounces. Larger sizes are available, but as you might imagine are quite expensive.
Many countries around the world produce gold in bullion form as well. These products are just as good as the gold products listed above. Some examples of popular foreign gold bullion is:
- Austrian Ducats
- British Sovereigns
- French Francs
- German Marks
- Mexican Pesos
- Russian Rubles
- Swiss Francs
There are numerous other products beyond these examples. The key in buying foreign gold is to make sure what the gold content is so that you are paying a fair price for that specific product.
Silver Bullion
Like gold, silver is another form of metal that is considered a safe haven product. In some conversations, silver is considered the "poor man’s metal". Poor or not, silver has performed admirably over the last three years and in many circles is still considered the better buy simply due to the fact that it remains undervalued. When purchasing silver you want to pay attention to a couple of important markings on the product. You want to see the size stamped on the product. (i.e. 1 Troy Ounce and 999 Fine Silver). This confirms the size and purity of the silver.
Silver comes in many shapes and sizes like gold. The most popular sizes are one ounce and ten ounces. Silver also comes in two basic shapes, rounds and bar form. You can get silver in sizes of 100 ounces or even larger and usually at a better price per ounce. Be aware though that liquidating these larger bars can be much more difficult, thus getting even spot price can sometimes be a challenge.
There are also brand name silver bars like Engelhard and Johnson Mathey which may bring additional premiums versus common generic silver products. At C R Coins, we charge the same for all our silver bullion. Our attitude is that an ounce of silver is an ounce of silver.
Other silver based products that are very popular are Silver Eagles and Junk Silver.
Silver Eagles
Silver Eagles are one ounce bullion coins made by the U.S. Mint. starting in 1986. Silver Eagles are extremely popular due to their design and the fact that are produced by the U.S. Mint. Many customers buy them to collect each year, while others buy them in bulk as a bullion product. Silver Eagles come in boxes of 500 called a monster box. Within that box are twenty-five individual rolls each containing twenty Silver Eagles. These coins can be purchased individually, by the roll or by the box. Be aware that the premiums for Silver Eagles are higher than other bullion products. Whereby you can buy a one ounce silver bar for generally small premium over spot, a Silver Eagle can run you about $4.00 over spot per coin. However, if you should decide to sell them at a later date, Silver Eagles (if taken care of) will bring a higher buy back price over regular silver bullion.
Junk Silver
Junk Silver (an industry slang term) is defined as U.S. minted circulated silver coins containing 90% silver dating from 1964 and earlier. This includes halves, quarters and dimes. Once these coins have lost their collectible component due to wear, the coins only retain their metal value thus the term “Junk Silver”.
Junk Silver is generally the least expensive way to buy silver and it offers much more flexibility as a bartering product due to its lower value per coin. Many customers that have concerns about an imploding economy have recently added Junk Silver to their portfolios to adequately cover their monetary needs if they had to fall back on their metals during a potential economic crisis.
At C R Coins, we sell Junk Silver by the roll versus by the bag. Some dealers sell Junk Silvers by the bag, which is generally $1,000 face value bags. Those bags are quite expensive, thus we have chosen to sell our Junk Silver by the roll. It offers our customers the flexibility to buy the quantity they prefer. In other words if you prefer ten rolls of dimes you may purchase that specifically. A large bag does not give that option.
Hopefully this information helps in your understanding of bullion metals and if we can assist you in any way with your bullion purchases, please let us know.
