Certified Gold vs. Bullion

Exactly what is that fascinating and beautifully rare metallic element, so highly venerated since the dawn of creation? Gold has the chemical symbol Au, short for the Latin word for gold, ‘Aurum”, which literally means ‘glowing dawn’. Its many unique properties have made it useful to mankind throughout the centuries, notably its excellent conductive properties and inability to react with water or oxygen.

Bulk gold is known as bullion. It may be in the form of bars or coins, but its value lies intrinsically in the metal content alone. Value based on rarity does not apply to bullion for it is the most widely traded form of gold and continues to be produced. Inexperienced investors may choose to begin with bullion when they first begin their gold venture. Bullion coins are generally better suited to short term investments, since it is the least expensive form of gold and has a tighter spread. In other words, you pay close to the actual rate of gold when you initially purchase it and can sell it back at market price soon after, with little loss and even potential gain, depending on current market conditions.

Unlike investment grade gold, bullion is not an entirely private investment, a transaction must be reported when liquidating kilo bars (32.15 troy oz of gold), or 1 oz .coins whenever 25 or more are sold within a 24 hour period.

Investment grade gold, or rare US coins, are called numismatic, semi-numismatic or certified coins. Investors are drawn to the double investment benefits of these historical coins because they not only reap the benefits when the intrinsic metal content of their coins appreciate, they also increase due to their collectible value. Certified coins have consistently outperformed gold and silver bullion. For 35 years, investment grade gold has consistently been one of the top non-leveraged investments in the world. In fact, even when the price of gold has dropped, rare coins have continued to thrive. The reason behind this is that supply, demand, and dealer inventories affect the price far more than the price of gold. Value is also determined by the condition and scarcity of the coins.

Supply of numismatics is subject to attrition through loss, mishandling, or donations to museums. Hoarding is common in the coin market, as collections are passed down from generation to generation. The Pittman Act of 1918 melted a large supply of numismatics, as did the seizure resulting from the Coinage Act of 1933.

The demand for numismatics continues to increase, although the supply remains finite promise growth and stability in the future. It is a collector based market and coins are worth as much as someone is willing to pay for them. For example, the Ultra High Relief, Lettered Edge sold for an astounding $2,000,000 in November of 2005.

Numismatics are favored over bullion in terms of their being one of the most confidential mode of keeping tangible assets as well. The transfer of ownership is completely private. Purchases and sales of rare coins can be without the 1099-B reporting the IRS requires for their bullion counterpart. Investors can literally become their own banker, holding their own personal property and enjoying the benefits of compound returns without disclosure. They are also easily transported without notice, as one could effortlessly fit over a million dollars worth into a briefcase.