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How to Buy Gold, Silver & Platinum Coins & Bars

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Bullion coins and bars allow investors to own investment grade gold, silver and platinum (between 0.90 and 0.9999 fineness) at a small premium to the spot price of these precious metals. The spot price is simply the current market price of gold, silver or platinum. Since the value of coins and bars is based on the market price of bullion, your investment in coins or bars will follow the bullion price daily.


Which Should You Buy: Bullion Coins or Bars?

The key principle is to get as much gold, silver or platinum as you can for your money. This means shopping around for the best deals and avoiding some of the more “premium” coin types. For example, right now in London I can buy a common 1 ounce gold South African krugerrand for £664 but a 1 ounce US Gold Eagle sells for £711. Clearly I would rather pay the lower £664 for my ounce of gold bullion.

Coins generally incorporate higher premiums than bars and you often find that the bid-offer spread on coins can be double that of bars. So bars tend to be better value at the time of purchase, however, they are not as widely recognised as coins produced by national mints and as a result they frequently need to be tested (assayed) for purity prior to resale. This reduces the proceeds you receive from the sale.

As a result, I do not believe it makes a big difference whether you get coins or bars – just make sure you get some bullion.

Another factor to consider when purchasing gold, silver or platinum coins and bars is that the premiums tend to decrease as the size of the coins or bars increase. It is therefore more cost effective to buy a single larger bar or coin rather than several small units.


Gold, Silver & Platinum Bullion Coins

Bullion coins fall into two general classifications: numismatic coins and bullion coins. The price of a numismatic coin is determined by its rarity and desirability for collectors, rather than its bullion value. Bullion coins, on the other hand, fairly accurately shadow the bullion price and will form the basis of discussion here.

Gold, silver, and platinum are all available in the form of bullion coins minted in the US, UK, Canada, South Africa, Austria, Australia, China and other countries. Most bullion coins are minted in 1/10oz, 1/4oz, 1/2oz & 1oz form. Some of the most popular coins include gold South African krugerrands, U.S. gold and silver eagles, Canadian gold and silver maple leafs and British gold sovereigns.

When looking for bullion coins you will often come across the terms “proof” and “uncirculated”. A proof coin in one which the national mints have taken extra time and effort to polish and present. These coins command significant premiums over their metal content and as such are only desirable to coin collectors. Go for the “uncirculated” coins which means they are a standard, newly minted coin.


Bullion Bars

Gold, silver and platinum bars come in a variety of weights and sizes, ranging from as little as one gram to 400 troy ounces for gold and 1000 troy ounces for silver.

(i) Gold Bars

London Good Delivery Bars

London Good Delivery Bars are normally used in major international markets and are 400 ounces or 12.5 kilograms. Most gold stored by central banks is in this form. At the September closing gold price a London good delivery bar costs around $400,000 (£250,000) and is therefore not a convenient size for most small investors.

Kilo Gold Bars

One Kilo Bars are a convenient weight but still relatively expensive at around $32,200 (£20,000).

Smaller Gold Bars

Smaller bars, such as fractional kilo bars, and one ounce bars, combine convenient size with reasonably low premium.

(ii) Silver & Platinum Bars

Silver and Platinum bars usually come in 1 ounce, 100 grams, 250 grams, 500 grams and 1 kilo weights, although sizes and weights can vary depending on the supplier and availability.


Tax Considerations

In the US, some states have no sales tax on precious metal bullion sales, so check before you buy. In the UK and EU, investment grade gold bullion is stamp duty and tax free (VAT exempt) in due to the EU Gold Directive of 2000. However, since silver and platinum are considered as industrial assets by the European tax authorities you will have to pay VAT on purchases of those metals in the UK and Europe.

One way to purchase physical silver and platinum without paying the VAT is to buy through GoldMoney. A purchase through GoldMoney does not incur VAT because the silver and platinum never leaves their specialised bullion vaults. You would only pay the VAT at the point the bullion leaves the vault, perhaps if you arranged with GoldMoney to take physical delivery of your metal.

UK gold sovereigns are a favourite with British investors since any profit realised on the sale of these coins is free from Capital Gains Tax.


Where to Buy Gold, Silver & Platinum

Only do business with a reputable dealer. The World Gold Council website has a 'Where to buy directory' which can be found at gold.org and the London Bullion Market Association members list which can also be located online at lbma.org.uk. Both list reputable gold dealers.

Buyers from the US or Canada try...

Northwest Territorial Mint >
Kitco >
Rocklin Coin Shop >

If you want to shop in person at a coin dealer near you, try the US Mint retailer locator which allows you to search for dealers in your particular state.

For customers based in the UK, try...

Baird & Co >

Some investors store gold in safety deposit boxes of conservative secure banks or in specialist depositories or storage facilities. Investors should choose their storage provider carefully, making sure of a high credit rating and high solvency. This leads some to prefer an offshore bank or specialist depository.


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