The precious bullion is originated from precious metals. The materials making up the precious bullion are found from rare metals, with most of them being gold and silver. The value of bullion is determined based on the kind of metals used and it’s not commonly valued based on currency. In other words, the purer the metal is, the higher the value of bullion becomes. As ore has been found in great amount and the mining as well as refining procedure have improved, gold, silver and similarly valued precious metals are experiencing a drop in value. This is due to the fact that the term ‘precious’ refers to the value of metal as perceived by the current market.
The trading of bullion is done in two ways – bulk ingots and coins. The government is given the responsibility to mint their own bullion coins. So far, a minimum of 10 countries have been minting their own bullion coins from silver and gold. The countries are U.K., S. Africa, Poland, Canada, Austria, China, Switzerland, U.S.A. and Mexico. The issuance of precious bullion coins are considered as legal tender. However, since minting is done by imposing nominal values, the actual face value is usually way below the current price of metals.
For instance, most governments will use at least 31g of gold to create their bullion coins that are valued between ten and a hundred U.S. dollars. Therefore, the average value of gold contained in gold precious bullion is only twelve U.S. dollars. Obviously, the value of bullion coins and metals is not interchangeable. There are some examples of precious bullion coins to look for:
- 1. Australia – Gold Nugget, L. Series (1) & L. Series (2)
- 2. Australia – Philharmoniker
- 3. Canada – The Maple Leaf
- 4. China – The Gold Panda
- 5. Mexico – Onza, Centenario and Libertad
- 6. Poland – Orzel Bielik
- 7. S. Africa – The Krugerrand
- 8. Switzerland – Vreneli
- 9. Great Britain – Sovereign & Britannia
- 10. U.S. – Buffalo, Eagle & Double Eagle
The biggest precious bullion coin is the Gold Nugget from Australia. Valued for $10k, the Australian government mints these coins in the form of 1kg coins containing pure gold. There are some other bigger coins available out there, but they’re not for mass production and impractical to handle. One good example is the Vienna Philharmonic gold coin which is valued for 100k euro and it was minted some time in 2004. It is comprised of 31 kg of gold. The second example is the Maple Leaf, produced in Canada. Minted in 2007, it has a face value of one million dollars and it is comprised of 100 kg of gold.
All in all there are at least three elements affecting how precious bullion is given its value. The elements are the type of metal, its purity and how much it weighs. To conclude total value of a bullion coin is derived by the choice of metal. This makes sense as certain metals are more valuable than the others. For instance, platinum is considered more valuable than gold and gold is valued higher than silver. Many coin collectors like to buy the silver precious bullion due to its lower price compared to gold and platinum.
Krugerrand – The Famous Bullion Coin Made of Precious Metal
There are 33 well-known bullions produced from all over the world, but the Krugerrand seems to be the most popular of all. It all started when the South African Mint Company produced the Krugerrand to make it as currency and circulated it all over the country. At that time, the coin has a legal tender status and due to that South Africa decided to market it to global audience. After 13 years of being traded on the global platform, the coin managed to dominate 90% of the global market for gold coins.
The Krugerrand can be found in 4 different versions:
1. Smallest one weighs 0.11 troy ounce, is 1.35 mm thick and has a diameter of 16.55 mm.
2. Second smallest weighs 0.27 troy ounce, is 1.89 mm thick and has a diameter of 22.06 mm.
3. ½ ounce Krugerrand weighs 0.55 troy ounce, is 2.22 mm thick and has a diameter of 27.07 mm.
4. Biggest one weighs 1.09 troy ounce, is 2.84 thick and has a diameter of 32.77 mm.
All four Krugerrand versions of coins are made to be 22K. They contain approximately 91% of pure gold and 8% of copper. The addition of copper is necessary to ensure that the coins are not too soft in order to resist rigorous handling and effects of wear and tear. After all, these coins are meant for circulation, so they must be very sturdy.
At the front piece of the Krugerrand coin the display is the image of Stephanus Johannes Paulus Kruger, the 5th South African Republic’s president. When observed closer it can be seen that Kruger’s surname and the currency of South Africa, Rand, were combined in order to come up with the name of the coin that is still used until today. The English and Afrikaans terms for ‘South Africa’ were also found on display with both of them printed in capital letters.
At the back side of the Krugerrand coin a springbok image is to be found. Springbok is the national symbol of South Africa. Above the image, the print of the coin’s name can be found in capital letters. Below it, the actual gold content of the coin is being mentioned both in English and Afrikaans. There are some samples of the Krugerrand coins whereby these limited editions are also offered for sale to interested collectors. Due to their limited production, these coins are way more expensive than the regular bullion coins. These two coins are distinguishable by looking at their serrations whereby the samples have 220 and the bullions have forty serrations less than the sample versions.
Since 1979, a number of countries especially the United States, Australia and Canada were seen to produce bullion coins of their own. One of the reasons why these countries decided to produce their own bullions is because they were most probably become inspired by the production of Krugerrand coins.
Up to now genuine Krugerrand coins are only made in gold, so those found to be claimed as Krugerrands are unlikely produced in South Africa.