Purchasing precious metals can be a smart investment, but it's important to understand exactly what you're buying. Most minted gold and silver comes in three different formats: coins, bars, or rounds. There is something unique about each one, so it’s important to know the difference and find a solid stacking strategy that makes sense for you.
Gold and Silver Coins
While most currency in the world is made from common metals such as nickel and copper, sovereign governments also create currency made from precious metals. While each piece is assigned a low face value, its intrinsic value is much higher. As you can guess, these types of coins aren't used in daily circulation, but are instead stacked by investors or acquired by collectors.
The intrinsic value of this type of bullion coin is based on the coin's precious metal content. Take the Canadian Silver Maple Leaf, for example. Its face value as a piece of currency is just $5, but its precious metal content is 1 Troy ounce of .9999 fine silver. So, in reality, the coin is worth the current trading price of an ounce of silver - almost always much higher than $5.
Gold and Silver Bars
Gold and silver bars made out of precious metal are most frequently created by private Mints and can't be used as legal currency. Instead, they serve as collectible pieces that can be purchased and stacked in digestible quantities. The front of the precious metal bar usually depicts some type of image or graphic, as well as the metal content and sometimes the private Mint's logo. Precious metal bars are sold based on the relevant metal's current commodity market price, which changes almost constantly. The seller then adds a premium price, which is known as the “price over spot.”
Precious Metal Rounds
Gold and silver rounds may have a similar appearance to a coin, but they function more like a bar. That's because there is no face value and they can't be used as currency. Instead, they display unique designs for collectors and hold intrinsic value based on their precious metal content. A 1 Troy ounce silver coin would have the same value (but not premium over spot) as a 1 Troy ounce silver bar, assuming the metal content is the same
Now that you know the difference, take a look at look at the precious metal coins, bars and rounds that GovMint has to offer to begin your collection!