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What’s Bullion?

Posted By Jim On 09/30/2010 @ 7:23 am In Personal Finance | 11 Comments

So a few weeks ago I wrote about bearer bonds [3] because I’d heard of them in movies and thought they were, besides insanely protected works of art, the thing to steal if you were going to steal anything. Another term I’d heard in the movies a lot was “bullion” and I knew it was related to gold and other precious metals but I wasn’t 100% sure what it meant.

Bullion actually refers to any previous metal whose value is tied to the metal itself and not some fiat money designation assigned by a government. So the bullion coins produced by the United States Mint [4] have no value designation, they are valued at it’s actual metal value. You can buy 1 oz., 1/2 oz., 1/4 oz., and 1/10 oz. of American Eagle Gold and Platinum Bullion coins.

Determining the value of a bullion coin requires three pieces of information – the precious metal, its weight, and the purity. You get the weight of the coin in troy ounces, multiply it by its purity, and then again by the value per troy ounce. American Eagle Gold Coins use 22 karat gold with a 91.67% gold (2% silver, 5.33% copper) and it’s actually quite funny to see the “face value” up against the actual value.

  • 1/10 oz – Face value of $5
  • 1/4 oz – Face value of $10
  • 1/2 oz – Face value of $25
  • 1 oz – Face value of $50

Gold at over $1,200 a troy ounce, its value as bullion is far greater than its face value.

(Photo: sirqitous [5])


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[3] bearer bonds: http://www.bargaineering.com/articles/bearer-bond.html

[4] bullion coins produced by the United States Mint: http://www.usmint.gov/mint_programs/american_eagles/index.cfm?action=american_eagle_bullion

[5] sirqitous: http://www.flickr.com/photos/sirqitous/3065230930/sizes/s/

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