When does something cease to be bullion?

Discussion in 'Bullion Investing' started by myownprivy, Dec 14, 2017.

  1. myownprivy

    myownprivy Well-Known Member

    When does something stop being bullion and starts being a collectible numismatic?

    Bullion, by its nature, is for investment with a value close to its metal value. That means you buy it to buy metal. Thus, the cost of the metal must be close to the coin.

    Numismatics are coins that are collected for their aesthetic value not their metal value.

    Eagles, Maples, Philharmonics, Britannias, and Kangaroos all sell for $1.50-$2.80ish over spot (or 8.5% to 15ish% over) when purchased individually.

    Libertads, Kookaburras, Pandas all sell for $4+ over spot, or around 25% over.

    How can any metal that costs more than 25% over its real value be classified as bullion.

    This is my argument. What do you think? Agree or disagree?
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  3. V. Kurt Bellman

    V. Kurt Bellman Yes, I'm blunt! Get over your "feeeeelings".

    Then I have NONE nor will I EVER for the rest of my life.
  4. medoraman

    medoraman Supporter! Supporter

    Always remember, the bullion value is not even the cost of the raw material for the mint. They have to take that, purify it, form it into planchets, and then strike. Also, handling before and after, wages, etc all are hard costs for them. Therefor, bullion value is not a great place to judge what is bullion versus numismatic.

    Its a fine line, depending on the collector, where that line is. My first thought would be within $5 on silver, $100 on gold is effectively bullion.
  5. V. Kurt Bellman

    V. Kurt Bellman Yes, I'm blunt! Get over your "feeeeelings".

    Yup, that's mine. Every stinking piece I own.
    Kim Greenwood and Santinidollar like this.
  6. desertgem

    desertgem MODERATOR Senior Errer Collecktor Moderator

    If it has a valid denomination by governmental source it is a coin. If not it is bullion no matter how pretty and offbeat it is.
    TheFinn likes this.
  7. CamaroDMD

    CamaroDMD Supporter! Supporter

    I think it depends on the status of metals. I remember back when silver hit $40 per ounce a lot of coins that had been collected for numismatic reasons suddenly lost their numismatic value and were sold for melt. When the price of metal goes up, suddenly a lot more coins are "bullion."
    asheland likes this.
  8. Cheech9712

    Cheech9712 Every thing is a guess

    You the man
  9. chrisild

    chrisild Coin Collector Supporter

    True, but quite a few government issues are bullion coins. :) Here in the euro area that would be the Austrian Philharmonics pieces; all others are collector coins. For me, one important difference is that the issue price of the "Phils" is determined by the value of their silver content. Also, the issue volume is not pre-set but depends on the demand.

    Now Germany for example issues €20 silver coins (Ag 925) at face. Nice as you don't pay a surcharge, but of course that 20 euro price tag is above the value of the silver content on the date of issue. Also, their weight is 18 g, nothing that bullion fans would be interested in. Last but not least, the mintage is limited - generously (so the pieces are and will not be "rare") but fixed.

    When it comes to gold, things get a little complicated in the European Union, as "investment gold" is VAT exempt. Here is an overview (search for the word "minted" on that page). To make things easier, the EU publishes a list of exempt gold coins every year; the list for 2018 is here.

    The list is not exclusive; other coins may meet the exemption criteria too. Not that any American would or should care ;) but that is another important factor around here when it comes to differentiating between investment gold coins and other gold pieces ...

  10. sakata

    sakata Devil's Advocate

    Bullion, by it nature, is most definitely NOT for investment. It is for insurance.
    green18 likes this.
  11. myownprivy

    myownprivy Well-Known Member

    You do realize you can "invest" in something even if your baseline goal is at least to hedge against inflation, right? Sort of like a Roth IRA that is composed of CDs or low risk funds? Your goal isn't really to make loads of money, but to preserve your money in light of inflation.

    Buying gold is done for the same reason.
    asheland likes this.
  12. GoldFinger1969

    GoldFinger1969 Well-Known Member

    NY State has a law, since sales tax is NOT charged on bullion sales. I think if you buy a coin it must be within 15% of the spot price otherwise it's numismatic and sales tax applies.
    yakpoo likes this.
  13. yakpoo

    yakpoo Member

    I began collecting the First Spouse $10 coin series in 2007 along with many other CT members. Over the years, as people dropped out, I was often criticized for paying a premium for "bullion".

    I guess there's an element of truth to the criticism given that First Spouse coins are listed in most guides under the "Gold Bullion" section...along with American Eagles and Buffaloes "denominated by a government source".

    By "valid denomination", do you mean to say "coins" are those pieces denominated (at that time) for circulation? Obviously, no one would use a .9999 pure gold First Spouse coin to pay for a $10 pizza.

    "Valid denomination" seems strange...since all gold coins are denoninated based closely to the last gold peg used by the U.S. government ($35/oz). No gold coins currently have "valid denominations" based on current prices.

    If so, could we better define "bullion" vs. "coin" in terms of alloy? Meaning, .9999 pure gold/silver (bullion) is too soft for circulation and never intended to circulate? Whereas, "coins" must be of some alloy to provide required rigidity (typically < .900 purity)?

    Of couse, modern commemorative coins are made of a "circulating alloy". Under the "valid denomination" definition, they would be classified as "bullion" and under the "alloy" definition, they would be classified as "coins". Hmmmm. I guess commemorative coins aren't meant to circulate (denomination), but meant to be handled (alloy).

    I guess the question comes down to...

    Should a .900 commemorative gold coin be classified as "bullion"?
    Last edited: Dec 15, 2017
  14. V. Kurt Bellman

    V. Kurt Bellman Yes, I'm blunt! Get over your "feeeeelings".

    Pennsylvania's law is that no legal tender collectible or investment coins are taxable (That's why ANA summer 2018 and spring 2009 shows are both in PA.), but all supplies, non-legal tender medals, and even collectible paper notes, are taxable.
    GoldFinger1969 likes this.
  15. Clawcoins

    Clawcoins Well-Known Member

    Michigan has no tax on any coins or paper notes or any age.

    Everything is bullion if a 99+% piece. Until one person puts value on it for it's aesthetic or numismatic qualities; then it's no longer "just bullion".

    Buying something strictly at "spot" price prohibits the value of labor and manufacturing that goes into it to produce it. Thus "new" items are rarely sold at spot.

    Imagine if I produced coins. If I bought silver at $16/oz to make 1oz coins. Then spent $$ in manufacturing it to coins/metals with electricity costs, equipment costs (acquisition, depreciation, etc), bldg rent, property taxes, labor and then was only able to sell it at $16/oz per coin.

    I'd be out of business real fast.
    asheland likes this.
  16. V. Kurt Bellman

    V. Kurt Bellman Yes, I'm blunt! Get over your "feeeeelings".

    Not in the fantasy world inhabited by small children, mental defectives, and bullion stackers.

    I read a fascinating article the other day that DISPUTES the notion that metals prices fundamentally track supply and demand for said metals and instead track energy prices.
  17. Bman33

    Bman33 Well-Known Member

    Beauty is in the eye of the holder. I say it is the individual who decides this. That is what collecting is all about. I look at ASE's as a collectible that could be something I stack too. Going for all ASE dates is a collection not just Bullion. Having 100+ of the same date is bullion. There are rounds that command a lot more than a buck over spot too. Whatever floats your boat.
  18. yakpoo

    yakpoo Member

    I would expect to see a correlation between metals and energy...when both are denominated in the same currency.

    However, I would suggest that both are more a reverse correlation to the denominated currency...with suppy/demand being a secondary influence.

    Once Bitcoin achieves market price discovery, it will be fascinating to see how these charts change/correlate when denominated in Bitcoin. Bitcoin can't be manipulated by any government. Government can only manipulate their currencies relative to Bitcoin.
    Last edited: Dec 15, 2017
  19. Clawcoins

    Clawcoins Well-Known Member

    Analysis can make correlations and inversions on just about anything depending upon how you look at it.

    Which energy products were they tracking? With the US both an energy buyer and producer it really skews in perspective to actual prices of various coals, crude oil, LNG and petro chemicals.
  20. Dougmeister

    Dougmeister The Coin Scavenger © ¯\_(ツ)_/¯

  21. SilverWilliesCoinsdotcom

    SilverWilliesCoinsdotcom Well-Known Member

    When its price exceeds the melt value and people need to see it in person or in a photograph before buying it.
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