Coin or Bar? What Separates a Bullion Coin From a Bullion Bar

WHAT IT MEANS

A bullion coin is struck by a government mint. The American Gold Eagle and American Silver Eagle come from the United States Mint, the Maple Leaf from the Royal Canadian Mint, the Krugerrand from the South African Mint. Each one carries a year, a design and a face value, which makes it legal tender in the country that issued it.

The face value is ceremonial. It sits far below the value of the metal inside the coin, and nobody spends a bullion coin at a register. What it does tell you is that a national government stands behind the coin's weight and purity.

A bullion bar is made by a refiner or a private mint. It carries the refiner's mark, its weight, its purity and, often, a serial number. It does not carry a portrait, a year or a face value, and it is not legal tender anywhere. Some bars are poured into a mould and cooled (cast bars). Others are cut from a rolled strip of metal and struck, the way a coin is (minted bars). Smaller minted bars often come sealed in a card that records the weight, purity and serial number.

WHY THE DIFFERENCE MATTERS

The two are backed differently. A coin is backed by the government that issued it. A bar is backed by the refiner whose mark it carries, and the bars traded between banks and central banks come from refiners on the London Bullion Market Association's Good Delivery list.

Purity also varies, and it is stamped on the piece. Most gold bars and many modern gold coins are .9999 fine, which is 24 karat. Some of the best-known gold coins are 22 karat (.9167 fine). The American Gold Eagle and the Krugerrand are both 22 karat: each contains one troy ounce of pure gold, plus a little copper (and, in the Eagle, silver) that makes the coin harder to scratch. That is why a one-ounce Gold Eagle weighs slightly more than one troy ounce on a scale.

Sizes differ too. Gold coins are commonly struck in one ounce and in fractions of an ounce: one-half, one-quarter and one-tenth. Bars run from a single gram to a kilogram and beyond. The bars held in central bank vaults weigh roughly 400 troy ounces each.

None of this makes one form better than the other. Which suits a person depends on what they intend to do with the metal: hold it, give it, store it, or one day sell it. That is a conversation, not a rule.

HOW IT CONNECTS TO PRECIOUS METALS

Coins and bars are measured the same way, in troy ounces. A troy ounce is 31.1035 grams, about ten percent heavier than the ounce on a kitchen scale.

Both are also checked the same way. When gold or silver comes through the door of a precious metals dealer, it is weighed and tested before anything else happens, whether it arrives as a coin, a bar or a tin of both. The stamp on a piece says what it should be; the test confirms what it is.

Both can be kept at home or held in a vault. At Alex Lexington, coins and bars are bought, sold and stored under the same roof, and vault holdings are recorded in troy ounces by metal.

THE BOTTOM LINE

A bullion coin is a government's product: a year, a design, a ceremonial face value and a national government behind it. A bullion bar is a refiner's product: a mark, a weight, a purity and often a serial number. Both are weighed in troy ounces. Both are tested.

In Task N° 61 of House Osborne Presents Alex Lexington The Series, a first-time visitor spends eleven minutes considering four gold coins on a velvet tray. The House does not rush that decision. Watch the episode at houseosborne.com/series, or book a consultation and ask the question in person.

RELATED TERMS

Troy Ounce | Purity (Karat/Fineness) | Bullion | Numismatics | Hallmark | Assay

DISCLOSURE

Alex Lexington provides this content for educational purposes only. This is not investment advice. Precious metals prices fluctuate and past performance does not guarantee future results. Consult a qualified financial advisor before making investment decisions. Alex Lexington is a licensed precious metals dealer, not a registered investment advisor.