What is Bullion Value?
Value of a coin based on the amount of precious metal the coin contains. The amount of precious metal in bullion is measured by weight, troy ounces.
The precious metal content of coins has changed over the years, therefore impacting the bullion value. Historically, the metal content of coins in the U.S. was as follows:
- Pennies contained copper
- Nickels, dimes, quarters, half dollars and dollars contained clad copper and nickel (if minted after 1965)
- Dimes, quarters, half dollars, and dollars contained silver (if minted between 1933 and 1964)
- Dimes, quarters, half dollars and dollars contained gold and silver (if minted prior to 1933)
Even though the precious metal content of a coin is fixed, the bullion value and coin value is not fixed. Bullion value is greatly impacted by the spot price of precious metals. A spot price is a price a precious metal is valued at in a commodity market. Precious metals such as gold, silver, platinum, and palladium are being traded continually in international commodity markets. These prices can change day-to-day or even minute-by-minute depending on trading activity.
There are bullion coins minted by governments to be put in circulation and recognized as legal tender with a specific face value. However, these coins are also being traded in commodity markets based on their bullion value. Their face value will generally be much lower than the collective precious metal bullion value.
Investing in coins based on their bullion value is considered a solid investment, and allows for diversity in an investment portfolio. Coins essentially have 2 values, their mintage date, and their bullion value. Some coins with early mintage dates and that are highly sought after by collectors can often be sold at prices well above their bullion value. Investors should look at both factors (mint date and bullion value) when considering the investment.
Back to All Terms