Numismatic Coins

A type of metal currency with a value that is typically above that of its face value, are known as Numismatic Coins.  A numismatic coin usually trades at a premium to its minted denomination due to rarity or historical value, and is considered especially desirable by those who collect coins.
Source: DCDictionary.com [forex].

The are companies such as ICG, PCGS and NGC, that grade and authenticate coins, tokens and medals from around the world for collectors and dealers.  Once coins are graded, they are typically encased, and labeled with its quality, face value, quality rating, grading company designation, and the coins’ authenticated year it was minted.  Numismatic Coins will vary in value based on characteristics such as their quality, rarity, quantity, and purity.

Gold and Silver Coins

Many nations mint coins, and the most widely used are Gold and Silver Coins.  Unless one has learned a little about precious metals, bullion, coins and “numismatics”, the typical person would not think of coins as bullion.  I know I didn’t know this until a few years ago.  Although nominally issued as legal tender, a coins’ face value as currency is far below that of their value as bullion.  In the United States, the Silver Eagle coin is one (1) troy ounce of .999  pure silver.  This silver dollar has a face value of $1, but is worth at least $32.38 USD, which is the current spot price of silver, as of the time of this writing – December, 12, 2012 at 7:45 p.m. Central Time.  I made the point of specifying the date and time, to point out that the price of silver, gold, and other precious metals changes every day, and even every second.  Another example – Canada mints a gold bullion coin (the Gold Maple Leaf) at a face value of $50 containing one troy ounce (31.1035 g) of gold—as of December 16, 2012  at 7:45 p.m. Central Time, this coin is worth about $1,692.80 USD as bullion.  Bullion coin minting by national governments gives them some numismatic value in addition to their bullion value, as well as certifying their purity.

The 10,000 dollar Australian Gold Nugget coin is one of the largest bullion coins in the world .  It was minted in Australia, and consists of a full kilogram of 99.9% pure gold.  There have been a small number of larger bullion coins, but they not practical to handle and are not produced in mass quantities.  China has produced coins in very limited quantities (less than 20 pieces minted) that exceed 260 troy ounces (8 kg) of gold.  A popular coin minted by China is the Gold Panda.  Silver Pandas are also minted in China, where silver is such a raw and sought after commodity, that by the end of year 2012 China will no longer allow silver to be taken out of the country.  Austria has minted a coin containing 31 kg of gold (the Vienna Philharmonic Coin minted in 2004 with a face value of 100,000 euro).  As a stunt to publicize the 99.999% pure one-ounce Canadian Gold Maple Leaf series, in 2007 the Royal Canadian Mint made a 100 kg 99.999% gold coin, with a face value of $1 million, and now manufactures them to order, but at a substantial premium over the market value of the gold.  It takes far less room to store a lot of value in gold and silver bars; however, Gold and Silver Coins are probably the most usable and versatile form of bullion.

Gold and Silver Bullion

A metal is deemed to be precious if it is rare.  Gold and Silver Bullion, and in particular a pile of gold bars, is what most people think of when they hear the word “Bullion”.  The status of a “precious” metals can also be determined by high demand or market value.  Precious metals in bulk form are known as bullion and are traded on commodity markets. Bullion metals may be cast into ingots or minted into coins. The defining attribute of bullion is that it is valued by its mass and purity rather than by a face value as money.  So now, when you think of Gold and Silver Bullion, you understand why it is worth it’s weight in gold (or silver).

Precious Metals

Precious metals are those that are considered to be rare and/or of high economic value.  They are metallic chemical elements, and chemically speaking, are less reactive than most other elements.  The higher relative values of these metals are driven by a various number of factors including their rarity, purity, uses in industrial processes and use as an investment commodity.

The gold and silver coinage metals are probably the most well-known of those classified as Precious Metals; however, they are heavily used for industrial applications.  While both gold and silver have industrial uses, they are better known for their uses in art, jewelry and coinage.  Kitco, one of the leaders in the industry, dedicates an entire division of their business to offering precious metals for industrial use.  Another major company providing related products and services for industrial and commercial use is Barclays, an established and well-known financial institution throughout the world.

There are many other metals that are considered precious, for example those included in the the platinum group metals: ruthenium, rhodium, palladium, osmium, iridium, and platinum, of which platinum is the most widely traded.  The demand for precious metals is driven not only by their practical use but also by their role as investments and a store of value.

Historically, precious metals were important as currency, but are now considered more for investment or as an industrial commodity and have commanded much higher prices than common industrial metals.
Precious metals in bulk is known as Bullion.  The Purity of Precious Metals varies in levels of the Purity.  Many Nations mint Bullion Coins, bars, and mini-bars in varous mass weights.  The economic use of gold and silver, and other precious metals, is an important consideration.

Pure Gold and Silver

Pure gold and pure silver are terms used to describe an item that is 100% pure.  Precious metals in bulk form is known as bullion, and is cast into ingots(bars or blocks) or minted into coins.  With respect to bullion, the level of purity varies from issue to issue.  A purity designation of “Three nines” (99.9%) is commonly accepted as the standard for the highest level of purity.  Another expression that designates the purity of gold is “pure gold” and for silver, “fine silver“.  In the adjacent image, you can see the terms used on the American Silver Eagle and the Canadian Silver Maple Leaf coins shown.

The purest mass-produced bullion coins are in the Canadian Maple Leaf series, which go up to 99.999% purity.   The Canadian Silver Maple leaf has a purity of 99.99% or .9999.  They are issued annually by the Canadian government and minted at the Royal Canadian Mint since 1988.   The Canadian Gold Maple Leaf is the official bullion gold coin of Canada and is also issued by the government of Canada and minted at the Royal Canadian Mint.  It is widely known as one of the purest regularly issued coins in the world, and has a designation of 99.99% (.9999) pure, with some special issues designated as 99.999% (.99999) pure.

A system that is very well-known for the designation of purity is the Karat or Carat System.  Karat is a variant of Carat and the purity is measured as 24 times the purity by mass.   The purity of gold using the Carat system is commonly and widely used with respect to fine gold and silver jewelry.  24 Carat gold is fine gold and is designated as 99.9% pure gold and not as 100% pure.

It is important to note that a achieving a 100% pure bullion is impossible, so pure gold and silver is usually demonstrated by the triple nines or better designation.