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What is the Difference Between Government and Private Bullion?

When it comes to collecting precious metals, investors have two ways to view the value of their bullion investment, and the distinction can be found in whether or not that bullion comes from a private or governmental source. Each holds distinct advantages, and potential disadvantages for the seasoned and novice collector alike. If you are just entering bullion buying game, this will get you up to speed in terms of the difference between government and private bullion, and which path will prove a better addition to your portfolio.

What is Government Bullion?

Government bullion, as the name implies, is crafted in the country’s national mint and the term “crafted” is not used lightly. Government bullion is oftentimes used to strike coins that honor special events, significant figures from national history, or that commemorate the beauty of national landmarks, or a country’s native wildlife. Examples of such include the Canadian Mint’s “Wildlife Series,” or the United States Mint’s “Eagle” coin set for instance.

Investor and collectors appreciate the pedigree that comes with a government-minted coin. Specifically, the national government assures weight and purity of the bullion, and this makes for an attractive option for investors and collectors. Indeed, governmental certificates of authenticity go a long way towards instilling collector confidence in their investment. In other words, they get a “warm and fuzzy” feeling about their purchase that does not necessarily occur when buying bullion from a private bullion provider.

Additionally, since most government bullion is made into collectible coins, the add on value represented by the extra minting work, artistic rendering, and intrinsic value of being legal tender significantly adds to the possibility that an investors money will be safe. For instance, say even if the price of gold or silver completely collapses the coin collector market would still represent a safe haven for their money. Since the gold and silver market show no indication that they are about to take a nosedive however, many investors look at the acquisition of government minted coins as a chance to improve their investment position.

These advantages come at a premium with investors expecting to pay substantially more for their government-minted bullion than they would for private bullion dealer. For this reason, many new investors, lacking the capital outlay to buy into this particular market, will shy away from the more expensively minted government coins.

A Note on the Allure of Numismatic Coins

Novice investors should note that when they buy a government minted coin, that purchase does not necessarily imply that the coin contains any gold or silver bullion. In fact, the value of some highly sought after coins is found simply in their numismatic value, or their status as a type of currency. Numismatic coins are frequently worth more than the value of their metal with their appeal being found in their rarity or other singular features. For these collectors, the value of the metal is not of interest to them because the collecting aspect of the coin is what they are paying for when they buy rare government coins.

What is Private Bullion?

Private bullion is minted in non-government facilities, and because there is no effort to put them in a collectable series, the value of private bullion is based on the value of the gold and silver in the bar. This allows the nascent collector to purchase more of the precious metals, which is an ideal solution for those investors who view bullion as having an intrinsic value beyond the value add on of artistic numismatic rendering and artwork. Unfortunately, private bullion does not come with the guarantees associated with government-minted bullion, which means that buyers may not know the exact weight, or purity of the precious metals that they are buying. For his reason, private bullion buyers must make intelligent choices to ensure they get their money’s worth. Finding a reputable private bullion dealer is the first key step in making an informed buying decision.

Private Bullion and the Reputable Dealer

Owing to the fact that private bullion manufacturers don’t deliver the same level of guarantees as their government counterparts, bullion investors should be careful and do their due diligence when it comes to choosing their private bullion partner. Privately minted bullion affords the opportunity to buy more precious metals than would otherwise be possible, but that advantage is lost if you deal with a shady dealer. Look for bullion dealers with a demonstrable record of accomplishment when it comes to delivering on their promise of offering only the highest quality bullion products.

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