Have you ever wondered why a small coin can sell for thousands of dollars? Distinguishing the difference between a bullion coin’s face value and its intrinsic value can be confusing. The face value on a 2019 America Gold Eagle could be $50 but the coin might be worth $2,100. The lines that distinguish between the actual value of a gold coin and its face value can be blurred but anyone buying or selling gold bullion coins will be better served understanding the differences and what they mean.
What is the face value?
The face value of a gold coin is the value stamped on the surface of the coin itself. Since most gold bullion coins are produced by government mints, we can say, the face value of gold bullion coins is allocated by the government and is regarded as a sort of legal tender. Coins that do not have this value are called rounds. Rounds are produced by private mints and they only have a melt value. Bullion coins are backed by the government whilst rounds aren’t.
The difference between bullion coins and rounds is also in the design which also factors into the price. In most countries, the shape is approved by a legislative advisory body. Some coin designs change every year like the Australian Kangaroo gold coin. This helps boost the appeal and the rarity of the coins. Rounds on the other hand are always round. They can be minted with any design, sometimes with designs that resemble the official designs on gold coins. Each government gold bullion coin will be marked which year it was minted.
The Intrinsic value of Bullion
When you sell gold bullion, you want to know what its actual value is, but for that to happen you need to know what size the bullion coin is, IE 1oz gold coin or half Oz gold coin and the international spot price. Most gold dealers will buy it a few percent below the spot price when you sell gold bullion to them.
Why do governments make gold bullion coins?
There is history of how bullion coins from various countries have the roots of their value in actual currency. For Example, the American Gold Eagle, got its name from the term “Eagle” which was used as one of the main decimal-base units that were used in US currency that was in circulation before 1933. Then an eagle had a value of $10. Most international gold bullion coins were never really part of any circulating currency and have a face value stamped merely for stylistic purposes.
When the time comes for you to sell gold bullion, the dealer who is making an offer to buy gold bullion coins, a gold dealer will offer you a fair price based on the gold content and of course on the spot price of gold. So of course, when the price of gold increases, then you stand to make a better profit.