When deciding to buy precious metals, it is imperative for the investor to know the vernacular used in the industry. Many individuals new to precious metals might see a product described as a coin and another as a round, and think these two products have the same characteristics. Although similar in physical appearance, coins and rounds have many different aspects that every investor must recognize before choosing which product to buy.
What is the difference between coins and rounds?
Before going over the differences, let’s review some similarities. Both styles are small, easy to transport, stackable, and circular. These physical characteristics make coins and rounds hard to differentiate. By understanding the differences, the investor will be able to make the perfect addition to their portfolio.
One key characteristic of a coin is that it must be minted by a sovereign government. Examples of sovereign mints include the United States Mint, the Royal Canadian Mint, the Perth Mint, and the Chinese Mint. Coins produced at sovereign mints are also backed by the government to ensure quality, weight, and purity.
Being produced at a government mint allows coins to become legal tender for that nation. Legal tender is a form of monetary face value that must be accepted as a form of payment within the country. Coins, even if they are meant to be collectibles, are still a form of currency within the country. The precious metal content is usually higher than the face value of the coin so bullion coins are rarely used as currency. An example of this is the 1 oz American Gold Eagle, which has a face value of $50, but as of July 2022, is valued closer to $2,000.
Unlike coins, rounds are not considered legal tender. Rounds are minted by private mints around the world. Popular private mints include SilverTowne Mint, Valcambi, Credit Suisse, and Sunshine Mint. Rounds can be of any design, weight, and purity. Since no government is regulating the design, the private mints have full authority to create any design, subject to copyright laws. There are some rounds that have the same design as popular coins but contain an “R” or “COPY” stamped on the round to inform the investor it is not a legal coin. Rounds, however, cannot have the exact same size and weight specifications as a sovereign-minted coin.
Since rounds are not used for circulation, they make a great investment opportunity. Their value mostly comes from the metal content of the round, making rounds generally closer to spot price than coins.
Another difference between coins and rounds is that coins contain the date of issue stamped on the obverse or reverse. The date of the issue is stamped on the coin to have a better tracking system for the coin. This helps to inform the respective mint about the popularity of specific coin releases and the expected demand for the coin going forward. Some rounds may contain a date of issue, but it is not required on rounds.
The price of coins is generally higher than rounds. Coins come from sovereign mints and are usually more reputable than private mints. The production process of coins tends to be more detailed to ensure authenticity and quality. Most investment-quality coins tend to be in better condition than rounds. Some of the most traded bullion include coins such as the American Eagle, Britannia, Maple Leaf, Krugerrand, and Philharmonic.
The value of rounds mostly comes from the metal content, making rounds generally closer to spot price than coins. Investors tend to buy rounds when they are looking to invest in the bullion itself, however, there are some rounds that commemorate specific people or moments in time, and these rounds could elicit a higher premium. Rounds have more in common with bars than coins, other than their shape.
Should you buy a coin or a round?
Both coins and rounds could be a great addition to an investor’s portfolio. If you are looking for lower premium bullion with the same weight and purity as popular coins, rounds are the ideal investment. If you are looking for a detailed, secured, and collectible product backed by sovereign governments, coins will fit in your portfolio. Coins tend to be more collectible because of their quality and availability. GoldClub Direct offers beautiful coins and rounds at the most competitive prices.
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