Understanding the Basics
When you buy physical precious metals, you're typically choosing between two primary formats:
- Bullion bars: Rectangular pieces of refined metal, struck by private mints or refineries. Available in many sizes from 1 gram to 400 oz.
- Bullion coins: Round coins struck by government mints (like the U.S. Mint or Royal Canadian Mint) or private mints ("rounds"). Government coins carry a face value, though their actual metal value far exceeds it.
Premiums: The Real Cost of Buying
The premium is the markup above the metal's spot price — this is how dealers make money. Premiums vary significantly by product type and size:
Gold Bars
- 1 oz bars: ~1%–3% over spot
- 10 oz bars: ~1%–2% over spot
- 1 kg bars: Under 1% over spot
Bars generally carry the lowest premiums, making them the most cost-efficient way to accumulate gold by weight.
Gold Coins
- American Gold Eagles (1 oz): ~3%–5% over spot
- Canadian Gold Maple Leafs (1 oz): ~2%–4% over spot
- Fractional coins (½ oz, ¼ oz, 1/10 oz): 5%–15%+ over spot
Government coins carry higher premiums but offer greater liquidity and global recognition. Fractional coins are popular for barter scenarios but cost more per ounce.
Liquidity: How Easily Can You Sell?
Liquidity refers to how quickly and easily you can convert your metals back to cash. Government-issued coins — especially American Eagles and Maple Leafs — are the most liquid precious metals products in the world. Any dealer will buy them immediately at a predictable spread.
Name-brand bars from refineries like PAMP Suisse, Perth Mint, or Valcambi are also highly liquid. Generic private mint bars may be harder to sell and may require assaying before a dealer will purchase them.
IRA Eligibility
Not all products qualify for a precious metals IRA. IRS regulations require:
- Gold must be 99.5% pure (American Gold Eagles are explicitly exempt despite 91.67% purity)
- Silver must be 99.9% pure
- Products must be struck by an approved national government mint or accredited refiner
Government coins from major mints and bars from approved refineries generally qualify. Junk silver (pre-1965 U.S. coins), collector coins, and numismatic items do not qualify for IRA.
Learn more about precious metals IRAs.
Storage Considerations
Bars are generally more compact and stackable than coins — important when holding large quantities. Coins require individual protective capsules or specialized storage tubes, which add bulk. For vault storage, bars' shape efficiency can lower storage costs per ounce.
Numismatic vs. Bullion Coins
A key distinction: bullion coins are valued purely for their metal content and trade near spot. Numismatic coins (collectible/rare coins) trade at premiums based on rarity, condition, and collector demand — far above their metal value.
Warning: Some precious metals dealers aggressively push numismatic coins because their higher premiums mean higher dealer profits. Unless you are a knowledgeable coin collector, stick to standard bullion coins and bars for investment purposes.
Summary: Which Should You Buy?
- Best cost efficiency: Bars (especially 10 oz or larger)
- Best liquidity: Government coins (Eagles, Maple Leafs, Philharmonics)
- Best for IRAs: Government coins or approved refinery bars
- Best for barter/emergency use: Fractional coins or junk silver
- Best overall for most investors: A mix of 1 oz government coins for liquidity + larger bars for cost efficiency