One of the first choices you have when purchasing bullion is the type of product you wish to buy. This is a choice of which precious metal and then which form of bullion.
1. Which precious metal – Gold, Silver, Platinum or Palladium?
We write extensively on this elsewhere on this website, but in summary:
Gold – Grabs most of the headlines and is considered the safest store of wealth, as it has for 1000’s of years. It has limited industrial use but the strongest in global monetary asset terms.
Silver – Rides the gold ‘precious metal’ train but has the added benefit of heavy and growing industrial use. Currently well above historic gold:silver ratios so plenty of scope for increases as this normalises but is generally a more volatile ride than gold.
Platinum / Palladium – similar to silver (though distant 3rd and 4th in volume traded) in that they are used industrially, especially in catalytic converters in the automobile industry. Like silver they tend to fluctuate more than gold.
>> Which one? That is a choice which comes down to your risk profile and personal choice based on education you can undertake within our website or more broadly. Like any investment portfolio it is often wise to have a mix to spread your risk.
2. Cast, extruded, minted or coined?
When producing bullion product there are 3 main choices – cast or also referred to as poured product, minted product or in the form of coins. A less common form is extruded.
Cast bullion – When the metal is melted and formed into bullion, casting or pouring is where the bullion is formed by simply pouring the molten metal into a mould. The resulting bar is generally of a lower finish to minted or extruded bullion, and a little more rounded. The necessary marks of brand, weight and purity are stamped into the semi cooled bars.
Minted bullion - Minted bullion is
struck with high pressure dies producing an identical, high quality finish to the bullion, usually on both sides. These can either take a bar or coin form (which we discuss below) and often come individually packaged in a plastic cover.
Extruded bullion – This bullion strikes a compromise between the 2 above. Extrusion is where the softened metal is forced through a shaped aperture forming its cross section, and then cut to specific lengths then stamped with the bar information. The finish is generally higher than cast bullion but sawn at the ends.
Coins –Coins are essentially minted bullion but in a round form and often are legal tender with a face value stamped on the coin. Coins are generally only produced by a limited number of Governmental producers.
>> Which one? Again this is a very personal choice and often depends on your ultimate use of your bullion.
Cast and extruded bullion is generally cheaper to buy and has identical purity and weight. Extruded bars can stack more easily than poured. These bars suit those who simply buy for investment in the metal and are unconcerned by appearance or international tradability.
Minted bullion is generally more expensive but often produced by COMEX or LBMA accredited refineries and hence has international recognition should you take your bullion overseas. If appearance is important these will generally be more attractive than cast bars and often come in a protective sleeve.
Coins are generally more expensive again but are the ultimate in flexibility in terms of being recognised by any dealer anywhere in the world, have a face value that may be beneficial for tax or import limits reasons if taking overseas, and some come in limited runs so may realise a ‘collectibles’ premium in years to come. One thing to be mindful of in coins is that they are deemed to be a ‘collectible’ in Self Managed Super Fund rules and hence must be independently stored and insured which can be done at Reserve Vault (www.reservevault.com.au ) in Brisbane.