Gold dealers trading in bars and coins or numismatics account for a large share of Retail Gold Investments. The gold is sold in retail shops or online. In contrast to managed gold products (see below), the purchased gold is directly collected or delivered to the customer.
8.1 Bullion gold characteristics
Bullion gold comes in the form of bullion bars and coins. The fact that the value of bullion gold is determined fully or for the very most part by the value of its physical gold content makes it a good choice for gold investors
Bullion gold in general:
- The value of bullion gold is primarily determined by its gold content and not by other factors, such as brand, design or scarcity.
- In some geographies, such as the UK and the EU, specific criteria define which bullion bars or coins qualify as investment gold.
- You should fully disclose the weight and fineness of bullion bars and coins to your customers.
- Gold bars or ingots typically require a purity of 99.5% or higher. In the UK and EU, bullion bars of that purity and with weights accepted by the bullion markets are considered investment gold.
- Gold coins with a high purity, which are primarily valued by their weight and fineness of gold.
- The UK and the EU define investment gold coins as those coins with a purity of at least 90% and minted after 1800, which are currently or have been legal tender in their country of origin. They are normally sold at a price no higher than 80% above the open market value of the gold content and not regarded as being sold for numismatic interest.
- In the US, gold coins require stamping by authority of the government, in order to determine their value, commonly called money; otherwise, they must be advertised as rounds.
8.2 Numismatic coins characteristics
Numismatic coins or collector coins are expected to have a value beyond the base value of the contained gold. The additional value is driven by the coin’s rarity and demand from customers. The grade of a coin is also a key determinant of its value, since coins with a higher grade are often rarer or in greater demand.
- Disclose information on the type of coin and the place and year the coin was minted as well as the coin’s grade.
- Disclose the coin’s weight and fineness, to enable your customers to calculate its melt value.
- Disclose information on buy-back options.
- Provide documents on a coin’s grade, including the name of the company that performed the grading or certification.
- coin’s grade refers to the coin’s condition or appearance; it is generally determined by criteria such as strike, preservation, lustre, colour, and attractiveness.