Bullion Coin

A bullion coin (from Old French bouillon = melting pot) is a coin struck by a government or government-authorised mint whose purchase price is derived primarily from the current precious metal spot price. In contrast to numismatic collector coins, the bullion coin's focus is not on rarity or condition, but on pure metal value. Bullion coins exist in gold, silver, platinum, and palladium and are regarded worldwide as one of the most widely traded physical investment products.

Characteristics and Distinction

Bullion coins share four core properties:

1. State mint mark — They carry a legal face value (e.g. €100 for the Vienna Philharmonic), which however lies far below the metal value and merely establishes legal tender status.
2. Defined fineness and fine weight — Each striking guarantees an exact quantity of pure metal, most commonly 1 troy ounce (31.103 g), but also ½ oz, ¼ oz, 1/10 oz as well as 1 kg or 1 g.
3. Market-related price — The dealer price is determined by spot + premium (agio); the premium covers minting, distribution, and dealer costs.
4. High liquidity — Globally recognised bullion coins are repurchased at any time by dealers, banks, and mints.

Collector coins (numismatics, proof quality) differ from bullion coins by their mass mintage (millions of pieces per year) and the absence of a collector's premium. Bars differ in having no state mint mark or face value, which in some countries means they do not enjoy the same tax advantages.

The Most Important Bullion Coins at a Glance

The Krugerrand occupies a special position: as the first modern gold investment coin in the world, it contains exactly 1 troy ounce of gold but is struck from a 22-karat alloy (916.7 ‰), which is why its gross weight of 33.93 g exceeds the standard of 31.103 g. The alloyed copper makes it more scratch-resistant.

Price Formation and Premium

The purchase price of a bullion coin is calculated according to the following scheme:

Purchase Price = Spot (per troy ounce) × Fine Weight + Premium (€ or %)

The premium varies depending on the coin, denomination, and market conditions. Small denominations (1/10 oz) carry a higher premium than the standard 1 oz coin, because minting costs per gram of fine metal increase. In times of crisis or supply shortages, premiums on gold can briefly rise to 10–15% and on silver above 50%.

The gold calculator can be used to quickly determine the current material value of a bullion coin; the melt value calculator is additionally useful for coins with a fineness deviating from 999.9 ‰, such as the Krugerrand.

Tax Classification in Germany

No investment or tax advice — the following information is general factual information.

In Germany, gold coins meeting certain criteria (fineness ≥ 900 ‰, minted after 1800, legal tender) qualify as investment gold and are VAT-exempt (§ 25c UStG). Silver and platinum coins, however, are subject to the full VAT rate of 19%, which significantly increases their effective premium compared to gold coins.

Gains from the sale of physical bullion coins held as private assets may be tax-free after a holding period of more than one year (speculative holding period § 23 EStG) — however, this should be clarified in individual cases with a tax adviser.

Authenticity Testing

Since bullion coins represent high-value industrial metals in compact form, counterfeits exist. Reliable testing methods include:

• Weight and dimensions: Each coin has an exactly defined gross weight and diameter. The coin weight checker compares actual and target values.
• Ping test: Genuine gold coins produce a characteristic bright ring when tapped.
• Density determination: Gold has a density of 19.32 g/cm³ — tungsten forgeries come close (19.25 g/cm³) but are exposed by precise density measurement (Archimedean principle).
• Sigma Metalytics / XRF: Contactless measurement of electrical resistance or X-ray fluorescence provides the most reliable confirmation.

Storage and Safekeeping

Bullion coins should be kept in their original capsules or coin tubes to avoid scratches — even though scratches do not reduce the material value, they can lower the resale price with some dealers. For larger holdings, bank safe deposit boxes or certified bonded warehouses are recommended.

In Brief

Bullion coins combine a government guarantee of fineness and fine weight with the ability to be liquidated at any time at the daily price. Those wishing to purchase physical precious metals will find the 1 oz bullion coin to be the most liquid and easily verifiable standard product in the global precious metals market.