A Definition of Bullion Value

How to calculate 'bullion value'

Silver Bullion and Coins

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Bullion value is the value given to a coin based upon the amount of precious metal that the coin contains. Some coins are made out of copper (pennies), clad copper/nickel (nickels, dimes, quarters, half dollars and dollars dated 1965 and after), silver (dimes, quarters, half dollars and dollars dated 1964 and before) and gold (1933 and prior). Additionally, the mixture of precious metals and base metals has changed over the years. It is important to look up the specification of the coin to determine the exact percentage of precious metal.

For example, if a coin weighs 0.2 troy ounces and is made out of 90% silver, it will have 0.18 troy ounces of pure silver in it. If silver is selling for $20 per troy ounce, the coin will have a bullion value of $3.60.

Calculating Bullion Value

Example specifications for a 90% fine silver coin:

  • Actual Weight: 6.23 grams
  • Fineness: 90% silver

Calculation Steps

  1. Convert the Actual Weight from grams to troy ounces. There are 31.1035 grams in one troy ounce. Therefore, divide the actual weight of the coin by 31.1035 to give you the actual weight in troy ounces.
    6.23 / 31.1035 = 0.200 (Actual Weight in troy ounces)
  2. Multiply the Actual Weight in troy ounces by the percent fineness as a decimal to give you the net weight of pure silver.
    0.200 x .90 = 0.18 (troy ounces of pure silver)
  3. Multiply the troy ounces of pure silver by the current spot price of silver. I am using $20 per troy ounce for this example.
    0.18 x $20.00 = $3.60 (worth of pure silver)

Bullion Spot Prices

"Spot Prices" for precious metals change by the minute. There are several commodity markets located around the world where gold, silver, platinum, and palladium trade almost continually around the clock. Here are several sites you can access to see the current precious metal spot prices:

Investing in Coins for Bullion Value

In addition to buying bars of precious metal, there are several numismatic opportunities to invest in coins for their precious metal bullion value. United States coins dated 1964 and previous including dimes, quarters, half dollars and dollar coins were made with 90% pure silver. Some of these coins have extremely low mintages and are sought after by coin collectors. Almost always, the numismatic value of these coins will exceed their bullion value.

High mintage coins that are common and in well circulated condition can be purchased from your favorite coin dealer at a slight premium over their bullion value. Rolls and bags of these coins can be purchased for a price based upon their precious metal value. They are usually priced at a multiple of face value depending upon the current spot price of the precious metal.

A Variety of Different Bullion Coins

The United States Mint, various foreign mints, and several private mints produce bullion or related items. For a coin to be considered a "bullion coin" and must be minted under the authority of a recognized government. Some foreign governments contract with private mints to producer coinage. This does not deteriorate the value of a coin because it is not produced at an official government mint facility.

One of the most well-known bullion coins is the South African Krugerrands. The South African mint first produced these coins in 1967 to help market the gold being mined and that country. By 1980 the Krugerrands accounted for almost 90% of the world gold bullion market. Although the coin only contains 91.67% gold, it weighs 1.09 Troy ounces. The balance of the composition is copper. Therefore, the coin actually contains one full troy ounce of gold. The copper is added to the coin to make the metal slightly harder and the coin more durable.

In 1985, the United States Congress authorized the U.S. Mint to start producing gold bullion coins. The first coins were released in 1986. The coins are offered in 1/10 oz, 1/4 oz, 1/2 oz, and 1 oz denominations. The one-ounce coin has a fifty dollar face value, the half ounce coin has a twenty-five dollar face value, the quarter ounce coin has a ten dollar face value, and the tenth-ounce coin has a five dollar face value. However, the value of the coin is determined by its gold content and not the face value.

United States Gold Eagle Bullion Coin.
United States Gold Eagle Bullion Coin.  United States Mint

Also Known As

melt value, BV, Actual Gold Weight (AGW), Actual Silver Weight (ASW), Actual Platinum Weight (APW)