The Definition of Bullion Value & How to Calculate it
Bullion is still a very legitimate and standard way to deal and trade precious metals today, despite appearing to be a dated idea. These bulky-looking coins, ingots, and bars of gold, silver, and platinum are still frequently used as money; even reserve banks and institutional investors keep them on hand as a backup plan in an emergency.
Despite looking like something you might expect to score in an 1800s steam-train heist, bullion is as relevant in the modern age as it ever has been. It has an earned reputation for being recession-proof, which has resulted in its being commonly considered a safe haven against geopolitical and economic turmoil. When fiat currencies crash and lose value, bullion retains its value and can often even increase in value.
We’re sure you’re taking these old coins and bars a little more seriously now, but there’s still much more to uncover about this concept. Throughout this article, we will delve a little deeper into what bullion is and how it relates to any investment jewellery you may be interested in purchasing or already own. So buckle up, and let's go explore bullion!
What is bullion value?
So, what exactly is bullion? And what exactly does "bullion" mean? Bullion value is the value given to a coin based on 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 always important to look up the specifications of a coin to find out exactly how much precious metal it has.
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. If silver sells for $20 per troy ounce, it will result in the coin having a bullion value of $3.60. This bullion value is also known as melt value, BV, Actual Gold Weight (AGW), Actual Silver Weight (ASW), and Actual Platinum Weight (APW).
How do you calculate it?
When calculating bullion value, the following formulas serve as an example. For this example, we’ll use a 90% fine-silver coin with an actual weight of 9.23 grams and a fineness of 90% silver.
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)
Multiply the Actual Weight in troy ounces by the percent fineness as a decimal, which will give you the net weight of pure silver: 0.200 x .90 = 0.18 (troy ounces of pure silver)
Multiply the troy ounces of pure silver by the current spot price of silver. We’re using $20 per troy ounce for this example: 0.18 x $20.00 = $3.60 (worth of pure silver)
Bullion spot prices
When calculating bullion values, “spot prices” are something commonly referred to. Spot prices for precious metals change by the minute. Gold, silver, platinum, and palladium are traded almost constantly around the clock on several commodity markets around the world. Spot prices are also always calculated in the troy ounces used in the formula above.
A spot price is always changing because it is based on the supply and demand in the market at that moment. The spot price is also often referred to more simply as the market price and the live price.
Investing in coins for bullion value
Outside of gold bullion value, there are external reasons why gold bullion makes sense as an investment. In addition to buying bars just for the precious metal they contain, there are a few ways to invest in coins for their precious metal bullion value through numismatics.
United States coins dated 1964 and earlier, including dimes, quarters, half dollars, and dollar coins were made with 90% pure silver. Some of these coins have extremely low mintages, making them extremely desirable among 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 favourite coin dealer at a slight premium over their bullion value. Rolls and bags of these coins can be purchased for a price based on their precious metal value. They are usually priced at multiple face values depending upon the current spot price of the precious metal itself.
All of this means that the value of bullion coins is often based on two different factors: the amount of precious metal they contain and how rare they are. For this reason, gold and silver coins (when invested correctly) can make for a highly worthwhile investment.
Investing in jewellery for bullion value
This brings us to the topic relevant to what we do here at 7879: jewellery. Jewellery is another chic, more modern way to invest in precious metals, with the most popular jewellery metals currently traded being gold and platinum. As with bullion, the value of investment jewellery is based upon the weight of the precious metal used to create it, as well as the current spot price of that metal.
Suppose you are considering buying jewellery for its precious-metal value. In that case, you should be aware that there are usually three different prices being quoted:
The first price is the retail price, which is what the jeweller sells it for
The second price is the wholesale price, which is what the jeweller paid for it
The third price is the melt value, which is the current spot price of the precious metal multiplied by the weight of the precious metal in the piece of jewellery
Let's say you are considering buying a gold necklace that weighs 18 grams. The current spot price of gold is $1,300 per ounce. The retail price of the necklace is $1,500, the wholesale price is $1,200, and the melt value is $24.60 (18 grams x 1,300).
As you can see, the retail price is much higher than the melt value. This is because the jeweller needs to make a profit. The wholesale price is closer to the melt value but still higher. If you are only interested in the precious metal content of the jewellery, then you should only pay the melt value.
When buying jewellery for its bullion value, it is essential to remember that not all pieces of jewellery are created equal. We’re referring to the fact that some pieces will have a higher percentage of precious metal than others. For example, a 14-karat gold necklace will contain 58.3% gold and 41.7% alloy. An 18-karat gold necklace will contain 75% gold and 25% alloy - the higher the purity of the gold, the more valuable it is.
You should also be aware that some pieces of jewellery are plated with a thin layer of precious metal. This means that the piece of jewellery is not made entirely of precious metal, and is therefore not as valuable. If you are buying jewellery for its precious-metal content, then you should ensure that it is made entirely of that precious metal.
One final thing to consider when buying jewellery for its bullion value is the weight of the piece. The heavier the piece, the more valuable it is. This is simply because there is more precious metal in a heavier piece of jewellery than in a lighter one.
When buying jewellery for its bullion value, it is important to remember these three things: purity, weight, and plating. The higher the purity of the gold - the heavier the piece, and the less likely it is to be plated - the more valuable it is.
If you’ve decided that you’d like to purchase some gold or platinum investment jewellery, what better way to begin than with 7879’s 24-Karat gold and Pure Platinum collections? At 7879, we price our exquisite 24-karat gold and pure platinum jewellery transparently, based on weight and current market price. This system means that you can be sure you are always getting the fairest price for your investment.
Being so much more than just an investment, our shimmering, glamorous pieces mean your investment can double as an exquisite piece of wearable jewellery.
Instead of hiding your gold or platinum investments in storage, away from the world, you can wear them proudly for all to see. Make the ultimate investment for the modern age - through 7879’s chic 24-karat gold and pure platinum investment jewellery.