How to Buy Physical Precious Metals Part 2: National Government Mint Bullion

Investing Strategy

I am a proponent of maintaining 2 positions in physical silver: a core position, for which no dollar amount is too much to either buy or sell and an investment position which is purely intended for taking profits and procuring other assets.

In my experience, starting up building up a core position the BEST strategy was to dollar cost average.  Every paycheck or every month, just buy a small amount regardless of the price doing no analysis of the charts or any research on the fundamentals.

Having built up a sizeable core position, I then moved on to building my investment position, for which I have formal rules, analysis and conditions dictating how I buy as well as an established plan for when to sell.

That being the case, I have found certain types of physical silver bullion are more suited, depending on the strategy I employ and my long term goals in investing in precious metals.

As a general rule, the best strategy to employ is to get gold and silver as close to the current market price as possible, lower if possible.  There is a minor exception to that, that presents itself with certain numismatic coins I will discuss.

Types of Silver Bullion

The following are the types of physical bullion you can invest in:

Numismatic or collectable coins
National government mint bullion
Generic private mint bullion
Junk Coins
Scrap

National Government Mint Bullion

Almost every country has a national mint.  If a country coins it's own currency, it has a mint.  Several mints also mint precious metal bullion and offer them as investments.  Some of the big names in this regard are the US Mint, the Royal Canadian Mint, the Perth Mint, and the Austrian Mint.


These mints produce a wide variety of products, including numismatic precious metal coins.  The big difference with these national mints over private mints is that they have the ability to denominate their national currency in many of the products they mint.  All of them have bullion products specifically designed to be investment vehicles that trade close to the market prices for the metal they are minted from.

While this is an interesting feature that allows for these bullion products to more easily traverse international borders, it is a bit of a gimmick, as the gold maple and eagles shown above face value of $50 dollars is significantly less than their market price (currently around $1700).


This nationally minted bullion tend to sell for a higher price than generic bullion or junk bullion as they do have a slight numismatic premium.  They tend to be more "beautiful" than generic bullion as well.  At the same time, many dealers tend to "buy back" these coins at a higher price than they do generic bullion or junk bullion - in my opinion, presumably because of a slight numismatic premium, but also because uniformity and higher quality of them make it easier to identify counterfeit specimens.


An added benefit to some national mint bullion is that occasionally, these mints release limited edition, specialty bullion products which sell slightly higher than their regular release bullion.  Good examples of this are the Canadian Wild Life Series coins released by the Royal Canadian Mint.   These coin CAN eventually realize a substantial numismatic premium substantially over the spot price and are a good way to diversify bullion holdings.  However, because of the uncertainty with those numismatic premiums, I tend not to stack too many of these speciality coins, specifically because the buy price for them tends to be higher than the already higher than spot prices for their equivalent, normal release bullion.

In an absolute worst case scenario if the economy ever breaks down into a barter economy, I personally would prefer to have American Eagles of Canadian Maples (both gold and silver) over generic bullion.  This is because the immediate recognizability and higher quality, in my opinion, may make them more easily acceptable, especially to people who are ignorant about what physical gold and silver look like.  However, I still would prefer in that scenario to have junk silver over nationally minted silver not only for that reason, but because they are fractional in weight and come in smaller sizes.


Honestly, I would rank nationally minted bullion and generic bullion as the majority of one's holdings oh physical metals.  Because of the quality, beauty, slightly higher resale, immediate recognizability of the nationally minted bullion - I tend to keep them as my "core" precious metals position.  


I will NOT trade maples, eagles, or maybe philharmonics (although I think the philharmonics are ugly) with the intent to make a short term profit.  If/when the metal prices explode, I might consider trading some gold or silver maples for real estate.  Honestly, I have an affinity especially for Canadian maples because they are quite nice to look at.


That said, they are an investment that tracks the market price for the metals and though they are quite "pretty" it's important not to "fall in love" with them, so as to never want to part with them.  Instead, this is why I think it is so important to have predefined, long term goals and conditions which, when met will justify selling.