Saturday, March 4, 2017

Physical Gold and Silver, the Whats and Hows – Part 2

In Part 1, I had touched on spreads, weights and spot, the spread within the spread, and a little bit on mints, refineries and the London Bullion Market Association. In this part, I will go into semi-numismatics and numismatics (or known as semi-numis and numis), jewellery and why they are not ideal for physical gold and silver investments, and whether you should go for bullion bar or coin.

Semi-Numismatics and Numismatics

According to the Oxford Dictionary, the word “numismatics” means “the study or collection of coins, banknotes, and medals”1. As for semi-numismatics, there is no clear definition, but usually it is a coin that is priced above the actual value of the gold or silver in it and is a collectable.

The key words mentioned are “collection” and “collectable”, so semi-numis and numis coins are meant for collectors who value them not just by their worth of the metal, but also their design, grade and rarity. For example, to a bullion investor, a 1 oz Year of the Dragon 2012 gold coin is worth almost the same as any other 1 oz gold coin, but to a collector it may be worth much more due to probably its intricate drawing of the dragon, the high grade and the limited circulation.

Semi-numis and numis are not an issue if you are a coin collector, but for the purpose of pure investment of the value of physical gold and silver, semi-numis and numis are not recommended, for they do not reflect the true price of the commodities in question. If you are both a Bedokian Portfolio investor and a coin collector, do remember to segregate your semi-numis and numis from your bullion.


Jewellery are something that you wear on your body, be it earrings, pendants, bracelets, rings, etc. They are good to look at, but it is not good for investment. Most jewellery is not made up entirely of gold and silver; they would be too soft to withstand the rigours of jewellery making and wearing. Also pure silver tends to tarnish easily when there are impurities in the air. Therefore other metals such as copper are added into the gold and silver to make them more durable.

Jewellery gold is graded in terms of karats (K), with 24K being pure gold. The common grades meant for jewellery are 18K and 22K, which consists of 75% and 91.6% gold content respectively2. For jewellery silver, sterling silver is typically used, with silver content of 92.5%.

In addition, unlike most bullion, jewellery is not exempted from the Goods and Services Tax. There is also this issue of a high mark-up due to workmanship fees. With all these added up costs, and they are not really investment grade gold and silver to begin with, the conclusion is jewellery is not suitable for The Bedokian Portfolio.

Bullion Bar or Coin?

To me, there is no difference in having bullion bars or coins for physical gold and silver, but to give a fair comparison, I shall highlight some advantages for each of them.

Pluses of bars
  • ·      Bars tend to be cheaper than coins in terms of the “spread within the spread”, given the same weight.
  • ·      Bars come in more weight steps than coins, in grams (g) and in ounces (oz).

Pluses of coins
  • ·      Most coins are legal tender, which means there is value attached to it and could be used as money (though the value is much less than the actual spot price).
  • ·      Coins could incidentally be worth more than its spot price due to its semi-numismatics or numismatics value.

In the next final part, I shall share with you on how to keep and store your physical gold and silver.

2 - Gold Purity and Colour Guide: What is the difference between 24K, 22K and 18K gold. (accessed 4 Mar 2017)

No comments:

Post a Comment