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Fractional bullion: good investment or waste of money?

Gam3rBlakeGam3rBlake Posts: 162 ✭✭✭
edited November 14, 2020 2:06AM in Precious Metals

Hello my fellow coin/bullion collectors!

Today I was at my local coin shop and a question popped into my head upon seeing his fractional (under 1 troy oz) bullion.

I noticed that fractional bullion is much more expensive than larger (1 troy oz +) bars/rounds/etc.,

For example it will cost someone a lot more to buy 10x 1/10th oz American Gold Eagles than it would to buy a simple 1x 1oz American Gold Eagle.

However it seems like fractional bullion has a very large benefit as well.

If someone wanted to sell/barter $1,000 worth of bullion it would be easier to sell 4x 1/10th oz American Gold Eagles than it would to sell an entire 1oz American Gold Eagle. An investor might not want to liquidate an entire troy ounce of gold.

So here is my question: Do you think buying fractional bullion is worth it for ease of use & ability to sell/barter it in a way that allows for someone to do so in smaller and more accurate amounts?

Or do you think fractional bullion is just too expensive and that it’s better to use that extra money to buy more bullion?

I’m curious in hearing your thoughts.

Thanks! :)

Comments

  • PerryHallPerryHall Posts: 39,301 ✭✭✭✭✭

    The buy/sell spread as a percent of value is lower for 1 oz AGE's than the equivalent weight in fractional AGE's. You can buy ten tenth ounce AGE's and a one ounce AGE from your local coin dealer and then sell them back a few weeks later to see what the spread is.

  • derrybderryb Posts: 30,376 ✭✭✭✭✭

    Forget barter when it comes to gold. Buy bullets.

    Smaller the coin, more plentiful the buyers.

    Again, the only thing that matters when choosing "which one" is ease of resell.

    Message me on how to get $40 free while earning 1% cashback on ebay purchases. Offer expires Dec. 25.

  • bronco2078bronco2078 Posts: 9,035 ✭✭✭✭✭

    If you think gold is going to go up then fractional will be a better sell in the future . I do not want to sell a 1 oz coin on ebay at $1900 it makes me physically ill to think how that will go wrong. If gold goes up that won't feel any better. If I am nervous about getting ripped off for the $4100 today . To be clear on the math $4100 loss on the one coin is achieved by selling an ounce for $1900 paying 15% in fees , having a buyer file case which results in them being refunded and then mailing a chocolate chip cookie back to me. The perfect storm of fraud , money refunded and item gone! Then $3000 spot gold will not feel better when I lose $6500 on one coin.

    That potential fraud leaves Ebay no longer an option at sale time. Which leaves local shop or APMEX type dealer the only outlet. I don't want my hands tied in that fashion

    I can stand to lose a sovereign that is my threshhold. I can sell one every two weeks for a year on ebay . I don't envision a need to sell every single scrap of gold I own in one instant. The plan should never be to dump all of it in a day. Notice I said sovereign , a 1/4 ounce is my limit but I'm not buying any 1/4 ounce AGE's as no one cares about or wants those . They only want 1/10's or full ounces. Look at the mintage numbers for 1/4 and 1/2 ounce there has never been any real demand. Pick one side of the fence and get on it

    If you think gold is going down then for christsakes don't buy it at all ;) Just don't buy physical at all .

  • blitzdudeblitzdude Posts: 3,045 ✭✭✭✭✭

    Never had any problems selling either but the smaller denominations always moved quicker for me when selling to private parties in places like craigslist. Premiums are certainly higher but so long as you are avoiding the coin shop and selling to an individual you can usually get most or all of your premiums back.

    When I first started stacking I stuck with fractionals because the price of a full ounce seemed expensive (lol less than a third of what it is now). Over time I moved primarily to full ounces mostly due to the lower premiums but I would still buy either if the price was right. There have been periods throughout the years where Apmex, MCM, Texasgse would list fractionals on ebay and in the non bullion categories. Bonus ebay bucks would roll around and you could at times net 1/10oz AGE's under spot.

    I guess if you are wanting to buy frequently to say dollar cost average and your budget is tight stick with fractionals. If you don't mind waiting and buying less frequently save up and buy the full ouncers. Can't go wrong either way imo.

  • Downtown1974Downtown1974 Posts: 5,470 ✭✭✭✭✭
    edited November 14, 2020 6:04AM

    I can’t comment on bartering but I would think the best bartering metal would be 90% constitutional silver.
    As far as gold is concerned, I like to have a mix of 1/10, 1/4, 1/2 and 1 oz. rounds. I don’t mess with the 1/20 oz. stuff, I would rather have a gold dos pesos if I’m going that small.

  • bronco2078bronco2078 Posts: 9,035 ✭✭✭✭✭

    @Downtown1974 said:
    I can’t comment on bartering but I would think the best bartering metal would be 90% constitutional silver.
    As far as gold is concerned, I like to have a mix of 1/10, 1/4, 1/2 and 1 oz. rounds. I don’t mess with the 1/20 oz. stuff, I would rather have a gold dos pesos if I’m going that small.

    i had a few roles of the dos pesos i sold into the updraft they moved very nicely . They have acquired a premium . I feel like 2 1/2 is a better size , a little more impressive looking not much more gold and a smaller premium .

    The best small gold is holed oor ex jewelry US 1 dollar gold. I would buy from shops for a few dollars over melt and you can easily double your money on ebay selling.

    They are not easy to buy in bulk obviously :#

  • rickoricko Posts: 77,889 ✭✭✭✭✭

    I like the AGE's..... Acquired stacks in days of 3 digit prices. The tenth ounce coins are definitely easier to sell. I do not plan on selling any, however, if I decide to, there is so much profit already stacked up, even at melt, I am not concerned. Cheers, RickO

  • Gam3rBlakeGam3rBlake Posts: 162 ✭✭✭

    @Downtown1974 said:
    I can’t comment on bartering but I would think the best bartering metal would be 90% constitutional silver.
    As far as gold is concerned, I like to have a mix of 1/10, 1/4, 1/2 and 1 oz. rounds. I don’t mess with the 1/20 oz. stuff, I would rather have a gold dos pesos if I’m going that small.

    Eh I don’t think 90% silver is very good.

    If we are in a scenario of economic collapse where people are resorting to barter with precious metals I think people would prefer pure gold/silver rather than stuff they’d have to melt down and reform into bars.

  • Gam3rBlakeGam3rBlake Posts: 162 ✭✭✭

    @bronco2078 said:

    @Gam3rBlake said:

    @Downtown1974 said:
    I can’t comment on bartering but I would think the best bartering metal would be 90% constitutional silver.
    As far as gold is concerned, I like to have a mix of 1/10, 1/4, 1/2 and 1 oz. rounds. I don’t mess with the 1/20 oz. stuff, I would rather have a gold dos pesos if I’m going that small.

    Eh I don’t think 90% silver is very good.

    If we are in a scenario of economic collapse where people are resorting to barter with precious metals I think people would prefer pure gold/silver rather than stuff they’d have to melt down and reform into bars.

    they are not going to melt anything , why would they do that? You need potatoes and the other guy needs to cast silver bullets to kill a werewolf?

    The barterer needs stuff , the barteree needs money to barter for other stuff ,Nobody does pointless work in a post apocalypse . I barter in to barter on and so does the next guy . You think in a world where people are fetching drinking water from a well and carrying it 5 miles they are going to be building microchips ? When its over , its gonna be all over forever. :D

    no one anywhere will need .999 , what would they do with .999 ? If I have 10 1 oz .999 coins i'm going to cast a bar? for what?

    90% is certified and divisible and scalable in both directions . .999 is going to be 3/4's chinese counterfeit and people will discount it

    99% of america has no clue wtf gold and silver are

    Well think about it. Why do governments store their reserves as pure gold bars?

    If you go to Fort Knox you won’t see vaults full of Gold Eagles you’ll see pure gold Good Delivery Bars.

    It would be harder to make a large purchase with thousands of 90% silver dimes than it would with say a single 1kg pure silver bar.

    Basically it’s just easier to use as a store of wealth.

  • blitzdudeblitzdude Posts: 3,045 ✭✭✭✭✭

    @Gam3rBlake said:

    @Downtown1974 said:
    I can’t comment on bartering but I would think the best bartering metal would be 90% constitutional silver.
    As far as gold is concerned, I like to have a mix of 1/10, 1/4, 1/2 and 1 oz. rounds. I don’t mess with the 1/20 oz. stuff, I would rather have a gold dos pesos if I’m going that small.

    Eh I don’t think 90% silver is very good.

    If we are in a scenario of economic collapse where people are resorting to barter with precious metals I think people would prefer pure gold/silver rather than stuff they’d have to melt down and reform into bars.

    In an "economic collapse" butter and beans will be much more valuable than any silly silver bar. Rgds!

  • MsMorrisineMsMorrisine Posts: 24,874 ✭✭✭✭✭

    @Gam3rBlake said:

    Well think about it. Why do governments store their reserves as pure gold bars?

    If you go to Fort Knox you won’t see vaults full of Gold Eagles you’ll see pure gold Good Delivery Bars.

    It would be harder to make a large purchase with thousands of 90% silver dimes than it would with say a single 1kg pure silver bar.

    Basically it’s just easier to use as a store of wealth.

    .999 gold is lighter than 22k gold and even .9999 gold coins take more space to store than bars.

    I also think the gub'mint stores 400 oz rather than 100 oz

    as far as ease of purchase, it would be easier to make a small purchase with 90% dimes than a kilo of .999 silver.

    you're overthinking this and looking for the perfect solution.

    if you plan to make different sized purchases then store different sized PMs

    Current maintainer of Stone's Master List of Favorite Websites // My BST transactions
  • bronco2078bronco2078 Posts: 9,035 ✭✭✭✭✭

    The other thing about barter is bullets . I have a bag of potatoes you need , you pull out a .999 round I shoot you and you have no need to barter again and I have both things . Or if you shoot first you have both things and either way everyone is all sorted out :D

  • Downtown1974Downtown1974 Posts: 5,470 ✭✭✭✭✭

    @bronco2078 said:
    The other thing about barter is bullets . I have a bag of potatoes you need , you pull out a .999 round I shoot you and you have no need to barter again and I have both things . Or if you shoot first you have both things and either way everyone is all sorted out :D

    Exactly. No negotiations, just taking!

  • MsMorrisineMsMorrisine Posts: 24,874 ✭✭✭✭✭

    so this is a situation where it's good to have .40 ?

    Current maintainer of Stone's Master List of Favorite Websites // My BST transactions
  • jmski52jmski52 Posts: 20,694 ✭✭✭✭✭

    Speed is dandy, but accuracy is everything.

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • derrybderryb Posts: 30,376 ✭✭✭✭✭
    edited November 15, 2020 5:40PM

    I think you changed the title once the discussion started. Confusing thing to do.

    I think your real question is "Are fractional gold coins worth the extra premium?"

    As long as they continue to SELL for that extra premium at which you bought them, the answer is yes. The smaller sizes give you a larger buyer pool. As you have been told here before, always consider resell when you buy.

    Message me on how to get $40 free while earning 1% cashback on ebay purchases. Offer expires Dec. 25.

  • jmski52jmski52 Posts: 20,694 ✭✭✭✭✭

    The buy-sell spread is more relevant than the premium over spot, but the market dictates both, and the market conditions do change.

    It's common sense to start out with mostly smaller denominations and to add the larger denominations as your stack becomes larger over time.

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • 3stars3stars Posts: 1,392 ✭✭✭✭✭

    If we're in a barter SHTF situation your bits of metal are worthless to me. Your fuel, food, clothing and ammo are way more appealing.

    Previous transactions: Wondercoin, goldman86
  • TPGSTPGS Posts: 73 ✭✭✭

    Trading bullets for food or gold. Hopefully not at 2,200 feet per second. :o

  • chesterbchesterb Posts: 734 ✭✭✭✭✭

    @3stars said:
    If we're in a barter SHTF situation your bits of metal are worthless to me. Your fuel, food, clothing and ammo are way more appealing.

    I have the liquor! That's gotta be worth something to someone.

  • derrybderryb Posts: 30,376 ✭✭✭✭✭

    stock up on smokes vape if you want to barter. Stock up on PMs if you want to protect your wealth.

    Message me on how to get $40 free while earning 1% cashback on ebay purchases. Offer expires Dec. 25.

  • Gam3rBlakeGam3rBlake Posts: 162 ✭✭✭

    @3stars said:
    If we're in a barter SHTF situation your bits of metal are worthless to me. Your fuel, food, clothing and ammo are way more appealing.

    I already have that stuff stocked up though. 😜

    60 days of food & water, antibiotics (which would be worth their weight in gold), a few rifles & handguns, and enough ammunition to last me quite a while.

    I don’t think precious metals will be “worthless” per se considering gold & silver were valuable even way back in ancient times when war & famine were common place and life was nasty, brutish and short.

    However owning precious metals has saved lives. Jews in WW2 and Vietnamese in the Vietnam War were able to escape the persecution & conflict by paying for passage to somewhere safe in gold & silver.

  • Gam3rBlakeGam3rBlake Posts: 162 ✭✭✭

    @derryb said:
    I think you changed the title once the discussion started. Confusing thing to do.

    I think your real question is "Are fractional gold coins worth the extra premium?"

    As long as they continue to SELL for that extra premium at which you bought them, the answer is yes. The smaller sizes give you a larger buyer pool. As you have been told here before, always consider resell when you buy.

    No I promise I didn’t change the title at any point. In fact I honestly didn’t even know I could do that. 😆

  • Gam3rBlakeGam3rBlake Posts: 162 ✭✭✭
    edited November 17, 2020 9:30PM

    @bronco2078 said:
    The other thing about barter is bullets . I have a bag of potatoes you need , you pull out a .999 round I shoot you and you have no need to barter again and I have both things . Or if you shoot first you have both things and either way everyone is all sorted out :D

    Killing someone isn’t as easy as you might think. Even in a SHTF kind of scenario. There are cases of police officers & soldiers who were in life/death scenarios but just could not pull the trigger to kill. Even in WW1 it was known that many men purposely aimed above their targets heads because they just couldn’t kill someone. It’s one thing to have it in you to kill someone in self defense but it’s something else entirely to kill someone just to steal their stuff.

    However imagine this scenario:

    You and your group have lots of food & ammo and another group has precious metals and medicines.

    It would be in the interest of both groups to work together and trade rather than both groups going to war trying to have everything.

    In that case you might be willing to sell potatoes for 1 oz of silver per potato or 1 oz of gold for a piglet and then use that gold & silver to buy what you need.

    Trust me when I say many people would not want to resort to lethal violence unless absolutely necessary.

  • blitzdudeblitzdude Posts: 3,045 ✭✭✭✭✭

    @chesterb said:

    @3stars said:
    If we're in a barter SHTF situation your bits of metal are worthless to me. Your fuel, food, clothing and ammo are way more appealing.

    I have the liquor! That's gotta be worth something to someone.

    Only to the drunks. Time to head for the bunker, the conspiracy nut job stuff is getting deep up in here. Semper Fi!

  • TPGSTPGS Posts: 73 ✭✭✭

    Stock up on what the ladies need. Tampons and toliet paper. Easy peasy.

  • 1630Boston1630Boston Posts: 8,284 ✭✭✭✭✭

    Successful transactions with : MICHAELDIXON, Manorcourtman, Bochiman, bolivarshagnasty, AUandAG, onlyroosies, chumley, Weiss, jdimmick, BAJJERFAN, gene1978, TJM965, Smittys, GRANDAM, JTHawaii, mainejoe

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