'Fractionals’ make bullion coin investing more affordable

Nov 24, 2020

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Bullion coins made from 1oz of gold make sense for many investors. It’s certainly the most popular weight sold by The Perth Mint.

But there are denominations made from less than 1oz.

These coins are known as ‘fractionals’ – and they provide investors with a number of practical benefits.

Because they contain smaller amounts of precious metal, fractional coins are sold at lower price points. For those on a tight budget, they make accumulating gold bullion possible for a more modest outlay.

Some people invest in gold to protect themselves against the worse-case scenario – a total collapse in the financial system. This type of investor probably believes fractionals would be useful to barter or trade with if paper currency suddenly became worthless.

Disaster scenarios aside, the other main benefit offered by fractionals is flexibility when it comes to converting precious metal back in to cash. For example, a portfolio containing exclusively 1oz gold coins means that a minimum of 1oz must be sold.

Sellers who want to redeem smaller amounts of gold could have achieved a more suitable outcome had they diversified through a range of fractional coins.

Bear in mind, however, that the premium over spot (i.e the cost of manufacture and sales) will likely be higher for smaller coins. If you’re interested in minimising the premium paid, then kilo and 10oz coins represent better value.

Australian fractional coins

The Perth Mint introduced Australian Nugget 1/2oz, 1/4oz and 1/10oz gold bullion coins in 1987. The series morphed into the renowned Australian Kangaroo and each size has remained popular with investors ever since.

The Australian Lunar series, first issued in 1996, provided buyers with the same choice of weights and an even smaller 1/20oz option.

Struck from 99.99% pure gold with the same meticulous attention to detail as their larger counterparts, each fractional is issued as Australian legal tender, a guarantee of its precise weight and purity.

For availability of Australian fractional gold bullion coins, please visit The Perth Mint website.