Legal Tender or Bullion? The Status of Gold Coins Explained

Determining the status of gold coins in New Zealand can be quite difficult because, as with many countries across the world, their status changed over time! New currencies were introduced, reducing the need for gold coins, although they remain extremely valuable. However, for potential investors, collectors or intrigued members of the general public, this article will explore the overlap between ‘legal tender’ and ‘bullion’ when it comes to determining the status of gold coins. Read on for more, below!

What’s the difference between legal tender and bullion?

Legal tender refers to currency, recognised and made valid by a government, able to be used to settle debts. This includes purchasing an item from a store, or paying off a loan! In New Zealand,

Bullion coins are an asset with a defined value, based on their precious metal content. Therefore, the more gold in your gold bullion, the more valuable it is. They are not typically used in everyday transactions, though can be invested in as a store of value! This is why financial advisors often recommend purchasing bullion in times of economic crisis. They do not have a fixed face value stamped on them, and should always be professionally appraised.

That is to say, the difference between legal tender and bullion is actually quite simple. Legal tender is official currency with a fixed face value not dependent on the presence of precious metal, unlike bullion.

So, where does gold stand?

In New Zealand, gold coins can count as legal tender if held as reserves by central banks or institutional investors. They aren’t designed to be circulated in everyday life, though. Their gold content makes them far more valuable than their face value may seem!

When the New Zealand as the world now knows it was established, British gold coins were used as legal tender, but were phased out over time in favour of the New Zealand dollar. Now, gold coins are considered bullion to most people, and they should be treated as such! They are one of the most straightforward ways to invest in gold, and protect your financial future.

Now knowing the status of gold coins, why not buy gold bullion coins of your own to enhance your investment portfolio? At the Commonwealth Vault, we offer our clients the opportunity to buy a range of gold and silver bullion through a streamlined purchasing process that protects their privacy and their investment. For more information about buying gold bullion coins with the Commonwealth Vault, browse our website or contact a member of our team in Christchurch or Auckland, today.