Gold Bullion

What Is Bullion?

Most of us probably think of gold bullion as large gold bars or ingots, the best known example being those stored in Fort Knox. The term is actually more general than that. "Bullion" just means a lump of precious metal, usually silver or gold. This can include large ingots but also small pure (or nearly pure) solid gold coins.

The level of purity required for investment grade gold varies between countries, usually between 99.5% and 99.9%. Bullion is often stamped with a purity level such as .999 (which means 99.9% pure) or 999.9 (99.99%). The difference between different gold bulion numbers thus referes to a difference in purity.

Buying and Selling

As with most commodity and currency trading, dealers rarely buy and sell at the same price - they make their profit from the difference between the prices, known as the spread. Many dealers and merchants refuse to accept payment by credit card because the cost of processing the card transaction eats too far into their spread pricing profit.

Today many people want to invest in gold without actually having to physically own it there are options such as Exchange Traded Funds (ETF) which track the market price. Such investments can be confusing to those of us without trading experience and there may also be tax implications. You should consider taking independent expert advice before making any investment.

For those of us without millions to invest you can also buy miniature bullion bars which, although small, are still extremely pure gold and fun to own or give as a gift.

Types of Bullion

Gold bullion for investment and official purposes normally comes in one of three forms: cast or minted bars and coins.

Cast

Cast bars are the traditional form of bullion and usually assocated with larger bars and ingots and are formed by pouring molten gold into a mould. The most common sizes of cast bar are 100g, 250g and 500g, however far larger weights are used by banks and governments.

Minted

Minted bars are a newer development, first issued in 1952. Their method of production is similar to that of gold coins: the bars are stamped out from a thin strip of metal. Often they are also stamped with a mark indicating their origin. Although large minted gold bars are available on the market, this method of manufacture is more commonly associated with lower weights.

Coins

Many individuals who invest in gold prefer to buy bullion coins such as the American Gold Eagle, the South African Krugerrand or British Sovereigns.

Modern gold bullion coins are rarely intended to be spent, even if they are legal tender. The value of the raw gold is usually more than the face value of the coin.

If you're considering buying any form of gold bullion as an investment then I suggest you seek advice from an expert regarding the suitability of the purchase and any tax or other legal implications.