Most people are aware that Gold is an investment. But what is something made out of Gold that isn’t classified as Gold bullion? And what is Gold bullion?
Gold Bullion: What It Is and Isn’t
Gold bullion is essentially high-purity physical Precious Metal that’s used for investment. Usually, this is in the form of ingots or bars, but there are other forms of bullion. Some coins are referred to as “bullion coins” and are usually made of very high purity Gold or other Precious Metals.
Bullion refers to investment-grade metal, not just an object that’s made out of Gold. Jewelry and other uses of Gold are not necessarily included. There may be investment-grade jewelry, but it’s uncommon, as Gold’s softness in very high grades of purity makes it impractical for regular wear.
Bullion’s Uses in Investment
Much of the Gold bullion in the world is kept by central banks. The United States is the world’s largest holder of Gold, with over 8,000 metric tons. These are kept in large bars in the bank’s vaults and can be transferred between banks for transactions.
Many people also like to invest in physical bullion themselves. Individual bullion investment often takes the form of high-purity bars or coins, often in the size of an ounce or less.
Some commonly used Gold coins have a lower purity than regular Gold bullion but may be desirable for other reasons. For example, in the United States, the U.S. Gold Eagle is an extremely popular investment coin. It has some tax benefits that other coins do not, despite its lower purity of 91.67%. The South African Krugerrand is another commonly used Gold coin. This is because it was the first Gold coin struck purely for investment purposes on the market, and though its Gold content is also 91.67%, it has been one of the most popular coins for so long that it is recognized and easily bought and sold around the world.
When people refer to bullion coins, they are referring to high-purity coins and rounds like the U.S. Gold Buffalo, the Canadian Gold Maple Leaf, the Austrian Gold Philharmonic and the Australian Gold Nugget or Kangaroo. You may also hear the term used for lower-purity coins like Eagles or Krugerrands, but bullion is typically over 99.5% fine.
Buying Gold Bullion
Gold bullion can be bought and sold easily around the world. It is one of the most liquid and recognizable stores of value. That is one of the biggest reasons individual investors purchase it, especially those who are insuring themselves against economic shock or collapse.
Gold is often bought as an investment hedge as well, though not in physical form. Bullion refers to the physical metal itself, and investment in ETFs, Gold mining stocks and other assets that don’t require physical delivery is not actually investment in bullion.
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This content was originally published here.