Finance

Gold Vs Gold Bullion: What’s The Difference?

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If you follow markets or if you read anything about the gold market you will often find gold traders and commodities experts referring to gold rates in the bullion market. If you delve deeper you will realize that gold and gold bullion are often talked of as if they were two separate things. Gold and bullion are different from each other. When you talk about jewellery, it would usually be referred to as gold but when traders and central banks move gold they often refer to it as bullion.

The term “bullion” is not exclusive to gold. It is also used to refer to other precious metals such as silver and platinum. So the term itself is pretty vague.  Bullion generally refers to bars, ingots, and coins. The term is generally used in the commodities market and people would normally talk of gold being traded in the commodities market. Silver and Platinum are commodities too but gold is the most heavily traded.

Bullion is defined as a refined and stamped precious metal. For gold, it means, a refined metal that has been refined to 99.9% fineness. Gold is a soft metal and most gold products are mixed with other metal alloys to make it stronger and more durable.  Most people think gold bullion is just those big gold bricks you find in Fort Knox or a Central Bank’s vault, the kind of bricks you would see in movies like “The Italian Job”, “Three Kings” and a lot of other movies about gold heists.

Gold bullion bars are refined according to the London Bullion Market Association’s specification for their Good Delivery system. These are refined by private refiners that are located all over the world. You can sell bullion made by manufacturers made by refineries on the LBMA’s “Good Delivery List”

Large gold bars are an efficient way to invest in physical gold. You can buy gold bars and store them at a gold bullion storage facility that is insured. Bullion bars are also good to buy if you use gold to make things like jewellery, electronics, art or other things requiring a sizeable amount of gold. If however, you don’t really use gold, gold bars can be costly to keep, you will need extra security and you may encounter a myriad of fees when you need to liquidate. These could include assaying fees, handling fees, and refining fees. It is costly to liquidate a large chunk of gold than it is to sell off, smaller amount..

Bullion also comes in the form of coins, these are basically smaller more affordable versions of bullion. Bullion coins are minted in fractions of one troy ounce to fit different budgets. A lot of countries have official bullion coins that come with a face value. However, just because you have a gold bullion coin with a face value of $20 does not mean that the coin itself is worth that much. You can sell bullion coins to dealers for a good price. You need to understand the bullion and the coin market so you know where you can sell your gold, how and for how much.

For a general idea, visit auction sites, coin collector sites, and coin dealer sites to see what the current prices of coins are.

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