Thursday, 27 August 2015

Everything You Should Know About - Bullion

The word 'bullion' has a very simple definition: a refined and stamped weight of precious metal. It is also used to refer to a metal piece shaped in the form of a coin or a bar. The word bullion comes from the old French word bouillon, which meant "boiling".

Bullion refers to precious metals in bulk form which are regularly traded on commodity markets. The value of bullion is typically determined by the value of its precious metals content, which is defined by its purity and mass.

To sum it up, the phrase “gold bullion”simply means gold in its purest form, valued by its weight and quality 99.9 pure, plus the small percentage costs incurred in refining, fabricating, and shipping that bullion to you.

A range of professional participants are active in the bullion markets: banks, fabricators, refiners and vault operators or transport companies as well as brokers. They provide facilities for the refining, melting, assaying, transporting, trading and vaulting of gold and silver bullion. Bullion investments can be considered as insurance against inflation. Buying gold bullion is now cheaper and easier than ever before. And it's still, by a long way the safest way to own gold.

Bullion


DIFFERENT FORMS OF GOLD BULLION

Gold Bullion Bars

If you’re serious about investing in gold, bullion bars provide a great way to efficiently purchase large quantities, and they’re pretty easy to store. However, there are some significant drawbacks. Gold bullion bars can be difficult and costly to liquidate when you’re ready to use and/or sell them. Also, while they do come in a range of sizes, they tend to come in larger sizes than coins, making them less versatile. Overall, they’re more appropriate for serious gold investors.

Gold bullion bars can weigh anything from a few grams upwards. 1kg and 100 oz ( Approx 2.83kg) bars.

Gold Bullion Coins

Bullion coins are cast from precious metals and bought for investment purposes. The only real difference between coins and bars is that coins have a different shape (coin shape, obviously) and are smaller. The value of these coins is whatever the current market price for gold is, plus a small amount to cover production costs. Since they’re smaller and already in usable form, coins are easier to liquidate and use than bars. Because of their versatility, gold coins are a good way for beginners to venture into the world of gold investing.

Well-known examples of Bullion coins are :

  • British Sovereign   
    British Sovereign

  • Canadian Maple Leaf     
    Canadian Maple Leaf

  • American Golden Eagle   
    American Golden Eagle

  • South African Krugerrand  
    South African Krugerrand

When to Buy

The simple aim of buying bullion is to buy when prices are low and sell when prices are high. However life and the markets are never simple or easy to predict. As we see, precious metals are best regarded as a long-term investment: so if you are able to buy during a slight dip in price that is good, but it is hard to call every turn of the market when considering how to buy gold.

Where to Buy
Investors can buy bullion gold through gold bullion dealers, online shops or providers of vaulted gold.

How to Sell

It is important to invest with a supplier that has a transparent, liquid market for buying back bullion at favourable rates that do not disadvantage the holder. Beware of offers of ‘all-in-one’ pricing where you cannot relate the deal to market rates.
You will often discover that companies, who sell bullion to you, particularly in the case of bars, will discount the market price by only 2% or 2.5% if you bought it from them.

Cost

Their value is based on their bullion content and prices fluctuate daily. In general, costs for the production of bullion gold coins are higher than the costs of producing bullion gold bars. Bullion gold coins are typically minted, whereas bullion gold bars are cast.

Both bullion gold bars and bullion gold coins are normally sold at a low premium or mark-up above the value of their gold content as compared to non-bullion gold such as collector coins or ornamental gold bars, also called investment bars.

Make a leap into the exciting world of Gems & Jewellery industry. Get Certificate in Gold Appraisal at Solitaire Diamond Institute.


Article by
Krupa J.S
CAD Designer, SDI