Gold has been gaining a lot of popularity as an investment vehicle recently. Because of worldwide economic unrest, investors are buying this precious metal to hedge against inflation, currency fluctuations and economic, political and social crises.
What is gold bullion?
Gold bullion's value is based just on the content of the precious metal. You can buy it in two forms: gold bullion coins, and bullion bars. Gold bullion bars and coins are different from jewelry or numismatic coins in the sense that they are not valued for any artistic or historical value.
Purchasing gold bullion coins and bars as an investment
Purchasing gold bullion coins and bars is a safe way to invest in gold. Gold coin prices tend to track the world price of this precious metal, although you can expect to pay a premium of 4 to 8% depending on the
quantity you buy. On selling bullion coins to dealers, you can also expect to get 4 to 8% less than the world gold price. Gold bullion bars come in a variety of sizes, and the purchase price is similar to that of gold bullion coins. These bars can weigh anywhere from a few grams to 1 or even 3 kilograms. These larger bars are typically for trading in bullion markets such as New York and Zurich, but have to pass through rigorous controls to ensure bullion purity and integrity. The main gold bullion market is in London. Here, the London Good Delivery gold bullion bar is traded. The weight of the London Good Delivery Bar is about 400 troy ounces, which equals about twelve and a half kg, and its length is about 11 inches. The name of the manufacturer, weight and purity are usually stamped on the top surface.
Gold bullion bars can appear quite scratched up and dented as a result of the soft bullion bars rubbing up against one another as they are stacked in the storage vaults. As gold bullion has no aesthetic value, it is treated as a commodity rather than with the gentleness you would associate with jewelry. Still, the London Good Delivery bar is considered the most important bullion in the world. These bars traded between bullion sellers and buyers in London are the standard for bullion trading across the world.
To be traded on the London market, gold bullion bars must have a purity of 99.5% or more, have a standard shape and weigh about 400 ounces, have been examined and stamped for purity and weight, have been manufactured by an approved refiner, and are usually accepted only from accredited bullion carriers or vaults. London Good Delivery bullion bars are the cheapest gold to trade in, and also commands the highest prices on the gold market. However, this type of gold bullion is not generally accessible outside of professional gold trading circles, as they are very expensive, and are kept in vaults that do not deal directly with private buyers. For those of us who are interested in purchasing gold bullion coins and bars as an investment, the best way is to go through gold bullion dealers such as BullionVault.
Although gold bars generally carry lower premiums than coins, you can get smaller markups with some of the old gold bullion coins (Austrian 100 Coronas and Mexican 50 pesos) which were the main gold bullion coins in the 1970s, before Gold Maple Leafs and American Gold Eagles were introduced, in 1979 and 1986 respectively. Nowadays, the Austrian 100 Coronas and Mexican 50 peso gold coins are not promoted in the United States, accounting for their lower premiums relative to some of the new gold bars. But these coins can be hard to come by.