Many people today have an interest in investment gold. They lack enough information about it to be able to make informed investment decisions. Understanding the gold industry is key to ensuring that you get the desired returns on your investment.
For instance, being able to differentiate gold and gold bullion is crucial. It will help you know if you are about to put your money in the right place. Many people confuse gold and gold bullion and sometimes use them interchangeably, but they are different in reality.
Gold bullion is the main focus of this blog post. It will define what gold bullion means and help you differentiate it from other gold products like fine gold, numismatic coins, or gold jewelry. This will make it easier to know if gold bullion is worth investing in and whether it can bring the desired returns.
It will also look into how people use gold bullion across the globe and also look into the value of gold bullion coins and gold bullion bars. You’ll be able to differentiate gold bullion from gold by the end of reading this blog post. Take your time to read to the end to ensure that you make the right investment decisions when entering the gold market.
Let’s get started.
Defining a Gold Bullion
Bullion is a general term for precious metals with high precious metal content. It can refer to any precious metal, including gold, silver, platinum, palladium, etc. In a nutshell, bullion derives its name from the precious metal’s purity rather than its form or anything else you may imagine. It is commonly found in the form of bars, whether that's silver bars, gold bars, or another form of bullion metal.
A precious metal needs to have at least 99.5% purity to become bullion. Otherwise, you can refer to it as gold if it doesn’t meet such high purity levels. You can make gold bullion into forms like bars, ingots, and coins when looking to make it ready for investment.
For instance, you can buy gold bullion (or silver bullion, or any other form of highly pure metals) in bars of different sizes, from 1 oz gold bars to hundreds of ounces of gold bars. You may also hear the term a troy ounce of gold, which equates to roughly 31 grams.
Dealers such as Acre have high-quality gold bars refined and ready for any gold investor to purchase. The varying sizes make it easy to invest in gold bullion. Besides, reputable bouillon dealers from the United States to Zurich allow flexible payments to make investment more manageable. Purchasing larger gold bullion blocks from bouillon dealers is specifically a cost-efficient way to buy physical gold at a lower premium.
It is vital to mention that gold bullion can only be physical gold bullion. Thus, other types of investment gold like EFTs, stocks, etc., cannot be gold bullion. This makes bullion worth investing in since it is tangible, and you can store it at home or in a third-party storage firm. It's an important aspect of the diversification of investment portfolios, largely to hedge against inflation and geopolitical risks that may otherwise effect gold prices.
Difference Between Gold Bullion and Gold
As noted earlier, there’s a difference between gold and gold bullion. Gold refers to the precious yellow metal that occurs naturally. After mining, it can get refined and used to make various items from legal tender to bars to the American Gold Eagle coin. It can even be used in electronics or manufacturing. But then, purity doesn’t matter; anything that contains this yellow element is gold.
Gold bullion is high-quality gold. It sells mainly because of its purity levels which makes it highly valuable. We already said that form doesn’t matter when talking about bullion. The main focus is on its purity levels which determines its face value and market price. Gold content levels are typically determined through fire assay.
That’s where the difference between these two lies. Gold bullion is expensive because of its high purity levels. Scarcity and collectability may also affect the spot price of gold. Gold is also costly because it has to get refined first. Once refined and made into jewelry or anything else, the gold spot price rises and becomes suitable for investment.
How Is a Gold Bullion Used?
It is vital to understand the use cases for gold bullion. That will make it easier to decide if it is worth owning. Well, people invest in gold bullion because of its ability to store value. It is highly dependable for keeping value, and it has a high universal purchasing power.
You can use gold bullion to store value for the short or long term. Most long-term gold bullion collectors are government mints, central banks, and private mints. Most individual investors hold it for the short term, but seasoned investors buy a lot of physical bullion for the long term.
The first step to investing in gold bullion is deciding the type. You can invest in bars or coins and later dispose of them whenever you want. Also, you should find reputable bullion dealers to work with when looking to invest in gold. A dealer like Acre will make your investment journey smooth.
They’ll make purchasing gold easy as they have flexible payment options. That makes it easy to stack your gold without having to break the bank. Before you know it, you’ll have enough gold to make you profits anytime you decide to sell it to a dealer.
What’s the Value of a Gold Bullion?
You also should know the worth of gold bullion before deciding if it is suitable for investment. As said before, purity is what matters when it comes to gold bullion. The higher the purity, the more the value bullion has. This also, in the end, makes its market price increase.
There’s no specific worth of gold bullion. Every bullion has its value, and purity is one factor that determines this. Before you decide to buy or sell gold bullion, you should check the purity level by testing it or having a professional help define its value and price.
The gold market has both genuine and fake dealers. Some sell fake gold or overprice it and take advantage of unsuspecting buyers. That’s one reason why you should scrutinize gold before buying it. As said, working with a professional can help if you’re a novice.
Another alternative is to find a reputable and trustworthy dealer. This has to be someone with experience in the industry and a reputation to protect. That will ensure you buy real gold and at the correct prices. They first inspect the gold, decide its value then set a price for it.
Gold Bullion: Bars vs. Coins
We already mentioned that gold bullion could only be physical. And the most common forms of physical gold are bars and coins. Many people think that gold bullion is only in bar form, but it can also be in coins. Thus, you have a choice to make when looking to buy gold bullion.
The significant difference between bars and coins is the shape. Otherwise, they could contain similar quantities of gold. Coins are often more expensive than bars. The high prices result from the amount of work and time invested in designing them into their shapes.
Gold bars are simple since all you need is to cut them into your preferred sizes. This is why they come slightly cheaper than coins. It is also the reason they are more attractive investments for beginners. If you are looking to enter the gold bullion market, then bars could interest you.
Coins, on the other hand, come with one significant benefit. They are much easier to liquidate than gold bars. Their small size and the fact that they come in usable form make them attract more investors. You can, therefore, never go wrong with gold coins if you want to multiply your wealth.
However, both are viable options for an investor looking to enter the gold market. All you need to do is consider your budget, needs, and preferences. Once you do, it will be easier to choose the best investment option for you between bars and coins.
Is Gold Bullion a Good Investment?
This is a question that crosses the mind of every beginner. Knowing whether gold bullion is good for investment helps you make informed decisions. Yes, gold bullion is a good investment, and you won’t go wrong with it if you understand how the gold market works.
Various factors make gold a better investment than most physical assets. One is the fact that its value doesn’t decline during economic crises. However, currencies fail in such times, and people holding paper money face many risks.
Another reason gold is a good investment is the fact that it is universally acceptable. Gold has the same value anywhere you go around the world. And, its demand also doesn’t change, so you can be sure that it will sell anytime anywhere and help solve financial emergencies.
Those are examples of the reasons gold is an excellent investment. People invest in gold with personal reasons in mind. Some do it for prestige, while for others, holding gold is a hobby. Thus, you do not have to invest in gold bullion for profits.
Those are the basics that anyone looking to invest in the gold market should know. We hope that you now understand the difference between gold and gold bullion. And that you can make wise decisions on the gold bullion to buy when you want to start your investment journey.
This blog post has also gone further to compare gold bars and coins. This is often the most confusing part for beginners. We could recommend starting your investment journey with gold bars. They are cheaper than gold bars and perfect for a starter.
You are free to contact us for more insights if you want to start investing in gold bars. We will answer all your questions and help you start investing from scratch.