What is Bullion?
Understand not merely what the term "bullion" means in the financial industry, but also how it differs from virtually all other asset classes.
Bullion is a physical precious metal in the form of a bar, coin, or round that is almost entirely valued by its precious metal melt value alone.
Knowing the definition of the word "bullion" is not enough to understand the ins and outs of this financial asset. For a long time, precious metals like gold and silver were the base of the monetary system. Currency was valued in relation to gold and silver prices. However, with the ending of the gold and silver standard in the 20th century and the rise of fiat currencies, in other words, a form of currency issued by a central bank that is not based on any form of commodity.
However, fiat currencies are always subject to inflation and devaluation. That is where bullion, such as physical gold or silver, usually comes in. As a way to diversify a portfolio and hedge against financial crisis, when interest rates are low and there is distrust on the stock market. Most experts would suggest allocating 10% to 15% of your investment portfolio to physical bullion, but that number can go even higher, depending on the market trends and your investor profile.
The Bullion Market
Bullion market prices are centered around an average price for each precious metal. This average bullion price is called a spot price. You can keep track of the gold spot price, silver spot price, and even platinum and palladium. The spot price of each physical precious metal is determined by trades occurring live on business days in markets such as the LBMA ( London Bullion Market Association ) or COMEX (Commodity Exchange Inc.). The spot price for each precious metal fluctuates during the day, sometimes by the minute.
What is Gold Bullion?
Gold bullion products are made almost entirely of gold produced specifically for investment purposes. You can find investment-grade gold bullion in .9167 fineness level (22-karat gold) or .999 (24-karat gold). Some examples of gold bullion include gold bullion coins, gold bullion bars, and even gold medals or rounds. The gold price is usually more stable and many experts suggest that gold is a long-term investment.
What is Silver Bullion?
Silver bullion is normally referred to as .999 pure silver products. Silver prices tend to be more volatile than gold's because it has more industrial uses, hence, more demand. Silver bullion includes silver bullion coins, silver bullion bars, and silver bullion rounds.
What are Bullion Coins?
Bullion Coins are physical precious metal items struck in the shape of a coin and issued as legal tender by a sovereign government mint. Gold coins and silver coins almost always have an enforceable face value (an exception being Krugerrand coins struck by the South African Mint). However, their real value comes almost entirely based on the precious metal melt value with a slight seigniorage premium (intrinsic value). Some of the most recognizable bullion coins in the industry include the American Eagle bullion program, the Maple Leaf series.
Some bullion coins, especially some key dates, can be very valuable to a coin collector, so on certain occasions, some bullion coins can share a market with the numismatic community.
Silver Bullion Coins
Here is a list of the most popular silver coins among our customers here at SD Bullion:
- American Silver Eagle;
- Canadian Silver Maple Leaf;
- Austrian Silver Philharmonics;
- South African Silver Krugerrand;
- Australian Silver Kangaroo;
- British Silver Britannia;
- Chinese Silver Panda;
- Mexican Silver Libertad.
Gold Bullion Coins
Gold Bullion coins that usually attract investors and coin collectors worldwide:
- American Gold Eagle;
- American Gold Buffalo;
- Canadian Gold Maple Leaf;
- Austrian Gold Philharmonics;
- South African Gold Krugerrand;
- Australian Gold Kangaroo;
- Gold Britannia;
- Chinese Gold Panda;
- Mexican Gold Libertad.
What are Bullion Rounds?
Bullion Rounds are physical precious metal items struck in a flat round shape, like a coin, by private mints. As such, they do not enjoy legal tender status, nor have a face value by law. Their value is almost entirely based on the precious metal melt value alone (with some rare collectible exceptions). Rounds usually have lower premiums over the spot prices when compared to a gold coin or silver coin, for instance.
What are Bullion Bars?
Bullion Bars are physical precious metals manufactured in a bar formation. They can be poured, by cooling molten gold or silver in a mold to give its shape or undergo a more precise process through minting, with the use of pressing machines that can add detailed designs. Their value is almost entirely based on the precious metal melt value alone (with some rare collectible exceptions). Struck by private mints mostly, there are a few sovereign government mints who also strike gold bars and silver bars (e.g. Royal Canadian Mint bullion bars).
Some of the most prominent private and national mints that produce silver and gold bullion bars include:
- PAMP Suisse
- Valcambi SA
- Germania Mint
- Scottsdale Mint
- Sunshine Minting Inc.
- Royal Canadian Mint
- Royal British Mint
- Perth Mint
Silver Bullion Bars
You can find silver bars in a variety of weights to accommodate any investment needs. You will find any of the options below on our website to purchase:
- Silver Gram Bars;
- 1 oz Silver Bars;
- 5 oz Silver Bars;
- 10 oz Silver Bars;
- Kilo Silver Bars;
- 100 oz Silver Bars;
- 1,000 oz Silver Bars.
Gold Bullion Bars
There are usually fewer size options when it comes to gold bars. The reason is that gold prices tend to be less volatile than silver’s. In addition, silver is far more affordable than gold, so it allows for a bigger variety of options. These are the gold bar weights you will be able to find on our website:
Purchasing and Investing in Bullion
Buying physical gold bars or silver bars is not a complicated process. It is possible to shop at brick-and-mortar precious metal dealers. However, remember that an online bullion dealer is usually able to offer lower premiums over the spot prices as they tend to have lower business costs. Hence, it is possible to acquire more gold and silver for your dollar invested.
Experience shows that gold coins and silver coins tend to be a more liquid option when it comes to bullion reserves. Some of the most popular bullion products remain the bullion coins that are actively made by the United States Mint ( aka US Mint ). The US Mint produces the following government-guaranteed legal tender face value bullion coins sold not merely in the USA, but all over the world year after year:
- American Eagle Silver Bullion Coins
- American Eagle Gold Bullion Coins
- American Eagle Platinum Bullion Coins
- American Eagle Palladium Bullion Coins
- American Buffalo Bullion Coins
On the other hand, as we have mentioned before, silver and gold bullion bars will likely fetch lower premiums from a bullion dealer. So you can acquire the same amount of pure gold and silver at usually lower bullion prices. Of course, when you feel it is time to sell bullion back to dealers or other investors directly, the premium prices you will get on the buyback process tend to be lower as well.
Frequently Asked Questions
What's the difference between gold bullion and gold?
The word gold, on its own, refers to a chemical element with the atomic number of 79 and is symbolized by the letters Au in the periodic table. It is a noble metal because it is resistant to oxidation and corrosion. In addition, it is a precious metal for its scarcity on the crust of the Earth and its different uses in jewelry, electronics, industry, and as a store of value in investment-grade purity levels. When gold is used to produce products for investment purposes (gold coins and gold bars) it is referred to as gold bullion.
What is the cheapest way to buy gold?
Experience shows that purchasing gold from an online bullion dealer is the safest and potentially the cheapest way to buy gold. In general, online bullion dealers have lower business costs, which allows them to offer better premiums over the spot price when compared to local shops.
Is gold bullion a good investment?
Gold is less volatile than stocks or even other precious metals. Hence, many experts see gold bullion as a relatively safe investment. They believe it to be a sensible way to diversify a portfolio and hedge against inflation, especially in times of economic downturns.
What is the difference between bullion and coins?
The term coins refer to round minted metals issued by a Central Bank or Government Mint that enjoys legal tender status and has a face value. Pennies, nickels, dimes, and quarters are coins. Bullion is a kind of precious metal product (gold, silver, platinum, or palladium, for instance) specifically produced for investment purposes. Bullion can have the shape of a coin, such as the American Gold Eagle coins. However, their real value comes from their intrinsic bullion content, rather than from their face value.
What is the difference between bullion coins and proof coins?
Bullion coins are usually just designed for investment purposes. Proof coins are produced as collectible items, in addition to being a possible investment option. Bullion coins might enjoy a semi-numismatic value, especially some key dates. But that is not their general purpose. Proof coins undergo a more precise minting process and typically receive a frosty finish to highlight the details of the design.
What is the difference between bullion coins and numismatic coins?
Numismatic coins are historic issues of old circulating coins, preferably in good condition and from key rare dates. Some examples include the Liberty Head Nickel, the Flowing Hair Dollar, the Draped Bust Quarter, the Seated Liberty Half Dollar, among others. Bullion coins, on the other hand, boast their value specifically from their precious metal content.
Buying Bullion Online at SD Bullion
SD Bullion has been in business since 2012 and has satisfied hundreds of thousands of customers. We offer the lowest premiums over the spot prices guaranteed! If you have any questions, reach out to our customer support service at 1(800)294-8732 or at email@example.com. We also have a web-chat option on the bottom right of your screen. We are available from Mondays to Thursdays, from 8 am to 6 pm EST, and on Fridays, from 8 am to 5 pm EST.