What Is Gold Bullion?
Gold is a dense precious metal known for its lustrous yellow shine. You may remember from chemistry class that gold carries the symbol of Au on the periodic table of elements.
Gold is a fascinating subject, with a rich history and massive future potential. Yet, it’s often misunderstood. This article will shed some light on gold bullion, its advantages and disadvantages, and what individuals should know before investing in it.
So, what is gold bullion?
Gold Bullion is Investment-Grade Physical Gold
Gold bullion refers to physical gold that is valued based on weight. It takes the shape of gold bars, coins, and rounds.
To be considered bullion by international standards, gold bars must contain at least 99.5% pure gold. Gold coins must contain at least 90% pure gold.
Bullion is pronounced as “bool-yuhn”, or sometimes “bool-yen”. It should not be confused with bouillon (pronounced “bool-yon”), which is a culinary ingredient used to make soup. We do not recommend using gold bullion for your next chicken noodle soup. Likewise, beef bouillon cubes are not a good long-term investment!
While it makes a lousy soup, gold bullion is an excellent long-term store of value. It can help preserve wealth, protect against inflation, and improve the diversification of an investment portfolio.
A Brief History of Gold Bullion
Historically, gold has been used as both a store of value and a common currency. Most societies throughout the millennia have valued gold highly. Many common coins were minted out of pure gold or gold alloys, wealth was often stored in the form of gold. Interestingly, the value of gold has kept up with inflation over much of written history, helping to preserve wealth for thousands of years.
The Gold Standard
In more modern history, we can look to government policies such as the Gold Standard. Up until 1933, every dollar in circulation in the United States was technically backed by physical gold bullion held by the government.
Under this system, every US currency note could be exchanged for physical gold. The federal government was unable to print more currency without first obtaining more physical gold bullion.
The gold standard was abandoned in 1933, with the last remnants of the system remaining in place until 1973. Today, the US government still holds huge quantities of physical gold bullion. However, the US dollar is not backed by gold or any other hard assets.
Gold Is an Ancient Asset with Intrinsic Value
Bullion is highly valued for its intrinsic value, otherwise known as the melt value. This means gold bullion is worth approximately the current value of the gold it contains. It generally carries little to no collector value, and is instead priced based on the current spot price of gold.
Collector coins are not generally considered bullion, even if they contain high concentrations of gold. Similarly, a piece of jewellery containing 24 karat gold would not be considered bullion, and would likely be worth more than its gold melt value.
Key Facts about Gold Bullion
- Gold bullion comes in the shape of bars, coins, and rounds
- It is valued based on the melt value of the gold it contains
- Gold bullion purity is measured in fineness (999.99, instead of 24 karat)
- Gold is typically measured in troy ounces (31.1 grams), grams, or kilograms
- The central banks of most major countries hold large reserves of gold bullion
- Many institutional and individual investors also hold physical gold bullion
Types of Gold Bullion
Gold bullion is available in a variety of shapes, sizes, and weights. The most common forms are:
Gold Bars - Low Cost, High Purity, Wide Availability
Individual investors can select gold bars made by both government mints and private producers. Gold bars typically contain 99.5%+ pure gold. The weight of a gold bullion bar can be as small as 1 gram and as much as 1 kilogram, or more. Central banks hold large gold bars, often weighing hundreds of ounces each.
Gold Coins - Moderate Cost, Global Recognition, Legal Tender
Many governments around the world offer official gold bullion coins. Examples include the American Gold Eagle (1/10oz, 1/4oz, 1/2oz and 1oz), and the Canadian Maple Leaf (1/20oz, 1/10oz, 1/4oz, 1/2oz and 1oz). These gold coins tend to command a small premium over spot price. Interestingly, many gold coins are technically legal tender, but their face value is usually worth far less than the actual gold value of the coin.
Gold Rounds - Low Cost, High Purity, Not Legal Tender
Similar to gold bars, gold rounds are produced by a variety of mostly private mints. While they look similar to gold coins, they do not carry a face value, and are not legal currency. Standard sizes are generally 1/10oz, 1/4oz, 1/2oz and 1oz.
How Much Is an Ounce of Gold Worth?
One troy ounce of gold (31.1g) is worth approximately the current gold spot price.
The gold spot price changes constantly. It is traded nearly 24 hours a day on the global spot market. Gold spot price is affected by demand from industry, jewellers, and investors alike. World events, expectations of inflation, and other factors can all contribute to the current gold price.
Gold Bullion Costs Slightly More Than Spot Price
When buying gold, you will usually need to pay a small premium above the current spot value. This premium covers the cost to design, produce, and distribute the bullion.
In some cases, a gold coin or bar may be worth slightly less or slightly more than spot price. This depends on the item’s collectible value, condition, and market demand.
Why Invest in Gold Bullion?
Gold is a popular investment class and store of value. It’s held by government central banks, investment funds, and individuals alike. A few benefits of investing in gold include:
1. Gold Preserves Wealth
Gold has been considered valuable for thousands of years. It is a powerful tool to preserve generational wealth, while protecting against long-term inflation.
2. Gold Is a Powerful Hedge
Gold can serve as somewhat of an insurance policy. It can help investors hedge against fluctuations in currencies, market crashes, and inflation.
3. Gold Helps Improve Diversification
As an asset class, gold helps improve the diversification of an investment portfolio. It tends to move independently of other assets, which can help smooth out the bumpy ride of investing.
4. Gold Is a Physical Asset
For those seeking a tangible asset, gold is very attractive. It’s one of the few investments that you can actually physically hold, gift to your children, or stash away for a rainy day.
There are many valid reasons to invest in gold — these are just a few of our favourites. For more information, see our full guide to investing in precious metals.
How to Buy Gold
Unless you happen to live in Abu Dhabi, where gold can literally be purchased out of a vending machine, you will likely find the most success with buying gold online. Residents of large cities can also look into local coin shops, but few coin shops can match the selection or pricing of online retailers.
1.Choose a Reputable Bullion Dealer
It’s very important to work with a well-established and reputable gold dealer. This ensures that you will receive authentic,
Investment-grade bullion at a fair price. This company is the most trusted gold dealer in the industry, with more than 130,000 positive reviews from customers.
1.Choose a Type of Bullion
Gold bars tend to carry the lowest premiums, while gold coins are often more durable, and feature more intricate designs. Regardless of which style you choose, SilverGoldBull offers industry-leading premiums and one of the widest selections available online.
2. Store Securely
Gold bullion is extremely valuable. Care should be taken to ensure that it is stored securely and discretely. For investors seeking peace of mind, the Silver Gold Bull Bullion Storage service allows for safe, insured storage in our world-class secure facilities.
Is Investing Investing in online Gold or Silver Bullions Halal?
Buying and selling gold is halal off-line is halal, however the subject matter here is about online gold trading or Investment.
There are two types of online gold trading: Online digital trading , and online physical trading.
In most cases the digital traders, the buyer and seller are not interested in possesing and delivery of the physical product. They trade in non-existence products with the sole intention of making money from non-existing products . This type of trading is not permitted in islamic commercial law. The reason is, in Islamic sales contract, majority of Islamic shariah scholars opined that the subject matter of a sales contract must be in existence at the moment the contract is concluded. It is therefore void, if the gold does not exist physicaly. This is subported by a famous hadith of the Prophet Mohammed (may peace be upon him) who said: "Bargain not about that which is not with you."
The 2nd type is of online sales of physical gold. The buyer can buy from trusted bullion dealers and ask for delivery, and it will be delivered to him/her. He/she can also ask the company to store it for him/her, as an asset of invetment portfolio. Read more
Silver and Gold is one of the trusted International Bullion Dealer. The company was voted the the best dealer of the year 2018 by world gold council.
They have free shipment of orders above US$199, and will ship to selected countries below
Asia United Arab Emirates | Hong Kong | Israel | Japan · 日本 | Korea | Qatar | Saudi Arabia | Singapore |
Europe Österreich · Austria | Belgien · Belgique · Belgium · België | Schweiz · Suisse · Switzerland | Czech Republic | Deutschland · Germany | Danmark · Denmark | Estonia | Spain · España | Finland | France · français | United Kingdom | Ireland | Iceland | Italy | Liechtenstein · english | Luxemburg · Luxembourg · Luxembourg | Monaco · français | Netherlands · Nederland | Norway · Norge | Poland | Sweden · Sverige | Slovakia |
North America Canada · français | Trinidad and Tobago | United States · Estados Unidos |
Oceania Australia | New Zealand |
You Are Interested to Invest But You did Find Your Country in The List? Dont Worry, There is an Option for You
You can Invest in the gold and the company will store the gold for you, till you need to sell , and they will buy it from you
How long can they keep it for you. It can be kept as long as you want it
Interested, GET STARTED.