What is a Bullion?

Published by Thomas Herold in Investments, Trading

'Bullion' is explained in detail and with examples in the Investments edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.

Bullion refers to gold, silver, platinum, or palladium that is officially government-recognized and -approved for its purity of minimally 99.5 percent by expert assayers. It generally comes in the form of either ingots or bars instead of collectible coins.

Bullion is created by mining companies unearthing the precious metals then extracting them from rock either through extreme heat separation or chemical separation. Once this process has been completed, the product becomes known as parted bullion. When it is still mixed with at least another metal, this is known as unparted bullion.

Investors and central banks alike hold gold and the other precious metals most commonly in the form of bullion rather than collector coins. The downside to such forms of the precious metals is that it is costly to either insure or store. The markets make it easy to trade bullion practically 24 hours each day, seven days a week. The volume will commonly be extremely high with the majority of transactions actually occurring either over the phone or electronically alternatively.

The vast majority of bullion is purchased in either silver or gold. Silver presents a few appealing options. Junk silver can be purchased in bags of early 1960s era circulating silver coins which came in 90 percent pure form. Since these coins have no practical collectible or numismatic value any longer in their heavily worn and used forms, they make a good format for purchasing silver.

There are also many bullion coins from which investors can choose. The classic favorite in the U.S. is the Silver Eagle. Other popular international silver coins include the Silver Maple Leaf, the Silver Britannia’s, the Silver Vienna Philharmonics, and the Silver Australian Koala Bears. Silver is more volatile than gold and the prices can move dramatically. It only takes a relatively small movement to make huge differences in the value of significant silver holdings too.

On the other hand, gold bullion does not come in the form of so-called junk gold. At the prices gold fetches, this would be an insult to even suggest. It does not mean that gold bullion investments have to break the proverbial bank. It is possible to buy it in small denominations of as little as one-tenth of an ounce in some of the coins like the Gold American Eagles. It also comes in smaller denominations in the form of Canadian Maple Leafs, the Vienna Philharmonics, the Gold Britannia’s, and other national mint-produced pieces.

The choices for platinum and palladium bullion coins and bars are far more limited. Both the Canadian Maple Leafs and the American Eagles come in platinum, as does the Vienna Philharmonic, Europe’s most enduring non-numismatic coin. Palladium is mostly limited to the long-lasting Canadian Palladium Maple Leafs, as no other major world mint strikes non-collectible coins in this rarer and more unusual member of the precious metals class.

When investors are ready to start buying either gold or silver bullion (or platinum or palladium) they should go through a decent amount of due diligence. Working with a reputable company is essential with all of the fraud and even fakes in the world today. By working with a well-regarded and reputable company, these pitfalls can be easily avoided. Purchasing gold or silver coins from eBay is only inviting counterfeits which the seller may not even be aware are counterfeit versions.

Without a doubt, precious metals easily make a strong addition to any investment or retirement portfolios or even collections. So long as a prospective investor possesses a solid understanding of the different types of the coins, bars, and bullion, he or she can go with the best personal selection in the precious metals universe.

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The term 'Bullion' is included in the Investments edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.