Gold bullion is the primary way to invest in precious metals. If you have seen commercials on TV about investing in gold, they were almost certainly referencing the purchase of pure bullion. Bullion is simply any type of gold that is clearly marked for its purity and weight.
Most of the time, though it is technically bullion, coins are considered separately from actual bullion. Bullion commonly references raw forms of the metal that are produced by mints almost exclusively for investment purposes.
In other words, bullion is not the type of gold that most collectors will chase after. Coins that are sold primarily for the value of their metal are considered bullion, while coins sold primarily for the value of their rarity are considered numismatic.
There are three different ways that you will typically run across gold, and those are bars, coins, and rounds. Everyone knows what a bar or coin of gold is, but rounds are unfamiliar to many newer buyers and investors.
A round is simply a coin shaped piece of gold, with the difference being that it does not have value as currency and was produced by a private minting company. Here is another article on gold bars vs. rounds vs. coins.
Gold Bars
A 10 oz Gold Bar from Credit Suisse
Gold bars are most ideal for the gold buyer who has an expansive budget available, but they will also have a space in the portfolio of someone who has a smaller amount of money available as well.
Bars can be found, especially with gold, in virtually any size any money. This is different than the case with silver, where larger sizes tend to be all that is available at the majority of dealers.
The sizes of gold bars start off at around 1 gram. You might be able to find pieces that are even smaller than this if you search around enough, but this is the common starting point. After 1 gram, there are pieces available in .5 and 1 gram increments all the way up to 100 oz. and even larger sizes.
Needless to say, 1 oz. or larger gold bars are going to be very expensive. Countries around the world tend to store their gold reserves in the form of 10 oz. or 100 oz. and sometimes even larger pieces of gold, but they have millions, even billions of dollars worth of gold. For the majority of people, 1 gram up to 1 oz. bars are going to be most commonplace.
Gold Coins
A 1 oz American Gold Eagle Coin
As mentioned before, gold coins are typically broken into bullion coins and numismatic coins. This section refers to bullion coins, which are traded and valued primarily based on their gold content, not a collectibility factor.
Gold coins differ from gold rounds only in origin – they share a common disk-shape, but gold coins are produced by official government mints and often hold a face value in their country of origin, while gold rounds are produced by any private mint and have no face value.
Gold coins are often produced in 1 oz and fractional oz sizes like 1/2 oz, 1/4 oz, and 1/10 oz. These coins are typically packaged in tubes of 10, 20, 25, or 50, depending on their size and type.
Due to their additional value as a currency, gold coins will have a bit more of a premium over spot price than gold rounds or bars.
Gold Rounds
A Gold Round from Independent Living Bullion
Gold rounds are the cousin to gold bars. The only inherent difference between the two is their shape. Aside from their shape, their weights are also going to be different.
Once you get to weights over 1 oz., your options will usually be dwindled down to bars, with coins being unavailable over this size in most instances.
There are some rare rounds that weigh more than an ounce, but they are hardly the usual size that most gold dealers will sell.
- Learn More About Gold Rounds
On a round, you will notice a company name, the purity of the piece (usually .999 or .9999) and the weight. Aside from this, there is nothing that will necessary be found on any given round.
They are very generic pieces and they are intentionally made this way as they are used as an investment vehicle more than anything else.
Producing Bullion
Gold bars and rounds are not produced by the same people who make coins. Instead, they are made by companies that are run almost everywhere. They are simply businesses just like anything else. What these companies do is melt down various forms of gold and turn it into bullion pieces.
They could produce rounds, bars, a chain, or whatever else they eventually re-sell. If you ever have pieces of metal weighed for their actual gold content and then sell it at a discount of spot price, the chances are that it is going to be melted down so it can be re-made as bullion.
The Price of Bullion
Bullion is attractive to investors in particular because it does not have premiums affixed to it like you will find with coins or other rare items. The price of bullion will be slightly higher than the actual spot price, but this is just the margin that exists so that the dealers or sellers can make a profit.
The smaller pieces of gold will have higher relative markups. For example, you might have a 5% added cost over spot for gram sized bullion where ounce sizes and larger will be 1% or 2% and even less when you order in bulk.
Bullion Buyers
If you are attempting to start a gold collection, bullion is not going to be the most fascinating and intriguing option. If you only want to invest in gold, however, bullion is the perfect choice.
The majority of your money will go directly to the actual metal content itself, whereas with coins or more collectible items you will have to pay extra because the items have a higher secondary market demand.
Bullion is available to anyone looking to order gold, whether you want a lot of it or just a little bit. You might have thought that you will need a ton of money if you want to buy pure, real, physical gold, but this is simply not the case.
Start off with smaller pieces and work your way up as you have more money available to spend. Don't be intimated or afraid to own some real bullion as it is one of the best stores of wealth available. You will be thanking yourself in a few years time, that much is for sure.
