Apr 2012


Apr 2012


By StoneX Bullion

Bullion Definition

The word bullion makes a reference to all the precious metals that are traded on the commodity markets around the globe. The form in which these precious metals are found is characterized as being found in bulk. A metal is referred to as being precious based on its rarity and also by the demand on the market.

The main characteristics that describe a precious metal as being bullion are its purity and mass. Therefore, the face value as money is not as equal in importance as the aforementioned attributes. The main forms in which are found the bullion metals are that of ingots and coins.

The most common purity is that equal to 99.9% which is also known as three nines and the purest metals minted as coins are the Canadian Gold Maple Leaf and the Gold Canadian Mountie with a purity of 99.999%, the highest amongst gold coins. We say that this is the highest purity because it is impossible to have a bullion product 100% pure. Silver coins have also a high purity and among investors and collectors are regarded as being more affordable than gold or platinum.

Bullion Minted Coins

The first bullion coin minted with the concept of measuring in pure gold was the Krugerrand. The rule for this coin is that it should have a content of at least 12/11 ounces of at least 11/12 pure gold. This was the coin that gave the start for all the gold coins.

However, there are also coins that have a long reputation and tradition and are renowned for being consistent with their content of pure gold so they do not necessarily inscribe it on the coins as it is the case with the British Sovereign.

Coins are minted as legal tender by many nations around the globe and their face value is smaller than their value as bullion and at the same time these coins are empowered with numismatic value for collectors. An example of how different the bullion value is from the face value can be given in the form of the Gold Maple Leaf who is issued in denominations of $50 for the weight of one troy ounce. However, the coin is worth approximately $1,500 for investors and collectors.

A more unique coin was issued by the Australian government and we are referring to the one kilogram Australian Gold Nugget coin which has 99.9% fineness. Being amongst the largest gold coins around the world, it is valued at $10,000.

Bullion for Investors

Whether we are talking about silver or gold as bullion, investors can be sure that there are plenty alternatives which match their funds. Silver bullion is more affordable compared to gold and in order to acknowledge that you can study the evolution of the silver/gold ratio.

Investing in coins as a form of owning silver or gold bullion is a lot cheaper compared to bars and also they are easier to be turned into liquid funds, being sought after by investors and collectors alike. Gold bullion coins are also exempt from VAT and are a way of investment that assures privacy for the investor.