What is Gold Bullion? Definition, Types and Investments

Gold bullion refers to physical gold that most often comes in the form of gold bars and gold coins. Also known as investment-grade gold, gold bullion offers investors a way to diversify an investment portfolio with precious metals, preserve their wealth, and hedge against inflation and economic instability. It’s different to gold jewellery in that it’s primarily valued and sought after for its gold content.

In this guide, we’ll cover what you need to know about gold bullion, including what it is, different types of gold bullion, gold bars vs gold coins, and things to consider before you invest in gold bullion.

What is gold bullion?

Gold bullion refers to investment-grade physical gold that comes in the form of bars, coins, rounds, or ingots. To qualify as bullion, gold bars must have a minimum purity of 99.5%, while the purity for gold coins can vary.

Gold bullion is different to gold jewellery and collectible gold items in that it’s valued purely for its precious metal content and not for its craftsmanship, rarity, or historical significance. For example, gold coins are often classed as legal tender with a nominal value in their country of issue. Their true value, however, far exceeds their face value due to the gold they contain. Gold bars are designed purely for investment purposes and so their worth is solely determined by their weight and purity.

Investors value gold bullion for its ability to act as a store of value, provide stability during periods of economic uncertainty, and act as a hedge against inflation.

See: Exploring the Role of Gold as an Effective Hedge Against Inflation

Types of gold bullion

Gold bullion comes in two forms: gold bars and gold coins.

Gold bullion bars

Gold bullion bars, or ingots, are rectangular blocks of gold that come in different sizes, from as small as a 1 gram gold bars to as large as 400 troy ounces. Each bar is stamped with its weight, purity, and a unique serial number that provides authenticity and traceability.

Gold bars are what most people think of when they picture bullion. Because they have a relatively straightforward production process and high gold content, they tend to carry less premiums over the spot price of gold. This makes them the most cost-effective option for large gold investments.

Gold bullion coins

Gold bullion coins are minted by governments and often classified as legal tender, although their face value is much lower than the value of their gold content. Some bullion coins feature distinctive designs and special issues that make them worth more than just their precious metals content.

Note that gold bullion coins are different to proof coins in the way that they’re produced. Gold bullion coins have a simpler minting process – known as ‘bullion finish’ – that allows for the production of up to 250 coins per hour. This simpler process minimises premiums to make gold bullion coins more accessible to investors. Proof coins, on the other hand, are struck multiple times using polished dies in a slow, meticulous process that results in higher costs.

Read More: What is a Proof Coin?

Gold bullion bars

Gold bullion bars can be produced in two different ways, cast or minted, and they’re available in various size ranges to suit different investors.

Sizes and weights

Gold bullion bars come in various weights, from as small as 1 gram to as large as 400 ounces. Smaller sizes, like 1 oz gold bars, 50 gram gold bars, and 100 gram gold bars, cater to retail investors, while larger sizes, like 1 kilogram gold bars or 400 ounce bars are more suitable for institutional investors, such as central banks.

The weight of gold bars is measured in either grams or troy ounces (1 troy ounce = 31.1035 grams). In Europe, grams are preferred as it aligns with the metric system, however in North America the troy oz measurement system prevails.

See More: Why Central Banks Buy Gold

Types and production methods

Gold bars can be manufactured in two ways: minted or cast.

Minted gold bars

Minted gold bars are cut from large sheets of gold that have been rolled to a particular thickness. These sheets are cut into blanks of specific sizes and weights, then pressed with a design and identifying information such as purity or weight.

This production process means minted bars have a highly polished, uniform appearance with sharp edges and a refined finish. Most minted bars are sealed in laminated protective wallets to preserve their quality. These wallets contain additional details such as the bar’s serial number and assay certificate for authenticity.

Cast gold bars

Cast bars are created by pouring molten gold into moulds and allowing it to cool naturally into a solid bar. This process results in a more rustic, less uniform appearance with rounded edges. Once they’ve cooled, cast bars are stamped with the manufacturer’s name, weight, purity, and unique serial number.

Unlike minted bars, cast bars don’t often come in laminated wallets. They do, however, typically include a paper of authenticity. Because the process of producing cast bars is simpler, they tend to carry lower premiums than minted bars, which makes them more ideal for larger purchases.

Minted vs cast gold bars

Many retail investors prefer the sleek, polished look of minted bars, and so minted bars tend to come in smaller sizes, from 1 gram up to 100 gram gold bars. Larger bars, like 250 gram gold bars or 500 gram gold bars, are generally produced using the cast method to keep production costs (and therefore premiums) lower.

Mid-weight bars or popular sizes, like 1 oz gold bars or 100 gram gold bars, are often available in both minted and cast versions to provide investors with their preferred choice.

Continue Reading: What Are the Best Gold Bars to Buy?

Gold bullion coins

Gold bullion coins are typically produced by official government mints, such as the United States Mint, Perth Mint, or Royal Mint. These coins are favoured by investors for their unique designs, exceptional craftsmanship, and sometimes VAT and CGT-exemption.

Sizes and purity

Gold bullion coins are usually available in four standard weights: 1/10 oz, ¼ oz, ½ oz, and 1 oz. Some coins, like the Canadian Gold Maple Leaf, provide even more fractional sizes like 1/20 oz, while others are produced in larger sizes, like 2 oz or 5 oz.

The purity of gold bullion coins can vary depending on the type of coin and the mint. For example, the American Gold Eagle has a purity of 91.67% or 22 carats, while the Gold Vienna Philharmonic coin has a purity of 99.99% or 24 carats. Less pure gold coins, like the American Gold Eagle or the Gold Krugerrand, incorporate small amounts of copper and other metals to enhance durability.

Popular gold bullion coins

Investors around the world value gold bullion coins for their unique designs, purity, and craftsmanship. These coins have global recognition and are highly trusted as they’re backed by governments and sovereign mints.

Some of the most popular gold bullion coins include:

• American Gold Eagle
• Canadian Gold Maple Leaf
• South African Krugerrand
• Gold Vienna Philharmonic
• Gold Britannia.

See: The Britannia Coin - All You Need to Know

Legal tender gold coins

Most gold bullion coins are considered legal tender and are assigned a nominal face value by the issuing government. For example, a Gold Britannia coin has a face value of £100. However, the real value of gold coins is actually tied to gold’s current market price, which far exceeds their face value.

Legal tender status provides an additional layer of confidence for investors as it guarantees a coin’s weight, purity, and authenticity. In many countries, including the United Kingdom, buying and selling legal tender coins is free from Capital Gains Tax (CGT). This is a valuable drawcard for many investors who value the tax-efficiency of these bullion coins.

Learn More: Gold Bullion Coins & Capital Gains Tax

Investing in gold bars vs coins

Gold bullion bars and gold coins are two ways to invest in physical gold – but which option is right for you? Each of these bullion types offers unique advantages depending on your investment goals.

Gold bars provide the following benefits:

• Lower premiums: Gold bars typically have lower premiums over the spot price of gold, which makes them more cost-efficient for those wanting to get maximum gold for the lowest price.
• Higher weight options: Gold bars often come in larger weight sizes, such as 100 grams or 1 kilo, which makes them ideal for large purchases or institutional buyers.
• Certification: Most gold bars include a serial number and an assay certificate which provides assurance of authenticity, weight, and purity. This can increase liquidity and make resale easier.

Gold coins provide the following benefits:

• Additional value: Gold bullion coins can sometimes carry additional value beyond their gold content. This is usually the case with rare or special issues.
• Smaller denominations: Gold coins are minted in smaller weights (1/10 oz, ¼ oz, ½ oz, and 1 oz) which can make them more accessible for beginners or investors with smaller budgets.
• Liquidity: Gold bullion coins have global recognition, particularly those minted from prestigious mints like the Perth Mint or the Royal Canadian Mint. Because they are so widely recognised, it can be easy to sell these coins.
• Potential tax benefits: The legal tender status of some gold bullion coins can provide additional tax benefits, such as CGT and VAT exemption.

Ultimately, the choice between gold bars or gold coins depends on your budget, investment goals, and preferences. If you’re looking to maximise your gold purchase, gold bars may be a good choice as they carry lower premiums. If you value craftsmanship and aesthetics, or you want to enjoy some tax benefits, then gold bullion coins may be a more suitable choice.

Read More: Pros and Cons of Buying Gold Bars vs Gold Coins

How does the gold bullion market work?

The gold bullion market operates similarly to other capital markets. Investors can purchase gold bullion, such as bars or coins, through online marketplaces or authorised dealers. Gold bullion is often priced based on the current spot price of gold, with additional premiums to account for manufacturing, distribution, and dealer margins.

Gold bullion can also be traded through gold exchange-traded funds (ETFs). These provide a way to invest in gold without needing to purchase the physical metal itself. Instead, gold ETFs track the price of gold and trade on stock exchanges.

This makes them more liquid and easy to trade, but it doesn’t offer the same benefits as investing in physical gold bullion, like hedging against inflation or being a reliable store of value.

Things to consider when investing in gold bullion

Before you begin investing in gold bullion, consider the following tips:

• Choose a reputable dealer: One of the most important factors when buying gold bullion – especially online – is choosing a reputable dealer. Look for a trusted vendor with positive customer reviews and transparent pricing. Bonus points if they’re a London Bullion Market Association (LBMA) affiliate member.
• Understand the fees: Take a close look at the fees involved before making your purchase. Some gold bullion dealers will charge additional fees for shipping, manufacturing, and processing. It might be worth comparing fees across multiple trusted dealers to avoid paying excessive premiums, however be cautious of dealers who offer too-good-to-be-true prices.
• Check gold’s spot price: Always check the current spot price of gold before making your purchase. This ensures you’re getting a fair deal and helps you identify any hidden markups.
• Consider insurance: Depending on the amount of gold you’re purchasing, you may want to consider insurance to protect your investment. This can come with additional costs that should be factored in.

Buy gold and silver bullion online

Gold bullion provides a trusted way to invest in the intrinsic value of gold. These investments act as a reliable store of value that can diversify a portfolio and provide a hedge against economic instability. At StoneX Bullion, we stock a wide range of gold and silver bullion in the form of bars, coins, and even wearable bullion.

All our bullion products are sourced from the world’s most well-respected mints, including the Austrian Mint, U.S. Mint, Perth Mint, and Royal Mint. We update our prices automatically each minute so you can browse confidently knowing you're shopping at the most recent gold spot price.

Browse our bullion collection and start investing in the timeless value of gold today.