When looking at different gold investment options, you’ll see the phrase “gold bullion” thrown around quite a bit. Let’s take a minute to talk about what exactly gold bullion is, and why it’s the best option when investing in gold.
The word “bullion” is defined as “gold or silver in bulk before coining, or valued by weight,” which basically means gold bullion is gold valued by its purity and weight. This contrasts with other forms of gold, such as jewelry or currency, whose value comes from other factors, including aesthetics. When buying gold bullion, you’re paying only for the market value of the gold plus the minor costs of manufacturing the gold into its current form. This means bullion is your best bet when investing in gold, because you won’t be paying for any extras—you’re simply buying gold in its purest form.
Gold bullion comes in different forms, most commonly bars and coins. Each type has different benefits and downsides.
Gold Bullion Bars
When you envision pure gold, images of big shiny gold bars most likely pop into your head. That’s what they show in the movies at least, and it’s actually not too far removed from reality. If you’re serious about investing in gold, bullion bars provide a great way to efficiently purchase large quantities, and they’re pretty easy to store. However, there are some significant drawbacks. Gold bullion bars can be difficult and costly to liquidate when you’re ready to use and/or sell them. Also, while they do come in a range of sizes, they tend to come in larger sizes than coins, making them less versatile. Overall, they’re more appropriate for serious gold investors.
Gold Bullion Coins
The only real difference between coins and bars is that coins have a different shape (coin shape, obviously) and are smaller. They are also produced by different entities, including the United States and Canadian governments. United States American Eagle Gold Bullion Coins contain their stated weight in gold, plus some alloy to help them hold their shape and ward off damage, making them just under 92% gold. They’re the only coin world-wide whose “weight, content, and purity are guaranteed by the United States Government.” The value of these coins is whatever the current market price for gold is, plus a small amount to cover production costs. There are other types of coins too, including the highly desired Canadian Maple Leaf Gold Bullion coin. Since they’re smaller and already in usable form, coins are easier to liquidate and use than bars. Because of their versatility, gold coins are a good way for beginners to venture into the world of gold investing.
Either way, gold bullion is the way to go if you want to invest in physical gold. The daily price of gold is listed in many places, including newspapers and all over the internet, so it’s easy to do your own research into exactly how much a gold bullion bar or coin should cost—ensuring you don’t overpay.
To sum it up: when you’re looking around at different gold investment options, don’t be intimidated by the phrase “gold bullion”—it simply means gold in its purest form, valued by its weight and quality.
By Madeline Marshall