Last Updated on March 17, 2024 by Ben
Gold is a tangible asset that is considered the safest and most stable form of investment. It offers long-standing value, stability, and attractiveness over time. These factors make gold a much-sought product among investors who want to diversify their wealth and cushion themselves against economic recessions. When you invest in gold bullion, you get to enjoy physical possession of a gold product that serves as your haven asset when anything goes wrong.
Additional Read:
What is Bullion?
Bullion is a stamped and refined weight of gold, silver, or other precious metal with 99.5% to 99% purity in the form of bars, ingots, or coins. The name came from Claude de Bullion, a French aristocrat who served as Minister of Finance under Louis XIII.
Gold History
Since time immemorial, gold has been a symbol of power, beauty, purity, fame, and wealth. Its existence was first recorded in 4,500 B.C.E when gold items were unearthed from the gravesites along with human skeletons. The early civilization in 4,000 B.C used it as material to create decorative objects and jewelry. It was only around 1,500 B.C. when the Byzantine Empire of Egypt made gold the official medium of exchange for international trading. They created the Shekel or a gold coin that weighs 11.3 grams. It became the Middle East standard unit of measure.
In 50 B.C, the Romans issued the Aureus (gold) coins. The name was derived from the Latin term for gold, Aurum. Thus, the chemical symbol of “Au” for gold. In 1787, Ephraim Brasher, a goldsmith, struck the first US gold coin. After a few years, the US government placed the country on a silver-gold standard under the Coinage Act.
When the Bretton Woods Agreement was signed in 1944, gold was replaced by the dollar as the world reserve currency. Richard Nixon removed the gold standard in 1971 and many countries followed. In 1976, gold was completely replaced by fiat currency.
Gold Bullion Products
Buying physical gold bullion has its appeal. Imagine holding a portion of your wealth in your palm anytime you want to. Isn’t it exciting? If you are planning to invest in gold bullion, here are the most popular products for your perusal:
- Bullion bars.They come in ingot or bar forms.
- Bullion coins. By definition, bullion coins are smelted or struck by a sovereign government mint and typically come with the legal tender face value. In essence, bullion coins are recognized for their store of investment or wealth. What’s cool about bullion coins are their hallmark designs that add aesthetic value to their given economic value.
- Bullion rounds. This type of bullion usually has a wafer or flat round shape. Bullion rounds are struck by private mints.
Ingots and Bars
Gold bars are physical blocks of gold that are designed to store a certain value of wealth. They are classified into cast bars and minted bars.
- Cast bars are manufactured by pouring molten gold into a mold and left to solidify. This traditional process often leads to uneven surfaces, which makes each bar distinct and unique. This type of gold bar is also cheaper, quicker to produce, and does not require too much handling.
- Minted bars are created from gold blanks that are cut to a certain dimension from a flat piece of gold. They are easily identified by even and smooth surfaces.
The Gold ingot is a quantity of premium metallic gold that is manufactured in small and large variants. Large ingots are made from liquid gold that is poured into molds. Small ingots are produced by minting or stamping from the rolled gold sheets.
Gold Coins
Is gold coin real gold? It is a common question that we ask whenever we see gold coins. Well, your gold coin may be made entirely of gold or has a 91.7% gold with silver and copper content.
Gold coins can either be pure or minted.
- Minted golds are 90% to 92% gold or 22-karat gold.
- Pure gold coins are 24-karat with 99.99% gold content.
Gold Bars vs Gold Coins: What Are the Differences?
Should you buy gold bars or gold coins? Deciding which is better requires an in-depth study of these products. While both are great investment assets, they have respective pros and cons that you should consider.
Gold Bars
Pros
- Gold bars are perfect for investors who collect gold for its economic value and gold content, not for sentimental reasons.
- Gold bars are more commoditized, meaning you can save up to 1% of the purchase value. You get more savings when you purchase a larger volume of gold bars.
- The value of gold bars is also easy to quantify because the purity level and equivalent weight are inscribed into the metal’s surface.
- Gold bars are usually priced closely to the spot price of gold, with a small additional margin from the merchant and mint.
- Gold bars come in multiple types and sizes, ranging from 1 gram to 1 kilogram. This will allow you to invest as little or as much as you like.
- Gold bars let you store a huge amount of wealth in a small space or vault.
- Gold bars come in handy when you want to create jewelry or resell them.
Cons
- Gold bars should be stored in a vault to protect their value and integrity. They should never leave the professional circuit to keep them from being compromised.
- When selling your gold bars, you need to hire a professional to verify or assay them.
- Finding buyers of a 1-kilogram gold bar can also be difficult because of its hefty price and they need to trust you that what you say about it is true.
- Large gold bars are hard to transport because some airports categorize them as blunt instruments.
- They are insurable at the post office for up to five thousand Euros (or equivalent) only.
Gold Coins
Pros
- Gold coins are regarded as the best form of gold investment because of the potential 50% upcharge due to their extra minting cost or the commemorative nature.
- Gold coins usually have historical value and are ideal for coin collectors.
- Gold coins come with higher traditional value or healthy premium value.
- Gold coins are highly liquid, which makes them easier to trade.
- Gold coins come in different sizes and perfect for those who like a valuable, yet discreet investment.
- Gold coins help you collect or accumulate precious metals.
- Gold coins can easily be stored inside boxes.
- Gold coins are produced in continuing annual series, which makes older variants more valuable.
Cons
- The gold coin’s value rises and falls along with the price of gold.
- The gold coin value is hard to quantify.
What Is Physical Gold Bullion?
Physical gold bullion is a tangible, investment-grade gold. It is essentially pure gold that is manufactured into bars through melting. It is a tradable form of gold that you can keep in your possession.
What Is Physical Gold Bullion Worth?
Physical gold bullion can be 0.999 fine or from 22-24 karats. Although its value is determined by the gold content and not its purity, people pay a premium for gold bullion’s overall quality. The gold’s worth depends on the size, weight, rarity, and aesthetic value. Its value tends to increase more during economically trying times. Moreover, it is worth holding because gold is considered a universal finite currency.
For What Is Gold Bullion Used?
Gold bullion is recognized as investment gold. Investors buy bullion to hedge their wealth against inflation risks, currency risks, and geopolitical risks. It adds diversification to any investment portfolio.
Investment companies, electronics, manufacturing, and jewelers are among those who use gold bullion as a commodity to produce or offer products or services to their clients. Many private individuals buy gold bullion for long-term protection of wealth or value investment.
How to Invest in Gold Bullion
The traditional way is to buy physical gold bullion, whether it is in the form of coins, bars, or ingots. It is the most emotionally satisfying way to invest in gold. You can buy gold bullions through online or local dealers, collectors, estate sales, pawnshops, or mint companies.
Benefits of Investing in Gold Bullion
While gold is a volatile investment, it never loses its appeal in the eyes of investors. Institutional investors buy gold bullion to hedge their portfolios from inflationary effects.
Here are the top benefits you will enjoy:
- Timeless value
- Long-term wealth preservation
- Safety net against any crisis
- Free from a counterparty risk
- Diversify your investment package
Is Gold Bullion a Good Investment?
Historically, gold bullion is called a store of value. The gold’s worth never depreciates, does not break down, does not require repairs, and serves as a useful financial instrument. Investing in physical gold bullion gives an assurance that you can pass it on from one generation to the next. And when you decide to sell your gold bullion, you can easily access it.
Conclusion
For all its worth, gold bullion is your time-tested disaster insurance. You can go anywhere and use your physical gold as a ticket against economic or personal troubles. Like traditional insurance, the gold investment gives you peace of mind and makes you prepared. Are you ready to invest in gold bullion? This is the right time!