Gold bullion is a precious metal, it is defined by the chemical symbol AU it is a rare element that has considerable economic value. Of all precious metals that can be found on earth, gold is still considered as the most popular choice for investment purposes because of its reputation as a store of value.
Investors have a huge choice of gold bullion products that they can use as store of value, either physical coins and bars or "paper" gold investment options.
The term "bullion" refers to precious metals in bulk form of an easily recognisable weight and purity, which can be traded as commodity in the marketplace. Most modern Bullion such as gold bullion in particular, is either cast into ingots or minted as coins. When it comes to determining bullion value, mass and purity are the main criteria (not its face value if minted) with some additional criteria such as prevailing market premium.
To regard a precious metal coin or bar as gold bullion it should be at least 99.5% pure, and with such purity investment demand for such bars or coins tends to be higher. However, some nations cast or mint bullion as coins in lower purities, but as these coins always contain a certified amount of gold within them, albeit in a lower purity, they are just as highly regarded as investment grade gold. One of the most popular gold coins is the South African Krugerrand and is widely regarded as one of the most recognised and traded gold coins.
Some gold bullion coins have legal tender status wherein the bullion coin has a face value in currency on it. This face value is nearly always lower than the bullion value of the coin. For example, Canada mints their Gold Maple Leaf, a gold bullion coin with a face value of $50 and its gold content is 31.035 g. This makes the actual coin worth nearly $1600 (at time of writing) as gold bullion. In the case of gold maples, there is some additional numismatic value attached as its purity is 99.9%.
One ounce gold coins are the most accessible gold bullion for most small investors or collectors.
In terms of gold bullion purity, they mostly range between 22 karats and 24 karats (Pure gold).
The purest form of gold, 24 carrat is very soft and coins struck in 24 karat can easily loose their shape because they are so soft. However, even with this softness such kind of gold bullion coins are considered by some collectors to be most in demand for investors and dealers. Other coins alloyed with silver or copper still contain a specific quantity of gold but in a less pure form.
Another measurement of the value of gold bullion coins and bars is its aesthetic. For gold bullion collectors a key feature of gold bullion is its aesthetic value or its artwork. Some coins such as the Krugerrand are considered to be quite ugly whereas the British Britannia is considered by some to be one of the most attractive coins available.
Knowing more information about bullion coins can really pay dividends as you may come across the odd item in auctions that is miss described or badly photographed and may provide you with an opportunity to acquire the item at a low premium.
Article Published On: 02 April 2009
Article Revised On: 11 May 2011