If you are new to investing in gold, then you might be thinking, what actually is bullion?
What is gold bullion?
The general term for bullion is gold (and other precious metals) in the form of bullion bars, ingots and coins.
Gold bullion is primarily used for investment purposes, and is based on its purity level of usually 99.99% pure gold.
In reality 100% pure gold bullion is impossible to refine, so gold bullion refiners use 99.99% pure gold bullion for general production. The gold Canadian maple leaf coin for example, is 99.99% pure gold.
What is considered ‘pure’ gold?
Pure gold bullion describing the purity percentage terms. For example, 99.99% pure gold.
What is .999 or .9999 fine gold?
Fine gold refers to purity in parts per 1000. For example, .999 fine would mean parts gold 1 part other metals. You might often see .9999 fine gold which is 999.9 parts gold which, therefore, offers additional purity.
.999 is widely considered pure gold. ‘Millesimal fineness’ is common practice when it comes to the purity of fine gold. Fine gold with a 999.9 millesimal fineness, could also be described as .9999 fine or 99.99% pure gold.
What is 24-carat? (spelt karat in U.S.).
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For gold, 24-carat is the proportion of gold to other base metals worked out in 24 parts. If you are using the carat system, then 24-carat would be considered pure gold. 14-carat, for example, would be 14 parts gold to 10 parts other base metals, meaning 58% gold, 42% other base metals.
Ingots are a specific type of gold bar which uses a certain type of mould process, which must abide by a set of rules issued by the LBMA. This is known as the Good Delivery Rules.
The LBMA stands for the London Bullion Market Association, which sets a high standard for the global wholesale market of bullion grade gold and silver. The LBMA state that the minimum purity for investment gold bars is .995 fineness.
The LBMA’s mission is to ensure the integrity and quality of certified bullion gold.
Bullion is different than other gold or silver products that you often see in gold jewellery for example. Bullion is purely for investment purposes and is mainly based on the spot price of gold.
There is a wide range of investment grade gold bullion coins, from the world famous South African Krugerrand coin to the US favourite American Eagle coin, the iconic Maple Leaf design of the Canadian Maple coin, and the unique Chinese Panda coin. These coins often have a face value as they can technically be legal tender.
If you are in the UK, then buying gold bullion coins, such as the Royal Mint British Britannia, is especially popular due to being British legal tender. Therefore, they are Capital Gains Tax (CGT) exempt.
When looking at a coins bullion content there are differences between coins. The British Gold Sovereign for example, is 22-carat gold, whereas the British Gold Britannia would be considered 24-carat gold.
Physical gold bars are also a are also a great way to buy bullion grade gold. Gold bars can come in all sorts of different sizes and shapes.
This then allows you the option to buy gold that has a smaller premium over the current spot price. This can be a great way to keep the premium of the purchase price low.
Bullion is considered an asset for investment purposes and is mainly based on the spot price of gold. If you buy gold for investment, then make sure it is real certified bullion.
BullionVault lets private investors around the world access the professional bullion markets. You can benefit from the lowest costs for buying, selling and storing gold and silver.
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