Bullion vs. Gold: Top Differences Between Investment Options
Have you ever encountered the words bullion and gold when searching about investment and retirement portfolios? Have you been confused about the difference between the two in the gold industry?
It is important to remember that even though the two terms tend to be used in an overlapping manner, they are different from each other.
Gold and Bullion
When we talk about gold, we refer to all forms of gold, such as gold coins, bars, and physical gold in other shapes and sizes. One of the most popular forms of gold is coins.
However, when we refer to bullion, we don't just include gold but also other precious metals such as platinum, palladium, and silver. Their value is derived from the precious metal content. Therefore, bullion is an umbrella term covering many commodities and not just the precious metal gold products. Find out the pros and cons of gold coins and bars to make a well-informed investment decision.
Differences Between Gold Products and Bullion
Many individuals believe that gold bullion products only refer to gold bars. But, this is not the case as any form of physical tradable gold is a type of bullion. It is true that, majorly, gold bullion exists in the form of gold bullion bars and is owned by central banks and the national governments and kept in the gold reserves. Hence, they can be considered legal tender. You can invest in gold and silver bullion easily through ETFs or futures.
While, with gold, we only refer to all commodities made out of gold. Bullion can also include coins, bars and ingots but in precious metals. You can buy ingots such as gold and silver bars from a reputable dealer to maximize return on investment.
The price of gold bullion is affected by the demand from companies that make quality products of gold, such as gold jewelry. Gold price also tends to change according to the changes in the general economy.
Gold bullion considers the weight, purity and fineness of gold content that you can buy at the current price of gold and additional costs of storage, shipping and decontaminating the gold.
What Is Meant By Trading in Bullion?
When we say that gold is being traded in a bullion market, we understand it as part of the broader bullion market. Gold is one of the most integral parts of the bullion market when it comes to trading because gold is traded more copiously than silver and platinum.
When we say we trade in bullion, we are talking about the physical market. The bullion market does not refer to a futures trade market. Nevertheless, gold does support both the futures market and bullion market.
In a bullion market, trading takes place in physical quantities. Hence, any precious metal traded will be in the form of bars, coins, or ingots. For example, if you trade gold in a bullion market, you will do so through gold bars or coins, etc.
Compared to a future market, the drawback of a bullion market is that as everything is dealt with in physical quantities, you might have a security threat as physical gold can be stolen. However, there is no such risk in a futures market.
- Gold vs. Stock Market: Investment Comparison
- Is It True That Gold Is Not in a Bubble Situation?
- What is a Gold Bar Worth?
- Gold Vs. Inflation: Factors to Consider
- Can you Buy Gold Anonymously?
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Disclaimer: Content on this website is not intended to be used as financial advice. It is not to be used as a recommendation to buy, sell, or trade an asset that requires a licensed broker. Consult a financial advisor.