Gold bullion is defined as gold in its purest form, smelted and refined into bars or coins of varying sizes, weights and purities. Gold coins are generally purchased as collector’s items, for their intrinsic beauty, rather than for investment purposes. The value of gold coins, if properly handled and cared for, appreciates and depreciates along the same lines as gold bars. Gold bars are equally as valuable, and equally as delicate as coins, so care should be exercised when handling them.
The benchmark price of gold bullion is fixed twice daily in London by representatives of five firms that trade bullion. The spot price of gold is derived from trading in globally based gold markets, at their respective opening and closing bells. The price of gold is based on the fundamental economic concept known as supply and demand: as the supply of gold increases, demand (and consequently the price) for gold will decrease, and vice versa. Other important factors that contribute to the price are the purity and weight of the individual gold bullion.
When purchasing gold bullion, it’s important to buy your bars from a reputable bullion dealer, one who has been in the business for a long time, and with a good reputation to uphold. A gold dealer will have your gold bullion assayed, and will be able to verify that the bar is solid throughout, and tests to the purity imprinted on the bar. There are four important markings on each gold bar, which identify the gold maker, the weight stated in Troy ounces, the purity percentage (on average this is 99.98% pure), and the serial number to the particular bar.
Online purchases of gold bullion will be shipped via registered mail, through the U.S. postal service; it should be insured for the gold’s full value. Dependent upon the size and value of the gold bullion purchased, the gold may be shipped by armored car service. Small sized gold bars can be protected in a bank’s safe deposit box, but for larger bars or bars in greater quantity, a privately-owned bonded vault facility to store, protect and insure your gold bullion investment should be considered.