Bullion is

non-ferrous metal In metallurgy, non-ferrous metals are metals or alloys that do not contain iron ( allotropes of iron, ferrite, and so on) in appreciable amounts. Generally more costly than ferrous metals, non-ferrous metals are used because of desirable pro ...

that has been refined to a high standard of

elemental An elemental is a mythic supernatural being that is described in occult and alchemy, alchemical works from around the time of the European Renaissance, and particularly elaborated in the 16th century works of Paracelsus. According to Paracelsu ...

purity. The term is ordinarily applied to bulk metal used in the production of

coin A coin is a small object, usually round and flat, used primarily as a medium of exchange or legal tender. They are standardized in weight, and produced in large quantities at a mint in order to facilitate trade. They are most often issued by ...

s and especially to

precious metal Precious metals are rare, naturally occurring metallic chemical elements of high Value (economics), economic value. Precious metals, particularly the noble metals, are more corrosion resistant and less reactivity (chemistry), chemically reac ...

s such as

gold Gold is a chemical element; it has chemical symbol Au (from Latin ) and atomic number 79. In its pure form, it is a brightness, bright, slightly orange-yellow, dense, soft, malleable, and ductile metal. Chemically, gold is a transition metal ...

and

silver Silver is a chemical element; it has Symbol (chemistry), symbol Ag () and atomic number 47. A soft, whitish-gray, lustrous transition metal, it exhibits the highest electrical conductivity, thermal conductivity, and reflectivity of any metal. ...

. It comes from the Anglo-Norman term for a melting-house where metal was refined, and earlier from French , "boiling". Although precious metal bullion is no longer used to make coins for general circulation, it continues to be held as an investment with a reputation for stability in periods of economic uncertainty. To assess the purity of gold bullion, the centuries-old technique of

fire assay A metallurgical assay is a compositional analysis of an ore, metal, or alloy, usually performed in order to test for purity or quality. Some assay methods are suitable for raw materials; others are more appropriate for finished goods. Raw prec ...

is still employed, together with modern spectroscopic instrumentation, to accurately determine its quality.

As investment

The specifications of bullion are often regulated by market bodies or legislation. In the

European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are Geography of the European Union, located primarily in Europe. The u ...

, the minimum purity for gold to be referred to as "bullion", which is treated as investment gold with regard to taxation, is 99.5% for gold bullion bars and 90% for

bullion coins A bullion coin (also known as a specie) is a coin struck from highly refined precious metal (bullion) and kept as a store of value or an investment rather than used in day-to-day commerce, or collectable, with numismatic value beyond that of its ...

. Investors may choose to purchase physical bullion for several reasons to attempt to hedge against currency risks, inflation risks, or geopolitical risks, or even just to add diversification to an investment portfolio.

London bullion market

The

London bullion market The London bullion market is a wholesale over-the-counter (finance), over-the-counter market for the trading of gold, silver, platinum and palladium. Trading is conducted amongst members of the London Bullion Market Association (LBMA), tightly ov ...

is an over-the-counter market for wholesale trading of gold and silver. The London Bullion Market Association (LBMA) coordinates activities of its members and other participants in the London bullion market. The LBMA sets and promotes quality standards for gold and silver bullion bars. The minimum acceptable fineness of the Good Delivery Bars is 99.5% for gold bars and 99.9% for silver bars. Bars with a purity less than these may not be referred to as "bullion".

Coins

Bullion coins are contemporary precious metal coins minted by official agencies for investment purposes. Some bullion coins have been used as currency throughout the 20th century, such as the

Maria Theresa thaler The Maria Theresa thaler (MTT) is a silver bullion coin and a type of Conventionsthaler that has been used in world trade continuously since it was first minted in 1741. It is named after Maria Theresa who ruled Austria, Hungary, Croatia and ...

and the

Krugerrand The Krugerrand (; ) is a South African coin, first minted on 3 July 1967 to help market South African gold and produced by Rand Refinery and the South African Mint. The name is a compound of '' Paul Kruger'', the former President of the South ...

. Modern bullion coins generally do not enter common circulation despite having legal tender status and nominal face value. Some modern bullion coins are produced as business

strike Strike may refer to: People *Strike (surname) * Hobart Huson, author of several drug related books Physical confrontation or removal *Strike (attack), attack with an inanimate object or a part of the human body intended to cause harm * Airstrike, ...

and collectible proof and uncirculated versions, such as the American Silver Eagle and American Gold Eagle coins. Private mint strikes called bullion rounds, bullion wafers or bullion bars are typically sold at prices slightly above the underlying prevailing precious metals spot price commensurate with their precious metal content, whereas collectible versions are sold at a significant premium over their precious metal bullion melt value. In some cases, the grade and mintages of privately struck rounds, bars or wafers can affect their value as a collectible too, they can at times be considered collectible numismatic pieces rather than bullion items.

Uses

Professional market participants participate in the bullion markets, such as

bank A bank is a financial institution that accepts Deposit account, deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital m ...

s, fabricators, refiners, and vault operators or transport companies, as well as

broker A broker is a person or entity that arranges transactions between a buyer and a seller. This may be done for a commission when the deal is executed. A broker who also acts as a seller or as a buyer becomes a principal party to the deal. Neither ...

s. They provide facilities for the refining, melting, assaying, transporting, trading and vaulting of gold and silver bullion.A Guide to the London Precious Metals Markets: http://www.lbma.org.uk/assets/OTCguide20081117.pdf Other professional parties such as investment companies and jewelers use bullion in the context of products or services which they produce or offer to customers. Shares of the world's largest gold

exchange-traded fund An exchange-traded fund (ETF) is a type of investment fund that is also an exchange-traded product, i.e., it is traded on stock exchanges. ETFs own financial assets such as stocks, bonds, currencies, debts, futures contracts, and/or comm ...

, the

SPDR Gold Shares SPDR Gold Shares (also known as SPDR Gold Trust) is part of the SPDR family of exchange-traded funds (ETFs) managed and marketed by State Street Global Advisors. For a few years, the fund was the second-largest exchange-traded fund in the world, ...

, represent a gold spot price mimicking derivative although shareholders in popular gold ETFs such as GLD are almost always unsecured creditors, meaning they own no

vaulted gold Vaulted gold denotes gold bullion stored in bank vaults. Buyers of vaulted gold obtain outright ownership of the physical gold which is held for them in a vault. This is unlike structured gold products such as Gold based exchange traded funds ...

bullion potentially underlying the exchange-traded fund (ETF). Investors often prefer to own bullion outright over ETFs due to the minimization of counter-party risks inherent. Private individuals use bullion as an

investment Investment is traditionally defined as the "commitment of resources into something expected to gain value over time". If an investment involves money, then it can be defined as a "commitment of money to receive more money later". From a broade ...

or as a store of value. Gold bullion and silver bullion are the most important forms of physical precious metals investments. Bullion investments can be considered as insurance against inflation or economic turmoil, their sole direct counterparty risk being theft or government confiscation. Compared to

numismatic Numismatics is the study or collection of currency, including coins, tokens, paper money, medals, and related objects. Specialists, known as numismatists, are often characterized as students or collectors of coins, but the discipline also inclu ...

coins, bullion bars or bullion coins can typically be purchased and traded at lower price premiums over the fluctuating spot price and their trading bid/ask spreads or buy/sell price differences are closer to the values of the contained precious metals.

References

{{reflist Precious metals Metallic objects

As investment

London bullion market

Coins

Uses

See also

References