The most basic definition of ‘Bullion’ is a refined and stamped weight of precious metal, whether it’s Gold, Silver, Platinum or Palladium. Most people imagine Bullion as the rectangular, heavy bricks of Gold often seen in movies and stored in bank vaults. However, Bullion is no more than a practical and tradable form of precious metal in a recognized weight and fineness that can be purchased at the current price for that particular precious metal. So it can be bars or coins, like Krugerrands – both are Bullion.
Our analysis shows that adding 2%, 5% or 10% in gold over the past decade to a hypothetical average SA investor portfolio would have resulted in higher risk-adjusted returns. Source: The World Gold Council
Gold Bullion bars are the preferred investment option for governments, financial institutions and the seriously wealthy who can afford to acquire large amounts from trustworthy mints for a low price. This means they may also pay a lesser premium on the spot price.
Smaller investors prefer Gold Bullion coins like Krugerrands. Not only are they more affordable than the bullion bars, but they are easy to acquire, store and transport and can, potentially, be used as currency.
The best return on this investment comes when the investor holds on to the coins for as long as possible, tracking the gold price and selling when the price has risen sufficiently to make the return worthwhile.
What’s the difference? The only difference is the size and purity of the Gold. Gold bars must be 99.5% pure to qualify as an investment. Coins though come in a variety of Gold content and sizes which will affect their price and value. Good research is needed to ensure you’re getting the right coins for your investment.