Guide of Buying Bullion from a Dealer
A novice bullion buyer may feel that he is astray in a labyrinth when it comes to gold bullion investing. There are many different product options available and can cause some confusion. On top of that, the value of bullion fluctuates wildly, and dealers sell each product at a premium. Which product is the correct one?
When you Buy bullion it requires an intensive knowledge of offers by bullion dealers. Buyers also need to research the reputation of dealers in the market. It is better to buy from a well-known dealer with an impeccable track record. The first step when you buy bullion is to find out what product is ideal for you.
What types of bullion are there?
The two main types of bullion available in the market are:
- bullion bars
- bullion coins
What is the difference between bullion bars and bullion coins?
Bullion bars are available in sizes ranging from 1 gram to 1 kg bars or even 400oz. The larger bars are ideal for institutional buyers, governments, central banks, or investors requiring large quantities of precious metals such as super funds. The premium on large bars is less, and therefore it is the most cost-effective way to buy large amounts of bullion.
The bullion bars have serial numbers on them to identify each bar. The definition of bullion states that it is a refined and stamped weight of precious metal. The bullion dealer sells bars that meet this definition of bullion by having a recognized hallmark and purity stamp of 99.99% pure and therefore is tax-exempt.
Some investors leave the bullion with the dealer. Most investors prefer to keep their bars at home in a safe at home, under the mattress or sometimes they even bury it.
Like bullion bars, coins are available in different weights. The weight is expressed as a “troy ounce” or a fraction thereof. Perth Mint’s Australian Gold Nugget series, or the “gold kangaroos” series are gold bullion coins struck by Perth Mint in Western Australia. The weight of the minted coins range from 1⁄20 oz, 1⁄10 oz, 1⁄4 oz, 1⁄2 oz, 1 oz, 2 oz, 10 oz, and the largest of 1 kg. The gold that Perth Mint produces is 99.99% standard.
Bullion has been around in many forms for thousands of years. Historically bullion coins had been used as currency. Today, gold and silver coins are collectible items and investment assets. It is mainly the result of the monetary system being a fiat system.
The intrinsic value of the coin depends on its gold and silver content. The “melt value” of the coins refers to their precious metals content. The price of the coins is linked to the spot price of gold and silver. The prices of the coins are therefore adjusted daily and fluctuate following the spot price.
The product you invest in will depend on the value, tradability, storage, and personal preferences. Buying bullion bars are less expensive than buying bullion coins. Bullion coins are more versatile and easier to store and sell. With the proper research, you can buy the product that is best suited to your requirements.