Top Bullion FAQs for Beginners Looking How to Invest in Bullion
For centuries only wealthy families were able to buy gold and precious metals as investments. It used to be a far-fetched idea for regular citizens to own secure assets and find a way to invest in bullion.
Fortunately, technology and digital communications have allowed more classes of people to access gold investments. You can now enjoy the financial benefits of owning “safe haven” investments like bullion.
If you are a newbie investor or an interested individual who just learned that you could use precious metals to protect yourself from inflation, you might have a few vital questions in mind.
Maybe you are wondering about what is bullion, how to invest in bullion, what it entails, how much money you need to spare, and other crucial details.
In this article, we answer ten questions that should give you excellent information about how to invest in bullion.
Here are 10 Vital Things You Need to Know About How to Invest in Bullion
- What is bullion?
- What is gold bullion?
- What is the price of gold bullion, or what is gold bullion worth?
- What is a bullion depository?
- What karat is gold bullion?
- What is the best gold to buy bullion?
- What is silver bullion?
- What is a bullion coin?
- What is platinum bullion?
- What is the best way to buy gold bullion?
FAQ No. 1: What is bullion?
When learning how to invest in bullion, you should know the subject you are dealing with. The main definitive to clear what is bullion is that it should be at least 90% pure in coins and 99.5% gold in bars or precious metal in concern.
Bullion can be gold, silver, or precious metal in the form of .5 gram to 1,000 oz coins, rounds, or bars. These assets come in the form of bars, coins, fractional coins, rounds, hand-poured creative items, and even bullet replicas.
Some bullion coins are considered legal tender, and their face value is stamped on one of their faces. However, the value of the precious metal it contains will be the main point of its price.
From the mines, they are heated, melted, and processed into their final 99.5% pure forms that can be traded or stored.
Aside from gold bullion, there are also lesser-value silver and copper items that can expand the denominations of a collection. Having silver and copper is like saving coins alongside your paper money savings – you know the advantages of having change.
There are also platinum bullion items available in the market.
FAQ No. 2: What is gold bullion?
When discovering how to invest in bullion, you might have heard about gold more than other precious metals. After all, it is the most traded bullion of all, making it highly popular.
First of all, gold bullion is what it is – 90% to 99.9% gold bars, ingots, and coins that you can buy and store as an investment. Some coins are government mints that have a face value, and some are private mints.
Gold is a highly reliable investment as it is historically proven to continuously rise in demand, especially when the economy is unstable. Even in normalcy, the rise in world population alone naturally expands the gold market.
Humanity has had a long history of upholding gold. Civilizations use the precious yellow metal to glorify deities and people of power and show their wealth.
Until now, society puts a premium on gold jewelry. As more emerging economies break their ceiling, they add more people to commodify higher-tier luxury products like gold.
While the human love for gold is more sentimental than practical, it seems it will not fade for thousands of years. Hence, gold’s value will rise as long as the demand is there and supplies are limited.
Gold bullion is an excellent asset to own, and after years of storing a significant amount of it, you will feel safe knowing the benefits it can bring to your family for generations to come.
FAQ No. 3: What is the price of gold bullion, or what is gold bullion worth?
Learning how to invest in bullion means that you should understand the value of the assets you are about to own.
To answer the FAQ directly, the price of bullion is whatever the price of gold, silver, platinum, or copper is, multiplied by the weight of a specific item. But the thing that you need to know is what premium above that price you’re expected to pay. As markets rise and the supply tightens, those premiums increase.
A fractional 1/2oz gold coin would have been worth around $950. However, if that 1/2oz gold coin was found in the Titanic or has some profound cultural significance, it can skyrocket to six or more figures.
The most expensive bullion coin in the world is not gold and is valued at $10 Million. It is the 1794/5 Flowing Hair Silver/Copper Dollar, believed to be the very first silver coin that the US Federal Government minted and issued.
The price of gold bullion is highly dependent on the price of gold and can be pushed by more sentiment. Hence, as you learn how to invest in bullion, you must know some facts about how the market value changes and what affects it.
Here’s a comprehensive list of things you need to know about gold price and what affects it.
In a nutshell, gold’s demand is as steady as the growing population. The more people there are in the world, the more consumers will want to buy it.
However, when economic troubles threaten societies, investors turn to gold as a safe haven. They bank on the fact that when currencies fail, people and factions will trade commodities for gold.
Gold is still a traditional hedge. When a country’s currency falls, its price counteractively rises.
True enough, when the 2020 pandemic broke out, the price of gold skyrocketed over $2000 in August. The preceding years saw 2015 at $1158.86, 2018 at $1244.40, and 2019 at $1519.50.
Looking at the pattern, the Covid shock shook the dollar value, and it dropped. Investors wanted to protect their money, so they bought as much gold as they could when the price was lower, eventually leading to a spike in demand and a rise in price.
Knowing the price of gold and precious metals should further guide you technically on how to invest in bullion.
FAQ No. 4: What is a bullion depository?
A bullion depository is a facility where a government stores its gold bullion deposits and other precious metals assets. Facilities as such also house a nation’s prized sentimental and historical items.
The United States Bullion Depository, known as Fort Knox, houses 147 million troy ounces of gold bullion, which is over half of the US Treasury’s stored gold. Others like West Point Mint are currently holding 54 million ounces, 22% of the nation’s gold bullion, and Denver, Philadelphia, and San Francisco mints where lesser portions are stored.
FAQ No. 5: What karat is gold bullion?
When figuring out how to invest in bullion, you should know about the purity of the precious metal that you are keeping.
First of all, what is a karat?
The karat is a standard measurement to define the ratio of gold to other metals or alloys in jewelry or bullion. Karats measure purity on a scale of 0 to 24, where the higher the karat number, the more gold an item contains.
The other metals and alloys usually mixed with gold are copper, nickel, silver, or palladium. The higher the karat, the fewer other metals or alloys a gold item has.
While bullion’s minimum purity is placed at .900, most pieces are .999 or 24-karat gold.
FAQ No. 6: What is the best gold bullion to buy?
When starting to discover how to invest in bullion, you should know what your objectives are. Of course, you want to get the best gold bullion to buy for excellent benefits in the future.
What you want are gold bullion items that are easy to buy and significantly more straightforward to sell. You need to have something easily recognizable and sells at high premiums.
Your best choice will be bullion coins, like Gold American Eagles. These coins are excellent for investments because they are sovereign coins and are highly recognizable, significantly tradeable, and can even sell at a higher value than gold bars.
While coins are the best, a diverse collection of different types of bullion will still have more benefits. When you have smaller items and lower-value metals like silver and copper, you will expand your collection’s denominations.
If you only had 1oz coins and want to get emergency money worth 1/2oz only, you would either have to find someone to give you two 1/2oz coins first. Emergencies don’t wait, so it would be excellent if you had smaller denominations in your bullion collection.
Additionally, you will be able to trade in more niches if you have more than one kind of bullion in your portfolio.
FAQ No. 7: What is silver bullion?
Silver bullion is .900 – .999 fine silver in the form of bars, fractional coins, government minted coins, privately minted items, hand-poured bars/rounds, and other collectibles like bullets. They are excellent bullion items to collect for beginners as they are significantly cheaper than gold but have their own merit.
Silver is highly in demand for jewelry, just like gold. Individuals who cannot afford gold will typically look to silver jewelry.
Silver’s price is generally affected by demand, and several essential markets ensure storing the metal is beneficial for the future.
Like gold, silver is a significantly excellent conductor of electricity and heat, making it in demand for high-tech equipment. Companies prefer silver over gold for mass production because gold’s premiums make its use impractical.
When you own silver, you have more items in your bullion inventory and have a foot in the electronics industry.
FAQ No. 8: What is a bullion coin?
When you are a beginner about how to invest in bullion, you should have heard more about coins as they are the most prevalent items in the market. A bullion coin is a .400 to .999 pure gold, silver, platinum, or copper coin that you can collect as an investment.
Coins are the best bullion to collect because they are easy to buy and sell, are highly recognizable, and are straightforward to store.
The value of bullion coins highly depends on the price of the precious metal it contains. A coin can sell for the value of its weight but typically sells for weight plus current premiums.
In some cases, however, there are bullion coins that have historical merit or are rare collector’s items. These coins will trade with not much focus on the item’s weight.
Here are some of the popular coins you will find in the market.
- American Eagles (Gold & Silver)
- American Gold Buffalos
- Canadain Maple Leafs
- Great Britain Britannias
- Mexican Libertads
- Chinese Pandas
- Austrian Philharmonics
- South African Krugerrands
FAQ No. 9: What is platinum bullion?
Platinum is something you should learn about when discovering how to invest in bullion.
Platinum bullion comes in .995 to .999 pure platinum bars and coins that you can collect as investments.
What’s good about platinum is that when the economy normalizes, it can double the gold value.
The best time to purchase and collect platinum is during inflation, deflation, or any economic downswing when the demand for the rare premium is low. Then, sell it when the economy bounces back for excellent returns.
FAQ No. 10: What is the best way to buy gold bullion?
Choosing the right source is a vital part of learning how to invest in bullion. There are online stores where you can pick the best bullion you need.
However, if you are a beginner, the long lists and catalogs might confuse you, and you might end up buying those that won’t benefit you at all. Some technicalities make some items better than others in specific periods, and you want those in your inventory.
Without the right expertise, diving into long technical jargon-riddled menus is dangerous. You will need an expert’s help and guidance to match the right items with your investment goals.
If you are looking for an easier way to get the best assortment of bullion that will surely bring you value for the future, subscribe for monthly curated boxes. With a monthly subscription, you will receive expertly-curated bullion boxes without any hassle.
Read more of our blogs for more information on how to invest in bullion.