The word “bullion” may conjure up images of pirates pillaging treasure chests or the military patrolling the golden bunkers of Fort Knox — but bullion isn’t just for the criminal class and the government. In fact, buying bullion is a great way to diversify your portfolio and (often) realize a great rate of return.
How exactly do you buy bullion?
1. Start with the basics.
Bullion — from the old French word bouillon meaning “boiling,” which was a term used for a mint or boiling house — refers to gold bars, silver bars and other precious metals. Traditionally, bullion didn’t include coins, but these days, gold and silver bullion coins are minted by governments and private mints.
2. Choose your investment.
Coins are an easy way to get started investing in bullion. Some of the most popular are the American Golden Eagle, the South African Krugerrand and the Canadian Maple Leaf. You can also buy privately minted coins as well as bars and ingots of bullion. They’re typically sold in weights of one Troy ounce (about 31.1 grams and 1.1 standard ounces), but you can also purchase them in what are called “fractionals,” which can be anything from 1/20th to ½ of a Troy ounce.
3. Gauge its worth.
These days, bullion is made for investment purposes, so its value is based on the amount of precious metal it contains, or “intrinsic value.” Intrinsic value also depends upon the metal’s purity, which can vary, but is commonly the purest form of the metal from which it is made. For example, the fineness of a gold bullion coin described as .9999 is equivalent to 24 karats of gold. The intrinsic value is almost always higher than the face value, so these bullion coins are not legal tender.
4. Find a reputable dealer.
The bottom line when purchasing bullion is that you have to trust your dealer. Make sure you’re working with an honest distributor. Don’t forget to take a look at the fine print before you buy (or sell) bullion, because disreputable dealers will sometimes tack on high premiums, which send the cost of your transaction through the roof.
5. Get accurate pricing.
Once you’ve educated yourself about bullion and know what you want, you’ll need to know the price. Metal prices fluctuate minute to minute.
Bullion is a great hedge against inflation and potential downturns in the stock market. Want to learn more about buying or selling bullion? Stop by Liberty Coin & Currency to talk to our bullion experts and see our wide selection of bullion coins, rounds and bars.
Liberty Coin & Currency specializes in gold buying and dealing in rare coins. We are a family-owned business that was first established over 16 years ago and is now located in Vancouver and Portland. We also buy and sell gold, silver, diamonds, currency and jewelry. Visit us first for a free evaluation.
