What is Bullion – Definition and Buying Guide (2024)

 

What is Bullion – And Should You Be Buying It? 

The term “bullion” refers to precious metal bars, coins, or rounds specifically created for investing purposes. Bullion products are usually at least 99.5% pure, making them some of the purest precious metal items on the market. Investors buy bullion to maximize the amount of pure gold, silver, or platinum they receive for their money. 

Investors and precious metal dealers usually draw an important distinction between numismatic and bullion precious metals. Numismatic precious metals include rare or old coins that are valued for significantly more than just their precious metal content, or melt value. Bullion silver, gold, and platinum products are typically valuable almost exclusively for the precious metals that they contain. 

What is bullion – and how can you buy it? Bullion refers to investment-grade precious metal products valued primarily for their high precious metal content. Investors can buy bullion online or at local gold shops, and price comparison websites have made it easier than ever to purchase high quality gold, silver, and platinum bullion without overspending. 

On this page, you’ll learn about the definition of bullion, how to buy bullion coins and bars, and more. 

Bullion Definition – What is Bullion? 

How is bullion defined? Investors use the term “bullion” to describe highly pure precious metal products created for investment purposes. All precious metals can be good investments – even gold and silver jewelry. A precious metal product is not automatically considered bullion just because it contains rare metals. Bullion products are extremely pure and bought and sold primarily by investors. 

When investors buy bullion, their goal is to invest directly in the precious metals that their coin, bar, or round is made out of. For this reason, numismatic coins and rounds are generally not considered bullion products – even though they do contain precious metals. Products minted with a purity higher than 99.5% and intended for investment are considered bullion. 

Types of Bullion 

Gold and silver are the most commonly traded types of bullion. Platinum and copper bullion products are also popular among investors and can play a vital role in portfolio diversification. What are the different types of bullion? Bullion products are defined by the pure precious metals they contain. Because of this, most bullion products fall into four main categories: 

• Gold
• Silver
• Platinum
• Copper

Below, we’ll take a closer look at the definitions and descriptions of each major category of bullion. 

Gold

Gold is one of humanity’s oldest commodities. The gold bullion trade accounts for around $478 billion per year, making it the 7th most commonly traded commodity. In fact, the gold trade amounts to just over 2% of all global trade annually. All of this data illustrates an important point – gold remains one of the world’s most established and valuable investments. 

What is gold bullion? Gold bullion refers to highly pure gold products produced primarily for investors. Common gold bullion products include bullion coins and bars. Private and public mints all over the world produce gold bullion products of varying purity. Gold bullion is distinguishable from numismatic gold by its purity and purpose. Numismatic gold coins are traded based on their collectability, condition, and gold content. Gold bullion is valued primarily for its gold content and does not tend to be particularly rare. 

Silver

Silver bullion is another popular way to invest in precious metals. Like gold bullion, silver bullion products are almost exclusively valued for their precious metal content. To be considered silver bullion, silver products need to meet two criteria: 

• High silver purity (typically above 99.5%)
• Intended for investment purposes

Numismatic silver is another popular product category, but numismatic silver is valuable for different reasons than silver bullion coins, bars, or rounds. Numismatic silver often comes in the form of rare silver coins, which are valuable for a combination of rarity, condition, and precious metal content. When investors search for silver bullion, their objective is to buy highly pure silver meant for investing. 

Silver bars, coins, and rounds are three popular categories of silver bullion. What is the difference between silver bullion coins and rounds? Silver rounds can be produced by private mints, but coins can only be manufactured by government mints. 

Platinum 

Although it is a much newer commodity than gold and silver, platinum has become one of the world’s most popular bullion categories. Industrial demand for platinum continues to grow, since the metal is an essential component of catalytic converters used in cars. Because of its usefulness in the automotive sector, platinum bullion is a popular choice for investors who prefer assets with a strong correlation to industry. 

Like silver and gold, platinum bullion refers to products with a high platinum purity that are primarily meant for investment purposes. Certain platinum coins may be considered numismatic rather than bullion because of their rarity, age, or condition. 

Copper

Copper bullion is an increasingly popular way to invest in cheap precious metals. Copper bullion is inexpensive compared to gold and silver, but it is also one of the most useful metals on the planet. Industrial demand for copper extends across nearly every major industry, making it an excellent way for investors to bet optimistically on the future of the global economy. 

Like we mentioned earlier, bullion traditionally refers to investment-grade products with a high precious metal purity. Copper is no exception. Most copper products are considered copper bullion, because there is not a robust numismatic copper industry as of 2024. 

Is Bullion a Good Investment? 

Is bullion a good investment? Bullion is undeniably the best way to invest directly in precious metals. Because bullion products are meant for investors and are valued primarily for their high precious metal content, investors can save money on premiums by buying bullion instead of numismatic gold, silver, or platinum. 

Despite the popularity of rare coin trading, the bulk of global precious metal sales comes from bullion. Investors prefer bullion to numismatic precious metals because of lower premiums, higher purity, and improved liquidity. 

Benefits of Investing in Bullion 

Low premiums are a big reason why some precious metal investors prefer bullion products. Premiums refer to small fees over the melt value of a gold, silver, or platinum item. Numismatically valuable coins or bars usually come with some of the highest premiums in the industry. By contrast, premiums tend to be relatively low for gold and silver bullion items, including both coins and bars. 

For the most part, bullion products are also purer than numismatic coins. Old U.S. silver coins are typically only 40-90% pure, which means investors receive less silver for their money when they opt for numismatic silver instead of bullion. To be considered bullion, coins and bars need to have a high purity and be primarily made for investment purposes. 

Bullion coins and bars are also easier to sell than most numismatic coins. Investors buy and sell bullion products based primarily on their precious metal content. Determining the value of a bullion coin or bar is relatively straightforward. After converting a product’s weight to troy ounces, multiply the weight in ounces of the item by the current spot price of gold or silver. 

The ease-of-sale offered by an investment is also called its liquidity. Since bullion investors do not have to worry about their coin’s numismatic value, bullion coins, rounds, and bars typically offer higher liquidity than other precious metal products. 

Bullion Vs. Precious Metals – Is There a Difference? 

The terms bullion and precious metals are often used interchangeably, but they can mean very different things. What is the difference between bullion and precious metals? “Precious metals” is a blanket term used to describe rare and valuable metals, such as gold, silver, or platinum. Bullion refers to a specific type of precious metal product that is both highly pure and meant for investment. 

All bullion products are made out of precious metals, but not all precious metals are bullion. A numismatic silver coin, for example, is made from a precious metal but is not considered silver bullion. 

How to Buy Bullion 

How do you buy bullion? Buying silver or gold bullion is a relatively simple process, thanks to the growing presence of online dealers in the precious metals market. There are two main steps involved in the bullion investing process: 

1. Choose the right precious metal products
2. Compare dealers to find the perfect price

Below, we’ll walk readers through the basic steps of the process of buying their first bullion coins, rounds, or bars. 

Choosing the Right Bullion Products

Choosing the right bullion product can be tricky, especially if you don’t know what to look for. It is helpful to break this step into two smaller choices. 

First, decide which precious metal is best for your investment needs. As a general rule of thumb, we recommend silver and gold for new investors. These metals can be volatile in the short term but offer an impressive track-record of long-term price performance. Platinum and copper bullion are also popular investment vehicles, especially if you prefer metals with exceptionally strong industrial demand. 

Second, you’ll need to decide which type of bullion product you want to invest in. What are the different types of bullion? Bullion usually falls into three main categories: coins, bars, and rounds. Coins and rounds can be fun to collect, but expect to pay higher premiums over spot price for these popular investment vehicles. 

For committed bullion investors, bullion bars are the most affordable option on the market. Gold bars offer some of the lowest precious metal premiums in the entire industry, and the same thing is true for silver and platinum. Although bullion bars are the most cost-effective way to stack precious metals, these products also come with very little collectable value. 

Once you’ve decided the best kind of bullion product for your needs, the next step is to pick a dealer. 

Comparing Dealers

Picking a dealer requires investors to do quite a bit of research. Comparing prices across multiple dealers is a good way to make sure you’re getting the most bullion for your cash. We also recommend taking a closer look at customer reviews, shipping fees, and return policies before settling on a dealer. 

Some bullion dealers charge $10 or more to ship items, which can kill an investor’s opportunity to profit from their new gold or silver coin, bar, or round. Dealers should also offer a fair return/refund policy and have a long list of happy customer testimonials to prove their track-record. 

Choosing a bullion dealer is important. To choose between dealers, look for a bullion dealer with impeccable customer service, competitive pricing, and fair shipping fees. Don’t get burned by overpaying for bullion or spurned by an unresponsive customer support team! 

Where to Buy Bullion 

Where can you buy bullion coins and bars? Investors buy bullion from one of two sources: local and online dealers. Both local and online bullion dealers offer benefits – and drawbacks. Online dealers generally boast large inventories, competitive prices, and convenience. Local gold and silver dealers offer fantastic customer service, some hard-to-find coins, and no shipping costs. 

Let’s review the differences between buying bullion online vs. local bullion dealers to help new investors make a more informed decision about who to buy bullion from. 

Online Vs. Local Bullion Dealers

Online bullion dealers are quickly becoming the most popular way to buy bullion. Decades ago, the only way to buy precious metals was to travel to a physical gold or silver shop. Now, massive online dealers merge convenience with affordability to make it easier than ever to purchase high quality gold, silver, and platinum bullion coins and bars. 

Despite the growing popularity of online bullion dealers, buying gold or silver locally can also be a good way to begin investing. Local dealers tend to offer better customer service, and it may be easier to save money buying bullion locally because these dealers don’t require shipping fees. Additionally, local dealers may have special, hard-to-find coins that big online dealers won’t bother to stock. 

Should you buy bullion online or in-person? Buying gold and silver online is generally the best way to invest in precious metals. Online dealers offer competitive pricing, convenient shipping policies, and a far larger inventory than the average local bullion shop can provide. Let’s take a closer look at how online bullion dealers and local shops compare: 

Online Bullion Dealers	Local Bullion Dealers
Competitive prices for coins, bars, and rounds	In-person customer service and support
Extensive inventory compared to local dealers	No shipping fees, which means lower total investment costs
Extremely convenient – no need to leave the house to buy bullion	Might have access to specific rare or hard-to-find numismatic coins

What Is Bullion – And Should You Be Buying It? 

Bullion refers to investment-grade precious metal products of high purity and quality. Unlike numismatic precious metals, bullion coins, bars, and rounds are bought and sold primarily because of their metal content. 

Stacking bullion gold, silver, and platinum can help you save money by cutting down on costly precious metal premiums. Bullion products also tend to offer greater liquidity than numismatic investments, which can make it easier for you to make some profit when you’re ready to sell your collection. 

You might also be interested in: 

• Best Type of Gold to Buy | New Investor Guide
• Gold Bars Vs. Gold Coins – What’s the Better Investment?
• Bullion Vs. Numismatic Silver – What’s the Best Way to Invest?