Categorized | Coins and Bullions

How to Trade in Bullion

Bullion is defined as a mass of any one of the known precious metals, though it is commonly made of either gold or silver. Another important thing to note is the fact that its value is not determined by its face value as money or its artificial currency value, but on the mass and purity of the metal used. Precious metals fetched significant values due to their rarity; hence, the rarer the metal, the higher its price or value. However, the discovery of new sources for ores and the modern improvements in the mining and refining processes have diminished the value of gold or silver bullion; while others attribute this to the precious qualification of the metal, which determines their market value or high demand.

For those who want to trade in bullion, you can do so using bulk ingots or coins. Gold or silver coins are minted by the government of a country and this may include the United States, Canada, United Kingdom, Switzerland, Poland, Mexico, Australia, Austria, China, and South Africa. These bullion coins are issued as a legal tender with nominal values assigned to them on minting. However, these face values are usually far below the commodity value of the metals themselves; for instance, the currency values issued by the United States range between $10 and S100, but all of them contain no less than 31 grams of gold.

Considering the consistent rise in the exchange rate of gold, it is clear to see that the currency value assigned by the government to the gold bullion coin has no value. Some of the gold and silver bullion coins issued by the government include the Australian Gold Nugget, Lunar Series I and Lunar Series II; the Austrian Philharmoniker, Swiss Vreneli, and the Canadian Maple Leaf. There are also the Chinese Gold Panda and the Mexican Centenario, Libertad and Onza; besides the Polish Orzel bielik, South African Kruggerand, the British Britannia and Sovereign, and the American Buffalo, American Eagle, and Double Eagle.

One of the world’s largest bullion coins today is the 10,000-dollar Australian Gold Nugget, which was minted by the Australian government and was made of 1 kilogram of 99.9% pure gold. However, since they are not practical to handle; it was not produced in mass quantities. Next in line in the most expensive bullion coins include the 100,000-euro Vienna Philharmonic, which was minted in 2004 and contained 31 kilograms of gold. The other one is the 1-million dollar Canadian Maple Leaf, which was minted in 2007 and contains 100 kilograms of gold.

Trading in gold and silver bullion is a common practice among commodity traders today because of they provide a great amount of potential for profit. It also provides a safe haven for investing money even when the currency gets weaker. This can be done in person-to-person transactions at coin stores, coin shows or jewelry stores; while gold in exchange traded funds can be traded on the stock market just like a stock. Though the overall value of bullion is determined by the metal used; its weight and purity can also affect its value.

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