Coins -vs- Gold Bullion
We often hear from
first-time gold buyers: "I want to buy gold, but I don’t
want to pay the expense of buying gold coins. How do I buy just
plain gold bullion?
Basically, this is a misunderstanding
of what gold bullion is. The common perception is that rectangular
bits of gold ("bars") are the most cost effective,
and perhaps the only available, form of gold bullion. The same
thinking has it that round bits of gold ("coins") are
not really gold bullion. There’s a common misperception
"coins" are limited in supply, expensive, and perhaps,
to some extent, collectors' items.
When you go to buy gold for gold's
sake, what you are looking for is a practical and tradable form
of gold - gold bullion. Gold bullion is a recognized weight and
fineness of gold that you can purchase for the current price
of gold, plus the small percentage costs incurred in refining,
fabricating, and shipping that bullion to you.
The word 'bullion'
has a very simple definition: a refined and stamped weight
of precious metal. Of course, what most of us think of as gold
bullion is the large gold 'bricks' that we imagine are stored
in Fort Knox.
You may remember seeing these large
gold bullion bars in movies such as "Three Kings," and
the old James Bond movie
"Goldfinger." Bars like these make up most of the world's
gold bullion owned by governments and central banks. These are
the "London good delivery" gold bullion bars of approximately
400 troy ounce size, refined and cast by the various private
refiners worldwide, and accepted for 'delivery' into London and
other major gold bullion markets.
bars are an efficient way to buy physical gold, particularly
if you are going to store your larger gold bullion holding
in a recognized insured precious metals storage facility. Also,
if you have a working use for the gold, such as in electronics,
manufacturing, or the arts, these large gold bullion bars are
the most cost-efficient way to buy it.
But if you don't
actually make use of them, these bars can be costly to liquidate
once removed from storage. You may encounter assay, refining,
or just handling fees in trying to liquidate that size gold
bullion bar. It's much more difficult and time-consuming to
liquidate gold bullion in a single chunk that is worth over
$100,000 than it is to sell the same amount of gold bullion
in more convenient and tradable sizes.