While the terms Bullion and Gold are often used interchangeably, their precise meanings do differ. When we refer to Gold, it could mean the coveted yellow metal in any of its various forms. These include nuggets panned from a riverbed by a prospector, wedding rings and other items of Jewellery, ornaments, coins and bars. However, each example is a reference to a single metallic element with the chemical symbol Au. By contrast, the term Bullion has a much broader meaning that extends to all Precious Metals traded as a commodity. Thus, in addition to Gold, it also covers Silver, Platinum and Palladium.
Futures of Bullion and Gold
Many who recognise Gold’s exceptional value as an investment opportunity prefer not to spend large sums of money to purchase the physical metal, usually coins or bars, in advance. Instead, they choose to leverage its established investment potential through more indirect means. One option is to purchase Gold futures, which allows the investor to take delivery of a quantity of Gold Bullion at a pre-agreed future date in exchange for a much smaller initial payment. However, since this type of trade is based on speculation, Gold futures carry a significant element of risk.
Exchange-traded Funds
Another alternative that may suit those who appreciate the potential of Gold but do not wish to purchase and store the physical metal is to invest in an exchange-traded fund (ETF). The latter is similar to a mutual fund; investors may buy or sell them through a stock exchange, just like company stocks. In this case, however, they track the price of a specified commodity – Gold, with no need to hold Bullion or any other physical form of this Precious Metal.
Mining Investments
Alternatively, for anyone seeking a regular income from their investment, the solution might be to buy shares in a Gold mining company. However, to ensure the best dividend payments, you must invest in one of the larger, more profitable companies and can expect to pay a correspondingly high price per share. On the other hand, investing in one of the minor mining operations carries the risk that it might be forced to cease operating, and your shares would have no value.
Gold Bullion
In practice, Bullion has proved to be the safest and most profitable way to invest in Gold, even though it may be necessary to wait a little longer to reap the rewards. If you decide on this route, buying Platinum or Palladium may not be the best choice. While these Precious Metals command a high price, their value is governed more by the changing demands of industries, such as electronics and car manufacturing. As such, their spot prices are prone to frequent and marked fluctuations. By contrast, the demand for Gold never significantly wanes. Consequently, the long-term history of the Gold Bullion market has been one of continued increases with only relatively minor fluctuations.
Minted bars are an excellent investment. Produced by the Rand Refinery, they are hallmarked with a unique seal confirming they contain 999,9 parts per 1 000 of the yellow metal, which translates as 24 Karat – the purest obtainable. Alternatively, Krugerrands are also of guaranteed weight and fineness, unlike most other Gold coins. We invite you to view the range of Gold bars [JS1] and Krugerrands available in-store or online from Mr K – an established licenced dealer in Gold and Silver Bullion.
Disclaimer: The information above was derived from reliable sources and deemed accurate at the time of writing. However, changes following publication may have affected its accuracy. Such changes may occur without notice and Mr K cannot be held liable for inaccuracies in this article’s content or how a reader may choose to interpret it.
