In the world of finance, "bullion" is a fundamental concept often obscured by jargon. For investors seeking to hedge against volatility, distinguishing between physical bullion and other metal assets is the critical first step.
Bullion refers to high-purity precious metals—typically gold, silver, platinum, and palladium—valued strictly by their mass and fineness. Unlike jewelry or collectible items, bullion carries no premium for artistic merit. Its value is derived from the intrinsic metal content.
Valuation Mechanics
Bullion valuation is transparent and standardized:
- Spot Price: The current market rate for raw metal.
- Weight: Measured in troy ounces (31.1g).
- Purity: Investment-grade is typically .999 or .9999 fine.
Bullion vs. Numismatics
The critical distinction for investors:
- Bullion: Value driven by intrinsic metal content. Low premium.
- Numismatics: Value driven by rarity and history. High premium.
The Investment Case
Global Liquidity
Gold and silver are recognized as money worldwide, allowing for easy liquidation in virtually any jurisdiction.
No Counterparty Risk
Unlike stocks or bonds, physical bullion is an asset you own outright. It does not rely on the solvency of another institution.
Start Your Portfolio
Now that you understand the fundamentals, approach the market with clarity.