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What is Gold Bullion?

The term ‘gold bullion’ is commonly thrown around in financial markets by people who tend to assume that everyone knows what it means. But what is gold bullion? How is it defined, and what distinguishes it from other types of gold products? Here’s everything you need to know about bullion: what it is, what types of gold bullion there are, and how you should go about buying it.

What is gold bullion?

Gold bullion is a general term used to cover a large quantity of gold. It can cover gold bars, gold ingots or gold coins, but tends not to be gold jewellery as it does not contain sufficiently large quantities of gold.

There is a second term to consider here as well, and that is ‘investment gold’. This is a category of gold bullion that is defined by HMRC. Investment gold has the benefit of being VAT-free. The tax authority requires investment gold to be at least 99.5 per cent pure gold and there are further restrictions on the production dates and purities of coins included under this label.

Gold coins tend to have a wider range of purities than gold bars, from Bahar Azadi Islamic gold coins which are 90 per cent pure, to Canadian Maple Leaf gold coins, some of which are minted to 99.999 per cent purity. Among the most popular investment gold coins are the Gold Britannia coin and the American Buffalo coin.

If you’re specifically looking for investment gold, then check the purity and weight of the gold, which should be inscribed on to the product itself or provided on an accompanying certificate. If you’re shopping with The Gold Bullion Company, you’ll notice where we’ve labelled products as VAT-free so this will also help you determine what is and isn’t investment gold.

Why should I buy gold bullion?

Many people decide to invest in gold, and have done so for a considerable amount of time. This is for one main reason: it is a steadfast, reliable investment and the gold price has a historical track record of rising in value over time. Historically, it has risen in value both in raw terms, and relative to the value of national currencies, which tend to inflate.

If you decide to buy a troy ounce of gold today, and wait many years or decades before selling, that gold will likely be worth much more than its value at the time of purchase. Gold’s value is so well regarded among investors that, according to the World Gold Council, about 30 per cent of all gold that is traded in the world is done so for investment purposes.

Particularly, in times of economic uncertainty and high inflation, gold has a track record of performing well. This means it is viewed by many investors as a long term way to secure wealth. Since the 1970s, gold has performed well against other investment plans, such as cash savings, stocks, bonds and other commodities.

Excluding US stocks, gold has performed better than all other investments over the last decade. In a decade defined by economic volatility following the global financial crash, gold has proved to be a reliable economic safeguard.

Should I buy gold coins or gold bars?

There are many different ways to invest in the gold bullion market. But if you’ve decided that buying physical gold is right for you, then your big decision is whether you will buy gold coins or gold bars.

Gold bars are simple, pure gold in block form, and can thus be priced closer to the contemporary spot price of gold than other products, which require more complicated minting processes.

The value of gold bars is mostly determined by the live spot price, which is an updating indicator of gold prices.

Some investors prefer gold bullion coins. Though the value of the raw gold content is governed by the live spot price, commemorative coins often command a collector’s premium for their historical and traditional value, on top of the live trading prices. This premium has the potential to increase with time, as the coins gain more historical significance.

How can I buy gold bullion?

Serious investors will pay close attention to the live gold price, in order to decide when it’s a good time to buy and sell. The best returns on investments can be secured by buying when prices are low, and selling when the price is high. It is difficult to predict how gold prices will change over time, but monitoring certain trends and indicators can help.

There is a range of different ways to buy gold bullion and you’ll have to decide for yourself which kind of gold is the best to buy depending on your circumstances. Dealers charge a small premium for their gold products above the live spot price, so it’s worth doing some price comparisons to find the dealer with the most competitive prices.

At The Gold Bullion Company, our prices are updated automatically in line with the gold price, so our products are among the most competitively priced available.

Add some gold bullion to your investment portfolio today with The Gold Bullion Company’s range of gold bars and gold coins.