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Gold Bullion

Gold bullion has long been the standard throughout the world to preserve and protect wealth. This gold is not like the necklace or piece of jewelry precious metal you buy, or the gold coins you may see on display at a museum although many do purchase gold coins such as 1 oz Eagles, Maple Leafs, Chinese Panda's or Krugerrand's for investment purposes.

Bullion is normally in the form of gold bars and/or .999 fine or pure coinage, it is put away under heavy guard for protection. It is the standard by which a nation's currency is set, and the government holds this gold. Though paper money in the US was once based on gold holdings, that is no longer the case.

Gold Bars

Bullion is traded in the international marketplace as refined gold of minimum .995 fineness in 400-ounce bars conforming to the specifications of the London Bullion Market Association. This form of gold is what is what gold prices are based on. Other principal bars traded on world markets are smaller and may be of higher purity, and range from 995 to 999.9 fineness.

Kilogram bars are favored in Europe, the Middle East; and Southeast Asia. Smaller bars and wafers in gram denominational weights are also available worldwide.

The International Bullion Market

The gold bullion market is international, gold is traded somewhere in the world every hour of the day. Gold is shipped to buyers by banks, bullion dealers, mining companies, and refiners. London has long been considered the major center for price setting, or 'price fixing' as it is known, where the same 5 bullion dealers from among the more than 60 members of the London Bullion Market Association meet twice daily to match orders.

The price at which orders and purchases are matched are immediately made available by news services and over the Internet and are used as reference points worldwide. Other principal gold trading centers are Frankfurt, Hong Kong, New York, Singapore, Tokyo, and Zurich.

Gold that is sold in the principal markets is often not shipped to the buyers. If it was purchased as an investment it may be left in the seller's vault even after the transfer of ownership has been documented. Some of the stored gold is shipped, but other bars may remain in the vaults indefinitely, sometimes going through many changes in ownership.

Gold Bullion Investment

Once upon a time, both gold bullion and silver were both the standard, and the coins given out matched the value of the metal they contained. That meant that you could use those coins to buy items or services, or you could melt them down to use the gold or silver for whatever purpose you chose..

Up until the year 1971, paper money represented gold in the reserves. If there was not enough gold to cover more currency, no more was issued.

Today, gold bullion is considered more of an investment than anything, be it in gold bars, gold certificates or leases. Some like to purchase gold mining or mineral stocks, others like to invest in the value of gold.

Though our paper money is no longer backed by 'the gold standard', the gold is still there for times of crisis should the need arise to use it. Paper money has value because we think it does, but is not necessarily represented by a block of gold bullion sitting in a guarded reserve any longer.

Those who choose to invest in gold do so because they believe it will increase in value just as with any other wise investment. The prices fluctuate just as with any investment, gold bullion has been around for centuries and will continue to be a sold investment.

When inflation lowers the worth of paper money, more and more people invest in gold. As with anything else, when the demand goes up, so does the value. In an abstract way, gold and paper money are still entwined.

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