Bullion is a precious metal in its purest form. This term is most familiar when used in conjunction with gold or silver. Gold has been used as a form of tender since the days of Croesus, although those coins were more likely an amalgam of gold and silver. China also has an ancient history involving gold coins as do most modern countries.
A notable event relative to gold coins came about in 1933 when the United State government, in response to the grim circumstances of the Great Depression, for the most part uncoupled the value of the U.S. Dollar from the value of gold and ordered that gold coins be turned in exchange for paper currency. Most of the coins thus amassed were melted and recast as ingots. The ostensible purpose for this move was to minimize hoarding and to try to revive some economic activity. The thinking was that people would not be inclined to hoard paper money and would be forced either to deposit money in a bank or to spend it.
The purity and durability of bullion lends it to be used as specie but the market driven value of gold now makes this an unlikely use. Gold bullion is often cast as ingots of 400 Troy ounces, about 27.4 pounds, or 12.4 kilograms, so it can be stored by banks or traded among bullion traders. A smaller ingot, weighing 1,000 grams and called a kilobar, is the same bullion in a form that is easier to handle for business transactions.
The gold bullion coin is basically a way to make gold easier to buy and sell, particularly for the small investor. Its designation as legal tender makes transnational movement much easier than it would be otherwise. Such coins are often one ounce in weight - about the size of a silver dollar - and range down to sizes of one-half, one-quarter, one-tenth, even one-twentieth an ounce. The tenth ounce coin is about the size of a dime. While the commodities market trades in gold futures, it is rare that such a contract would be fulfilled by the delivery of gold. In addition, the desire by some people to have and hold an item of value very often plays a part in the decision to buy gold bullion coins. The coins that are struck as legal tender, have a face value but it is for reference purposes as the underlying value of the gold is much higher. The South African Kruggerand and the Canadian Gold Maple Leaf are two well-known examples of a one ounce gold bullion coin. The Maple Leaf is .9999 per cent gold while the Krugerrand is an alloy with 90 per cent purity; the Krugerrand is an alloy as it was originally created to be circulated as a coin. Both coins are available in fractional sizes of an ounce.
Since the days of the Nixon administration, it has been legal for Americans to own gold, other than as jewelry. A number of businesses buy and sell gold bullion coins, locally as well as on the internet. As in any such transaction, it is best to know as much as possible about a seller or a buyer if one is seeking to cash in gold bullion coins. The price of gold has climbed quite high in this century as economic turmoil has wreaked havoc on other more traditional investments. Consequently undertaking an investment in a gold bullion coin should only be undertaken with a well established understanding of the price fluctuations that might ensue. Nonetheless, as it has been for two thousand years, gold is a very solid investment.
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