What is gold bullion?
Gold bullion is the collective name used for investment grade gold of known weight, fitness and at least 99.5% purity. Coins and bars are the most common forms of bullion.
Very often you will see the term gold bullion used to refer to just gold bars, rather than coins. This is technically incorrect as coins are also gold bullion. It is always worth double-checking what exactly is being discussed.
The origin of the word ‘bullion’ is not clear but many believe it is thanks to Claude de Bullion, the French Minister of Finance under Louis XIII.
What is gold bullion worth?
Gold is worth a lot to investors, not just because of its price but because of the benefits it brings to the wider investment portfolio. Gold is an excellent way to diversify your portfolio and has been shown to insure against financial risks, and as a hedge against currency, inflation and geopolitical risks.
Gold bullion comes in many shapes and weights. For example, a LBMA Good Delivery bar is approximately 400 troy ounces and so will be around 400 times more expensive than a 1 oz gold coin.
The price of gold bullion is closely connected to the spot price of gold. This is constantly changing according to global events and market dynamics but if you were to look at the spot price of gold on our charts page, it would closely resemble the price of a one oz gold coin such as a Britannia.
Several factors can influence how much a gold bar is worth, namely the following:
- Gold Spot Price: this is the wholesale price at which 400 oz gold bars (London Good Delivery Bars) are traded between banks in international markets. Typically, private investors will pay a premium over the spot price. It takes less time and effort to produce bars, which is why they tend to have a smaller premium than gold coins, and gold dealers generally charge lower premiums for larger bars.
- Gold Content: According to the London Good Delivery List, administered by the London Bullion Market Association (LBMA), investment-grade gold bars must have a minimum fineness of 995.0 parts of fine gold per thousand. Therefore, the higher the gold content, the higher the worth of the gold bullion bar.
- Investor Demand: As mentioned above, the purest bars are the most sought after and can command a higher premium. Imbalances between supply and demand can influence the premiums at which gold bars trade.
- Weight: the worth of a gold bar will always be influenced by its weight. The more it weighs, the more it's worth.
Is gold bullion expensive?
Gold bullion (bars and coins) can be purchased at the spot price of gold, plus the premium or small percentage costs incurred in refining, fabricating, minting and shipping that bullion to you.
There is a common misperception that gold coins are more expensive than bars as they might be limited in supply, come with a higher premium or even classed as collectors items. This is not always the case, and certainly not when you buy gold coins with GoldCore.
But contradictorily, when you mention gold bullion some people believe you must be referring to the enormous bars adored by the eponymous Goldfinger in the famous Bond film. These are not a good depiction of the wide variety of gold bars that are available on sites such as GoldCore!
Do I have to pay Capital Gains Tax on gold bullion?
You do pay Capital Gains Tax (CGT) on gold bullion, however any coins that are legal tender in the United Kingdom are exempt.
But the payment of CGT is not a given. It is only due when you sell your gold bullion and only then on gains that are over that particular tax year’s CGT threshold.
It is also worth remembering that you do not pay VAT on investment gold, it is currently exempt.
You can also read our detailed blog on “Do you pay Capital Gains Tax on Gold Bullion?”
Should I buy gold bullion or gold associated products?
In the age of online trading and spread betting it is easy to think that buying a gold ETF or shares in a mining company will afford you the same benefits of investing in physical gold, at a lower price. But, they are dramatically different investment products. “Paper gold" and “digital gold” investments raise considerably different risk-reward considerations than those seen in physical gold products.
The simple fact is that unless you buy bullion (a physical, tangible asset with intrinsic value) then you are just buying an asset that is another entity’s or third person’s liability. You are not buying physical gold.
When you buy shares in a gold mining company this gives you ownership in a company that mines gold. It does not give you ownership of the final product of the mining operation! There are other factors to take into account - the management of the company, the financial risks it has been or will be exposed to, hedging risk and even geopolitical risks. These do not feature in the risk profile of gold bullion.
When you choose to buy physical gold bullion you have direct ownership of that asset. This is regardless of whether the precious metals are held in your personal custody or stored safely in your name in an insured account at a qualified facility. It is not just a piece of paper or derivative product that serves as a proxy for the precious metal, as would be the case should you invest in an ETF or gold mining company.
When deciding what gold product to buy, ask yourself why you have decided to buy gold. For the majority of investors and companies they buy gold bullion to hedge against currency risks, inflation risks, geopolitical risks, or to add diversification and financial insurance to an investment portfolio. Sadly stocks and shares are not able to tick the same boxes.
How to buy gold bullion
There are a number of ways in which you can choose to buy gold bullion and hold it. We offer investors the opportunity to buy gold for direct delivery or secure storage in a variety of high-security vaults worldwide. Our team of experts have experience working with all classes of investors in the United Kingdom, from private individuals to companies.
Whether you decide to buy gold bars or gold coins, you can be sure that we have a solution to suit your needs. We offer a range of gold bullion products and services, such as:
- GoldCore Secure Storage
- Perth Mint Certificates
- GoldSaver (gold accumulation program)
- Bullion coin and bar delivery.
Set Up Your Account
To open your account, choose from one of the following options:
- Personal Account: This account is ideal for private individuals who want to manage all their precious metal investments. You can use this account to handle your investments, including buying, storing, selling, and receiving gold bars at any time.
- Joint Account: This account type is similar to a personal account, but can be used by more than two private individuals. Depending on what suits you best, you can decide between a single signature and a dual signature account.
- Corporate/Trust Account: This type of account allows companies, charities and trusts to trade gold bars. To open this account, you will need to provide the correct documentation and appoint a representative to operate on behalf of the group.
- Pension Account: With our pension account option, you have the opportunity to secure your future by processing your precious metal-approved pension investments. It is vital to note that pension assets cannot be delivered to an individual while they are held in a pension account.
All accounts give you the option to buy, sell, store, and receive delivery of gold coins, bars, and Perth Mint Certificates.
Provide the Necessary Documents
Next, you need to provide us with the necessary documents to confirm your identity and give proof of residency. To prove your identity, you need to provide us with either a copy of your passport or driver’s license. You can supply documents such as utility bills, bank statements, or government-issued correspondence for proof of residency. These documents must be current, no more than six months old.
There’s no need to send in physical copies. Simply scan or take a clear photograph of your documents and upload them to our site.
Fund Your Account
Once you have chosen an account and provided the necessary documents, your account will be open. Now you need to fund it.
At GoldCore, we give clients the option to use bank transfer or a credit/debit card. Furthermore, trading can be done in various currencies.
Choose whichever method suits you best:
- Credit/Debit Card: Using your credit or debit card allows you to get started immediately. You can buy up to €/£/$50,000 (EUR, GBP, USD) worth of gold bars online right away! Ensure you have your special Verified by Visa password or Mastercard SecureCode password.
- Bank Transfer: The most cost-effective option is to transfer funds from your bank to ours. It is important to note that we keep client funds separate from our own in segregated bank accounts.
Now that everything is set up, you are ready to get started!